Earnings of construction operator OKP Holdings were down 39.4% to $976,000 for 1HFY21 ended June, from the $1.6 million posted in the previous year, due in part to lower payouts and rebates from the government.
On a fully diluted basis, this translates to earnings per share of 0.32 cents, down from 0.52 cents in 1HFY20. With this, net tangible assets per share were at 39.36 cents as June 30, compared to 39.56 cents at Dec 31 2020.
Revenue for the first six months of the year rose by 40% to $45.1 million, thanks to higher contributions from construction (+33.8% to $30 million), maintenance (+70% to $11.7 million) and rental income (+16.4% to $3.4 million).
The revenue growth for the construction and maintenance segments follows a higher percentage of revenue recognised from existing and newly awarded projects in 1HFY21.
This “more than offset” the temporary cessation of construction activities in line with the government’s Covid-19 measures, the group reports in its results filing.
Meanwhile the rise in the group’s rental income from investment properties were generated from its property at 6-8 Bennett Street, East Perth, Western Australia as well as a newly acquired investment property at 35 Kreta Ayer Road in Singapore.
An appreciation of the Australian dollar vis-à-vis the Singapore dollar also helped lift rental income.
Cost of sales was up 42.9% to $40.6 million mainly due to higher sub-contracting costs incurred for specialised works such as bored piling, asphalt works, mechanical and electrical works, soil testing, landscaping and metal works that are usually sub-contracted to external parties.
The group also incurred higher costs of construction material and labour costs.
Still, gross profit was up by 18.4% to $4.5 million in 1HFY21, from $3.8 million in the year before.
Of this, the rental income segment contributed $2.2 million, the same as that from the construction and maintenance segments.
However, the gross profit margin for the construction and maintenance segment dipped to 5.3% in 1HFY21, from 7.5% previously. This was largely due to lower profit margins for new and current projects following increases in the prices of materials and manpower.
Other gains fell by 52.5%, to $2.3 million mainly due to a lower government rebates, interest income and gains on foreign exchange. Additionally, the one-off reversal of impairment allowance following the disposal of a former associated company in 1HFY20, did not recur in 1HFY21.
In this time, the group saw its administrative expenses decline by 21.2% to $5.7 million largely due to lower legal fees incurred an ongoing trial that concluded in 1HFY21.
Similarly, finance costs were down 14.2% to $0.5 million due to lower interests incurred on a bank term loan for the purchase of the 6-8 Bennett Street property.
As at June 30, OKP Holdings had $56.3 million in cash and cash equivalents, down from $74.3 million in the year before.
Group managing director Or Toh Wat says the group has continued to broaden its business focus. As of June 30, the group's order book stood at $214.1 million, with projects extending till 2023.
“For our core civil engineering business, we will continue to strengthen our capabilities, ensuring consistent execution and delivery of our projects. We will continue to focus on workplace safety and strive to uphold our performance by ensuring consistent execution and delivery of our order book,” says Or.
A key emphasis will be on integrating innovative technology, enhancing and upscaling its workforce as well as boosting the implementation of equipment and tools to scale down on the reliance on manpower.
On its property development and investment front, the group said that it will continue to explore global business opportunities through strategic partnerships.
In a separate announcement, the group said that it has completed the purchase of the properties at 69 Kampong Bahru and 71 Kampung Bahru.
Shares of OKP Holdings closed at 19.1 cents on Aug 4, up 0.1 cents or 0.5%
Cover image: file photo
