Financials

Financial Statements And Related Announcement - Full Yearly Results

Financials Archive

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Income Statement

Statements Of Financial Position

Review of Performance

Our Business

OKP Holdings Limited is a home-grown infrastructure and civil engineering company in the region. It specialises in the construction of urban and arterial roads, expressways, vehicular bridges, flyovers, airport infrastructure and oil and gas-related infrastructure for petrochemical plants and oil storage terminals as well as the maintenance of roads and roads-related facilities and building construction-related works. We tender for both public and private civil engineering and infrastructure construction projects. We have expanded our core business to include property development and investment.

We have three business segments: Construction, Maintenance and Rental income from investment properties.

Income Statement Review (Current Financial Year ended 31 December 2024 vs Previous Financial Year ended 31 December 2023)

Revenue

Our Group reported a 13.3% or $21.4 million increase in revenue to $181.8 million during the financial year ended 31 December 2024 ("FY2024"), compared to $160.4 million recorded in the preceding financial year ended 31 December 2023 ("FY2023"). The increase was primarily due to a 11.3% increase in revenue from the construction segment, reaching $114.0 million, alongside a 19.6% rise in revenue from the maintenance segment, totalling $61.7 million. However, there was a slight decrease of 5.0% in rental income.

Both the construction and maintenance segments exhibited positive revenue growth in FY2024 as compared to FY2023. It was mainly attributable to a higher percentage of revenue recognised from various ongoing and newly awarded construction and maintenance projects as they progressed to a more active phase in FY2024.

The decrease in rental income was mainly from the decrease in rental income generated by the property located at 6-8 Bennett Street, East Perth, Western Australia as a tenant had vacated some units during the second half of FY2024.

The construction and maintenance segments remain the major revenue drivers for our Group. On a segmental basis, construction, maintenance and rental income contributed 62.7% (FY2023: 63.8%), 34.0% (FY2023: 32.2%) and 3.3% (FY2023: 4.0%) respectively to our Group's revenue for FY2024.

Cost of sales

Our cost of sales decreased by 8.9%, translating to a $12.1 million decrease from $135.7 million in FY2023 to $123.6 million in FY2024. The decrease in cost of sales was attributed mainly to:

1. a decrease in sub-contracting costs, predominantly comprising costs related to premix works, signages, asphalt works, mechanical and electrical works, soil testing, landscaping and metalworks, typically outsourced to external parties; and
   
   
2. a decrease in the cost of construction materials due to lower utilisation of materials,
   
   
which were partially offset by:


3. an increase in labour cost due to increased headcount and a higher provision for bonus;
   
   
4. an increase in consultancy fee; and
   
   
5. an increase in overheads, particularly depreciation and hiring costs associated with the rental of additional heavy equipment and machineries to support ongoing and newly awarded projects,
   
   
during FY2024.

Gross profit and gross profit margin

Our gross profit increased by 135.4%, amounting to a $33.5 million increase from $24.7 million in FY2023 to $58.2 million in FY2024.

While the rental income segment demonstrated a marginal decrease in gross profit contribution by $0.1 million, reducing from $4.0 million in FY2023 to $3.9 million in FY2024, the construction and maintenance segments exhibited a substantial $33.6 million increase, soaring from $20.7 million in FY2023 to $54.3 million in FY2024.

The gross profit margin for the construction and maintenance segments notably improved from 13.4% in FY2023 to 30.9% in FY2024. The improvement in the gross profit margin was mainly attributed to the Group's ongoing initiatives to enhance efficiencies, productivity and cost management, notwithstanding the challenges posed by rising manpower costs and higher overhead costs.

Other (losses)/gains, net

Other (losses)/gains demonstrated a significant decrease of $47.4 million or 101.1%, decreasing from gains of $46.9 million in FY2023 to losses of $0.5 million in FY2024. The substantial decrease was mainly due to:

1. a decrease of $0.9 million in government grants;
   
   
2. a one-off arbitral award of $43.8 million in relation to the Contract 449A worksite incident, which was awarded in FY2023;
   
   
3. a decrease of $7.8 million in fair value gain on investment properties as a result of a fair value gain of $4.9 million reported in FY2023 as compared to a fair value loss of $2.9 million reported in FY2024;
   
   
4. a decrease of $0.1 million in gain on disposal of fixed assets; and
   
   
5. an increase of $0.7 million in the loss on foreign exchange arising from the revaluation of assets and liabilities denominated in Australian dollar to Singapore dollar,
   
   
which were partially offset by:


6. an increase in interest income of $1.2 million resulting from higher fixed deposit placement and higher interest rate from bank deposits;
   
   
7. an increase in dividend income of $0.5 million; and
   
   
8. a decrease of $4.2 million in loss allowance provided for amount due from an associated company, which was provided in FY2023 but did not recur in FY2024,
   
   
during FY2024.

Administrative expenses

Administrative expenses decreased by $0.9 million or 4.7% from $18.7 million for FY2023 to $17.8 million for FY2024. The decrease was largely due to:

1. a decrease of $0.3 million in professional fees; and
   
   
2. a decrease of $1.1 million in directors' remuneration (including profit sharing accrued),
   
   
which were partially offset by:


3. an increase of $0.5 million in employee compensation due to salary adjustment and higher provision for bonus,
   
   during FY2024.
   
   

Finance expenses

Finance expenses remained consistent at $2.0 million in both FY2023 and FY2024. It is due to the stable interest rates across the periods and there were no new major financing facilities obtained by the Group.

Share of results of associated companies and joint ventures

The share of results of associated companies and joint ventures remained consistent at $0.2 million in both FY2023 and FY2024.

Profit before income tax

Profit before income tax decreased by $13.0 million from $51.1 million in FY2023 to $38.1 million in FY2024. The decrease was due mainly to (1) the decrease in other gains of $47.4 million, which were partially offset by (2) the increase in gross profit of $33.5 million and (3) the decrease of $0.9 million in administrative expenses, as explained above.

Income tax expense

Income tax expense increased by $1.6 million or 43.9% from $3.7 million in FY2023 to $5.3 million in FY2024, primarily driven by the Group's higher taxable profit, attributed to the operational profit derived from both ongoing and newly awarded projects.

The effective tax rates for FY2024 and FY2023 stood at 13.9% and 7.2%, respectively, which was lower than the statutory tax rate of 17%, due to the utilisation of tax credits.

Non-controlling interests

Non-controlling interests of $0.9 million was due to the share of losses of our subsidiary corporation, Raffles Prestige Capital Pte Ltd, in FY2024.

Net profit

Overall, net profit decreased by $14.6 million or 30.9%, from $47.4 million for FY2023 to $32.8 million for FY2024, following the decrease in profit before income tax, and the increase in income tax expense, as explained above.

Our net profit margin decreased from 29.6% for FY2023 to 18.0% for FY2024.

Review of income statements for the Half Year ended 31 December 2024

Revenue

Our Group reported a 19.3% or $17.5 million increase in revenue to $107.9 million during the second half year ended 31 December 2024 ("2H2024") as compared to $90.4 million during the second half year ended 31 December 2023 ("2H2023"). The increase was due mainly to a 9.7% increase in revenue from the construction segment to $67.9 million and a 46.2% increase in revenue from the maintenance segment to $37.0 million, partially offset by a 7.8% decrease in rental income.

The increase in revenue from both the construction and maintenance segments was mainly attributable to a higher percentage of revenue recognised from various ongoing and newly awarded construction and maintenance projects as they progressed to a more active phase in FY2024.

The decrease in rental income was mainly from the decrease in rental income generated by the property located at 6-8 Bennett Street, East Perth, Western Australia as a tenant had vacated some units during 2H2024.

The construction and maintenance segments remain the major revenue drivers for our Group. On a segmental basis, construction, maintenance and rental income accounted for 63.0% (2H2023: 68.5%), 34.3% (2H2023: 28.0%) and 2.7% (2H2023: 3.5%) respectively of our Group's revenue for 2H2024.

Cost of sales

Our cost of sales increased by 4.1% or $2.8 million from $67.7 million for 2H2023 to $70.5 million for 2H2024. The increase in cost of sales was due mainly to:

1. a decrease in sub-contracting costs, predominantly comprising costs related to premix works, signages, asphalt works, mechanical and electrical works, soil testing, landscaping and metalworks, typically outsourced to external parties; and
   
   
2. a decrease in the cost of construction materials due to lower utilisation of materials,
   
   

which were partially offset by:

4. an increase in labour cost due to increased headcount and a higher provision for bonus; and
   
   
5. an increase in overheads, particularly depreciation and hiring costs associated with the rental of additional heavy equipment and machineries to support ongoing and newly awarded projects,
   
   

during 2H2024.

Gross profit and gross profit margin

Overall, our gross profit for 2H2024 increased by 64.8% or $14.7 million from $22.7 million for 2H2023 to $37.3 million for 2H2024.

The contribution from the rental income segment to gross profit remained consistent at $2.0 million in both 2H2023 and 2H2024. There was an increase in gross profit of $14.7 million from the construction and maintenance segments, soaring from $20.6 million in 2H2023 to $35.3 million in 2H2024.

Our gross profit margin for the construction and maintenance segments demonstrated a notable increase from 23.7% in 2H2023 to 33.7% in 2H2024. The improvement in the gross profit margin was mainly attributed to the Group's ongoing initiatives to enhance efficiencies, productivity and cost management, notwithstanding the challenges posed by higher material costs and rising manpower costs.

Other (losses)/gains, net

Other gains decreased by $4.0 million or 216.3% from other gains of $1.8 million in 2H2023 to other losses of $2.2 million in 2H2024. The decrease was due mainly to:

1. an increase in loss on foreign exchange of $1.1 million arising from the revaluation of assets and liabilities denominated in Australian dollar to Singapore dollar; and
   
   
2. a decrease of $7.8 million in fair value gain on investment properties as a result of a fair value gain of $4.9 million reported in 2H2023 as compared to a fair value loss of $2.9 million reported in 2H2024; and
   
   
3. a decrease of $0.1 million in government grants,
   
   
which were partially offset by:


4. an increase in interest income by $0.3 million resulting from higher fixed deposit placement and higher interest rate from bank deposits;
   
   
5. an increase in dividend income of $0.5 million; and
   
   
6. a decrease of $4.2 million in loss allowance provided for amount due from an associated company,
   
   

during 2H2024.

Administrative expenses

Administrative expenses decreased by $0.9 million or 8.1% from $11.3 million in 2H2023 to $10.4 million in 2H2024. The decrease was largely due to:

1. a decrease of $0.8 million in directors' remuneration (including profit sharing) accrued, reflecting the higher profit generated by the Group;
   
   
2. a decrease of $0.1 million in repair and maintenance of office equipment;
   
   
3. a decrease of $0.1 million in professional fees; and
   
   
4. a decrease of $0.2 million in donation,
   
   
which were partially offset by:


5. an increase of $0.2 million in employee compensation due to salary adjustment and higher provision for bonus; and
   
   
6. an increase of $0.1 million in medical fees,
   
   

during 2H2024.

Finance expenses

Finance expenses remained consistent at $1.0 million for both 2H2023 and 2H2024, due to the stable interest rates across the periods and there were no new major financing facilities obtained by the Group.

Share of results of associated companies and joint ventures

The share of results of associated companies and joint ventures increased by $0.2 million or 2500.0%. The increase was attributable to the share of profits of the Group's 22.5%-held associated company, Chong Kuo Development Pte Ltd, during 2H2024.

Profit before income tax

Profit before income tax increased by $11.8 million or 97.3% from $12.2 million in 2H2023 to $24.0 million in 2H2024. The increase was due mainly to (1) the increase in gross profit of $14.7 million, (2) the increase in share of results of associated companies and joint ventures of $0.2 million, and (3) the decrease in administrative expenses of $0.9 million, which were partially offset by (4) the decrease in other gains of $4.0 million, as explained above.

Income tax expense

Income tax expense was mainly in relation to the operating profits registered by the profitable entities within the Group. The increase of income tax expense by $2.8 million or 507.7% from $0.6 million in 2H2023 to $3.4 million in 2H2024, was primarily driven by the Group's higher taxable profit, attributed to the operational profit derived from both ongoing and newly awarded projects.

The effective tax rates for 2H2024 and 2H2023 stood at 14.2% and 4.6%, respectively, which was lower than the statutory tax rate of 17%, due to the utilisation of tax credits.

Non-controlling interests

Non-controlling interests of $1.2 million was due to the share of losses of our subsidiary corporation, Raffles Prestige Capital Pte Ltd, in 2H2024.

Net profit

Overall, net profit increased by $9.0 million or 77.5%, from $11.6 million in 2H2023 to $20.6 million in 2H2024, following the increase in profit before income tax of $11.8 million, partially offset by the increase in income tax expense of $2.8 million, as explained above.

Our net profit margin improved from a net loss margin of 12.9% in 2H2023 to a net profit margin of 19.1% in 2H2024.

Review of the financial position for the Financial Year ended 31 December 2024

Current assets

Current assets increased by $50.7 million, from $123.1 million as at 31 December 2023 to $173.8 million as at 31 December 2024. The substantial increase was primarily driven by:

1. a $43.2 million boost in cash and cash equivalents, mainly due to $58.3 million generated from operating activities, an increase of $0.6 million in pledged deposits, alongside $4.4 million in cash used in investing activities and $11.3 million in cash used in financing activities;
   
   
2. an increase of $11.4 million in trade and other receivables, as a result of higher billings for on-going construction and maintenance projects; and
   
   
3. an increase of $0.2 million in inventories, attributed to the utilisation of materials for ongoing construction and maintenance projects,
   
   
which were partially offset by:


4. a decrease in contract assets of $4.1 million, due to a decrease in construction contract receivable from customers, arising from lower unbilled amounts expected to be collected from customers following the higher revenue,
   
   

during FY2024.

Non-current assets

Non-current assets decreased by $1.3 million, from $136.4 million as at 31 December 2023 to $135.1 million as at 31 December 2024. The decrease was due mainly to:

1. a decrease in investment properties due to fair value loss of $4.2 million; and
   
   
2. a decrease of $3.5 million in other receivables, due to $1.0 million loan repayment from an associated company, Chong Kuo Development Pte Ltd, and a notional fair value adjustment of $3.3 million. The decrease was partially offset by a $0.8 million advance extended to USB Holdings Pte Ltd,
   
   
which were partially offset by:


3. an increase of $3.4 million in investments in associated companies, driven by share of profit and recognition of notional fair value of loans from an associated company;
   
   
4. an increase in property, plant and equipment of $1.1 million, mainly attributable to the addition of property, plant and equipment;
   
   
5. an increase of $0.8 million in right-of-use assets, resulting from the purchase of plant and equipment to support new and ongoing projects through hire purchase, along with the reclassification of certain plant and machinery from property, plant and equipment; and
   
   
6. an increase in deferred income tax assets of $1.1 million arising from the recognition of deferred income tax assets in one of the subsidiary corporations,
   
   

during FY2024.

Current liabilities

Current liabilities increased by $20.4 million, from $55.1 million as at 31 December 2023 to $75.5 million as at 31 December 2024. The increase was due mainly to:

1. an increase of $18.0 million in contract liabilities due to advance billings for three construction projects for which obligations have yet to be fulfilled; and
   
   
2. an increase of $3.4 million in current income tax liabilities due to higher tax provision allocated for profitable entities within the Group,
   
   
which were partially offset by:


3. a decrease of $0.7 million in trade and other payables, attributable to reclassification of short-term advances amounting to $1.6 million from non-controlling interest, and a decrease of $1.0 million in accruals, offset against the increase of $1.8 million in trade payables and increase of $0.1 million in other payables; and
   
   
4. repayment of bank borrowings totalling $0.3 million,
   
   

during FY2024.

Non-current liabilities

Non-current liabilities decreased by $4.5 million, from $34.9 million as at 31 December 2023 to $30.4 million as at 31 December 2024. The decrease was due mainly to:

1. a decrease in other payables of $3.3 million, attributed to reclassification of shortterm advances amounting to $1.6 million from non-controlling interest and notional fair value adjustment of $4.9 million following the loan structuring exercise; and
   
   
2. repayment of bank borrowings totalling $1.8 million,
   
   
which were partially offset by:


3. an increase in lease liabilities of $0.2 million arising from the purchase of plant and machineries for newly awarded projects; and
   
   
4. an increase of $0.4 million in deferred income tax liabilities,
   
   

during FY2024.

Shareholders' equity

Shareholders' equity increased by $33.6 million, from $169.5 million as at 31 December 2023 to $203.1 million as at 31 December 2024. The increase was primarily driven by:

1. an increase of $8.7 million in non-controlling interests as a result of fair value adjustment on interest-free loans; and
   
   
2. profits generated from operations amounting to $33.7 million attributable to equity holders of the Company,
   
   
which were partially offset by:


3. a decrease of $4.2 million in capital reserve as a result of fair value adjustment on interest-free loans; and
   
   
4. dividend payment to shareholders of $4.6 million,
   
   

during FY2024.

Review of cash flows for the Financial Year ended 31 December 2024

Net cash provided by operating activities

Our Group reported net cash generation of $58.3 million from operating activities in FY2024, marking a decrease of $16.9 million, compared to $75.2 million in FY2023. The decrease was largely attributable to:

1. a decrease in cash generated from operating activities before working capital changes, amounting to $8.3 million;
   
   
2. a decrease in net working capital inflow of $7.5 million; and
   
   
3. an increase in income tax payments of $2.3 million,
   
   
which were partially offset by:


4. an increase in interest received totalling $1.2 million,
   
   

during FY2024.

Net cash used in investing activities

Net cash used in investing activities increased by $2.1 million from $2.3 million in FY2023 to $4.4 million in FY2024. The increase was due mainly to:

1. an increase of $0.4 million in cash used for the purchase of property, plant and equipment;
   
   
2. structural improvements of $0.8 million that were capitalised to investment properties;
   
   
3. a decrease of $2.3 million in loan repayment received from an associated company; and
   
   
4. a decrease of $0.1 million in proceeds received from disposal of property, plant and equipment,
   
   
which were partially offset by:


5. a decrease of $0.2 million in advances extended to an associated company; and
   
   
6. a decrease of $1.3 million in cash used for the purchase of right-of-use assets,
   
   

during FY2024.

Net cash used in financing activities

Net cash used in financing activities decreased by $0.7 million, from $12.0 million in FY2023 to $11.3 million in FY2024. The decrease was due mainly to:

1. a decrease of $3.5 million in principal repayment of borrowings; and
   
   
2. an increase of $0.1 million in pledged bank deposits,
   
   
which were partially offset by:


3. a decrease of $0.3 million in advance from a non-controlling shareholder;
   
   
4. an increase of $1.7 million in repayment of lease liabilities; and
   
   
5. an increase of $0.9 million in dividend disbursements,
   
   

during FY2024.

Overall, free cash and cash equivalents stood at $124.3 million as at 31 December 2024, marking a notable increase of $42.6 million from $81.7 million as at 31 December 2023. This represents cash reserves of 40.5 cents per share as at 31 December 2024, a marked increase from the 26.6 cents per share recorded as at 31 December 2023 (based on 306,961,494 issued shares).

Commentary

Economic Outlook

Based on advance estimates released by the Ministry of Trade and Industry ("MTI") on 2 January 2025, Singapore's economy grew at a slower pace of 4.3% on a year-on-year basis in the fourth quarter of 2024, compared with the 5.4% growth in the previous quarter. On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 0.1%, moderating from the 3.2% expansion in the third quarter. For the whole of 2024, the economy grew by 4.0%, faster than the 1.1% in 2023.

On 24 January 2025, the Monetary Authority of Singapore ("MAS") announced that it will maintain the rate of appreciation of the Singapore dollar nominal effective exchange rate ("S$NEER") policy band, with no change to the width of the band or the level at which it is centred. It will closely monitor global and domestic economic developments and remain vigilant to risks to inflation and growth. MAS expects Singapore's growth momentum to slow over this year, after outperforming in the second half of 2024. Meanwhile, core inflation has moderated more quickly than expected and will remain below 2% this year, reflecting the return to low and stable underlying price pressures in the economy.

Industry Outlook

According to MTI, the construction sector grew by 5.9% year-on-year in the fourth quarter, a faster pace than the 4.7% growth in the third quarter. The growth was driven by an increase in public sector construction output. On a quarter-on-quarter seasonally-adjusted basis, the sector grew at a faster pace of 3.4%, compared to the 1.6% growth in the third quarter.

Based on projections from Building and Construction Authority ("BCA") released on 23 January 2025, construction demand in Singapore is expected to increase this year, with the value of construction contracts to be awarded ranging between $47 billion and $53 billion. Normalised to real values, 2025's demand is projected to range between $35 billion and $39 billion, which is between 0.3% to 11.7% higher than pre-COVID levels in 2019.

The strong demand is underpinned by the expected award of contracts for several large-scale developments, including Changi Airport Terminal 5 ("T5") and the expansion of the Marina Bay Sands Integrated Resort, alongside public housing development and upgrading works. High-specification industrial buildings, educational developments, healthcare facilities, as well as mechanical and engineering contracts for rail lines are also expected to contribute to the increased demand.

Over the medium term, BCA expects construction demand to range between S$39 billion and S$46 billion per year from 2026 to 2029. It cautioned that while the medium-term construction demand is projected to be robust, the schedules and phasing of projects are subject to change due to potential unforeseen risks arising from an uncertain global economic climate. BCA also highlighted that the T5 development is likely to be a one-off exceptional project over the medium term, and thus overall industry demand could eventually moderate after this period.

BCA added that Singapore's Built Environment sector will continue its transformation efforts to achieve better outcomes through increased coordination and productivity. A key component in this transformation effort is CORENET X, a one-stop digital platform for integrated regulatory submissions for building works. Furthermore, Singapore's Built Environment sector is fostering closer collaboration through collaborative contracting that facilitates deeper collaborations amongst developers, consultants and builders.

The flash estimates released by the Urban Redevelopment Authority ("URA") on 2 January 2025 indicated that private residential price index increased by 2.3% on a quarter-on-quarter basis in 4Q2024, bringing the gain for the whole of 2024 to 3.9%. This represents a moderation from the gains of 6.8% in 2023 and 8.6% in 2022.

To ensure adequate supply to meet housing demand and maintain market stability, the Government has increased the overall private housing supply in the Government Land Sales ("GLS") Programme from approximately 8,140 units in 2H2024 to 8,505 units in 1H2025. This comprises approximately 5,030 private housing units, including 980 Executive Condominium units, to be tendered out via the Confirmed List in 1H2025, which is close to 60% higher than the average half-yearly GLS supply in the Confirmed List from 2021 to 2023. An additional 3,475 units will be made available via the Reserve List, an increase from the 3,090 units in 2H2024.

The Group expects price momentum of the private residential market to moderate with the increased supply in 2025. Amid the uncertain global economic climate, the Group remains cautiously optimistic, on the back of higher-for-longer interest rates and heightened geopolitical tensions.

Company Outlook and Order Book Update

Looking ahead, the Group expects global challenges, including the higher-for-longer interest rate environment and geopolitical risks, to continue. Nevertheless, the Group remains focused in building a sustainable and resilient business to navigate challenges effectively. Supported by a healthy pipeline of construction projects and extensive experience as a contractor, especially for public sector projects, the Group is positioned to navigate challenging market conditions while ensuring effective cashflow management and financial prudence.

As at 31 December 2024, the Group's order book stood at $600.7 million (31 December 2023: $518.6 million), with projects extending till 2027.

For its property investment business, the Group's investment property situated at 6-8 Bennett Street in Perth, Australia, continues to generate recurring rental income.

To drive recurring income, the Group owns a portfolio of investment properties, comprising a freehold, three-storey shophouse situated at 35 Kreta Ayer Road and freehold, two-storey conservation shophouses located at 69 and 71 Kampong Bahru Road. These properties, held through its 51%-owned subsidiary, Raffles Prestige Capital Pte. Ltd., continues to generate a steady stream of recurring rental income, contributing positively towards the Group's performance.

Supported by a decades-long track record and industry expertise, the Group remains steadfast in its strategy to diversify earnings and build recurring income streams. The Group will also pursue strategic partnerships to strengthen its foothold in property development and investment ventures. By remaining steadfast in its vision, the Group is well positioned to deliver long-term value to its stakeholders.