Chairman's Statement

The year under review was marked by uncertain global economic conditions and dominated by disruptive geopolitical tensions, persistent inflationary pressures and elevated interest rates. Against this backdrop, Singapore’s economic growth slowed to 1.1% in 2023, moderating from the 3.8% expansion the previous year.

Meanwhile, the construction sector experienced continued recovery, improving from 4.6% growth in 2022 to 5.2% in 2023. This growth was bolstered by an uptick in demand from both the public and private sectors. However, sector challenges remained prevalent. The industry had to grapple with, amongst others, continued manpower shortages, rising interest rates and increased raw material prices.

Notwithstanding a challenging operating environment, the Group returned to profitability in FY2024, on the back of better results from our construction division and increased sales at our Malaysian residential development. Total Group revenue increased from $393.4 million to $500.4 million, translating into a net profit attributable to shareholders of $7.4 million, a turnaround from the loss of $28.7 million the previous financial year.

To reward shareholders for their continuous and loyal support, the Board has proposed a final cash dividend of 1.0 cents per share for FY2024, subject to shareholders’ approval at our upcoming Annual General Meeting (AGM) scheduled on 24 October 2024. This together with the interim dividend of 0.5 cents per share already paid, totals to a full year dividend of 1.5 cents per share.

For the year under review, the performance of our Property Division remained stable, generating a slightly lower revenue of $22.1 million compared to $26.3 million last year.

Retail occupancy at our joint venture project, Tekka Place, improved from 80% to almost 83% as at the end of FY2024. We will continue with leasing activities for the remaining vacant units, while continuing with promotional campaigns to boost footfall and drive tenant sales. Meanwhile, occupancy at Tekka Place’s apart’hotel, Citadines Rochor Singapore, registered robust occupancy, averaging 77% over the financial year under review.

In tandem with Malaysia’s GDP growth of 3.7% in 2023, its property market continued to show consistent improvement. The Group launched 34 units of bungalows in April 2024 and as of end August, seven bungalows from the April launch have been sold. For FY2024, a total of 28 units and one shop unit were sold during the financial year. In the meantime, we had completed and successfully handed over nine shop units in November 2023.

Continuing its position as top revenue contributor, the Construction Division accounted for 95% of total revenue for the financial year under review. The division’s revenue grew by 30% from $365.9 million in FY2023 to $477.3 million in FY2024, due largely to increased construction activities in both the building and interior divisions.

No new construction projects were added to LCBC’s order book during the year under review. LCBC focused on the execution of existing projects, among which, the Family Justice Court project obtained TOP in September 2024 while the resort under the Mandai Rejuvenation Project achieved roof structural completion earlier this year in February.

LC Interior, our interior specialist contracting arm was awarded contracts for conservation/restoration/addition and alteration works for Temasek Shophouse, Bank of East Asia Building, and the National Museum. In September 2024, it was also awarded a contract by the Ministry of Health, for the design and retrofitting works to operationalise the Community Hospital at Bedok. During the financial year, LC interior also completed a couple of milestone projects - the conservation and addition works to Red Cross House, and the interior fitting-out works for the Eurokars Group new corporate headquarters at Kung Chong Road.

LCBC continued its digital strategy implementation to drive enterprise and project value. Operationally, it continued to build on its digitalisation efforts by allocating resources to enable better project design, safety, operational efficiency and talent management. Specifically, leveraging data analytics from a digital safety feedback dashboard to improve safety initiatives, automating BIM server size monitoring, and migrating its talent development programme online.

It also adopted new technologically enabled construction operations including thermographic mapping, 3D photogrammetry and remote controlled electric robotic crusher. Thermographic mapping facilitates efficient rectification of defects on conservation façade walls by identifying specific locations of defects, while the cutting-edge 3D photogrammetry transforms ordinary photographs into precise three-dimensional models.

In recognition of its contributions towards the Built Environment industry, LCBC was conferred the Singapore Concrete Institute Excellence Award 2023 for its work on the Woodlands North Coast project. The award recognises achievements of industry players towards improvement of productivity in their building or civil projects.

The Group has always prioritised safety and continues to strive for consistently high standards of safety across all our projects. Its safety programmes seek to empower employees to identify and report safety hazards, and in doing so, encourage a proactive culture that prioritises the well-being of our workforce.

LCBC won the Gold Award in RoSPA’s Occupational Health and Safety Awards 2024, while LC Interior took home the coveted WSH Performance Gold Award at the WSH Awards 2024, after three years of consecutively securing Silver Awards.

Looking ahead, the Ministry of Trade and Industry (MTI) expects that global economic downside risks will remain significant, including geopolitical tensions in the Middle East and the Ukraine war which could potentially disrupt global supply chains and trade. Despite these challenges, MTI projects Singapore’s economic growth to come in at between 2% and 3% for 2024.

With the public sector expected to drive more than half (55%) of total construction demand in 2024, the Building and Construction Authority (BCA) anticipates total local construction demand to range between $32 billion and $38 billion. Public sector projects expected to be awarded in 2024 include public housing contracts, additional Cross Island MRT Line projects, infrastructure works for the future Changi Airport Terminal 5, Tuas Port developments, and other major road enhancement and drainage improvement works.

In the medium term, BCA expects a steady improvement in construction demand to reach between $31 billion and $38 billion per year from 2025 to 2028 led by public sector demand. Besides public housing projects, public sector construction over the medium term include MRT projects (Cross Island Line Phase 3 and Downtown Line extension to Sungei Kadut), Alexandra Hospital redevelopment, Toa Payoh and Siglap South Integrated Developments, and the redevelopment of various Junior Colleges.

As we look ahead, the Group expects operating conditions to remain challenging, with increasing competition, rising costs of manpower and uncertainty due to geopolitical tensions. We expect tenders in the construction sector will continue to be challenging, and tender prices will likely remain competitive and compressed. The Group remains well-positioned to tender for new projects and will continue to be selective and strategic in our bids, while working on existing projects. In parallel, the Group continues to review overall cost structure and remains disciplined in capital management.

We announced in December 2023, that Mr Tony Fong would be stepping down from his role as Executive Director and Company Secretary from 1 January 2024, and subsequently from the Board at the end of June 2024. One of our long-serving colleagues, Tony played an important role in the Group’s financial and treasury management, focusing on disciplined cost control, robust cashflow generation and effective capital deployment. He was also actively involved in business development and the exploration of the Group’s strategic investments. Beyond that, Tony was also instrumental in establishing corporate governance policies and practices. We thank Tony for his commitment and invaluable contributions to the Group.

I would also like to recognise the dedicated service and contributions of our esteemed long-serving directors, Mr Peter Sim and Dr Willie Lee, who have advised the Board of their intention to retire as Independent Directors at the Company’s AGM in October 2024. Both gentlemen have, through their invaluable wisdom and insights, made decisive contributions to the Group’s development since the early 2000s.

Separately, Mr Kenneth Ho who had been a member of the Board since 2021 had stepped down from the Board in May 2024. The Board and Management would like to thank him for his advice and dedication. We wish Mr Sim, Dr Lee, Mr Ho and Mr Fong the very best for the future.

The Directors and I are committed to ensuring that the Board is sufficiently diverse with an appropriate balance of experience and fresh perspective. To ensure that the Board continues to be fit for purpose, we recently welcomed Mr Benedict Ho, who joined us as an Independent Director in early September 2024. Mr Benedict Ho brings with him over thirty years of business and leadership experience in various public listed firms and banks, and I am confident he will prove to be a strong asset to the Board.

Finally, I wish to thank my fellow Board Members whose expertise, experience and independent assessments of issues have contributed greatly to ensuring that the Group remains resilient to prevailing challenges. I would also like to commend the Senior Management team and all Lum Chang employees for their unwavering dedication and diligence during the year. My thanks also go out to our partners, clients and shareholders for their continuous support and trust.

May you and your loved ones enjoy good health and success in the year ahead.