BH Global Corporation Ltd

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Extracted from Annual Report 2017

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 2017 ("FY2017").

Dear Shareholders,

YEAR IN REVIEW

Chairman

In 2017, in spite of the recovery in oil prices as the oil demand and supply gap narrowed, headwinds in the marine and offshore industries continued to persist. Largely due to lingering overcapacity issues, positive effects from the recovery were dampened. Similarly, global economic outlook improved towards the tail end of 2017 but consolidations remain prevalent in the marine and offshore sectors as companies endeavoured against cash flow and financing issues. Due to the abovementioned factors, the Group faced a very challenging year and the Group's core business made its first ever loss. However, the Group's Security and Engineering Services divisions have shown encouraging results.

SUPPLY CHAIN MANAGEMENT ("SCM") DIVISION

The SCM division continues to be the Group's main business division. The prolonged slowdown in activities in the marine and offshore sectors affected the SCM division, with the SCM division reporting a loss for the first time. Fewer new build projects and increased competition resulted in a significant decrease in our revenue from marine cables and accessories. To counteract the muted market conditions, the Group implemented certain cost cutting measures and expanded our marketing initiatives. At the same time, the Group continued to explore viable opportunities in the industrial and petro-chemical sectors.

In 2017, our strong relationships with long term clients and with our key cable supplier, Seoul Electric Cables Group ("SEC"), were a mitigating factor during these tough times. Similarly, the Group's cost management plan helped to achieve cost savings in areas such as procurement, manpower and utilities, showing good progress and alleviating some of the competitive pressures from the market.

Going forward, we aim to be more focused on consistent improvements to stabilize and subsequently bolster performance in the long run. This includes further attention to logistics and inventory management using initiatives such as RFID tracking, a warehousing management system, and better fleet management for deliveries.

Our online store for the SCM division (www.bh-estore.com) which was started in 2015, showed some positive results, achieving S$100K of revenue in 2017. We hope to continue this initiative to widen our reach to new clients and provide ease of access and greater service levels to our customers. Ultimately, we aspire to establish 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 Iran Oil Show, Sea Asia, INMEX-Vietnam and CM Beijing in 2017.

MANUFACTURING DIVISION

The Manufacturing division comprises two main businesses, the galvanized steel wire business in Oman, Gulf Specialty Steel Industries ("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 remained under harsh industry conditions in 2017. Subsequent to year end, the Group has entered into a non-binding Letter of Intent to dispose its interest in GSSI.

The Group's LED lighting solutions business' performance was affected by supplier-related delays from the year prior. Despite having sourced for new suppliers in 2017, the ripple effect from the delays resulted in lower sales to major customers this year. The Group is looking forward to the construction of the new factory which is poised to be completed by the second quarter of 2018 and should help enhance production capacity. Thus, the Group will focus on ramping up production and sales once the factory has been completed. The Group remains positive on the long-term sustainability of this business as the demand for higher energy efficient products continues to grow.

ENGINEERING SERVICES DIVISION

The liquidation of Oil & Gas Solutions Pte. Ltd. ("OGS") remains ongoing. BOS Offshore & Marine Pte Ltd ("BOS") continues to fulfil the activities of this division and this year BOS entered into a joint venture with our Japanese partners to explore feasible business expansion opportunities in the Japanese market. On PTE, the Group has entered into a memorandum of understanding to dispose the Batam land. Overall, for this business, the Group continues to seek further viable opportunities in the engineering design and management of projects.

SECURITY DIVISION

The functions of technology are expanding at an unbridled rate, and its prominence continues to grow in our lives, from hosting our sensitive personal data to everyday cashless transactions. As such, governments and businesses face a constant struggle between efficiency and security. Reliance on technology has become more prevalent, and detection of threats ahead of repercussions is paramount. Furthermore, technology itself is playing a more critical role in identifying threats of all nature.

The Group's new Security division which was established in FY2016 targeted 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 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 acquire classified and critical infrastructure projects as well as ICA projects including Changi airport, seaports and check points. It has also acquired a project in Japan.

The outlook for this division remains promising and the Group continues to proactively market this division, taking part in 10 conferences and roadshows during the year. These include local and global events such as Milipol Paris 2017, RSA Conference Asia Pacific 2017, Cloud & Cyber Security Expo, Interpol World 2017 and Singapore Health and Biomedical Congress 2017.

The Group has also established a branch office in Taiwan with the aim of enhancing its R&D capacities and extending its regional reach. The Group will continue to focus on gaining exclusive distributorships and developing further channel structures globally.

A WORD OF THANKS

2017 was a tough year for the Group as we continued to experience a spill over of unfavourable conditions from the year prior in several of the industries we operate in. The Group has been placed in the watchlist by SGX. That being said, we will persevere with our new initiatives. This journey is not going to be easy and no immediate result can be seen in the short term. With our committed employees and shareholders, we are confident of braving the adversities ahead. We would like to express our heartfelt gratitude to our customers, suppliers, bankers, employees, Board of Directors and shareholders who have shown consistent support in this difficult period. We remain steadfast in our aim to bring BH Global into 2018 with confidence and hope.

Vincent Lim Hui Eng

Executive Chairman and Chief Executive Officer