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Dear Investors,

Thank you very much for the questions and the opportunities to clarify them. We hope you have a better understanding of our business through this online exchange.

Your questions will be reposted in blue followed by our replies in black.

Rgds,
The Management Team
OKP Holdings Ltd

Dear Sean, you wrote:

  1. Congrats on the good set of results. Can you describe some of the things you have done for the past 3 yrs to restore margins? What has management done to cope with the foreign labor restrictions?

    The margins vary for different projects and are dependent on the nature of each one. For the last two financial years, we worked on several maintenance projects that commanded better margins and recognised variation orders for a construction project that also increased overall profitability.

    On the cost front, we took active measures to raise productivity which partially contributed to our higher profitability, and correspondingly, margins. These included regular training to raise technical expertise of existing pool of talent and implementation of new construction technology. Such measures, along with tapping on government grants and collaboration with partners, where feasible, help to mitigate the impact of a tighter talent pool resulting from foreign labour restrictions.

Dear Yeo KH, you wrote:

  1. Property: Do you have any more ongoing property developments besides Amber Skype? Would there be any penalties if you and your partner are still holding to the unsold units?

    Is there any more impairment to be made this year after one made in FY2015?

    Other than Amber Skye and LakeLife, which has received its Temporary Occupation Permit ("TOP") on 30 December 2016 and has almost all of its units sold, we currently do not have any other ongoing property developments.

    The TOP of Amber Skye is scheduled to be in April 2017, and with the Qualifying Certificate (QC) charge only applicable to the development in 2019, there remains about two years for the units to be sold. Together with the majority shareholder of CS Amber Development Pte. Ltd., which is experienced in property development and sales, we are stepping up on marketing efforts and will continue to actively push for sales. The new Amber MRT station, which is under construction and expected to be ready come 2023, will add to the unique selling proposition of this development.

    In view of the decrease in selling price of properties in Singapore, we provided an additional impairment of $758,000 in FY2016.

  2. Construction: How many projects are you tendering this year compared to FY2016? Can you provide a ball park figure on the total value of tenders you will be making in FY2017 compared to FY2016?

    How much of your outstanding order book of over S$300m will be recognized in FY2017? Can you provide a range of gross margin you are expecting in FY2017 for your construction revenue to be recognized this year?

    Your gross margin has been trending up over last two years. Besides variation orders in both years and ignoring the gains from share from associates, what are the reasons for the improvement in gross margins?

    How much will the impending increase in diesel cost affect your gross or net margins?

    We are actively tendering for some public sector infrastructure projects including those relating to the North-South Corridor and the Circle Line. The estimated values of such projects range from S$200 million to S$500 million.

    It is not appropriate for us to provide guidance on future revenue and profit numbers. However, in view that the Government will also bring forward S$700 million worth of public sector infrastructure projects to FY2017 and FY2018, we expect the demand for construction projects to remain buoyant over the medium to longer term.

    As the margins vary for different projects, depending on the nature of each one, and from year to year, we are unable to determine the expected range for FY2017. It would also depend on the projects we can secure and start work on during FY2017.

    We took active measures to raise productivity which partially contributed to our higher profitability and correspondingly, margins. These included regular training to raise the technical expertise of existing pool of talent and implementation of new construction technology.

    The impact of diesel duty on our gross margin is negligible.

  3. Maintenance: Your maintenance revenue has declined in last two years? Are you expecting a further decline this year? How long is your maintenance contract typically? Do they relate mostly to road maintenance?

    Maintenance contracts relate to re-construction work performed on roads, pavements, footpaths and kerbs, guardrails, railings, drains, signboards as well as bus bays and shelters. They also include improvements to roadside drains and drainage systems. Our maintenance contracts typically last for 2 years.

    The decrease in revenue from the maintenance segment for last two years was largely attributable to the substantial completion of some existing maintenance projects in FY2015 and FY2016. We experience fluctuations in revenue of the maintenance segment from year to year, depending on the projects secured and executed.

Dear Susan Tang, you wrote:

When is the TOP of Amber Skye? How many units of the 109 unit have you sold?

The TOP of Amber Skye is scheduled to be in April 2017. Currently, 14 Amber Skye units have been sold. Together with the majority shareholder of CS Amber Development Pte. Ltd., which is experienced in property development and sales, we are stepping up on marketing efforts and will continue to actively push for sales. The new Amber MRT station, which is under construction and expected to be ready come 2023, will add to the unique selling proposition of this development.

Dear Investors,

Thank you for all your questions and the interest in OKP Holdings Ltd. We have come to the end of this Q&A session.

We have enjoyed and learnt much from your questions and we hope that you have a better insight of our Company and know more about our operations.

Rgds,
The Management Team
OKP Holdings Ltd.