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INFRASTRUCTURE and civil engineering company OKP Holdings Ltd posted a 62.4 per cent drop in its third-quarter net profit to S$742,000, on the back of lower revenue which was partially due to an accident in July at the worksite of its subsidiary Or Kim Peow Contractors.
On Tuesday, OKP announced that earnings per share for the three months ended Sept 30, 2017 stood at 0.24 Singapore cent, down from 0.64 Singapore cent the year before.
In Q3 2017, revenue decreased 3.6 per cent to S$27.1 million. OKP said that the decrease in revenue from the construction segment was largely attributable to a lower percentage of revenue recognised from a few construction projects which were reaching completion, coupled with no revenue generated from a construction project at the Pan-Island Expressway (PIE) exit to Tampines Expressway during Q3 2017.
The decrease in revenue from the construction segment was partially offset by an increase in revenue from the maintenance segment.
In July, OKP was dealt a blow when it had to halt the trading of its shares after the accident at the worksite took place near the PIE exit to the Tampines Expressway. A viaduct under construction collapsed and a Chinese worker died in the incident while the injured were immediately sent to Changi General Hospital.
Group managing director Or Toh Wat said: "The group continues to work closely with the authorities on the ongoing investigations relating to the worksite incident at the Pan-Island Expressway exit to Tampines Expressway. We will continue to provide all necessary assistance and support to ensure that the needs of the affected workers are fully taken care of."
OKP's profit before income tax decreased by 50.5 per cent to S$1.1 million in Q3 2017. The decrease was due mainly to the decrease in gross profit of S$1.5 million, which was partially offset by the increase in share of results of investments of S$100,000 and the decrease in administrative expenses of S$200,000.
Mr Or said: "The operating environment remains challenging due to keen competition. However, the group stays optimistic on the back of healthy demand from the public sector, given that the government is bringing forward projects worth a total of S$1.4 billion to this year and next."
In a report published in July, KGI Research said that the collapse of the uncompleted viaduct on July 14 was "likely to hurt OKP's earnings and dividends".
"Ongoing works on the project have been put on hold, and this has dampened our expectations of topline growth this year. A possible impairment charge due to the viaduct collapse is likely to further hurt FY17F earnings and dividends," the report said.
"OKP was previously penalised for a safety lapse that had led to another worker's death in 2015, and was debarred from employing new workers for a period of three months (Jan 5 to April 4, 2017). Coupled with the pending investigation of this latest workplace safety breach, this could affect OKP's chances of winning major upcoming public road construction projects as safety records could be taken into consideration in the tender process," it added.
OKP closed unchanged at S$0.375 on Tuesday.