Financials

CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS AND FULL YEAR ENDED 31 DECEMBER 2024

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 2H2024, revenue from the Electrical and Technical Supply Division increased by 3% ($682k) 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 FY2024 increased 7% ($3.2 million) compared to FY2023.

Security

The Security Division comprises Infrared and Thermal Sensing Technology and Cyber Security businesses. Revenue from this division decreased by $1.2 million (26%) and $2.8 million (32%) for 2H2024 and FY2024 respectively due to lesser projects delivered in both 2H2024 and FY2024.

Integration Engineering

For 2H2024 and FY2024, revenue for the Integration Engineering Division increased by 48% ($1.3 million) and 11% ($760k) mainly due to more projects delivered in 2H2024.

(ii) Gross profit

The Group's 2H2024 gross profit margin 41%, is slightly lower than 2H2023 at 42%. However, 2H2024 gross profit increased slightly by $238k from $12.5m in 2H2023 to $12.7 million in 2H2024, mainly due to higher revenue.

(iii) Other operating income/(expenses)

2H2024 recorded other operating income of $129k as compared to an expense of $62k in 2H2023 mainly due to lower foreign exchange loss and higher interest income offset by a loss arising from deconsolidation of a deregistered subsidiary.

(iv) Operating expenses

Selling & Distribution expenses increased by $900k, from $6.2 million in 2H2023 to $7.1 million in 2H2024, mainly due to the following:

• Increase in research and development expenses amounting to $511k.
• Increase in write down of inventories amounting to $378k.

Administrative expenses decreased by $153k, from $4.3 million in 2H2023 to $4.1 million in 2H2024, mainly due to the following:

• Decrease in personnel related cost amounting to $458k. This is mainly due to reduction in bonus, commission and restructuring of Security Division.
• Increase in legal and professional fees amounting to $153k.

Finance costs increased by $121k, from $319k in 2HFY2023 to $440k in 2HFY2024. This is mainly due to increase in working capital loan drawdowns offset by lower interest rates.

(v) Share of results of a joint venture

The increase in 2H2024 share of profits of a joint venture was due to higher profits from the Group's joint venture for 2H2024.

(vi) Share of results of associated companies

The Group recorded a share of loss of associated companies for 2H2024 as compared to a profit in 2H2023 as one of the associated companies was loss making in 2H2024.

(vii) Taxation

The Group recorded a tax expense of $479k in 2H2023 as compared to a gain of $93k in 2H2024 mainly due to write-back of prior years' over-provisions in 2H2024.

(viii) Net profit for the period/year

For FY2024, the Group registered a net profit of $2.1 million, compared to $2.7 million in FY2023, and a net profit of $1.5 million in 2H2024, compared to $1.7 million in 2H2023, mainly due to an increase in operating expenses for both FY2024 and 2H2024.

Financial Position of the Group

Inventories

Inventories increased by $2.5 million from $30.7 million as at 31 December 2023 to $33.3 million as at 31 December 2024, mainly due to increase in Electrical and Technical Supply of $5.4 million; offset by decrease in Infrared Thermal Sensing Technology Division $0.9 million and Integrated Engineering Division by $1.7 million.

Trade receivables

Trade receivables decreased by $3.9 million from $16.3 million as at 31 December 2023 to $12.4 million as at 31 December 2024 as a result of faster collection. Thus, debtor turnover days improves from 100 days in FY2023 to 75 days in FY2024.

Provisions

Provisions increased by $54k from $83k as at 31 December 2023 to $137k as at 31 December 2024 mainly due to provision of warranty for Security Division.

Borrowings

Overall increase in total bank borrowings (current and non-current) of $4.1 million mainly due to working capital loan net drawdown of $5.5 million offset against repayment of bank borrowings of $1.4 million.

Cash flow review

The Group registered a lower net cash flow from operating activities of $0.8 million in FY2024 as compared to $5.3 million in FY2023. This was mainly due to decrease in profits and increase in inventories, decrease in contract liabilities offset by decrease in receivables.

The net cash flow used in investing activities decreased from $2.8 million for FY2023 to $1.7 million in FY2024 mainly due to lower development cost incurred and purchase of property, plant and equipment.

The Group recorded a net cash generated from financing activities of $1 million for FY2024 as compared to a net cash used in financing activities of $3.0 million in FY2023 as a result of higher draw down of borrowings.

Commentary

Industry Trends and Competitive Conditions Relating to BH Global Corporation Ltd

The maritime and offshore industries in Singapore continue to be shaped by geopolitical developments, sustainability initiatives, and digital transformation. As a key global hub for shipping, oil and gas, and marine services, Singapore plays a pivotal role in driving industry trends and responding to emerging challenges. A recent industry blueprint, unveiled by Manpower Minister and Second Minister for Trade and Industry Dr. Tan See Leng, highlights the nation's commitment to guiding marine and offshore energy companies toward emerging growth areas, particularly in decarbonization.

Geopolitical and Economic Landscape

Singapore's maritime industry remains affected by persistent global uncertainties, including USChina trade tensions, disruptions in the Red Sea, and the Russia-Ukraine conflict. These geopolitical risks impact global trade flows, freight costs, and supply chain stability. As a major transshipment hub, Singapore must continue leveraging its strong logistics network to mitigate these risks and ensure supply chain resilience.

Despite these challenges, the ASEAN region's economic resilience continues to drive demand for maritime and offshore services. Southeast Asia is witnessing increased infrastructure development, particularly in renewable energy projects, oil and gas exploration, and port expansions. Singapore's strategic location and strong maritime ecosystem position the Group well to capitalize on these opportunities.

Digital Transformation in Maritime Operations

The maritime industry is undergoing significant digital transformation, with the adoption of ecommerce and digital platforms reshaping procurement and supply chain management. Singapore's Smart Port initiatives, including Just-in-Time (JIT) port operations, exemplify this shift. BH Global's digital platform, BH eStore, aligns with these developments and aims to streamline purchasing and inventory management.

In addition, regulations from the International Maritime Organization (IMO) on cybersecurity and vessel resilience are driving demand for advanced digital protection in the maritime sector. BH Global's Cyber Security Division is well-positioned to capitalize on market opportunities arising from increased cyber threats and digital challenges. Through advanced technologies and tailored solutions, the Group aims to optimize maritime operations while enhancing safety and sustainability.

Sustainability and Decarbonization Efforts

The recently introduced industry blueprint underscores the importance of decarbonization, urging companies to invest in green technologies and sustainable practices. Singapore's Maritime and Port Authority (MPA) supports this transition through initiatives promoting the electrification of harbour crafts and the adoption of cleaner fuels. BH Global is well-positioned to contribute to these efforts with its expertise in: Vessel electrification, Energy storage systems, Energy-efficient LED lighting retrofitting, Digital Power management systems and Green piping solutions. By aligning with Singapore's sustainability roadmap, the Group is poised to support and provide Green maritime solutions.

Offshore & Marine Market Outlook

The offshore and marine sector is experiencing renewed optimism, supported by increased capital expenditure in oil and gas, as well as the expansion of offshore wind projects. Rising demand for offshore support vessels (OSVs), floating production storage and offloading (FPSO) units, and maintenance services will create business opportunities for companies involved in technical procurement and marine engineering solutions. The ship repair and conversion sector is also expected to remain strong, driven by stricter environmental regulations that necessitate vessel retrofits and fuel efficiency enhancements. BH Global, with its expertise in marine electrical solutions, is well-positioned to support these industry upgrades.

Workforce Development and Technological Integration

Singapore's maritime industry faces ongoing challenges in talent retention and workforce development, particularly in engineering, digitalization, and sustainability roles. With an increasingly competitive labour market, companies must embrace automation, artificial intelligence, and robotics to enhance productivity and operational efficiency. BH Global is committed to leveraging "Singapore's Industry Transformation Map" (ITM) for Sea Transport, integrating technology-driven processes and upskilling initiatives to ensure a sustainable workforce. Through automation, and workforce training, the Group aims to maximize efficiency while addressing long-term talent sustainability.

Singapore's maritime and offshore energy sectors are poised for significant transformation, driven by sustainability goals, digitalization, and workforce innovation. BH Global aims to be in line with regulatory changes and technological advancements, ensuring the Group remains competitive in an evolving global landscape. By investing in green technologies and cybersecurity capabilities, BH Global will continue to strengthen its market position while contributing to Singapore's ambitions as a global maritime leader.