OKP : Reports Growth In Net Profit Attributable To Equity Holders Of S$35.6 Million In 1H2023

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For Immediate Release

OKP HOLDINGS LIMITED REPORTS GROWTH IN NET PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF S$35.6 MILLION IN 1H2023

• Positive contributions from construction and maintenance segments, driven by revenue recognition from both existing and newly awarded projects
• Strong order book of S$383.7 million, with revenue visibility extending to 2026
• Healthy balance sheet, with free cash and cash equivalents of S$65.8 million
• To explore strategic alliance with experienced partners to broaden its foothold in property development and investment business
• A special interim dividend of 0.5 Singapore cent per share declared

S$' Million	1H2023	1H2022	▲/▼ (%)
Revenue	70.0	53.6	▲30.6
Gross Profit	2.1	5.0	▼58.6
GP Margins	2.9%	9.3%	▼6.4 ppt
Net Profit	35.8	1.3	▲2756.8
Net profit attributable to	35.6	1.2	▲2899.7
equity holders

Singapore, 4 August 2023 - MAINBOARD-LISTED infrastructure and civil engineering company, OKP Holdings Limited (胡金标控股有限公司) ("OKP" or the "Group"), today reported a 30.6% increase in revenue to S$70.0 million for the half year ended 30 June 2023 ("1H2023") as compared to S$53.6 million in the previous year ("1H2022"), mainly due to higher contribution from the construction and maintenance segments of S$16.5 million, partially offset by a decrease of $0.1 million

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in rental income. Net profit attributable to equity holders of S$35.6 million was reported for 1H2023, 2899.7% higher as compared to S$1.2 million a year ago, due mainly to higher revenue growth and other gains.

The Board of Directors has declared a special interim tax exempt (one-tier) dividend of 0.5 Singapore cent per share to reward shareholders for their continued support.

Group Managing Director, Mr Or Toh Wat (胡土发), said, "We are pleased with our performance for 1H2023 which was bolstered by the recovery in the local construction sector. With a positive outlook of steady construction demand from both the private and public sectors, along with a healthy pipeline of construction projects, we remain vigilant in leveraging on our core expertise to tender for projects, while maintaining prudence in our capital structure and finances.

"Amidst the prevailing macroeconomic uncertainties and elevated material prices, we remain even more focused on our strategy to diversify our earnings base and build up our base of recurring income. Furthermore, OKP will continue to explore strategic partnerships with experienced partners, especially for our property development and investment business, both locally and potentially in the region, to ensure the continued delivery of value to stakeholders."

Review of Performance

	1H2023	1H2022	▲/▼
Revenue	S$' Million	S$' Million	S$' Million
Construction	40.5	37.3	▲3.2
Maintenance	26.3	13.0	▲13.3
Rental Income	3.2	3.3	▼0.1
Total Revenue	70.0	53.6	▲16.4

The overall 30.6% increase in the Group's revenue in 1H2023 was primarily driven by the rise of 8.7% and 101.8% in revenue from the construction segment and maintenance segment respectively, partially offset by a 2.4% decrease in rental income.

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Revenue from both the construction and maintenance segments increased to S$40.5 million and S$26.3 million respectively, mainly due to the higher percentage of revenue recognised from a number of both existing and newly awarded construction and maintenance projects as they progressed to a more active phase in 1H2023. Both the construction and maintenance segments remained the major contributors to the Group's revenue.

The 2.4% decline in the Group's rental income from investment properties to S$3.2 million was primarily attributable to the loss from foreign exchange translation arising from the rental income generated from the property at 6-8 Bennett Street, East Perth, Western Australia, following the revaluation of the Australian dollar to the Singapore dollar. Nevertheless, the Group's rental income contributed 4.5% to the Group's total revenue in 1H2023.

The Group's gross profit decreased by 58.6% to S$2.1 million in 1H2023. Overall gross profit margin declined by 6.4 percentage points as gross profit margin for the construction and maintenance segments fell by 5.8 percentage points from 5.9% to 0.1% due to higher material costs and rising manpower costs. This was mitigated by an improvement in gross profit margin in the rental income segment, which increased from 62.2% for 1H2022 to 62.9% for 1H2023.

Other gains increased by S$44.1 million to S$45.1 million in 1H2023, from S$1.0 million in 1H2022. The increase was mainly due to the increase in interest income, the arbitral award in relation to the Contract 449A worksite incident, and a decrease in the loss on foreign exchange from the revaluation of assets and liabilities denominated in Australian dollar to Singapore dollar, which were partially offset by a decline in government grant.

Overall, net profit attributable to equity holders increased to S$35.6 million for 1H2023 as compared to S$1.2 million for 1H2022.

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Balance Sheet Highlights

The Group's balance sheet remains strong with net tangible assets ("NTA") of S$157.7 million while NTA per share was 51.37 Singapore cents as at 30 June 2023.

OKP's free cash and cash equivalents increased to S$65.8 million as at 30 June 2023, compared to S$33.3 million a year ago.

Earnings per share (basic) for 1H2023 increased 2871.8% to 11.59 Singapore cents, as compared to 0.39 Singapore cents in 1H2022.

Based on OKP's closing share price of S$0.25 as at 4 August 2023, the Group's market capitalisation is S$76.7 million.

Outlook

Based on advance estimates released by the Ministry of Trade and Industry ("MTI") on 14 July 2023, the Singapore economy grew by 0.7% on a year-on-year basis in the second quarter of 2023, expanding marginally from 0.4% growth in the preceding quarter. On a quarter-on quarter seasonally-adjusted basis, the Singapore economy expanded by 0.3%. This is a turnaround from the 0.4% contraction in the first quarter of 2023, averting the risk of a technical recession which is defined as two consecutive quarter-on-quarter contractions.

Construction

According to MTI, the construction sector grew by 6.6% year-on-year in the second quarter, extending the 6.9 % growth in the first quarter. Growth was supported by expansions in both public and private sector construction output. On a quarter-on- quarter seasonally-adjusted basis, the sector expanded by 2.6% in the second quarter, accelerating from the 0.3% growth in the preceding quarter.

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Based on earlier projections released by BCA on 12 January 2023, total construction demand in 2023 is expected to range between $27 billion and $32 billion, while total construction demand in the medium term is expected to reach between $25 billion and $32 billion per year from 2024 to 2027. Construction demand from the private sector is projected to remain steady over the medium-term, reaching approximately $11 billion to $14 billion per annum from 2024 to 2027, in view of healthy investment commitments amid Singapore's strong economic fundamentals. Construction demand remains stable, driven by the public sector such as the government ramping up Build- to-Order housing supply, and enhancement of public transportation network like the Cross Island line (Phases 2 & 3) and Downtown Line Extension to Sungei Kadut and Brickland North South Line station.

On 23 May 2023, the Ministry of Manpower ("MOM") announced the cessation of the Heightened Safety Period ("HSP") (implemented on 1 September 2022 and ended on 31 May 2023), without further extension. However, the Multi-Agency Workplace Safety Taskforce will retain some HSP measures and implement new measures to strengthen Workplace Safety and Health ownership on a sustained basis.

The Group will diligently adhere to the regulations and leverage on its strong record and industry experience as well as exercise caution when taking actions.

Looking ahead, the Group expects a persistence of uncertainties arising from rising interest rates, inflation, higher energy and manpower costs, and ongoing geopolitical tensions. Although some elevated material prices pose as a challenge, improving market conditions are setting the stage for the construction sector to get back on track.

Despite the Group's positive outlook and the support by its healthy pipeline of construction projects, the Group will remain vigilant to navigate challenging market conditions and continue to ensure good cashflow management and remain prudent with its capital structure and finances. Also, the Group will continue to seize

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