Chairman's Statement

Dear Shareholders,

Overall, 2010 has been an interesting and exciting year for OKP. Quarter after quarter, we have worked hard and I am extremely pleased that we have delivered a solid set of results and turned in an impressive financial performance for the year ended 31 December 2010.

Financial Highlights

We posted a profit after tax attributable to equity holders of $17.0 million, up 17.4% from the previous year, and recorded a new high of $139.9 million in revenue, an increase of 7.6%. The increase in the Group's revenue was derived largely from an 18.1% growth in the Construction segment, which contributed $116.0 million to the top line, and accounted for 82.9% of the Group's total revenue. This growth was partly offset by a 24.9% fall in revenue from the Maintenance business, which contributed the remaining $23.9 million, or 17.1% of total revenue.

With higher overall revenue, gross profit was up by $6.1 million, or 26.1%, to $29.5 million for FY2010 from $23.4 million a year ago. Gross profit margin rose to 21.1%, from 18.0% previously, primarily due to a few construction projects that commanded better gross profit margins, coupled with better project management and tighter cost controls.

Moving In The Right Direction, Continually And Corporately

Our strong results serve as an encouragement to us and spur us to work harder and be better in all that we do. Indeed, as all of us face operational challenges each day, onsite and in the office, ensuring that our projects move smoothly, we are highly conscious of the need to excel. We are also acutely aware that each decision we make, each move we take individually are like building blocks, contributing to the eventual growth of the organisation.

On the corporate level, some of the moves that we have taken are more strategic in nature, and unlike operational execution, these moves tend to be more apparent to the public eye. The effect and outcome, however, may not be as immediate as the operational moves and may take some time to bear fruit. While we can never be guaranteed of a positive outcome, we know that the decision we have made at that time would have been the best one based on all the knowledge that we possess at that juncture.

Still we are always mindful that in business, we have to stay alert and nimble at all times, on all levels. Our target is a constantly moving one. By this, I mean that once a specific target has been achieved, another - further and higher and better target - always presents itself.

As a child's growth is imperceptible to those around him, the same is true for an organisation. As a team, we work hard and do our best each day to ensure that we fulfil our work obligations to the best of our abilities. Only when we pause at certain junctures to take stock are we able to see and assess our overall performance and growth.

As a young vibrant growing organisation, OKP takes a forward-looking stance at all times. The corporate world is a competitive one, and discipline and planning are important factors when you want to make a mark. Decisions and moves must be taken in a well-thought-out fashion. In our experience, we have found that to move forward confidently and appropriately, it is sometimes helpful to step or look back briefly. This allows us to assess the situation and make educated intelligent decisions that will help the Group to advance.

A Look Back

As I look back at the last 44 years of our existence, there have been many significant moves. Some have been difficult to make, others have been challenging, most have been exciting but all have been taken in a considered, measured fashion.

Perhaps one of the most important corporate moves we took was to go public in 2002. It was the start of a journey that has been interesting and exhilarating.

Our corporate moves, especially those taken recently, have been exciting and noteworthy as they present significant growth opportunities for the Group and can propel the Group to a different level. The new experiences and greater exposure can deepen and broaden our knowledge, expertise as well as corporate experience, and make a considerable difference to the complexion of our business.

Our move into the Oil & Gas arena in 2006, for example, has reaped benefits for us. Teaming up with China Sonangol International (S) Pte. Ltd in 2009 as a strategic partner created an opportunity for us to extend our reach further afield. China Sonangol International (S) Pte. Ltd. is a subsidiary of China Sonangol International Limited ("China Sonangol"), an overseas conglomerate that specialises in oil, gas, and minerals investment and explorations, crude oil supply and national infrastructure construction projects with headquarters in Hong Kong.

Last year, after due consideration, OKP decided to diversify into Property Development to tap opportunities in the private sector, specifically, in the buoyant property market in Singapore. This move will eventually broaden OKP's revenue base, reducing dependence on infrastructure and civil engineering projects which are largely a function of government spending.

Interestingly, China Sonangol's decision to venture into property development in Singapore has also created a new opportunity for us. This took the form of a $83.5 million contract for the construction of a luxury condominium at 21 Angullia Park. China Sonangol is the owner of the development site, which formerly housed The Parisian condominium. The latest contract, valued at $83.5 million, was awarded to a new company, Forte Builder Pte Ltd, a 50-50 joint venture between OKP's wholly-owned subsidiary Or Kim Peow Contractors (Pte) Ltd and Soil-Build (Pte) Ltd, a subsidiary of property developer Soilbuild Group Holdings Ltd. It was awarded by Angullia Development Pte Ltd, a related company of China Sonangol International (S) Pte. Ltd..

While some of the intitiatives may appear independent and isolated, they are in fact part of an overall game plan. Our ultimate goal is to grow our future through each of these moves, ultimately creating an organisation that is vibrant and attractive -- to our customers, our staff and our investors.

Solid Foundations

One of OKP's key foundations is its leadership position in the public sector, which was again a key contributor to OKP's revenue in 2010. Overall, Singapore's construction industry saw contracts worth a total of $25.7 billion - 14% higher than in 2009. Of this, the public sector's share of construction demand was $8.3 billion last year, down 40% from $13.9 billion a year ago. Still, OKP was able to secure a total of 6 government contracts, totalling $82.2 million.

Indeed, we are proud to be involved in building and maintaining the road infrastructure in Singapore, and continue to augment our lead in this market through the way we operate and execute our projects. OKP is a much-trusted name among our clients in the public sector, who see us as a reliable and trustworthy partner, able to deliver high-quality projects on time and on budget. These qualities all contribute towards differentiating OKP from the rest of the players.

We continue to prospect for private sector deals in our efforts to diversify our revenue streams. In addition to the construction contract for the Angullia Park luxury condominium, we are pleased to have garnered a $1.1 million contract for land reclamation works on Jurong Island, further strengthening our foothold in the Oil & Gas industry.

Outlook

The outlook for our industry appears promising. In his address at the BCA-REDAS Construction and Property Prospects 2011 Seminar, Minister for National Development Mr Mah Bow Tan had supported this positive view with a slew of statistics. He said the Government will continue to invest in public infrastructure in the year ahead to support its economic activities, including infrastructure projects such as the Downtown Line Stage 3 and various major roadworks. With a projected GDP growth of 4% to 6% for 2011, construction demand is forecasted to be between $22 billion and $28 billion. Of this, between $12 billion and $15 billion are expected to be derived from public sector projects, making up about 55% of overall construction demand. The Minister also mentioned that we can expect to see a sustained level of construction demand in 2012 and 2013 of between $19 billion and $26 billion worth of contracts to be awarded annually.

OKP's leading position in the public sector arena will put us in good stead to benefit directly from the contracts anticipated in the years ahead. Over the years, we have broadened and deepened our expertise and as we look ahead, we are ready to take on bigger challenges. This may take the form of larger and more complex civil engineering projects that will generate higher revenues and profitability. We are currently participating in various tenders.

As we look forward to a new year, we stand ready to embrace the changes and challenges that will definitely come our way. We draw our fortitude and strength from the years of collective experience we have amassed in the past 44 years. We stand prepared for contingencies. We are primed for opportunities, so that we can continue to perfect our moves in order to grow our future.

Dividends

Our Board of Directors has recommended a final dividend of 2.0 cents per share and special dividend of 2.0 cents per share. An interim dividend of 1.0 cent per share has been paid in September 2010, bringing total dividends for FY2010 to 5.0 cents per share. It is our way of thanking our shareholders for their continuous and unstinting support.

A Note Of Thanks

I would like to thank our customers, suppliers and business partners for their continued encouragement and support. Thanks also to my management team and my staff for their commitment, dedication and diligent contribution. Finally, we thank you, our shareholder, for your support and loyalty.

Or Kim Peow
Group Chairman