BH Global Corporation Ltd

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Extracted from Annual Report 2016

On behalf of the Board of Directors, I would like to present to you the annual report of BH Global Corporation Limited ("BH Global" or the "Group") for the financial year ended 31 December 2016 ("FY2016").

Dear Shareholders,

YEAR IN REVIEW

Chairman

2016 was indeed filled with challenges in light of the bleak market conditions. The marine and offshore industries remained muted, plagued with oversupply, overcapacity issues and low oil prices. Issues in the operating environments have not been alleviated and substantial budget cuts by companies persist. Consolidations remain prevalent as many companies struggle to solve cash flow and financing issues, leaving outlook in these industries unclear. As the Group operates under these conditions, it was not immune to the challenges. However, the Group's core business remained profitable and resilient.

SUPPLY CHAIN MANAGEMENT ("SCM") DIVISION

The SCM division remains our core business. Amidst the adversities, the SCM division stayed buoyant, remaining profitable and providing a buffer from the negative impact of the downturn on the Group's overall results.

In 2016, we continued to fortify our relationships with our customers and suppliers. Agreements such as the Distribution and Representation Agreement with our key cable supplier, Seoul Electric Cables Group ("SEC"), continued to provide us fortitude in these tough times. The agreement signed in June 2015 appointed the Group as the exclusive selling representative and distributor of SEC's cables in territories of Southeast Asia, India, Middle East and East Asia.

Similarly, during the year we embarked on various initiatives to improve the performance of the core SCM division. We continued our work towards providing customers better services and solutions. To do this, we explored means to enhance our logistics and inventory management and looked towards projects such as RFID tracking, new warehousing management system, and better fleet management for deliveries. These initiatives were aimed at improving overall productivity, reducing administrative inefficiencies and providing better stock management control. Simultaneously, we incorporated a cost management plan alongside these initiatives to achieve cost savings in areas such as procurement, manpower and utilities.

We continue to examine areas that have strong growth potential and foreseeable returns. We launched our online store for the SCM division (www.bh-estore.com) in 2015 and developed several marketing initiatives in 2016 to complement it. With the ability to readily showcase our comprehensive range of products and provide ease of access to customers, our online store allows us to reach out to new sales channels that could broaden our customer base. We have also continued our marketing efforts by taking part in various trade exhibitions such as Sea Asia, INMEXVietnam and CM Beijing in 2016.

MANUFACTURING DIVISION

The Manufacturing division comprises two main businesses, the galvanized steel wire business in Oman, Gulf Specialty Steel Industries LLC ("GSSI"), and LED lighting solutions business operating primarily in the People's Republic of China, GL Lighting Holding Pte Ltd ("GLH").

The Group's galvanized steel wire plant in Oman faced headwinds due to difficult trading conditions and a rise in operating costs. The business continues to perform below expectations and short of the targeted breakeven production and sales volumes. A turnaround in this business remains challenging and the Group is currently working closely with our Omani joint venture partner, Takamul Investment Company SAOC, to explore various options to move forward.

As for the Group's LED lighting solutions business, its performance continues to be affected by factors arising from the relocation of the factory from Shanghai to Kunshan, and supplier delays. Nonetheless, the Group remains positive on the long-term sustainability of this business as more companies and consumers are drawn to higher energy efficiency products and recognise the cost savings LED lighting provides. The Group looks forward to stabilising operations with the new factory expecting completion by end 2017. The new factory will provide the much needed space, boost manufacturing capacity and ultimately allow the Group to regain its footing with respect to this business.

ENGINEERING SERVICES DIVISION

In 2016, the creditors' voluntary liquidation of Oil & Gas Solutions Pte Ltd ("OGS") remains ongoing. The activities of the division continue to be carried out by our subsidiary, BOS Offshore & Marine Pte Ltd ("BOS"). BOS has since taken over the major engineering and procurement project for Kawasaki Heavy Industries. In retrospect, the Group has learned from its experience in this division and BOS has moved away from the construction management of projects. Instead, BOS will focus on the engineering, procurement and project management. The Group is closely monitoring the progress of projects to strive for timely completion and avoid cost overruns.

As for the Group's engineering operations in Batam, it remains our intention to dispose of the remaining shipyard.

SECURITY DIVISION

At the rate of technological globalisation, reliance on technology continues to grow and security threats from a technological standpoint have become more prevalent. Furthermore, technology itself is playing a more critical role in identifying threats of all nature.

The Group's new Security division was started to target these threats and is represented by two subsidiaries, Athena Dynamics Pte Ltd ("ADL") and Omnisense Systems Pte Ltd ("OMS"). ADL focuses on cyber security and Enterprise IT Operation Management, as well as Critical Infrastructure OT protection products that have done well in their countries of origin but have yet to establish a foothold in Singapore and neighbouring countries.

OMS is a newly acquired sensing security company which produces global leading technologies in infra-red health screening and night vision security. The Group currently owns 51% shareholding interest in OMS.

The Security division continues to outdo expectations and show promising results. Together the two subsidiaries have achieved an impressive customer base ranging from airports, hospitals, schools to banks in Singapore and we are hopeful that their influence will continue to expand in 2017.

A WORD OF THANKS

2016 was a year filled with obstacles in several of the markets the Group operates in. That being said, the resilience of our Group, our core business and our dedicated employees have helped us strive through these adversities. It is said that "with experience comes great wisdom" and we continue to build on our experience to gain a strong foothold for when the market recovers. We would like to express our heartfelt gratitude to our customers, suppliers, bankers, employees, Board of Directors and shareholders who have shown unwavering support in these dark times. We shall keep our chins up and together, we look ahead to a more fruitful 2017.

Vincent Lim Hui Eng

Executive Chairman and Chief Executive Officer