Review of performance of the Group

Income Statement Review – Six-Month Period Ended 31 December 2024 ("2H2024") vs Six-Month Period Ended 31 December 2023 ("2H2023")

Group revenue achieved in 2H2024 was $179.2 million, representing an increase of $50.8 million or 39.6% from $128.4 million achieved in 2H2023. Revenue increased across all business segments except for the Property Development business segment. Revenue from the General Construction business segment improved with the increased construction activities from the active ongoing projects. The increase in revenue from the Specialised Engineering business segment was contributed mainly by the bored piling business.

The Group's Property Development business segment launched the sale of the residential units of The LINQ @ Beauty World ("The LINQ") in November 2020. The LINQ is a 20-storey mixed development along Upper Bukit Timah Road. With the Group obtaining the temporary occupancy permit ("TOP") for The LINQ in November 2024, the balance remaining revenue from the sale of the residential units recognised in 2H2024 was $8.9 million as compared to a revenue of $57.1 million recognised in 2H2023.

In addition, in 2H2024, the Group consolidated the results of the newly acquired accommodation business which resulted in an increase in revenue of $20.4 million.

Gross profit increased by $7.7 million or 39.9% over the two periods in comparison. Gross profit from the Property Development business segment decreased on the back of a lower revenue. This was offset by an increase in gross profit from both the construction and accommodation business.

Other income of $27.8 million comprised mainly of a gain on disposal of subsidiary of $7.0 million from the disposal of the subsidiary in Thailand and a bargain purchase (or negative goodwill) of $19.8 million arising from the acquisition of the accommodation business which has been determined on a provisional basis as acquisition accounting is currently incomplete/still in progress.

Administrative costs decreased marginally by $0.1 million or 6.3%.

Other operating costs increased by $19.3 million from $9.8 million to $29.1 million. This was mainly due to (1) provisions for losses on financial assets comprising trade and other receivables and contract assets of $14.7 million made as compared to a provision of $0.04 million in 2H2023; and (2) fair value loss of $4.7 million on the investment property held by the accommodation business taking into account the valuation conducted by an independent valuer on the completion date of the acquisition and at the end of the financial year 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.

The provision for losses on trade receivable and contract assets of $3.4 million includes general expected credit loss provision as well as specific loss provision in relation to one of the Group's debtors in Malaysia which is facing cash flow problem and defaulted in meeting contractual payment terms. The Group had commenced recovery action from the debtor under the Construction Industry Payment and Adjudication Act.

The provision for losses on other receivables includes provisions on some project deposits made and also $8.5 million in relation to amounts receivables from the Thailand subsidiary which was disposed during the year. At the time of disposal, there were ongoing discussions by one of the remaining shareholders with a new potential investor to raise capital for the Thailand entity and that part of the funds received will be used for repayment of the amounts owing to the Group. However, to date the investment from the potential investor has not materialised and given the uncertainty in collection, provision for losses had been made. Considering the gain of $7.0 million arising from the disposal, if the Thailand subsidiary defaults in its repayment to the Group, the net impact will be $1.5 million.

The impact of these increases was offset by a lower amortisation of capitalised contract cost relating to the sales commission paid for the sale of property development units at The LINQ which is amortised in a systematic manner via the percentage of completion of the development.

Finance costs decreased by $0.7 million or 18.0% with the partial repayment of long term bank borrowings and as well as a decrease in interest paid to non-controlling shareholders.

Share of results of associates were a loss of $0.02 million and a gain of $0.7 million in 2H2024 and 2H2023 respectively.

Share of results of joint venture was a loss of $3.4 million in 2H2024 arising from the reversal of the provisional bargain purchase and share of profits recognised in 1H2024 from the acquisition of the accommodation business during the financial year. The provisional bargain purchase amounted to approximately $19.8 million was reported in "Other Income".

The Group had during the financial year acquired a 49% shareholding interest in a company in the accommodation business providing workforce housing (the "Investee"). For accounting treatment, the Group had previously classified the investment as a joint venture. 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. In view of the above, the investment is now treated as a subsidiary based on the interpretation of Singapore Financial Reporting Standards (International) 10. The results of the Investee were consolidated into the Group's results with effect from the completion date on 5 June 2024.

The cash consideration paid together with the loan which was subsequently disbursed in January 2025 shall form the purchase consideration (the "Total Consideration") which amounted to $24.3 million. Based on the identifiable net assets of the Investee on completion date, the Group recognised a bargain purchase (or negative goodwill) of $19.8 million which has been determined on a provisional basis as acquisition accounting is currently incomplete/still in progress.

The Group had a profit attributable to equity holders of the Company of $18.7 million for 2H2024.

Income Statement Review – Financial Year Ended 31 December 2024 ("FY2024") vs Financial Year Ended 31 December 2023 ("FY2023")

Group revenue achieved in FY2024 was $289.5 million, representing an increase of $52.2 million or 22.0% from $237.3 million achieved in FY2023. Increased revenue was recorded across all business segments except for the Property Development business segment. Revenue from the General Construction business segment improved with the increased construction activities from the active ongoing projects. The Specialised Engineering business segment which comprises post-tensioning, bored piling and Prefabricated Prefinished Volumetric Construction ("PPVC") business, also registered an increase in revenue. Although revenue from post-tensioning and PPVC has dropped due to the reduced construction activities for post-tensioning works in Thailand and the lack of sizable projects for PPVC respectively, the decrease was offset by an improvement in revenue from the bored piling business.

For the Property Development business segment, revenue from The LINQ was $34.6 million in FY2024 as compared to $112.3 million in FY2023.

In addition, the Group's had consolidated the results of the newly acquired accommodation business which resulted in an increase in revenue of $20.4 million.

Gross profit increased by $2.6 million or 7.2%. Although gross profit from the Property Development business segment decreased on the back of a lower revenue, this was offset by an increase in gross profit from both the construction and accommodation business.

Administrative costs decreased by $0.3 million or 8.0% due to the moving expenses for relocation of store and expenses for minor fitting-up works of the store incurred in FY2023 which were non-recurring. As part of the Group's sustainability efforts, solar panels were installed at the rooftop of office building for electricity generation and this resulted in a decrease in electricity costs.

Other operating costs increased by $19.7 million for the same reasons as in second half year as aforesaid explained.

Finance costs decreased by $1.4 million or 18.3% with the partial repayment of long term bank borrowings and as well as a decrease in interest paid to non-controlling shareholders.

Share of results of joint ventures and associates were a profit of $0.08 million and $0.02 million in FY2024 respectively.

The Group had a profit attributable to equity holders of the Company of $21.1 million for FY2024.

Statement of Financial Position and Cash Flow Review

The consolidated statement of financial position as at 31 December 2024 included that of the newly acquired accommodation business but excluded the Thailand subsidiary which was disposed during the financial year.

The investment property of $77.9 million arose from the acquisition of the accommodation business which owns a leasehold property. Non-current contract assets increased by $5.9 million due to an increase in retention receivables.

Trade receivables increased $13.3 million due to higher construction project billings in the last quarter of 2024 and sales proceeds receivable from the purchasers of The LINQ that were substantially collected subsequent to the financial year end. On obtaining TOP for The LINQ, progress payments were collected from the purchasers and this accounted for substantially the decrease in current contract assets of $47.5 million. Development properties which represent the capitalisation of the development cost for the unsold commercial units of the development were reversed and classified as Properties held for sale. Other receivables decreased by $5.0 million with the refund of a deposit placed as well as provision for losses made on project deposits.

Current trade and other payables increased by $2.1 million, which was mainly due to the increased construction activities from the General Construction business segment and offset by a decrease from the deconsolidation of the Thailand subsidiary upon its disposal. Other liabilities increased by $16.3 million mainly due to the $10 million consideration payable for the acquisition of the accommodation business that was settled subsequent to the financial year end and refundable customers deposits from the accommodation business which were being consolidated in this set of financial statements. Similarly, the consolidation of the accommodation business resulted in an increase in both the current and non-current lease liabilities and income tax payable. Non-current trade payables increased by $7.2 million due to an increase in retention payable to subcontractors. Provisions of $6.5 million were related to reinstatement cost of the leasehold investment property held by the accommodation business on the expiry of the lease term.

Short term borrowings decreased mainly by $3.1 million. Whilst there was a new loan of $8.1 million arising from the consolidation of the accommodation business, the effect was offset by the regular loan repayments, some partial repayments of loans obtained for property development purpose out of the project proceeds collected and the deconsolidation of the of the Thailand subsidiary upon its disposal.

For the financial year ended 31 December 2024, operating cash flows before working capital changes stood at $27.2 million. After accounting working capital changes and interest, the net cash generated from operating activities was $52.9 million. The substantial improvement was brought about by the progress payment collections from The LINQ.

Net cash used in investing activities was $11.1 million, which is mainly due to the acquisition of the accommodation business.

Net cash used in financing activities amounted to $20.2 million. This comprised the net repayment of $16.5 million for all borrowings and $4.2 million for lease liabilities, offset by a reduction in pledged deposits of $1.5 million. 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 2024.

The Group's cash holding was $78.6 million as at 31 December 2024, up by $21.7 million from $56.9 million as at the end of the last financial year.

Commentary

On 14 February 2025, the Ministry of Trade and Industry¹ ("MTI") announced that the Singapore economy grew by 4.4 per cent in 2024, faster than the 1.8 per cent expansion in 2023. Growth in the construction sector expanded by 4.5 per cent in 2024, extending the 5.8 per cent expansion in 2023. The growth was driven by both public and private sector construction output.

Furthermore, the Building and Construction Authority² ("BCA") projects total construction demand for 2025 to exceed pre-COVID levels in 2019 at between S$35 billion and S$39 billion. The strong demand is underpinned by several large-scale developments, including Changi Airport Terminal 5 (T5) and the Marina Bay Sands Integrated Resort expansion, alongside public housing developments and upgrading works.

Despite strong overall demand, the Group continues to face intense competition while the operating environment in the construction industry remains challenging amidst an inflationary cost environment and the shortage of foreign labour supply.

As at 31 December 2024, the Group has a construction order book of approximately S$259 million. The Group will continue to stay vigilant in managing its project costs and operating expenses. It will remain focused on executing its order book on hand and leverage its track record in building, construction, and specialised engineering to secure more projects.

The Group's property development project, The LINQ had obtained its TOP in November 2024. Meanwhile, the Group continues to work closely with its appointed real estate agents to strengthen marketing efforts for the lease of the two-storey retail podium with 53 strata-titled units at The LINQ.

According to the Urban Redevelopment Authority's³ ("URA") statistics, the overall private residential property price index increased at a slower pace of 3.9% for 2024 as compared to 6.8% for 2023 and 8.6% for 2022. The Group will continue to take a prudent approach in evaluating potential opportunities for future property development projects amidst a competitive environment.

The Group's accommodation business continues to generate recurring rental income. The Group will continue to explore business opportunities in this business segment.