Review of performance of the Group

Income Statement Review - Six-Month Period Ended 30 June 2025 ("1H2025") vs Six-Month Period Ended 30 June 2024 ("1H2024")

The Group had on 5 June 2024 completed the acquisition of a 49% shareholding interest in a company in the accommodation business of providing workforce housing (the "Investee"). For accounting treatment, the Group had classified the investment as a joint venture in the 1H2024 reporting and adopted the equity accounting method to account for the Group's share of the investee results and the provisional bargain purchase arising from the acquisition.

Under the terms of the shareholders' agreement, the Group was appointed to supervise, manage and liaise with the dormitory operator. In addition, the shareholders agreement provided for the extension of a loan by the Group to the other shareholder, and the repayment of which shall be from future dividends declared by the Investee through an assignment of rights in the future dividends to the Group. After further review on the terms of the acquisition and the shareholders' arrangement, the investment was subsequently treated as a subsidiary based on the interpretation of Singapore Financial Reporting Standards (International) 110 – Consolidated Financial Statements in the 2H2024 reporting. The results of the Investee were consolidated into the Group's results with effect from the completion date of acquisition on 5 June 2024. Hence the comparative figures for 1H2024 are now restated to account for the investment as a subsidiary and the results of the Investee were consolidated into the Group's results for 1H2024 for a more meaningful and comparable presentation.

Group revenue achieved in 1H2025 was $114.4 million, representing an increase of $1.7 million or 1.5% from $112.7 million achieved in 1H2024. Revenue increased for the General Construction business segment with the increased construction activities from the active ongoing projects. The improved revenue for the Specialised Engineering business segment was contributed mainly by the bored piling business. The Green Technology business segment saw a decline in revenue as there were fewer projects during the period in review.

Revenue from the Property Development business segment decreased by $25.7 million as the revenue from the sale of the residential units of The LINQ @ Beauty World ("The LINQ") was fully recognised in the last financial year when the temporary occupation permit ("TOP") was obtained.

The Accommodation Business segment which provides workforce housing, derived its revenue from the subsidiary acquired on 5 June 2024, contributed $18.3 million in revenue for 1H2025.

Gross profit increased by $1.6 million or 11.8% over the two periods in comparison as the contribution from the accommodation business had offset the decreases in gross profit from the other business segments.

Other operating income increased by $0.3 million or 15.5% mainly due to rental income generated in 1H2025 from the leasing of the retail units of The LINQ.

Other (expense)/income for 1H2024 included a one-off bargain purchase (negative goodwill) of $19.8 million determined on a provisional basis from the acquisition of the accommodation business which had been previously reported in the audited accounts for the financial year ended 31 December 2024.

Administrative costs increased by $0.6 million or 35.0%. This arose from non-claimable GST input taxes incurred on the goods and services used to generate the exempt supplies of the accommodation business.

Other operating costs decreased by $2.0 million or 21.8% from $9.2 million to $7.2 million. This was mainly due to (1) absent of amortisation of capitalised cost relating to the sales commission paid for the sale of residential units of the LINQ as this was already fully amortised in the last financial year when TOP was obtained; and (2) no additional provisions for losses on financial assets comprising trade receivables, other receivables and contract assets.

Finance costs decreased by $1.5 million or 50.0% with the repayment of long term bank borrowings and as well as a decrease in interest rate on the borrowings.

Fair value loss of $4.4 million was recognised in 1H2025 on investment property held by the accommodation business taking into account the valuation conducted by an independent valuer at the end of the financial period based on the unexpired leasehold interest of the property on an as-is basis and subject to existing tenancies and amortisation of the right-of- use relating to this leasehold property. In 1H2024, this amounted to $0.6 million as it took into consideration the fair value loss since the completion date of acquisition on 5 June 2024 to the end of the reporting period on 30 June 2024.

Group profit before taxation was $1.8 million. After accounting for income tax and non- controlling interests, profit attributable to equity holders of the Company was $0.5 million for 1H2025.

Statement of Financial Position and Cash Flow Review

Trade receivables decreased $19.7 million due to collection received since the last financial year end, including the sales proceeds received from the purchasers of The LINQ.

Current trade and other payables decreased by $6.6 million due to settlement of balances owing to suppliers and subcontractors since the last financial year end. Other liabilities decreased by $10.4 million as the consideration payable for the acquisition of the accommodation business was settled subsequent to the last financial year end. Non-current trade payables increased by $1.7 million due to an increase in retention payable to subcontractors.

Short term borrowings decreased by $78.5 million with full repayment of the land and development charge loan obtained for the development of The LINQ and the other regular loan repayments. At the same time, a new loan of $25 million was drawn down to refinance the retail podium of The LINQ and hence resulted in an increase in the non-current loans and borrowings.

For the financial period ended 30 June 2025, operating cash flows before working capital changes stood at $9.2 million. After accounting for working capital changes and interest, the net cash generated from operating activities was $11.9 million. The substantial improvement was brought about by trade receivables and progress payment collections of The LINQ.

Net cash used in investing activities was $0.5 million, which is mainly due to the purchase of property, plant and equipment.

Net cash used in financing activities amounted to $57.2 million. This comprised the net repayment of $53.8 million for all borrowings and $2.4 million for lease liabilities. The Company also paid the final dividend of $1.0 million declared for the last financial year after obtaining shareholders' approval in the annual general meeting held on 30 April 2025.

The Group's cash and cash equivalents excluding the restricted cash was $30.7 million as at 30 June 2025, as compared with $76.4 million as at the end of the last financial year.

Commentary

The global economy remains challenged by evolving geopolitical tensions, structural shifts in trade, and prolonged tight financial conditions. While selected markets have exhibited resilience, the overall outlook remains uneven, shaped by policy developments in major economies, ongoing armed conflicts, and continued realignment of global supply chains.

Against this backdrop, Singapore's economy is forecast to grow between 1.5% to 2.5% in 2025. This outlook reflects a slightly improved external demand environment following recent easing of trade tensions between major economies. While overall growth prospects remain cautious, the construction sector continues to perform strongly, expanding 6.0% year-on-year in 2Q 2025, supported by increased public and private sector projects¹.

The Building and Construction Authority (BCA) projects total construction demand in 2025 to range between $47 billion and $53 billion in nominal terms², reflecting continued strength in public infrastructure and housing projects.

While the demand outlook remains healthy, the operating landscape continues to face pressure from elevated costs and labour constraints. Construction costs are projected to rise by 0% to 2% in 2025³, reflecting moderated but sustained inflation in key components such as manpower, materials, and compliance-related expenditure. Prices for core construction materials remain elevated, even as global raw material costs show signs of easing.

In addition, the reciprocal tariffs between the United States and key trading partners, while not directly targeting Singapore's construction sector, may add indirect cost pressures through global supply chain disruptions and sustained high prices for certain imported materials. These cost pressures, coupled with labour constraints, continue to weigh on sector margins, contributing to persistent margin compression across the industry.

Despite prevailing headwinds, the Group continued to strengthen its order book. In the first half of 2025, the Group secured approximately S$220 million in new contracts, including Housing and Development Board (HDB) residential and community works, bored piling works, and a large-scale infrastructure project in eastern Singapore. These contracts, which will commence progressively from June 2025, are expected to contribute revenue from FY2026 onwards and support a robust medium-term project pipeline.

In the property development segment, the Group continues to market the 53-unit, strata-titled retail podium at The LINQ. According to the Urban Redevelopment Authority (URA), the overall private residential property price index increased by 1.0% in the second quarter of 2025, a moderation from the 2.3% growth in the fourth quarter of 2024⁴. Given this trend of stabilising prices, alongside moderating economic growth and persistent global uncertainties, the Group remains prudent in its landbanking and development decisions to navigate the evolving market environment.

The Group’s accommodation business continues to generate steady recurring rental income. With the rising rent rate of bed space rentals and demand for compliant worker dormitories, the Group views this segment as a strategic complement to its core construction business and continues to explore expansion opportunities in this area.

While cost pressures, labour constraints, and macroeconomic uncertainties persist, the Group maintains a measured outlook for the near term. The focus remains on disciplined cost control, timely project execution, and prudent capital allocation. Leveraging its established track record in construction and engineering, the Group will continue to pursue opportunities across its core and complementary business segments, positioning itself for sustainable growth in an evolving operating environment.

As at 30 June 2025, the Group has a construction order book of approximately $400 million.