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Financial Statements

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Condensed Interim Consolidated Income Statement

Condensed Interim Consolidated Statement of Comprehensive Income

Condensed Balance Sheets

* The gearing ratio is computed as borrowings divided by total capital. Total capital is calculated as borrowings plus net assets of the Group.
** The net gearing ratio is computed as borrowings less cash and bank balances divided by total capital.

Group Performance Review

(a)(i) First half review – 1H 2024 vs 1H 2023

The Group’s revenue increased 27% to S$124.4 million in the first half-year ended 30 June 2024 (“1H 2024"), from S$97.9 million reported in the first half-year ended 30 June 2023 (“1H 2023”).

The higher Group revenue was attributable to the continued positive rental rate revisions in both Purpose-Built Workers Accommodation (“PBWA”) and Purpose-Built Student Accommodation (“PBSA”) portfolio globally as well as increased occupancies across its properties in Singapore, United Kingdom (“UK”) and Australia.

Financial occupancy for the Group’s Singapore PBWA, which consist of five Purpose-Built Dormitories (“PBDs”) and four Quick Build Dormitories (“QBDs”) increased from 98% in 1H 2023 to 99% in 1H 2024. Revenue from Singapore was an increase of 34% or S$21.4 million from S$63.8 million to S$85.1 million, as tenancies due for renewal during 1H2024 were renewed at higher prevailing market rates.

In Malaysia, the average financial occupancy was 90% in 1H 2024, a reduction from 94% in 1H 2023 as its portfolio bed capacity expanded due to its AEI initiatives. This includes the 770 beds newly added at Westlite Senai in 4Q 2023, where occupancy is being progressively ramped up. Malaysia revenue reported in 1H 2024 was S$9.5 million compared to S$9.9 million for 1H 2023, due primarily to the weaker Malaysian ringgit registered in 1H 2024 as compared to 1H 2023, which translated to a lower revenue when reported in Singapore dollars. In its local currency of Malaysian ringgit, Malaysian revenue increased by 2% as compared to 1H 2023 mainly driven by positive rental revisions.

The average occupancy in the Group’s UK PBSA has increased from 90% in 1H 2023 to 99% in 1H 2024, coupled with positive rental revisions arising from increased demand from both domestic and international students. UK revenue reported in 1H 2024 increased 26% to S$20.8 million, compared to S$16.6 million in 1H 2023.

In Australia, average financial occupancy of the Group’s Adelaide and Melbourne assets improved from 86% in 1H 2023 to 94% in 1H 2024 with the return of international students to Australia. Australian PBSA revenue grew 20% from S$6.9 million to S$8.2 million in 1H 2024, boosted by healthy rental revisions.

Consequently, the Group’s gross profit increased 34% from S$70.4 million in 1H 2023 to S$94.1 million in 1H 2024, mainly because of revenue growth due to improvement in financial occupancy and rental rates.

Other income reduced by S$0.3 million largely due to government grant income.

Administrative expenses increased by S$3.9 million due to expanded business operations. Finance expenses increased marginally by S$64,000 due to a higher interest rate environment that was offset by reduced borrowings.

Share of profit of associated companies and joint venture increased by S$20.9 million, largely due to fair value gains, positive rental rate revisions and high occupancy at Westlite Mandai as well as the absence of fair value adjustments on the assets held by the Centurion US Student Housing Fund (“CUSSHF” or “Fund”) in 1H 2024 as compared to a fair value loss recorded by the Fund in 1H 2023.

Net change in fair value of investment properties in 1H 2024 mainly relates to the valuation movements on the Group’s investment properties as at 30 June 2024, based on management assessments made in consultation with the independent valuers who had carried out the valuation of the investment properties as at the last financial year end, as well as the adjustment of fair value of right-of-use ("ROU") investment properties that were leased as at 30 June 2024, in accordance with SFRS(I) 16 Leases.

The net fair value gain of S$61.6 million in 1H 2024 was mainly recorded in the Group’s investment properties in view of stronger operating performance and offset against the adjustment of fair value of the ROU investment properties. This was compared to a fair value gain of S$5.4 million in 1H 2023 arising mainly from investment properties in Singapore and Malaysia.

Income tax expenses increased by $11.6 million mainly due to the higher profit and deferred income tax from fair value changes of investment properties.

Accordingly, net profit after tax derived from the Group’s operations for 1H 2024 was S$127.7 million, as compared to S$42.4 million in 1H 2023.

Excluding fair value adjustments, net profit derived from core business operations was S$53.4 million in 1H 2024, which was 48% higher than the S$36.0 million reported in 1H 2023.

(b) Review of Group Balance Sheet

Cash and Bank Balances increased by S$15.8 million largely due to cash generated from operating activities and proceeds from the disposal of Westlite Bukit Minyak to Kumpulan Wang Persaraan (“KWAP”), Malaysia’s public services pension fund.

Trade and other receivables increased by S$11.9 million mainly due to advances made to participate in a project that is under evaluation.

Assets held for sale reduced by S$23.1 million with the disposal of Westlite Bukit Minyak completed in 1H 2024. Investments in associated companies increased by S$23.5 million due to profits in 1H 2024.

Investment properties increased by S$126.7 million largely due to the fair value gains, companies expenditure on assets under development as well as recognition of right-of-use asset in Westlite Bukit Minyak upon the completion of the sale and leaseback with KWAP.

Lease liabilities increased by S$24.1 million from the added right-of-use assets in Westlite Bukit Minyak and two master leases for dwell Prince Edward and dwell Ho Man Tin in Hong Kong, China.

Borrowings & Gearing

The Group’s borrowings reduced from S$657.4 million as at 31 December 2023 to S$653.7 million as at 30 June 2024, due primarily to repayment of borrowings during the period.

The Group’s net gearing ratio was 34% as at 30 June 2024, as compared to 38% as at 31 December 2023. The Group’s acquired operating assets and assets under development are primarily funded through bank borrowings, which have an average remaining maturity profile of 5 years. The Group uses long-term bank debt with regular principal repayments to finance its long-term assets.

As at 30 June 2024, the Group’s balance sheet remained healthy with S$90.5 million in cash and bank balances. The Group has unutilised committed credit facilities of S$82.7 million (of which S$72.4 million relates to unutilised committed credit facilities expiring more than 12 months after balance sheet date) to meet the net current liabilities of S$18.5 million as at 30 June 2024.

(c) Review of Company Balance Sheet

Trade and other receivables as well as trade and other payables mainly relate to intercompany balances with subsidiaries.

(d) Review of Statement of Cash Flows

In 1H 2024, the Group generated a positive cash flow of S$52.8 million from operating activities.

Net cash provided by investing activities amounted to S$6.3 million, mainly due to proceeds from disposal of Westlite Bukit Minyak offset against cash paid for the Westlite Ubi and Westlite Toh Guan projects.

The Group recorded net cash used in financing activities of S$43.7 million mainly due to repayment of borrowings, interest, principal portion of lease liabilities and dividends paid during the period.

Commentary On Current Year Prospects

As at 30 June 2024, Centurion operates a diversified portfolio of 32 operational purpose-built workers and student accommodation assets (“PBWA” and “PBSA” respectively), comprising 66,495 beds across Singapore, Malaysia, Australia, the United Kingdom (“UK”) and the United States (“US”).

Workers Accommodation

Singapore

In Singapore, the Group operates nine Purpose-Built Workers Accommodation (“PBWA”) of 34,786 beds, which includes five Purpose-Built Dormitories (“PBDs”) comprising 27,530 beds, and four Quick Build Dormitories (“QBDs”) comprising 7,256 beds.

The outlook for PBWAs in Singapore continues to be positive, supported by strong financial occupancy numbers and healthy rental revisions. Tenancies due for renewal during 1H2024 were renewed at higher prevailing market rates, yielding a positive impact on Singapore’s PBWA performance. Moreover, the average financial occupancy increased by one percentage point to 99% in 1H 2024. As a result, Singapore’s PBWA revenue increased 34% in 1H 2024, compared to 1H 2023.

While rental rate revisions have begun to moderate, market rates are expected to maintain at healthy levels going forward as demand remains robust in the near term. The Building and Construction Authority (BCA) is expected to award construction contracts amounting to between $32 billion to $38 billion from 2025 to 2028¹ , providing a positive tailwind for PBWA demand.

The Group continues to work towards enlarging its Singapore portfolio capacity to capture the rising worker housing needs driven by the robust demand for dormitory beds in Singapore. A healthy portfolio pipeline is underway to deliver a steady supply of both newly constructed and redeveloped PBD beds, which will be fully compliant with the Dormitory Transition Scheme (“DTS”) Interim Standards and New Dormitory Standards (“NDS”) laid down by the MOM².

The new Westlite Ubi development is expected to be operational by December 2024 and will add approx. 1,650 beds to the Group’s portfolio.

As part of its longer-term plans to transition to new regulatory standards, the Group has commenced redevelopments at two PBDs, adding a new block each in Westlite Toh Guan and Westlite Mandai. The redevelopments are expected to add approx. 5,460 beds by 2026, with Westlite Toh Guan adding approx. 1,764 beds and Westlite Mandai adding approx. 3,696 beds. The Group has targeted the redevelopments to complete before the DTS commencing from 2027 to minimize disruption from retrofitting works in existing blocks. The new blocks will serve as “swing sites” for residents while other blocks undergo retrofitting works.

Malaysia

In Malaysia, the Group manages eight PBWAs which are in the states of Johor in the South, Penang in the North and Selangor in Central Malaysia. These states have the largest foreign worker population in the country’s manufacturing sector, which accounts for approx. 35% of Malaysia’s two million foreign workers³.

Regulatory enforcement of the Workers’ Minimum Standards of Housing and Amenities (Amendment) Act 2019 (“Act 446”), coupled with international ethical pressures and growing awareness for the need to improve welfare of migrant worker populations, has led to increased demand for well-designed, professionally managed PBWAs (or Centralized Living Quarters) in Malaysia.

The Group’s Malaysia PBWA portfolio bed capacity was 27,373 as of 30 June 2024. Average financial occupancy declined from 94% in 1H 2023 to 90% in 1H 2024, including 770 beds newly added at Westlite Senai in 4Q 2023, where occupancy is being progressively ramped up.

Demand for quality PBWAs that conform to Act 446 continue to support a healthy outlook for PBWAs in Malaysia. The Group continues to focus on expanding its portfolio capacity to capture the expected strong demand.

An Asset Enhancement Initiative (“AEI”) is in progress at Westlite Senai II, which will add approx. 920 beds on completion in 4Q 2024. Two further AEIs are planned at Westlite Pasir Gudang and Westlite Johor Techpark, to add approx. 950 beds and approx. 1,740 beds respectively in 2025.

In December 2023, the Group acquired the remaining shares in the associated company, Oriental Amber Sdn Bhd, which holds a plot of land in Nusajaya, Iskandar, Johor. The Group is currently evaluating the development of a new PBWA with approx. 7,000 beds.

China

In July 2024, the Group made its maiden foray into China’s PBWA market. The Group has secured a master lease of five years and 11 months, with an option to renew for a further term of five years, for an existing property in Hong Kong’s Sheung Shui, New Territories. The property will be retrofitted into a specialized accommodation for foreign workers primarily in the F&B and services sectors.

Managed under the Group’s Westlite Accommodation brand, Westlite Sheung Shui is expected to be operational in November 2024 with a capacity of approx. 550 beds, which will cater to the growing demand for foreign labour in HKSAR. Foreign worker inflows are being driven by the recent implementation of the Enhanced Supplementary Labour Scheme (“ESLS”) by the Hong Kong authorities in September 2023, where 27,000 additional workers are expected to fill up vacancies across 26 job categories, which includes those in the construction and F&B industries^4,5.

Student Accommodation

As at 30 June 2024, the Group manages a portfolio of 4,336 beds across 15 operational PBSA assets in Australia, the UK, and the US. While student housing demand and financial occupancies are strong across all markets, UK and Australia, in particular, reported significant upticks in financial occupancy. The improvements were driven by rising student numbers amidst a tight supply of beds in key university cities.

United Kingdom

Average financial occupancy rates for the Group’s 10 PBSA assets in UK, all of which are strategically located near top universities, have increased by nine percentage points to 99% in 1H 2024. This underscores UK’s popularity for international students pursuing higher education.

According to Knight Frank’s 2Q 2024 UK Student Market Update report⁶ , a slowdown in the delivery of new PBSA developments has led to an ongoing shortage in PBSA supply. This shortage has enabled positive rental revisions, resulting in increased revenue for the Group.

UK has recently tightened immigration laws in a move to address student visa abuse, restricting international “students” from bringing family members to the UK⁷. Thus, encouraging a more genuine student-tenant base and benefiting PBSA providers⁸. Universities remain committed to growing international student numbers, spurring continued high demand for PBSA beds.

Australia

The average financial occupancy for the Group’s PBSA in Australia, which comprises 887 beds in dwell Village Melbourne City and dwell East End Adelaide, improved from 86% in 1H 2023 to 94% in 1H 2024. Occupancies are expected to remain resilient, supported by strong international student inflows. According to The Institute of Public Affairs Australia⁹, close to 55% of Australia’s net new housing supply will be absorbed by international students in 2024.

Similar to the UK, Australia has also taken measures to restrict migration after a substantial spike in student visa numbers resulted in housing concerns across key university cities. Besides more stringent scrutiny of visa applications, Australia has doubled its student visa fee in a bid to maintain the integrity of international students and manage migration numbers¹⁰.

Australian universities, which rely heavily on international student populations and fees, will need to work with private PBSA operators to address the student housing shortage, to mitigate government concerns and visa management measures. The Group believes this to be a positive tailwind going forward and plans to enlarge its Australia portfolio capacity to tap continued robust demand.

At dwell Village Melbourne City, pending finalization of Development Approval, the Group plans to redevelop an existing carpark into a new block of PBSA of approx. 600 beds. The Group is also evaluating the redevelopment of existing accommodation blocks in dwell Village Melbourne City to further enhance the asset. Additionally, the Group is exploring an opportunity to seek planning approval for a land site in close proximity to RMIT University Melbourne, for approx. 575 PBSA beds.

The Group will continue to explore opportunities for portfolio expansion, including developmental opportunities, in key cities across Australia.

United States

The Group’s US portfolio consists of three freehold PBSAs, which are held under the Centurion US Student Housing Fund (“CUSSHF” or “Fund”). Centurion holds approx. 28.7% of the total number of units in issue in CUSSHF and manages the Fund and its assets.

As CUSSHF comes to term in November 2024, the Fund has sold dwell Tenn Street in 2Q 2023. The Fund has also disposed of dwell Logan Square and dwell Stadium View in 2Q 2024. The remaining three portfolio assets continue to deliver healthy financial occupancy.

China

The Group has entered the Hong Kong, China market, securing master leases for two properties in Kowloon in 2Q 2024.

The 2 properties, dwell Prince Edward at Prince Edward Road West and dwell Ho Man Tin at Hung Hom, will be refurbished as PBSAs to offer 66 beds and 89 beds respectively upon expected completion in September 2024. Notably, dwell Prince Edward is refurbished from a historic building that dates to the 1930s, and will be the first “women-only” dormitory in Hong Kong.

Both projects are secured under 5-year master leases with optional extensions of up to 5 additional years.

Hong Kong has increased its quota for non-local post-secondary students from 20% to 40%, as part of government’s efforts to position Hong Kong as an international education hub¹¹. With non-local enrolment expected to rise and amidst a slow construction environment, Hong Kong faces an estimated shortfall of 40,000 beds for international university students in 2024, and the shortage is expected to increase by 60% by the 2027-2028 academic years¹².

Restrictions for international students taking on part-time jobs have also been lifted, which will allow students to financially support themselves and assimilate into Hong Kong’s job market¹³.

The student-bed ratio is projected to remain above 2:1 for the next 5 years, and rental rate revisions are expected to remain positive for private student accommodation¹⁴.

Looking Ahead

The Group continues to explore new, promising markets through an asset-light strategy including joint ventures and master leases. This approach minimizes capital commitments and provides flexibility, enabling the Group to allocate capital and resources selectively for strategic, sustained growth.

The Group also actively seeks opportunities to scale and enlarge its capacity in existing markets, including new assets and optimising existing assets to tap evolving needs, including shifting customer preferences and regulatory requirements.

Centurion Group will continue to enhance its assets, operations and reallocate its portfolio to scale and improve operational efficiency, to deliver long-term value to stakeholders.

Remarks:
1. https://www.straitstimes.com/singapore/between-32-billion-to-38-billion-in-construction-contracts-to-be-awarded-in-2024-bca, The Straits Times, 15 Jan 2024
2. https://www.mom.gov.sg/newsroom/press-releases/2023/1011-dts, MOM, 11 Oct 2023
3. https://www.channelnewsasia.com/asia/malaysia-foreign-worker-dependence-jobs-labour-4034881, Channel News Asia, 11 Jan 2024
4. https://www.straitstimes.com/asia/east-asia/hong-kong-to-unveil-plan-to-recruit-foreign-labour-amid-shortage-as-business-surges, The Straits Times, 13 Jun 2023
5. https://www.humanresourcesonline.net/hong-kong-starts-accepting-applications-for-enhanced-supplementary-labour-scheme, Human Resources Online, 4 Sept 2023
6. https://content.knightfrank.com/research/169/documents/en/uk-student-housing-q2-2024-11358.pdf, Knight Frank, Q2 2024
7. https://monitor.icef.com/2024/06/home-office-data-confirms-downturn-in-uk-visa-issuances-through-q1-2024/, ICEF Monitor, 19 Jun 2024
8. https://thepienews.com/analysis/visa-integrity-the-hunt-for-genuine-students/, The PIE News 4 Jan 2024
9. https://ipa.org.au/wp-content/uploads/2023/07/IPA-Research-Australias-housing-shortage-International-student-intake-exacerbating-nationwide-housing-supply-shortfall-July-2023-FINAL.pdf, Institute of Public Affairs Australia, Jul 2023
10. https://www.channelnewsasia.com/world/australia-foreign-student-visa-fee-double-migration-crackdown-university-4447691, CNA, 1 Jul 2024
11. https://www.universityworldnews.com/post.php?story=20231025122118185, University World News, 25 Oct 2023
12. https://www.scmp.com/business/china-business/article/3257355/hong-kong-faces-shortfall-59500-beds-university-students-creating-opportunity-investors-hotel-owners, South China Morning Post, 31 Mar 2024
13. https://www.news.gov.hk/eng/2023/10/20231026/20231026_154101_683.html, News.gov.hk, 26 Oct 2023
14. https://www.colliers.com/en-hk/news/hong-kongs-tertiary-education-policy-shift-ignites-coliving-growth, Colliers Research, Apr 2024