For Investors

Chairman's Statement


Business cycles, the natural rise and fall of economic growth that occur over time, are both inevitable and essential in weeding out inefficiencies and propelling businesses further.

The mild contraction was exactly what we witnessed in the past few years, but the imminent expansion is just unfolding. The Singapore economy saw a respectable GDP growth of 3.6% for the year financial ended 31 December 2017 (“FY2017”), outperforming initial forecasts of 1% – 3% by the Monetary Authority of Singapore back in December 2016.



Amidst this macro landscape, the Group achieved an impressive revenue of S$369.4 million for FY2017. This is 7% higher than the S$345.7 million achieved last financial year (“FY2016”). The increase ofS$23.7 million was mainly due to stronger contributions from the Construction and Building Materials division.

The Group’s net profit attributable to shareholders rose 49% to S$19.8 million in FY2017 compared to S$13.3 million in FY2016, outpacing revenue growth. The bottomline growth was lifted by a 970% rise in other gains relating to gains relating to the bulk sale of units at The Lumos, as well as share of profit of joint ventures on completion of Westwood Residences – our first executive condomiunium (“EC”) project and Singapore’s first cycling-themed residential development.

During the year, our construction order book was boosted by the Circle Line 6 contract, the Deep Tunnel Sewerage System Phase 2 contract, as well as the remaining package for Runway 3 by Changi Airport Group, the first package of which was awarded to the Group’s joint venture with Samsung C&T. Subsequent to the year end and alongside its partners, the Group had also in March 2018 won a S$960.0 million landmark project from the Ministry of Health through a joint venture to construct the upcoming Woodlands Health Campus, a first in the Woodlands vicinity.



The Group stands steadfast and unwavering today, having first laid the bricks of its foundations from a sole proprietorship in 1966. It has since remained resilient, having weathered all storms and outlasted all disasters over the past five decades. With the numerous multimillion-dollar revenue streams annually, the unyielding foundation is set for the Group to achieve greater heights.

This foundation is built on our ardent efforts in adopting a strategy of diversification: in addition to honing and growing our core expertise, we continually keep a lookout for opportunities in new sectors, while meticulously engineering synergies and cementing our niche as a lifestyle-themed developer.

From humble beginnings, we have grown to become an established brand that commands top-of-mind awareness in all our endeavours. Ranging from the iconic Marina Barrage to Singapore’s first cycling-themed residential development, Westwood Residences EC, the Group enjoys a sterling track record that includes both landmark infrastructures as well as distinctive developments.

In 2016, we identified emerging opportunities in the water and wastewater treatment as well as hydro-engineering sectors and hence injected our flagship civil engineering arm, Koh Brothers Building & Civil Engineering Contractor (Pte.) Ltd., into our SGX Catalist-listed subsidiary, Koh Brothers Eco Engineering Limited (“KBE”) to sharpen our niche in the water and wastewater treatment, and hydro-engineering industry. Our controlling stake in KBE also allows us to harness operational efficiencies, synergies and cost savings, as well as to participate actively in its growth.

The enhanced KBE enables the Group to access the government’s increased emphasis on water as a resource and hence more local business opportunities in this sector. It also empowers the Group to explore regional opportunities in the water and wastewater treatment, hydro-engineering, bio-refinery and bio-energy engineering sectors along with other infrastructure projects to build our businesses.

With the strategic recruitment of talented, international staff to aid in strengthening our existing technical competencies and incorporating new technologies, while maximising the efficiencies of our incumbent staff, we are able to tender for more and increasingly complex projects.

The results are evident as the Construction and Building Materials division recently won a S$225.4 million contract for the construction of cut-and-cover tunnels connecting the future Prince Edward station to the existing Marina Bay station, as part of Circle Line 6, as well as a S$520 million joint venture project for the design and construction of the Deep Tunnel Sewerage System (DTSS) Phase 2 from PUB.



With the Comprehensive and Progressive Agreement for Trans-Pacific Partnership recently signed and the optimistic world economic outlook by the International Monetary Fund, along with the restructuring in the local economy and the government-projected maturation at a long-term Gross Domestic Product (GDP) growth of 1.5% to 3.5%, the upcoming year seems promising.


Real Estate

The Urban Redevelopment Authority (URA) has recently released statistics signaling a turnaround for the sector, with private residential property prices in 4Q2017 rising 0.8%, continuing the 0.7% growth in 3Q2017. For the whole of 2017, prices rose 1.1% while developers sold 10,566 units, as compared to the 3.1% decline in the previous year with only 7,972 units sold.

Being cognisant of rising land prices, we have prudently and selectively replenished our land bank subsequent to the financial year end, prioritising locational attributes and the ability to clearly distinguish our products from the crowded market.

In March 2018, we were awarded the en bloc tender for the freehold Toho Mansion, an elevated site within a private enclave overlooking the adjacent Good Class Bungalow estate. This is a prime and rare site in the heart of the vibrant Holland Village lifestyle enclave that we are confident to be able to create a fresh concept to offer a seamless and integrated experience with the convenience and connectivity in the up-and-coming neighbourhood that has been earmarked by the Government for a highly-anticipated makeover and expansion. We will continue to monitor the market closely to launch the project at an opportune time to ride on the residential market’s upcycle.

While we continue to explore opportunities in Singapore to accumulate sites for development, our maiden foray into South Korea is slated to be launched in 1H2018. The 45%-owned project in South Korea will be developed into a mixed-use development comprising two 19-storey towers with 5 basement floors. The proposed development will consist of 293 residential units, including SOHO units, and 5,629 square metres of retail space.

Our Real Estate division will continue to prudently seek opportunities to replenish land bank locally and abroad so that we can uphold our niche in unique lifestyle-themed developments and continually pursuit redefining lifestyle, in a way that we are able maintain healthy development margins. The group is also open to the possibility of collaboration with other developers, for better diversification of risks and efficient use of capital.



Construction and Building Materials

The Building and Construction Authority (“BCA”) has projected construction demand for 2018 to be sustained between S$26 billion and S$31 billion, 60% of which will be for public projects. With a controlling stake in KBE that has enhanced its suite of capabilities, and a strong track record in public and civil engineering projects, this puts the group at an edge.

For the Building Materials division, the Group is exploring ways to build up our PPVC capability.


Leisure and Hospitality

While we continue to drive growth for the real estate and construction pillars, the leisure and hospitality segment continues to contribute positive recurring income to the Group. We’ll continue to keep a look out for yield-accretive investment opportunities in Singapore and abroad to bolster our recurring income streams.

Our vision is to be the Best and Largest Contractor in Singapore. In order to transcribe our vision into reality, we have to remain steadfast in driving up our overall productivity and reduce dependency on manpower, innovate in our work processes, as well as scale up our technical capabilities to improve our competency. This will empower us to take on even higher value projects and move up the supply chain.

As we seek these upgrades, we resolve to keep in mind and be guided by our overarching strategy to stay prudent, safety-conscious and quality-conscious while constantly anticipating the ever-changing and highly competitive market conditions to best position ourselves.



It has been another successful year for us, and we’d like to share the fruits of our labour with our valued shareholders who have stood by us. I am therefore pleased to report that the Board has proposed a final and special cash dividend of 0.60 Singapore cent per share and 0.40 Singapore cent per share, respectively, payable on 13 June 2018 after approval by shareholders at the forthcoming Annual General Meeting. This brings the total dividends distributed for FY2017 to 1.0 Singapore cent per share and translates to a dividend payout ratio of 21%.




Weathering the ups and downs of business cycles to attain our achievements today is only made possible by the hard work and sheer determination and commitment of all our management and staff – the driving force behind our business. I would therefore like to convey my deepest appreciation, thank you for your dedication and hard work that has made the Group the success it is today. To our clients, business associates and shareholders, I would like to extend my sincere and heartfelt appreciation for your unwavering support over the years. Let us forge ahead together, and let us achieve our shared vision!


Koh Tiat Meng
Executive Chairman
28 March 2018