BH Global Corporation Ltd

Email This Print This 财务报告

QUARTERLY FINANCIAL STATEMENTS FOR THE 4TH QUARTER AND FULL YEAR ENDED 31 DECEMBER 2017

Financials Archive

Get Adobe Reader 注: :文件是Adobe(PDF )格式。
请下载免费的Adobe Acrobat Reader来查看这些文件。

Income Statement

Statement of Comprehensive Income

Balance Sheet
Review Of The Performance

Revenue

(4Q2017 Vs 4Q2016)

Supply Chain Management

Supply Chain Management Division accounts for 72% of the Group's turnover in 4Q2017, of which marine cables and accessories contributed 50%, marine lighting equipment and accessories 40% and others 11%. Revenue from the division decreased by 11% due to continuing slowdown in activities in the marine and offshore sectors as a results of weak global shipping markets and low oil prices. However, revenue from marine lighting equipment and accessories increased by 134% due to sales of new product range to a Japanese customer.

Security

Security Division mainly provides security products and solutions relating to information technology. The division accounts for 5% of the Group's turnover in 4Q2017.

Engineering Services

Engineering Services Division accounts for 23% of the Group's turnover in 4Q2017. Revenue from Engineering Services Division increased by 168% due mainly to higher progressive recognition of revenue of an existing project in procurement phase in 4Q2017 as compared to 4Q2016 where the project was reaching the end of its engineering phase.

(FY2017 Vs FY2016)

Supply Chain Management

Supply Chain Management Division accounts for 76% of the Group's turnover in FY2017, of which marine cables and accessories contributed 50%, marine lighting equipment and accessories 33% and others 17%. Revenue from the division decreased by 42% due to continuing slowdown in activities in the marine and offshore sectors as a results of weak global shipping markets and low oil prices. However, revenue from marine lighting equipment and accessories increased by 20% due to sales of new product range to a Japanese customer.

Security

Security Division was established in 2Q2016 and mainly provides products and solutions relating to cyber security and security system. The division accounts for 7% of the Group's turnover in FY2017.

Engineering Services

Engineering Services Division accounts for 17% of the Group's turnover in FY2017. Revenue from Engineering Services Division increased by 238% due mainly to higher progressive recognition of revenue of an existing project in procurement phase in FY2017 as compared to FY2016 where the project was in its engineering phase.

4Q2017 vs 4Q2016

Geographical segment

Revenue derived from Singapore decreased by $1.1 million or 22% from $5.1 million in 4Q2016 to $4.0 million in 4Q2017 due mainly to slowdown in activities in marine and offshore sectors.

Revenue derived from overseas increased by $1.8 million or 36% from $5.2 million in 4Q2016 to $7.0 million in 4Q2017 due mainly to higher marine lighting equipment and accessories sales to a customer in Japan and higher recognition of revenue of an existing oversea project.

Gross profit

The Group's overall gross profit remains comparably the same but the Group's overall gross margin decrease from 32% in 4Q2016 to 30% in 4Q2017 due to higher revenue from Engineering Division where the gross margin is lower.

Other operating income

Other operating income decreased by $1.1 million from $1.4 million in 4Q2016 to $0.3 million in 4Q2017 due mainly to a foreign exchange loss in 4Q2017 as compared to a gain in 4Q2016.

Operating expenses

The Group's operating expenses comprise of mainly selling & distribution and administrative expenses. Selling & distribution expenses increased by 133% to $8.5 million due to higher provision for doubtful debts and stock obsolescence. Administrative expenses increased by 112% due mainly to higher impairment loss on goodwill, intangible assets and investment in an associated company, and provision for liabilities.

Share of results in associated companies

The higher Group's share of loss in associated companies is due mainly to lower sales to major customers. In particular, the performance of GLH was affected by supplier-related issues which disrupted production and the associate company's ability to meet its sales orders.

Share of results in joint ventures

The Group's share of results in joint ventures registered a gain of $4k in 4Q2017 as compared to a loss of $2.5 million in 4Q2016 due mainly to the Group ceased to share the of loss in Gulf Specialty Steel Industries ("GSSI") as the cost of investment has been fully written down. However, the Group has provided additional provision for liabilities as a result of a corporate guarantee given by the Group to GSSI's banker.

Interest on borrowing

Interest on borrowings remains comparable.

Tax credit

The tax credit of $1.5 million is due mainly to the utilisation of group relief of a loss making subsidiary and write back of deferred tax resulting from impairment loss on intangible assets.

Depreciation

Depreciation remains comparably the same.

Foreign exchange (loss)/gain

The Group reported a foreign exchange loss of $0.9 million in 4Q2017 as compared to a foreign exchange gain of $0.8 million in 4Q2016 is due mainly to translation of US$ denominated bank balances and receivables as a result of weaker US$ against S$.

Provision for stock obsolescence

The Group has assessed its net realizable value of its inventory and has provided a higher provision for stock obsolescence.

Provision for doubtful debts

In view of the weak marine and offshore markets where payment from customers are slower coupled with poor performance announced by certain customers, the Group has provided a higher provision for doubtful debts.

Impairment loss in an associated company

The Group provided impairment on investment in an associated company after assessing the future discounted cash flow of GL Lighting Holding Pte Ltd ("GLH").

Impairment loss of goodwill

The Group provided impairment loss of goodwill after assessing the future discounted cash flow of Omnisense Systems Pte Ltd ("OMS").

Impairment loss of intangible assets

The Group provided impairment loss of intangible assets of OMS after assessing the future discounted cash flow from its technology acquired.

Provision for liabilities

The Group has provided additional provision for liabilities as a result of additional losses of GSSI in FY2017.

Net Loss for the Period

The Group registered a net loss of $22.4 million in 4Q2017 as compared to $10.1 million in 4Q2016 due mainly to higher provision for doubtful debts and stock obsolescence, impairment loss on goodwill, intangible assets and investment in an associated company, and provision for liabilities.

Balance Sheet and Cash Flow Analysis

Investment in associated companies

The decrease in investment in associated companies is due mainly to the share of loss and provision of impairment in GLH.

Intangible assets

The decrease in intangible assets is due mainly to impairment of goodwill and provision of impairment on acquired technology in OMS.

Purchase deposit to a supplier

The purchase deposit is paid to a main cable supplier which will be offset from future purchases over a fiveyear period (refer to the Group's announcement on 9 June 2015 to the SGX). The decrease is due to a partial repayment from the supplier during the year.

Inventories

Inventories decreased by $2.4 million from $27.2 million in FY2016 to $24.8 million in FY2017 is due mainly to higher provision for stock obsolescence and management's intention to reduce the Group's inventory level as a result of the slowdown in the marine and offshore sectors.

Due to customers on construction contracts

The increase in amount due from customers on construction contracts is due to unbilled work-in-progress of project of the Engineering Division in 4Q2017.

Trade receivables

Trade receivables decreased by $5.3 million from $14.2 million in FY2016 to $8.9 million in FY2017 due mainly to higher provision for doubtful debts in FY2017.

Other receivables

The decrease in other receivables of $2.6 million is due mainly to offsetting of deposits paid to trade payables for project procurement upon receipts of such supplies.

Tax recoverable/payable

The increase in tax recoverable/payable is due to the utilization of group relief of a subsidiary. Subsequently the tax authority has disallowed this group relief but the Group, has reassessed and given the material facts of the case, the Group concluded we have a higher chance of utilizing this group relief and is in the midst of discussion with the tax authority.

Asset held for sale

Asset held for sale relate to the Batam yard where the group is in discussion with a potential buyer. Consequently, the Batam yard is classified from property, plant and equipment to asset held for sale.

Deferred tax liability

The decrease in deferred tax liability of $1.1 million is due mainly to reversal of deferred tax liability arising from impairment loss of intangible assets and asset held for sale.

Convertible loan notes

One of the Group's subsidiary, OMS and its shareholders entered into a convertible loan agreement ("CLA") dated 7 September 2017, pursuant to which its shareholders have agreed, subject to the terms of the CLA, to grant a convertible note of up to aggregate principle amount of up to $4 million to the Company at an interest rate at 6.0% per annum. Subscription of the convertible loan closed on 30th December 2017.

Non-current payables

The decrease in non-current payables is due mainly to fair value gain on contingent consideration payable arising from acquisition of OMS.

Other payables

The increase in other payables $1.2 million is due mainly to increase in accrual of project cost from Engineering Division and deferred revenue arising from service contract from Security Division.

Provisions

The increase in provisions of $1.7 million is due mainly to additional provision for impairment losses on investment in GSSI.

Cash flow

Net cash generated from operating activities amounted to $0.9 million in 4Q2017 as compared to a net cash generated from operating activities of $7.1 million in 4Q2016. Net cash and cash equivalent increased by $2.5 million in 4Q2017 compared to a decrease of $6.4 million in 4Q2016. The increase is due mainly to drawdown of bank borrowings.

In order to meet the Group's cash flow requirement for the next 12 months, its controlling shareholder, Beng Hui Holding (S) Pte Ltd has committed to extend up to S$10 million loan to the Group. The loan will be interest-bearing and repayable after 12 months. Further details of the loan will be announced on a later date once the shareholder's agreement is formalised.

Commentary

The Group's core business, the Supply Chain Management division, saw overall revenue decrease in 4Q2017 despite an increase in marine LED lighting sales. The Group is focused on consistent improvements to enhance its business functions that will help stabilize and subsequently bolster performance in the long run. The Group's cost cutting measures showed progress and it will maintain these measures while exploring other viable opportunities in the industrial and petrochemical space.

The Security division was formed in 2Q2016 and focuses on cybersecurity, enterprise IT operation management and sensing security products for both public and private sectors in Singapore and the region. This division has shown considerable growth and potential with orders from both government agencies and private companies. The Group aims to further its exposure in regional markets.

The operations of GLH, the Group's associated company, faced supplier-related issues and delays in the completion of its new factory in FY2017 which resulted in lower sales to major customers. The construction of the new factory is poised to be completed by 2Q2018. The Group made provisions for losses after assessing the future discounted cash flow of GLH and will focus on ramping up production and sales once the factory has been completed.

The situation of the Group's galvanized steel wire factory in Oman has not improved and the Group has made the necessary provisions in its FY2017 financial statements. The Group will continue to work closely with its Omani joint venture partner to explore all possible options for this business.

On its Engineering Services division, the liquidation of OGS remains ongoing. On PTE, the Group is currently in discussion with a potential buyer for the Batam land. The recently formed BOS Engineering International Pte Ltd has entered into a joint venture with Japanese partners during FY2017 to explore any business expansion opportunities in the Japanese market.