2017 Third Quarter Report of Offshore Oil Engineering Co., Ltd Third Quarter Report of Offshore Oil Engineering Co., Ltd.

Transcription

1 Company code: Company abbr.: COOEC 2017 Third Quarter Report of Offshore Oil Engineering Co., Ltd. 1 / 33

2 Table of Contents I. Important Notices... 3 II. Basic Information of the Company... 3 III. Important Matters... 8 IV. Appendix / 33

3 I. Important Notices 1.1 The Company's Board of Directors, Board of Supervisors and directors, supervisors and senior managers guarantee the contents of the quarterly report are true, accurate and complete, without false records, misleading statements or major omissions, and assume individual and joint legal responsibilities. 1.2 All directors of the Company attend the board meeting to review the quarterly report. 1.3 Jin Xiaojian, the principal of the Company, Chen Yonghong, the principal of accounting and Wang Yajun, the principal of accounting agency (accountant in charge) state: authenticity, accuracy and completeness of financial statements in the quarterly report are secured. 1.4 The Company's third quarter report hasn't been audited. II. Basic Information of the Company 2.1 Major financial data Unit: Yuan Currency: RMB At the end of the report period At end of last year Increase or decrease at end of the Report period compared with the end of last year (%) Total assets 29,592,486, ,811,198, Net asset attributable to shareholders of the listed company 22,963,664, ,155,451, From beginning of the year to end of the report period (January to September) From the beginning of last year to end of the report period last year (January to September) Increase or decrease from the same period of last year (%) Net cash flow from business operation -56,183, ,211,082, From beginning of the year to end of the report period (January to September) From the beginning of last year to end of the report period last year (January to September) Increase or decrease from the same period of last year (%) Operating revenue 6,849,066, ,045,239, Net profit attributable to shareholders of the listed company Net profit attributable to shareholders of the listed company after deducting 302,126, ,117,860, ,360, ,092, / 33

4 nonrecurring loss and profit 2017 Third Quarter Report of Offshore Oil Engineering Co., Ltd. Return on weighted average net assets (%) Basic earnings per share (EPS) (yuan / share) Down 3.56 percentage points Diluted EPS (yuan / share) Items and amount of nonrecurring loss and profit Applicable Inapplicable Items Disposal loss and profit of non-current asset Current amount (July to September) Unit: Yuan Amount from beginning of the year to the end of the report period (January to September) 0-669, Currency: RMB Remarks Government subsidies debited into the current items, except the ones gained continuously in close relation with company normal business operation, in line with nation policies and regulations, and in accordance with some normal quota or quantity Loss and profit from investing or managing assets by others entrusted In addition to effective hedging business relating to normal operating of the Company, variable loss and profit of fair value generated from held transaction financial assets and transaction financial assets as well as investment income gained from disposal of transaction financial assets, trading financial liabilities and 5,351, ,768, Government subsidy accounted into the current profit and loss in first three quarters was RMB 54 million, mainly referring to government financing. 20,740, ,886, Profit from investment entrusted to others in first three quarters was RMB 68 million, mainly earnings from buying bank financial products. 41,496, ,808, in first three quarters was RMB 87 million, mainly resulted from future foreign exchange settlement contract delivery of Qingdao subsidiary. 4 / 33

5 available-for-sale financial assets 2017 Third Quarter Report of Offshore Oil Engineering Co., Ltd. Other non-business income and expense except the respective items above Other loss and profit items conforming to nonrecurring loss and profit definition 1,722, ,892, ,136, ,410, Effect on minority interest (after-tax) -20, , Amount effected by income tax -15,228, ,009, Total 63,198, ,765, Table of total shareholders, and shareholding of top ten shareholders and top ten floating shareholders (or shareholders not subject to restriction on sales) by the end of report period Unit: share Total shareholders 140,373 Holding situation of top 10 shareholders Number of Pledge or Name of shareholders (full name) Amount of holding shares by the end of period Proportion (%) held shares subject to the restrictions on sales freezing conditions State of Quantity shares Nature of shareholder China National Offshore Oil Corporation China Offshore Oil Nanhai West Corporation China Securities Finance Co., Ltd. Central Huijin Asset Management Co., Ltd. Bosera Funds - Agricultural Bank of China - Bosera CSF Financial Assets Management Plan E Fund - Agricultural Bank of China - E Fund CSF Financial Assets Management Plan 2,270,969, None 0 Country 294,215, None 0 State-owned legal-person 101,662, None 0 State-owned legal-person 89,714, None 0 State-owned legal-person 36,704, None 0 Unknown 36,704, None 0 Unknown 5 / 33

6 Dacheng Funds - Agricultural Bank of China - Dacheng CSF Financial Assets Management Plan Harvest Fund - Agricultural Bank of China - Harvest Fund CSF Financial Assets Management Plan Guangdong Development Fund - Agricultural Bank of China - Guangdong Development Fund CSF Financial Assets Management Plan Lombarda China Fund - Agricultural Bank of China - Lombarda China Fund CSF Financial Assets Management Plan China Asset Management - Agricultural Bank of China - China Asset Management CSF Financial Assets Management Plan Yinhua Fund - Agricultural Bank of China - Yinhua Fund CSF Financial Assets Management Plan China Southern Fund - Agricultural Bank of China - China Southern Fund CSF Financial Assets Management Plan ICBCCS Funds - Agricultural Bank of China - ICBCCS CSF Financial Assets Management Plan 36,704, None 0 Unknown 36,704, None 0 Unknown 36,704, None 0 Unknown 36,704, None 0 Unknown 36,704, None 0 Unknown 36,704, None 0 Unknown 36,704, None 0 Unknown 36,704, None 0 Unknown Share Holding of Top Ten Shareholders Not Subject to Restriction on Sales Name of shareholders Amount of held Types and number of shares 6 / 33

7 circulating shares not subject to restriction on sales Type Quantity China National Offshore Oil Corporation China Offshore Oil Nanhai West Corporation China Securities Finance Co., Ltd. Central Huijin Asset Management Co., Ltd. Bosera Funds - Agricultural Bank of China - Bosera CSF Financial Assets Management Plan E Fund - Agricultural Bank of China - E Fund CSF Financial Assets Management Plan Dacheng Funds - Agricultural Bank of China - Dacheng CSF Financial Assets Management Plan Harvest Fund - Agricultural Bank of China - Harvest Fund CSF Financial Assets Management Plan Guangdong Development Fund - Agricultural Bank of China - Guangdong Development Fund CSF Financial Assets Management Plan Lombarda China Fund - Agricultural Bank of China - Lombarda China Fund CSF Financial Assets Management Plan 2,270,969,554 RMB ordinary shares 294,215,908 RMB ordinary shares 101,662,906 RMB ordinary shares 89,714,500 RMB ordinary shares 36,704,400 RMB ordinary shares 36,704,400 RMB ordinary shares 36,704,400 RMB ordinary shares 36,704,400 RMB ordinary shares 36,704,400 RMB ordinary shares 36,704,400 RMB ordinary shares 2,270,969, ,215, ,662,906 89,714,500 36,704,400 36,704,400 36,704,400 36,704,400 36,704,400 36,704,400 7 / 33

8 China Asset Management - Agricultural Bank of China - China Asset Management CSF Financial Assets Management Plan Yinhua Fund - Agricultural Bank of China - Yinhua Fund CSF Financial Assets Management Plan China Southern Fund - Agricultural Bank of China - China Southern Fund CSF Financial Assets Management Plan ICBCCS Funds - Agricultural Bank of China - ICBCCS CSF Financial Assets Management Plan 36,704,400 RMB ordinary shares 36,704,400 RMB ordinary shares 36,704,400 RMB ordinary shares 36,704,400 RMB ordinary shares 36,704,400 36,704,400 36,704,400 36,704,400 Particulars about connected relation or concerted action among the shareholders mentioned above Particulars about preferred shareholders with restored voting rights and the amount of shareholdings Among the top 10 shareholders, CNOOC Nanhai West Corporation is a wholly-owned subsidiary of and connected to CNOOC. It is unknown whether there is association or concerted action among other shareholders. No preferred shares, inapplicable. 2.3 Table of total preferred shareholders, and shareholding of top ten preferred shareholders and top ten preferred shareholders not subject to restriction on sales by the end of report period Applicable Inapplicable III. Important Matters 3.1 Main situation of production and operation in the report period In the third quarter of 2017, international oil price still fluctuated at a low level, global oil and gas exploration and development industry was still not booming with depressed investment, relevant demands of ocean oil and gas engineering industry were not obviously improved and the market still faced fierce competition, so industry operation is still very hard. Facing the continuing harsh situation, the Company continued to firmly grasp such works as cost reducing, market expansion, strict project implementation and safety management, to ensure stable process of 19 onshore construction and offshore installation projects. COOEC has gained business income of RMB billion in the first three quarters, including the net profit of RMB 302 million belonging to shareholders of the listed company. COOEC has gained business income of RMB billion in the third quarters, including the net profit of RMB 102 million belonging to shareholders of the listed company. 8 / 33

9 (1) Projects making steady progress as planned In the third quarter, the Company operated 15 offshore oil & gas field exploitation projects and 4 modular onshore construction projects in total. Russia Yamal project, Wenchang capacity release project, Ningbo 19-6 extended test project were completed. It has completed onshore construction of 1 jacket, and implemented offshore installation of 1 module and laying of 7.5 km subsea pipelines. The Company won "2017 PMI (China) annual project management prize", marking international recognition of the Company s project management level. Large-scale projects including Penglai, Dongfang, Bozhong and Huizhou stepped into peak period of construction. After completion of Yamal project, other domestic projects such as Bozhong, Dongfang and Penglai projects are commenced in Qingdao Yard successively, module construction of Huizhou 32-5/33-1 project is started in Zhuhai Yard, 10,000-t module construction of Bozhong 34-9 Project is began and the 8,000-t jacket for Penglai 19-3 Oilfield zone 1/3/8/9 overall adjustment project is also under construction. Vertical laying of flexible pipe won the first battle. Underwater working team made full use of the favorable climate conditions during the typhoon period of the South China Sea to smoothly finished the vertical laying of 6 flexible pipe of 5 km for development project of Wenchang 9-2/9-3/10-3 gas fields with proficient operation process, which was the first show of China s first 325 t deepwater vertical flexible pipe laying system newly purchased by the Company, marking the Company s mastering of deepwater vertical pipe-laying ability. Subsea pipeline laying of Dongfang 13-2 project was began, marking the formal starting of the largest subsea pipeline project of Subsea pipeline laying of Dongfang 13-2 project was launched in early September, including laying work of 2 single-layer 18 stainless composite pipelines and gas transmission lines, 1 gas transmission line of 24 and 1 oil transmission line of 6 with accumulated laying mileage of km which covers 70% of total workload of subsea pipeline laying in this year. Pipe-laying team of the Company overcome the frequent occurring period of typhoon and monsoon season as well as such difficulties as large diameter of subsea pipeline, large wall thickness and thick cement coating, deep operation position and high welding requirement, to stably push forward the project. Progress of key projects in the third quarter: No. Project name: Actual progress 1 Nigeria Dangote project 3% 2 Saudi Arabia CRPO3648 offshore transport installation project 7% 3 Qatar NFA EPCI project 17% 4 Huizhou 32-5 project 18% 5 Penglai 19-3 oilfield zone 1/3/8/9 overall adjustment project 23% 6 Dongfang 13-2 project 26% 7 Central Bohai Bay 34-9 oilfield development project 34% 8 Brunei Hengyi single-point and subsea pipeline project 39% 9 Tianjin substitutionary project of 160,000 m 2 tanks 68% 10 Brazil FPSO module project 78% 11 Wenchang 9-2/9-3/10-3 gas fields development project 82% 12 Later project of Liwan 3-1 Phase I 88% 13 Royal Dutch Shell SDA project 98% 14 Russia Yamal Project 100% 280,000 man-hours is devoted in design. In terms of construction, processing of 32,200 t of structure steels is completed. 2,100 ship-days is devoted to offshore operation, such as installation. 9 / 33

10 (2) Vigorously exploiting domestic and overseas markets The Company achieved a contracting amount of RMB 820 million yuan in the report period, including RMB 744 million from domestic market and RMB 76 million from foreign market. An accumulative contracting amount of RMB billion was achieved in the first three quarters, showing a growth compared with RMB 3.83 billion in the same period of last year. In terms of international market, the Company continued to enhance the business contact with energy companies in Southeast Asia, the Middle East and Brazil, and closely tracked relevant projects of Indonesia, the North Sea, Qatar, Saudi Arabia and Nigeria. In the report period, the Company signed the contract for Chevron Thailand platform demolition project, which was China's first demolition project overseas and also the first offshore demolition project in Gulf of Thailand. Through continuous effort, the Company won the qualification for contracting large-scale offshore project of Saudi Aramco, which was of great significance to expanding business in the Middle East market. Besides, the Company held the 5th International Forum for Deepwater and Modular Construction Technology in Shenzhen jointly with Fluor, in which totally over 400 representatives from famous petroleum companies, ocean engineering enterprises and financial institutions both in and abroad participated. With the help of this platform, the Company vigorously promoted its modular construction and EPCI ability, further enhancing the Company s influence in industry and expanding the market development channel. In terms of domestic market developing, the Company continued keeping communication with clients and did a good job in preparation of market development. Lvda Project of the Bohai Sea and Liuhua Project of the South China Sea were going to enter startup stage. (3) Vigorously promoting new technology, new material and new process, as well as standardization, simplification and domestication, continuously promoting quality improvement and efficiency increase, and further enhancing cost control The Company gives play to cost reduction by science & technology, vigorously promotes new technology, new material and new process, as well as standardization, simplification and domestication in design link, and tries to reduce overseas procurement cost and cycle by developing and using new technology, material and process and applying domestic equipment, to optimize the design scheme, thus more favorable to reducing raw material or saving offshore working time. Meanwhile, it gives active play to the leading role of design business in EPCI business chain, tries to authorize affiliated design company for EPCI management to improve project management mode, so as to push forward integration of scientific research and production, give maximum play to leading role of design and explore the cost reduction potential of design link. The Company will continue to explore the market with full strength as always, strengthen quality and efficiency improvement, and do a good job in safety management, to guarantee stable project operation and strive to finish operation target of the year. 3.2 Major changes and their causes of the Company's major accounting statement items and financial indicators Applicable Inapplicable (1) Analysis of profit statement Unit: Yuan Currency: RMB Item January to September of 2017 January to September of 2016 Change ratio (%) Operating revenue 6,849,066, ,045,239, / 33

11 Operating cost 5,651,744, ,804,586, Taxes and surcharges 97,379, ,617, Financial cost 281,873, ,706, Inapplicable Income from changes in fair value 184,809, ,956, Investment income -131,677, ,289, Inapplicable Non-business income 79,813, ,448,117, Income tax expense 91,789, ,586, Net profit belonging to shareholders of the parent company 302,126, ,117,860, Net of tax of other composite incomes -51,263, ,813, Inapplicable Cause analysis: 1 Operating revenue Operating revenue was RMB billion in the first three quarters, with a year-on-year decrease of RMB billion, viz %. It is mainly because the overall work quantities decreased to certain extent, among which finished steel processing quantity of onshore construction decreased by 29% compared with that of last year, and operation ship-day of offshore installation decreased by 35%. 2 Operating cost Operating cost was RMB billion in the first three quarters, with a year-on-year decrease of RMB billion, viz %. t is mainly because that on the one hand, work quantity decline pulls down production cost; on the other hand, the Company makes efforts to control and decrease cost, and variable cost was RMB billion, with an year-on-year decrease of 28.17%. 3 Net profits attributable to shareholders of the parent company Net profits attributable to shareholders of the parent company were RMB 302 million, with a year-on-year decrease of 72.97%. It is mainly because that on the one hand, the overall work and price level declined under the influence of depressing industry trend; on the other hand, Zhuhai subsidiary contributed relevant assets of Zhuhai Site totaling USD 429 million to COOEC-Flour Heavy Industries Co., Ltd. and sold part of assets in the same period of last year, which brought appreciation in assets value and carry-over of deferred income, resulting in net profit increase of RMB 452 million, but no relevant income was gained in the first three quarters. 4 Taxes and surcharges Taxes and surcharges were RMB 97 million, with a year-on-year increase of RMB 38 million, viz %. It is because that on the one hand, based on the influence of replacing business tax with VAT, the related taxes accounted into management expenses at the same period of last year were accounted into Taxes and Surcharges as specified in the first three quarters of this year, with the amount of RMB 25 million. On the other hand, Yamal project performed the export and the declaration of tax exemption, offset and reimbursement at the current period, making an increase of tax surcharges. 5 Financial expense Financial expense was RMB 282 million, with a year-on-year increase of RMB 384 million. The increase was mainly due to the exchange rate fluctuations and the exchange net loss of RMB 255 million in the first three quarters of this year. 6 Income from change of fair value, investment income and non-business income Income from change of fair value was RMB 185 million, with a year-on-year increase of RMB 145 million, viz %, mainly resulting from forward exchange settlement and sale contract of Yamal project of Qingdao subsidiary. On the one hand, exchange settlement of Yamal project during January and September was USD million with finished foreign exchange settlement confirmed as investment income, and former confirmed P/L of changes in fair value rolled out; on the other hand, floating profit and loss appeared due to the difference between exchange settlement rate of unsettled parts in the late third quarter and forward exchange settlement rate at the beginning of this year, hence leading to profit of fair value. 11 / 33

12 Investment income was RMB -132 million, with a year-on-year increase of RMB 650 million. This was mainly due to (1) RMB 68 million financing income from bank financial products; (2) RMB -98 million of forward foreign exchange settlement income of Qingdao Company; (3) dividend of RMB million from COSL; (4) current losses of the Company s joint venture - COOEC-Flour Heavy Industries Co., Ltd. The Zhuhai subsidiary recognized the investment profit of RMB -135 million based on the equity method, while the downstream transactions between Zhuhai subsidiary and COOEC-Flour Heavy Industries Co., Ltd. failed to realize gains or losses of internal transaction of RMB 27 million. In the same period of last year, Zhuhai subsidiary invested and sold assets to COOEC-Flour Heavy Industries Co., Ltd. due to the unrealized confirmed investment income of unfulfilled internal transaction profits and losses of RMB -733 million. The causes above made a year-on-year increase of current investment income in the first three quarters of this year. Non-business income was RMB 80 million, with a year-on-year decrease of RMB billion. This was mainly due to the Zhuhai subsidiary invested and sold assets to COOEC-Flour Heavy Industries Co., Ltd. in the same period of last year. Non-business income resulting from assets accretion and deferred income was RMB billion, leading to a year-on-year decrease of non-business income. 7 Income tax expense Income tax expense was RMB 92 million, with a year-on-year decrease of 64.91%, mainly due to the profit decline of the period. 8 Net of tax of other composite incomes Net of tax of other composite incomes was RMB -51 million, with a year-on-year decrease of RMB 34 million. It was mainly because that on the one hand, the Company changed the holding-shares of Lanpec Technologies Limited for stock price change, and its market change value was bigger than that of the same period of last year; on the other hand, the change value of translation difference of currency statement in the first three quarters of this year was bigger than that of the same period of last year. (2) Asset liabilities analysis Unit: Yuan Currency: RMB Assets item September 30, 2017 Saturday, December 31, 2016 Change ratio (%) Advance payment 404,771, ,711, Other receivables 172,744, ,927, Inventory 2,408,049, ,611,161, Other current assets 2,433,719, ,679,958, Construction in progress 402,653, ,630, Item of liabilities and owners equity Financial liabilities measured by fair value with their changes accounted to current profits and losses September 30, 2017 Saturday, December 31, 2016 Change ratio (%) 27,493, ,302, Advance receivings 393,831, , Employee salary payable 392,314, ,991, Interest payable 62,123, ,193, Cause analysis: 1 Assets item Advance payment was RMB 405 million, with an increase of RMB 240 million, viz %, compared with the end of last year, mainly due to the advance payment for purchasing raw materials for engineering projects increased. 12 / 33

13 Other receivables is RMB 173 million, showing an increase of RMB 61 million, viz %, compared with the end of last year, mainly due to the increase of other receivables arising from the increased export drawback receivables. The inventory was RMB billion, showing an increase of RMB 797 million, viz %, compared with the end of last year, mainly because the unsettled completed work of this year increased by RMB 701 million than the end of last year. Other current asset was RMB billion, showing a decrease of RMB billion, viz %, compared with the end of last year, mainly due to the decrease of bank financial products for RMB 1.4 billion by the Company and Zhuhai subsidiary. Projects under construction amounted to RMB 403 million, increased by RMB 139 million from the end of last year, viz %, which was mainly due to the investment on constructing the pipe trenching DP working vessel. 2 Liabilities item Financial liability calculated based on fair value with their change included in current P/L was RMB 27 million, showing a decrease of RMB 185 million, viz %, compared with the end of last year, mainly due to change in fair value of long-term exchange settlement and sale contract signed on Yamal Project between Qingdao subsidiary and Standard Chartered Bank. The advance payment was RMB 394 million, increased by RMB 394 million from the end of last year, which was mainly due to settlement with the client along with development of the project. Employee salary payable was RMB 392 million yuan, increased by RMB 110 million yuan, viz %, compared with the end of last year, which was mainly because the comprehensive impact of the distribution of employees salary and accrual. Interest payable was RMB 62 million, increased by RMB 52 million, viz %, from the end of last year, which was mainly because bond interests of the RMB 1.2 billion corporate bond of the Company were paid annually, and that accrued in the first three quarters was RMB 52 million. (3) Cash flow analysis Unit: Yuan Currency: RMB Items of cash flow statement Net Cash Flow from Business Operation Net Cash Flow from Investment Activities January to September of 2017 January to September of / 33 Change ratio (%) -56,183, ,211,082, ,940, ,849, Inapplicable Net Cash Flow from -352,135, ,105,338, Inapplicable Financing Activities The net cash flow from operating was RMB -56 million, representing a year-on-year decrease of RMB billion, which was mainly because that the inflow and outflow of cash from operating decreased with the reduction of completed work amount of the Company. Wherein, the inflow of cash from operating in current year was reduced by RMB billion on a year-on-year basis, and the outflow of cash from operating in current year showed a year-on-year decrease of RMB billion. The net cash flow from investment was RMB 948 million, representing a year-on-year increase of RMB 960 million, which was mainly because that on one hand, the recovered net investment was RMB 1.4 billion after maturity of bank financial products but the increased net investment expenditure in bank financial products in first half was RMB 1.2 billion; on the other hand, Zhuhai subsidiary injected capital to COOEC-Flour Heavy Industries Co., Ltd. in first half and sold the fixed assets and intangible assets, resulting in cash inflow of RMB 1.59 billion. The two offset each other, so the net cash flow from investment in the first three quarters of this year increased. Net cash flow generated from financing was RMB -352 million, showing a year-on-year decrease of RMB 753 million, which was mainly due to the annul profit distribution of 2016 the Company implemented, totally RMB 442 million cash dividends distributed, and the entrusted loans for RMB 90 million form the China National Offshore Oil Corporation (CNOOC); while the cash dividends distributed in same period of last year was RMB billion, as a result, the net cash flow of the first three quarters in this year shows a year-on-year decrease.

14 3.3 Analysis and description of the progress of major matters and their impact and solutions Applicable Inapplicable 3.4 Overdue unfulfilled commitments in the report period Applicable Inapplicable 3.5 Warning and cause description for expected loss or major year-on-year change of cumulative net profit from the beginning of the year to the end of next report period Applicable Inapplicable Company name Legal representative Offshore Oil Engineering Co., Ltd. Jin Xiaojian Date Wednesday, October 25, / 33

15 IV. Appendix 4.1. Financial Statements Consolidated Balance Sheet September 30, 2017 Prepared by: Offshore Oil Engineering Co., Ltd. Unit: Yuan Currency: RMB Audit type: Unaudited Items Ending balance Balance at the beginning of the year Current assets: Currency capital 7,038,691, ,706,031, Settlement reserves Lending funds Financial assets measured at their fair values and with the variation included in the current profits and losses Derivative financial assets Notes receivable Accounts receivable 2,031,184, ,992,778, Advance payment 404,771, ,711, Premiums receivable Reinsurance account receivable Provision of cession receivable Interest receivable 4,754, ,891, Dividend receivable Other receivables 172,744, ,927, Redemptory monetary capital for sale Inventory 2,408,049, ,611,161, Assets divided into held-for-sale Non-current assets due within one year Other current assets 2,433,719, ,679,958, Total current assets 14,493,916, ,286,460, Non-current assets: Issued loans and advances Financial assets available for sale 264,542, ,277, Held-to-maturity investment 15 / 33

16 Long-term receivables Long-term equity investment 1,938,997, ,046,600, Investment real estate Fixed assets 11,023,307, ,484,633, Construction in progress 402,653, ,630, Engineering materials Disposal of fixed assets 330, Productive biological assets Oil and gas assets Intangible assets 808,101, ,170, Development expenditure Business reputation 13,075, ,075, Long-term deferred expense 67,778, ,623, Deferred income tax assets 579,783, ,726, Other non-current assets Total non-current assets 15,098,569, ,524,737, Total assets 29,592,486, ,811,198, Current liabilities: Short-term loan Loans from the Central Bank Deposits from customers and interbank Funds borrowed Financial liabilities measured by fair value with their changes accounted to current profits and losses 27,493, ,302, Derivative financial Liabilities Notes payable 2,268, Accounts payable 3,715,300, ,065,799, Advance receivings 393,831, , Financial assets sold for repurchase Handling charges and commission payable Employee salary payable 392,314, ,991, Taxes payable 367,556, ,301, Interest payable 62,123, ,193, / 33

17 Dividends payable Other payables 123,257, ,296, Dividend payable for reinsurance Insurance contract reserves Receivings from vicariously traded securities Receivings from vicariously sold securities Debts divided into held-for-sale Non-current liability due within one year 1,199,823, ,198,558, Other current liabilities 5,610, ,266, Total current liabilities 6,289,581, ,391,798, Non-current liabilities: Long-term loan 90,000, Bond payables Wherein: preferred shares Perpetual bond Long-term payables Employee salary payable for long-term Special payables 28,662, ,111, Estimated liabilities Deferred income 179,914, ,426, Deferred income tax liabilities 30,443, ,432, Other non-current liabilities Total non-current liabilities 329,020, ,969, Total liabilities 6,618,601, ,642,768, Owner s equity Capital stock 4,421,354, ,421,354, Other equity instruments Wherein: preferred shares Perpetual bond Capital reserves 4,247,940, ,247,940, Minus: treasury stock Other composite incomes 133,333, ,399, Special reserve 512,463, ,551, / 33

18 Surplus reserves 1,364,424, ,364,424, Generic risk reserve Undistributed profit 12,284,147, ,421,780, Total owners' equity attributable to the parent company 22,963,664, ,155,451, Minority stockholders' interest 10,221, ,978, Total owners' equity 22,973,885, ,168,429, Total debts and owners' equity 29,592,486, ,811,198, Legal representative: Jin Xiaojian Person in charge of accounting affairs: Chen Yonghong Person in charge of accounting department: Wang Yajun 18 / 33

19 Balance Sheet of Parent Company September 30, 2017 Prepared by: Offshore Oil Engineering Co., Ltd. Unit: Yuan Currency: RMB Audit type: Unaudited Items Ending balance Balance at the beginning of the year Current assets: Currency capital 1,479,105, ,829,859, Financial assets measured at their fair values and with the variation included in the current profits and losses Derivative financial assets Notes receivable Accounts receivable 1,809,455, ,195,387, Advance payment 169,532, ,083, Interest receivable 1,251, Dividend receivable 1,485,000, Other receivables 777,121, ,183, Inventory 1,924,765, ,174,595, Assets divided into held-for-sale Non-current assets due within one year Other current assets 1,147,180, ,404,071, Total current assets 8,792,161, ,578,431, Non-current assets: Financial assets available for sale 264,542, ,277, Held-to-maturity investment Long-term receivables Long-term equity investment 9,075,974, ,985,974, Investment real estate Fixed assets 5,432,207, ,744,802, Construction in progress 274,207, ,113, Engineering materials Disposal of fixed assets 330, Productive biological assets Oil and gas assets 19 / 33

20 Intangible assets 32,669, ,727, Development expenditure Business reputation Long-term deferred expense 65,635, ,025, Deferred income tax assets 364,851, ,761, Other non-current assets Total non-current assets 15,510,418, ,475,682, Total assets 24,302,579, ,054,114, Current liabilities: Short-term loan Financial liabilities measured by fair value with their changes accounted to current profits and losses Derivative financial Liabilities Notes payable 2,268, Accounts payable 4,108,733, ,121,861, Advance receivings 258,472, , Employee salary payable 276,798, ,820, Taxes payable 36,142, ,920, Interest payable 62,123, ,193, Dividends payable Other payables 123,220, ,908, Debts divided into held-for-sale Non-current liability due within one year 1,199,823, ,198,558, Other current liabilities 4,033, ,033, Total current liabilities 6,071,616, ,722,306, Non-current liabilities: Long-term loan 90,000, Bond payables Wherein: preferred shares Perpetual bond Long-term payables Employee salary payable for long-term Special payables 28,662, ,111, / 33

21 Estimated liabilities Deferred income 87,487, ,654, Deferred income tax liabilities 25,227, ,109, Other non-current liabilities Total non-current liabilities 231,377, ,875, Total liabilities 6,302,993, ,856,181, Owner s equity: Capital stock 4,421,354, ,421,354, Other equity instruments Wherein: preferred shares Perpetual bond Capital reserves 4,245,387, ,245,387, Minus: treasury stock Other composite incomes 117,392, ,577, Special reserve 485,910, ,862, Surplus reserves 1,354,782, ,354,782, Undistributed profit 7,374,758, ,547,966, Total owners' equity 17,999,585, ,197,932, Total debts and owners' equity 24,302,579, ,054,114, Legal representative: Jin Xiaojian Person in charge of accounting affairs: Chen Yonghong Person in charge of accounting department: Wang Yajun 21 / 33

22 Consolidated Profit Statement January to September, 2017 Prepared by Offshore Oil Engineering Co., Ltd. Unit: Yuan Currency: RMB Audit type: Unaudited Amount from Amount from Items Current amount (July to September) Amount of previous period (July to September) beginning of the year to the end of the report period (January to September) beginning of last year to the end of the report period (January to September) I. Gross revenue 2,670,729, ,949,598, ,849,066, ,045,239, Wherein: revenue 2,670,729, ,949,598, ,849,066, ,045,239, Interest income Earned premium Handling charges and commission income II. Gross operating cost 2,592,949, ,711,564, ,589,833, ,367,716, Wherein: operating costs 2,264,569, ,489,469, ,651,744, ,804,586, Interest expenses Handling charges and commission expense Surrender value Net amount of compensation payout Net amount of reserves for reinsurance contract Policyholder dividends Expenses for reinsurance accepted Taxes and surcharges 46,144, ,183, ,379, ,617, Sales cost 3,441, ,446, ,929, ,055, Management cost 148,317, ,763, ,644, ,247, Financial cost 130,455, ,299, ,873, ,706, Assets impairment loss 20, ,261, ,083, Plus: income from changes in fair value 66,119, ,196, ,809, ,956, / 33

23 (loss is marked by - ) 2017 Third Quarter Report of Offshore Oil Engineering Co., Ltd. Investment income (loss is marked by - ) Wherein: investment income from Associates and Joint Venture -46,686, ,363, ,677, ,289, ,375, ,944, ,602, ,552, Exchange gain (loss is marked by - ) Other incomes III. Operation profit (loss is marked by - ) Plus: non-business income Wherein: disposal income on non-current liability Less: non-operating expenses Wherein: loss from disposal of non-current assets IV. Total profit (total loss is marked by - ) Less: income tax expense V. Net profits (net loss is marked by - ) Net profit attributable to holding company Profit and loss of minority stockholders P/L from continuous operation P/L from discontinuing operation VI. Net of tax of other composite incomes Net of tax for other comprehensive 97,213, ,867, ,365, ,810, ,184, ,533, ,813, ,448,117, ,634, ,811, , ,047, , ,617, ,046, , ,559, ,287, ,354, ,356, ,375,690, ,183, ,889, ,789, ,586, ,103, ,464, ,567, ,114,104, ,276, ,668, ,126, ,117,860, , , ,559, ,755, ,323, ,520, ,787, ,114,160, , , , , ,349, ,713, ,263, ,813, ,257, ,699, ,066, ,931, / 33

24 incomes (i) Not to be reclassified into other comprehensive income of profit and loss 1. Re-compute the set net debt of benefits plan or change in net assets 2. Shares cannot be reclassified into other comprehensive income of profit and loss under the equity law (ii) To be reclassified into other comprehensive income of profit and loss -8,257, ,699, ,066, ,931, Shares to be reclassified into other comprehensive income of profit and loss under the equity law 2. Change of fair value recognized in profits or losses of available-for-sale financial assets -1,963, ,389, ,724, ,827, Held-to-maturity financial investment reclassified as available for sale investments profit and loss account 4. The effective portion of hedging profits and losses for cash flow 5. Translation differences of foreign currency financial statements -6,293, ,310, ,341, ,895, Others The net of tax for other comprehensive -91, , , , / 33

25 incomes attributable to minority stockholders 2017 Third Quarter Report of Offshore Oil Engineering Co., Ltd. VII. Total consolidated Income Total consolidated income attributable to holding company Total consolidated income attributable to minority shareholder 93,754, ,178, ,303, ,097,290, ,018, ,368, ,060, ,100,928, , , ,757, ,637, VIII. Earnings per share: (i) Basic earnings per share (yuan/share) (ii) Diluted earnings per share (yuan/share) Consolidation of enterprises under same control doesn t exist in current period Legal representative: Jin Xiaojian Person in charge of accounting affairs: Chen Yonghong Person in charge of accounting department: Wang Yajun 25 / 33

26 Profit Statement of Parent Company January to September, 2017 Prepared by Offshore Oil Engineering Co., Ltd. Unit: Yuan Currency: RMB Audit type: Unaudited Amount from Amount from Items Current amount (July to September) Amount of previous period (July to September) beginning of the year to the end of the report period (January to beginning of last year to the end of the report period (January to September) September) I. Revenue 1,861,395, ,228,200, ,685,331, ,196,502, Less: operating costs 2,024,480, ,191,530, ,139,501, ,987,686, Taxes and surcharges 888, ,611, ,237, ,987, Sales cost 213, , , ,058, Management cost 106,646, ,127, ,818, ,637, Financial cost 39,153, , ,527, ,590, Assets impairment loss 1,240, ,035, Plus: income from changes in fair value (loss is marked by - ) Investment income (loss is marked by - ) 5,798, ,532, ,016,332, ,286, Wherein: investment income from Associates and Joint Venture Other incomes II. Operation profit (loss is marked by - ) Plus: non-business income -304,189, ,388, ,124,778, ,045, ,221, , ,527, ,927, Wherein: disposal income on non-current liability Less: non-operating expenses Wherein: loss from disposal of non-current assets 4,371, , ,207, ,371, , ,200, / 33

27 III. Total profit (total loss is marked by - ) Less: income tax expense IV. Net profits (net loss is marked by - ) P/L from continuous operation -298,967, ,654, ,139,201, ,765, ,222, ,335, ,724, ,833, ,745, ,319, ,268,926, ,598, ,745, ,319, ,268,926, ,598, P/L from discontinuing operation V. Net of tax of other composite incomes 2,410, ,075, ,185, ,352, (i) Not to be reclassified into other comprehensive income of profit and loss 1. Re-compute the set net debt of benefits plan or change in net assets 2. Shares cannot be reclassified into other comprehensive income of profit and loss under the equity law (ii) To be reclassified into other comprehensive income of profit and loss 2,410, ,075, ,185, ,352, Shares to be reclassified into other comprehensive income of profit and loss under the equity law 2. Change of fair value recognized in profits or losses of available-for-sale financial assets -1,963, ,389, ,724, ,827, Held-to-maturity financial investment reclassified as available 27 / 33

28 for sale investments profit and loss account 4. The effective portion of hedging profits and losses for cash flow 5. Translation differences of foreign currency financial statements 4,373, ,314, ,539, ,525, Others VI. Total consolidated income -251,334, ,244, ,238,741, ,245, VII. Earnings per share (i) Basic earnings per share (yuan/share) (ii) Diluted earnings per share (yuan/share) Legal representative: Jin Xiaojian Person in charge of accounting affairs: Chen Yonghong Person in charge of accounting department: Wang Yajun 28 / 33

29 Consolidated Cash Flow Statement January to September, 2017 Prepared by Offshore Oil Engineering Co., Ltd. Unit: Yuan Currency: RMB Audit type: Unaudited Items I. Cash Flows from Operating Activities: Amount from beginning of the year to the end of the report period (January to September) Amount from beginning of last year to the end of the report period (January to September) Cash received from sale of goods or provisions of services 6,568,010, ,353,549, Net increases from customer's deposit and deposit from other banks Net increases from borrowing from the Central Bank Net increases from borrowing funds to other financial institutions Cash received form premium of original insurance contract Net cash received from reinsurance business Net increase from policyholder deposit and investment Disposal of net increase of financial assets measured at their fair values and with the variation included in the current profits and losses Interests, handling charges and commission received Net increases received from borrowing funds Net increases received from counter purchase of business funds Refund of tax and fare received 280,678, ,762, Other cash received relating to operating Sub-total of cash inflows from operating 244,218, ,187, ,092,907, ,973,499, Cash paid for goods and services 5,156,580, ,439,456, / 33

30 Net increases from customer lending and advances Net increases from deposits in the Central Bank and deposits of the same trade or business Cash paid for claim payments of original insurance contract Cash paid for the interests, handling charges and commission Cash paid for policy dividend Cash paid to and on behalf of employees 1,292,692, ,314,088, Payments for various taxes 514,056, ,114, Other cash paid relating to operating Sub-total of cash outflows from operating 185,760, ,757, ,149,090, ,762,416, Net Cash Flow from Business Operation -56,183, ,211,082, II. Cash Flows from Investment Activities: Cash received from disposal of investments 8,004,028, ,879,319, Cash received from returns on investments 91,233, ,531, Net cash received from disposal of fixed assets, intangible assets and other long-term assets ,590,186, Net cash received from disposing subsidiaries and other business units Other cashes received relating to investment Sub-total of cash inflows from investment Cash paid to acquire fixed assets, intangible assets and other long-term assets 8,095,262, ,543,037, ,312, ,943, Cash paid to acquire investments 6,600,000, ,063,955, Net increase in hypothecated loan Net cash used for acquiring subsidiaries and other business units Other cashes paid relating to investment 98,009, ,987, / 33

31 Sub-total of cash outflows from investment 7,147,321, ,554,887, Net Cash Flow from Investment Activities 947,940, ,849, III. Cash Flows from Financing Activities: Cash received from absorbing investment Wherein: cash received from increase in minority interest by subsidiary Cash received from borrowings 90,000, Cash received from issuing debentures Other cash received relating to financing Sub-total of cash inflows from financing 90,000, Cash paid for settling debts Cash paid for distribution of dividends, profits and repayment of interests 442,135, ,105,338, Wherein: cash paid for distribution of dividends or profit or reimbursing interests by subsidiary Other cashes paid relating to financing Sub-total of cash outflows from financing 442,135, ,105,338, Net Cash Flow from Financing Activities -352,135, ,105,338, IV. Effect of Exchange Rate Fluctuation on Cash and Cash Equivalents V. Net Increase in Cash and Cash Equivalents Plus: balance of cash and cash equivalents at the beginning of the period -210,365, ,873, ,256, ,173,767, ,628,261, ,809,364, VI. Balance of Cash and Cash Equivalents at the End of the Period 6,957,518, ,983,131, Legal representative: Jin Xiaojian Person in charge of accounting affairs: Chen Yonghong Person in charge of accounting department: Wang Yajun 31 / 33

32 Cash Flow Statement of Parent Company January to September, 2017 Prepared by Offshore Oil Engineering Co., Ltd. Unit: Yuan Currency: RMB Audit type: Unaudited Items I. Cash Flows from Operating Activities: Amount from beginning of the year to the end of the report period (January to September) Amount from beginning of last year to the end of the report period (January to September) Cash received from sale of goods or provisions of services 3,809,083, ,318,552, Refund of tax and fare received 100,311, ,037, Other cash received relating to operating Sub-total of cash inflows from operating 119,803, ,783, ,029,198, ,578,373, Cash paid for goods and services 3,810,477, ,761,444, Cash paid to and on behalf of employees 937,308, ,424, Payments for various taxes 22,473, ,455, Other cash paid relating to operating Sub-total of cash outflows from operating 39,297, ,326, ,809,556, ,176,649, Net Cash Flow from Business Operation -780,358, ,401,723, II. Cash Flows from Investment Activities: Cash received from disposal of investments 3,535,119, ,809,499, Cash received from returns on investments 532,863, ,916, Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposing subsidiaries and other business units Other cashes received relating to investment Sub-total of cash inflows from investment 4,067,983, ,038,416, Cash paid to acquire fixed assets, intangible 173,521, ,415, / 33