Corporate Social Responsibility

Financials

CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS AND FULL YEAR ENDED 31 DECEMBER 2023

Financials Archive

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Condensed Interim Consolidated Statement Of Profit Or Loss And Other Comprehensive Income

Condensed Interim Statements Of Financial Position
Review Of The Performance

Financial Performance of the Group

(i) Revenue

Electrical and Technical Supply

For 2H2023, revenue from the Electrical and Technical Supply Division increased by 10% ($2.1 million) as the industry continues to recover in the level of activities, with the resumption of operations by shipyards in Singapore and the region. Accordingly, revenue for FY2023 increased 10% ($3.9 million) compared to FY2022.

Security

The Security Division comprises Infrared and Thermal Sensing Technology and Cyber Security businesses. Revenue from this division decreased by $459k (9%) and increased by $505k (6%) for 2H2023 and FY2023 respectively. This was mainly due to the decrease in revenue of $477k (13%) for 2H2023 and increase in revenue $839k for 2H2023 and FY2023 respectively from Cyber Security Division.

Integration Engineering

For 2H2023 and FY2023, revenue for the Integration Engineering Division decreased by 29% ($1.1 million) and 6% ($458k) mainly due to delays in certain projects.

(ii) Gross profit

The Group's overall gross profit increased from $23.1 million in FY2022 to $24.4 million in FY2023 in line with the increase in revenue.

The gross margin remains unchanged at 42% for both FY2023 and FY2022.

(iii) Other operating income

Other operating expenses in 2H2023 decrease by $195k and other operating income in FY2023 increased by $170k. This was mainly due to the higher foreign exchange gain in both periods.

(iv) Operating expenses

For FY2023, selling & distribution expenses decreased by $894k or 6%, mainly due to :

  • decrease in repair and maintenance expenses of $369k;
  • decrease in research and development expenses of $132k;
  • decrease in advertising and promotion expenses of $179k.

Administrative expenses remain comparatively unchanged.

Finance costs remain comparatively unchanged.

(v) Reversals of impairment losses on financial assets

Reversal of impairment losses on financial assets decreased by $440k and $1.1 million for 2H2023 and FY2023 respectively due to most of the doubtful trade receivables provided previously had been recovered in 1H2022 and FY2022.

(vi) Share of results of joint ventures

The decrease in share of profits of joint ventures was due to lower profits from the Group's joint ventures for FY2023.

(vii) Share of results of associated companies

The Group recorded a share of profit of associated company for FY2023 as compared to a loss in FY2022 as the associated company was profitable in FY2023.

(viii) Taxation

Tax expense increased from $310k in FY2022 to $947k in FY2023 due to higher profits in FY2023.

(ix) Net profit for the period/year

For 2H2023, the Group registered a net profit of $1.7 million compared to $0.9 million in 2H2022. This is mainly due to increase in revenue and lower operating expenses.

For FY2023, the Group registered a net profit of $2.7 million compared to $2.1 million in FY2022. This is mainly due to increase in revenue in FY2023.

Financial Position of the Group

Inventories

Inventories decreased by $2.3 million from $33.0 million as at 31 December 2022 to $30.7 million as at 31 December 2023, mainly due to decrease in Electrical and Technical Supply of $1.2 million; decrease in Integration Engineering Division by $556k and decreased in Infrared and Thermal Sensing Technology of $624k.

Trade receivables

Trade receivables increase by $1.8 million from $14.4 million as at 31 December 2022 to $16.2 million as at 31 December 2023. Electrical and Technical Supply increase by $3.3 million; offset by decrease in Cyber Security Division of $1.4 million.

Cash and cash equivalents

Cash and cash equivalents decrease by $0.4 million from $5.7 million as at 31 December 2022 to $5.3 million as at 31 December 2023 mainly due to higher loan repayment in FY2023.

Trade payables

Trade payables decrease by $1.6 million from $7.2 million as at 31 December 2022 to $5.6 million as at 31 December 2023 mainly due to higher payments made to suppliers during FY2023.

Provisions

Provisions increased by $52k from $31k as at 31 December 2022 to $83k as at 31 December 2023 mainly due to higher provision for warranty.

Borrowings

Total borrowings decreased by $0.3 million from $8.3 million as at 31 December 2022 to $8.0 million as at 31 December 2023 due to net repayments made during the year.

Cash flow review

The Group registered a net cash flow from operating activities of $5.7million in FY2023 as compared to a net cash used in operating activities of $0.6 million in FY2022. This was mainly due to the increase in profits, decrease in inventories, contract assets and contract liabilities partially offset by increase in payables.

The net cash flow used in investing activities increased from $1.0 million for FY2022 to $3.0 million in FY2023 mainly due to higher research and development costs.

The net cash used in financing activities increased from $2.3 million for FY2022 to $3.0 million in FY2023 mainly due to higher repayment of bank borrowings in FY2023.

Commentary

Persistent challengesin US-China trade tensions, the Russia-Ukraine war, an escalation or spread of the conflict beyond Gaza and Israel, as well as an intensification of the disruptions in the Red Sea, have significantly impacted the global economy and our businesses.

An increase in capex spending in oil and gas as well as renewables, with demand superceding supply of active tonnage, continues to point towards optimism for the offshore vessel market and encourages Marine and Offshore activities. The increasing adoption of digital platforms and e-commerce in the maritime industry will transform procurement and supply chain management processes. BH eStore's digital platform aims to streamline purchasing and inventory management, to better serve our customers' needs.

Decarbonisation- With energy transition to greener sources being the key focus, the drive towards the Green Sustainability and Decarbonization in the shipping industry is accelerated through legislation, subsidies, and taxes. Greater investment in green technology for eco-friendly vessels, equipment that comply with stricter environmental standards and land and sea-based critical infrastructure is vital to lower carbon emissions significantly over the next decade. This presents opportunities for the Group in Consolidated Technical Procurement, Green LED retrofitting, Vessel Electrification, Green Energy storage and GRE piping solutions.

Employers face higher costs of staff retention among a tighter talent pool and will need to maximise the efficiency of its current workforce through productivity-boosting technology- this speeds up the widespread adoption of technology, robotics and artificial intelligence. Continued technological advancements will also drive efficiency improvements and innovation in the maritime supply chain. International Maritime Organisation regulations on cyber-security and resilience of vessels is spurring demand for cyber protection in the maritime industries. Our Cyber Security Division is well-positioned to capitalize on market opportunities from increased cyber-attacks and digital-related challenges through advanced technologies and solutions that optimize operations and enhance safety and sustainability.