Chairman,President and Party Secretary | Wang Zhangling

Esteemed shareholders and friends,

On behalf of the Board of Directors of Offshore Oil Engineering Co., Ltd., it is an honor to present to you the Company's Annual Report 2023 for your review. At the same time, I would like to express my heartfelt gratitude to all shareholders and everyone who cares about and supports the development of COOEC!

In 2023, we firmly took high-quality development as the primary task, adhered to our strategies, maintained our strategic commitments, continuously enhanced the Company's capabilities of value creation, lean execution, reform and innovation, and risk prevention and control, and drove the Company to take a new step forward in its high-quality and sustainable development.

Record-high Capacity and Output Value.  COOEC achieved historic breakthroughs in operating performance last year, with record-high sales revenues of RMB 30,752 million. The net profit attributable to shareholders reached RMB 1,621 million, representing a year-on-year increase of 11.08%. We successfully completed construction for projects such as Lingshui 25-1, Lufeng 12-3, and Enping 20-4, completed the main structures of a cylindrical FPSO for the Liuhua Oilfield and the "Haiji No. 2" jacket, and delivered overseas projects such as the LNG projects in Canada and Hong Kong. The cumulative workload reached 472,000 tons, setting a new historical high.

A "Crucial Step" Forward in Role Change. COOEC resolutely follows the development path of "domestic operations driving international operations and international operations boosting domestic operations." The Company is undergoing a historic transformation from an international subcontractor to an international general contractor. Particularly, the ground-breaking projects in Saudi Arabia, Qatar, and other countries have paved the way for the Company's efforts to "create another COOEC" in the Middle East region. Last year, COOEC won contracts with a total value of RMB 33,986 million, including RMB 14,176 million from overseas markets. Both were unprecedented figures. For the first time, COOEC made it on two ENR lists in 2023, ranking 68th among the Top 250 International Contractors and 98th among the Top 250 Global Contractors.

Green Development in Acceleration. The Company actively responds to the national strategy for "carbon peaking and neutrality" and deeply implements the concept of green development. In 2023, the Company successfully constructed China's first deep-sea floating wind power platform "Haiyou Guanlan," China's first offshore carbon dioxide storage and seabed data cabin, and other demonstration projects, exemplifying our offshore engineering solutions for the green and low-carbon transformation of China's offshore oil and gas development. "China's first offshore one-million-ton carbon dioxide reinjection system" we supplied won the Special Award for Carbon Peaking and Carbon Neutrality Innovation Project from the China Association of Plant Engineering. We successfully ensured grid connection and power generation of the photovoltaic projects in Tianjin Lingang, Qingdao, and Zhuhai. COOEC was also recognized as a Green Supply Chain Management Demonstration Enterprise by the Ministry of Industry and Information Technology and was listed among the "Top 50 Chinese Listed Companies for Carbon Neutrality."

Continuous "Breakthroughs" in Scientific and Technological Innovation. COOEC focuses on achieving high-level technological self-reliance through continuously strengthening the development of key core technologies and optimizing mechanisms for scientific and technological innovation. Throughout the year, we put 31 key scientific research achievements into applications. Breakthroughs were made in more than ten core technologies, including deep-sea floating wind power development. 12 key equipment and materials, such as single-point liquid slip rings, realized production in China. For the first time, we applied for the establishment of a National Innovation Center and a National Key Laboratory. We kept developing original technology sources and the offshore and subsea industry chain. The key technologies for the design, construction, and installation of deep-water jackets were included in the "Science and Technology Innovation in China" leading technology list by the China Association for Science and Technology. 14 scientific and technological achievements, including the design, construction technology innovation, and engineering application of a 350,000-ton ultra-large deep-water FPSO, received awards from industry associations.

Ongoing "Iterations and Upgrades" for Digitization and Intelligence Convergence.  COOEC regards the transformation toward "digitalization" and "intelligentization" as a driving force for implementing intelligent manufacturing and smart engineering. In 2023, we released our first digital universal technology platform, laying a solid foundation for the Company's digital transformation characterized by "unified construction, management, and operation and maintenance." We explored the construction of a data asset center, shared 27 million entries of data across all domains, and created a more comprehensive data governance system. Our data asset management case successfully won the "Xinghe Award" for Big Data. The digital twin health management system was continuously upgraded and iterated, and the dual delivery and maintenance system's construction progressed steadily. We gradually deepened intelligent manufacturing. The Tianjin Intelligent Manufacturing Base was selected as a 5G demonstration factory by the Ministry of Industry and Information Technology and obtained the 5G Application Industry Matrix certification. It also won the silver award in the benchmark competition of the 6th "Zhanfang Cup" 5G Application Collection and first place in the Tianjin 5G Full-Connectivity Factory competition.

Consolidating "Three Lines of Defense" for Risk Prevention and Control.  COOEC attaches great importance to risk management and compliance, continuously improves its risk management system, and enhances its risk prevention capabilities. Business units guard the "first line of defense," the risk control department maintains the "second line of defense," and the audit department watches the "third line of defense." We developed an internal control system and comprehensive risk management. We established an "all-level" corporate risk prevention and control system, a "life-cycle" project risk prevention and control system, a "multi-dimensional" compliance risk prevention and control system, and an "all-process" safety risk prevention and control system. The Company's risk prevention and control and management performance continued to enhance.
In 2024, we are entering an era of strategic opportunities with great potential while still facing more complex internal and external environments and more challenging production and operation situations. We will resolutely focus on our strategic plans, seize opportunities while addressing challenges, and create new landscapes through action. We will continuously enhance our core competitiveness and strengthen core functions, striving to move on to a new level of high-quality development.

A Balanced Approach to Strategic Management. COOEC's "1-2-3-5" development strategy, goals of the "14th Five-Year Plan," and the 2035 Vision keep the Company on track and depict a new chapter in its transformation and development. We remain unwavering in our strategic direction, strengthen strategy execution, and enhance the guiding role of plans in operating activities. We incorporate strategic plan indicators and tasks into daily operations and management, establish and maintain mechanisms to track plan execution, and ensure plan execution is under control. In the face of increasingly intense market competition and a complex and changing operating environment, we will maintain flexibility in strategic management, adjust development strategies according to market changes and the Company's developmental dynamics, better seize market opportunities, create first-mover advantages, integrate scientific and technological innovation resources, take the lead of development of strategic emerging industries and future industries, accelerate the formation of new quality productive forces, and promote high-quality development.

Spirit and Substantive Measures of Corporate Governance.  As the new Company Law will take effect on July 1, 2024, COOEC will seize this opportunity to upgrade its corporate governance system. Following the principle of "unity of power and responsibility," we will improve the operating mechanisms of various roles in the corporate governance system and establish a management, service, and support system for external directors to perform their duties. We will enable external directors to better participate in decision-making, supervision and checks and balances, and professional consulting within the Board of Directors, ensuring that the corporate governance system meets the requirements for listed companies while rapidly responding to market demands. We will keep establishing a sound ESG governance architecture and long-term operating mechanisms, empowering the Company's sustainable development. Efforts include the "institutionalization of management, procedure formulation for regulations, form preparation for procedures, and informatization of forms," gradual improvement in the scientific decision-making mechanisms, strict adherence to the bottom line, strengthened inherent governance drivers, and continuous enhancement of effectiveness in corporate governance.

"Integration of Research and Application" in Scientific and Technological Innovation. Scientific and technological innovation is a driving force behind the Company's growth. The Company focuses on "chain-based" development and continuously strengthens the development of key core technologies. We are accelerating the research and application of cutting-edge technologies in fields such as deep-sea systems, new energy, and new materials to build future development advantages. We work to offer important technologies and products with independent intellectual property rights, particularly striving for new breakthroughs in the field of deep-sea and offshore floating wind power and becoming a leader in deep-sea and offshore wind power. Concurrently, we are empowering and unleashing organizational innovation capabilities and further cultivating a market-oriented research and innovation ecology with efforts centering on reforms in scientific and technological systems and mechanisms.

"Simultaneous Advancement of Soft and Hard Power" in Digital and Intelligent Transformation. COOEC will continue to forge leading advantages in digital and intelligent transformation. As for software, we are consolidating a future-oriented digital foundation, resolutely increasing digital and local content, deepening data governance in production and operations, enhancing data precision, reliability, and usability, further unlocking data value, and expanding the scope of data services. As for hardware, we are resolutely following the path of standardized engineering and construction, further promoting the "transformation from customized products to standardized products, and the extension of standardized products to standardized components." Through the comprehensive establishment of an "assembly-oriented design, product-oriented manufacturing, and modularized installation" model, we are building intelligent factories to double the efficiency of assembly sites and lead the transformation in construction models and the digital and intelligent transformation of the industry.

A "Two-Pronged Approach" of Risk Prevention and Control.  COOEC will give full play to the BOD Audit Committee's role in coordinating internal control, supervision, and risk prevention and control, focus on the development of the Company's risk management and control system, and promote the integration of risk management and control at the organizational and project dimensions. Based on comprehensively optimizing the risk list, we will improve the risk early warning and monitoring system, risk assessment system, and risk handling system at different levels. We will establish a risk management and control mechanism covering all levels, chains, and cycles, achieving coordinated enhancement, driving, and promotion of risk management and control at the organizational and project dimensions, ensuring that risks are identifiable, preventable, and controllable.

Where ambition beckons, no distance is too far. 2024 is a crucial year for COOEC to achieve the goals and tasks in the 14th Five-Year Plan period, and a critical year for building new capabilities for high-quality development. We will closely focus on the goal of building a world-class offshore energy engineering company with Chinese characteristics. Taking the opportunity to implement measures to improve the quality of listed companies under central state-owned enterprises, we will act to fulfill commitments, achieve breakthroughs in reform, make innovative endeavors, and create greater value for shareholders and society.

   
Chairman and Party Secretary
Wang Zhangling