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Operations Review

BUSINESS REVIEW

(i) Construction

Completed Construction Projects

During the year under review, the Group completed one construction project, which was secured in December 2021.

Ongoing Construction Projects

In 2024, we continued to execute 12 ongoing construction projects, which had been secured since February 2015. We won two projects which were awarded by the Land Transport Authority (LTA). These new construction projects were for the construction of Cycling Park Network (Central), which was secured in February 2024, and for the construction of Cycling Park Network (West), which was secured in April 2024.

The construction segment remained the main revenue driver for the Group, accounting for 62.7 per cent or $114.0 million of the total revenue in FY2024.

List of Completed Construction Project

List of Ongoing Construction Projects

(ii) Maintenance

Completed Maintenance Projects

No maintenance project was completed during the year under review.

Besides providing a steady and recurring income stream for OKP, our maintenance segment remains a cornerstone of the services provided to our clients. This segment contributed $61.7 million, which constituted 34.0 per cent of OKP’s total revenue, in FY2024.

Ongoing Maintenance Projects

In 2024, we secured three maintenance projects. One project was awarded by the Public Utilities Board while two projects were awarded by the LTA. These three new contracts awarded during the year are: Upgrading of road signs; footpath renewal; and improvement to old roadside drains in batch 10 of the Estate Upgrading Programme - contract 6 (Cheng San - Sunrise & Cactus Estates).

We continued to execute eight ongoing maintenance projects, including the three newly secured contracts.

List of Ongoing Maintenance Projects

(iii) Rental Income

Rental income contributed $6.1 million or 3.3 per cent of our Group’s total revenue for FY2024, down from $6.4 million in the previous year.

The 5.0 per cent drop in rental income was mainly attributed to the lower rental income generated by the property located at 6-8 Bennett Street, East Perth, Western Australia as a tenant had vacated some units in the second half of FY2024.

Financial Review

Income Statement

Balance Sheet

Income Statement

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 a joint venture

The share of results of associated companies and a joint venture 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.

Balance Sheet

(i) 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 was 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.

(ii) 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 was 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.

(iii) 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 was 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.

(iv) 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 short-term 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.

(v) 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.

Our Operating And Financial Review

Our Property Portfolio

Corporate Liquidity And Cash Resources

We maintain a healthy balance sheet and cash flow position which enable us to explore new infrastructure projects and property investments, either here or overseas.

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 was partially offset by:


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

during FY2024.

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 was 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 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 was 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).

The finance lease liabilities of $6.4 million (FY2023: $6.4 million) are secured by way of corporate guarantees issued by the Company and charges over the property, plant and equipment under the leases.

The bank borrowings of $22.0 million (FY2023: $24.1 million) is secured by first legal mortgage over an investment property of the Group, certain bank deposits, the Group's shares in a subsidiary corporation and corporate guarantees of the Company.

The decrease in debt amount from $32.0 million as at FY2023 to $30.2 million as at FY2024 as a result of repayment of lease labilities and bank borrowings during FY2024.

Value Added Statement

Total value-added created by the Group in FY2024 amounted to $106.0 million (2023: $109.3 million), due to higher profits reported in FY2024.

In FY2024, about $52.4 million or 49.0 per cent of the value-added was paid to employees in the form of salaries and wages. $5.6 million or 5.0 per cent was paid to the government in the form of corporate and property taxes while $6.2 million or 6.0 per cent was paid as dividends and interests to financial institutions. Balance of $38.9 million was retained by the Group for its future growth.

In FY2023, about $48.1 million or 44.0 per cent of the value-added was paid to employees in the form of salaries and wages. $4.0 million or 4.0 per cent was paid to the government in the form of corporate and property taxes while $5.3 million or 5.0 per cent was paid as dividends and interests to financial institutions. Balance of $52.6 million was retained by the Group for its future growth.