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Management Q & A

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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 Brandon Koh, you wrote:

I notice the following facts:

In view of a competitive & challenging environment, what plans do you have in risk management & what are your key differentiating factors?

We have always been prudent in the way we manage our business and have various mechanisms in place to help manage and mitigate risk. These include:

  • Business risk: In the light of the finite size of the Singapore market, OKP is aware of the need to manage this risk. It does this by actively looking for overseas opportunities to diversify geographically and, more recently, it has diversified into the oil and gas/petrochemical industry.
  • Credit risk: We carefully assess each business opportunity that comes our way, and choose to tender for and secure projects by creditworthy customers.
  • Liquidity risk: Internally, we have strong and prudent financial controls, and monitor our cashflow carefully.
  • Investment risk: To mitigate this risk, not only do we seek a good understanding of the markets we enter. Where possible and appropriate, we will grow our business through strategic alliances and/or joint ventures. An example of the latter is our 55%-45% JV last month with mainboard-listed Rotary Engineering Ltd to tap on the oil and gas sector in Singapore.

Key differentiating factors:

  • Management's hands-on approach: Our management team adopts a hands-on approach to all their projects. This way, they are constantly in touch with their customers and are kept abreast of all developments in a project. They will be in a position to manage cost and provide the highest level of customer service.
  • Close relationship with customers and suppliers: One of the guiding principles at OKP is valued collaborations. The company takes pride in the maintenance of close relationships with its clients as well as suppliers, forging goodwill and close links that often go a long way to get work done faster and more efficiently.
  • Experienced management team: Established in 1966, OKP has a strong and capable team with the highest level of professionalism.
  • Specialised teams: OKP is structured according to specialist capabilities. We believe that this gives us an extra edge as the special industry knowledge would enable us to handle projects more efficiently. Currently we have three such teams:
    • Oil & Gas/Petrochemical
    • Airport infrastructure
    • Roads construction and road maintenance

Dear DanielXX, you wrote:

1) Of your current $150M-odd order book, how much of it is oil-and-gas related? Is it possible to provide a breakdown of the order book currently?

2) How affected will OKP be by the current problems with sand? I understand road construction is one of the most intensive users of cement.

3) Would you be able to reveal the current Section 44 status post-1.5ct dividend?


1) For competitive reasons, it is not our practice to give a break-down of our order book.

2) Progress in some projects has been affected somewhat due to the sand shortage. However, we foresee that this situation will be resolved soon.

3) We do not have any Section 44 credits, so our dividend is a one-tier tax exempt dividend.


Dear Tony, you wrote:

Going forward, what is the future plan for the company?


Going forward, we will:

  • Stay focused on our core competencies: this means that we will concentrate on construction and maintenance projects; this is our area of expertise and it is where we have built up a distinctive track record over the years. We believe this is a prudent business strategy for OKP.
  • Diversify into Oil and Gas: To spread our risk, we will actively look to grow our niche in the expanding Oil and Gas Sector over the next three to five years. In so doing, we will not only be looking to grow our earnings base, but also ensure that we do not become overly-dependent on a single revenue source. In so doing we would also further strengthen our Oil & Gas project team; this will hold us in good stead as we prepare to tap the numerous opportunities in this sector.
  • Explore overseas opportunities: While keeping a firm grip on the local market, we will also continually look for opportunities to grow our business overseas.

We believe that engaging in the above strategies will help us to expand our earnings base.


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.