Extracted From Annual Report 2022

On behalf of the Board of Directors (“Board”), I am pleased to present the Annual Report of CH Offshore Ltd. (“CHO” or the “Company”) and its subsidiaries (the “Group”) for the financial year ended 31 December 2022 (“FY2022”).

After two years of being challenged by the ever-changing nature of the Covid-19 pandemic, 2022 was a year in which most of the world emerged to recover and refocus on the future ahead. Unfortunately, the Ukraine – Russia war reared its ugly head and, together with the restrictive zero- Covid policy in China, took centre-stage, dampening global economic growth. The geopolitical tensions led to a sharp increase in energy prices (with Brent crude oil reaching

$127.98 per barrel in March 2022) though prices have seen a steady down trend since the peak to end the year only about 9% higher than the start of the year. Persistent high inflation has resulted in an increase in the cost of goods while the rapid increase in interest rates to address inflation has driven up cost of funding. The war has highlighted the continuing importance of the oil and gas sector despite the progress made in the renewables sector which is still in a nascent stage. The discussion on energy diversification and transition has been accelerated to address environmental concerns.

Although the oil and gas market saw a pick-up in activity as oil prices rose, day rates and contractual terms are still not attractive enough to justify new builds in the offshore space¹ with perhaps new build activity picking up in 2024 as the supply and demand gap closes. There also remains an uncertainty over the choice of alternative fuel for the maritime sector including the offshore marine space with government policies and need for infrastructure development driving a large part of the discussion.

In December 2021, the Singapore Exchange announced its roadmap for issuers to provide climate-related disclosures based on recommendations of the Task Force on Climate related Financial Disclosures amongst other requirements including sustainability training for directors and the formalisation of board diversity policies. Accordingly, we have expanded our Sustainability Report to include under Energy and Emissions, our Scopes 2 and 3 in addition to our Scope 1 which we have been disclosing over the last few years. We have also prepared our Sustainability Report with reference to the Global Reporting Initiative

11 Oil and Gas sector standard and are committed to support Singapore’s Green Plan 2030 and will be improving our climate-related disclosure as our Sustainability Report matures.

FINANCIAL PERFORMANCE REVIEW

The Group incurred a net loss of US$3.33 million in FY2022 as compared to a net loss of US$4.95 million in FY2021. The lower losses in FY2022 were attributed to higher gross profits but were offset by provisions for expected credit losses.

Group revenue saw an increase of 19.8% from US$15.52 million in FY2021 to US$18.60 million in FY2022. This increase was due to an increase in utilisation rate of 74% for FY2022 as compared to 59% for FY2021 from CHO- owned vessels and higher revenue generated from third- party vessels.

The Group also recorded a 3.2% decrease in administrative expenses to US$2.88 million for FY2022 compared to US$2.97 million for FY2021 due to lower manpower costs and legal fees.

The Group’s shareholders’ equity stands at US$48.51 million as at 31 December 2022, a decrease from US$51.87 million as at 31 December 2021 after accounting for the loss of US$3.33 million incurred in FY2022.

Cash and cash equivalents increased from US$6.93 million as at 31 December 2021 to US$7.32 million as at 31 December 2022 arising from operating activities, repayment of loan from associate but offset by repayment of bank loans.

OUTLOOK

The global economy is expected to decelerate in 2023 reflecting synchronous policy tightening to address persistent high inflation and continued disruptions from the Ukraine-Russia war. However, a soft-landing is expected with growth bottoming out and inflation abating towards the end of 2022. Fears of recession are still present though China’s sudden re-opening paves the way for rapid pick-up in activity².

Although oil majors are likely to have entered 2023 with their healthiest balance sheet yet, capital investments by oil majors remain undecided due to economic uncertainty with recession potentially looming, volatile energy prices and uncertain demand growth.³ In addition, oil majors have also focused on shoring up their balance sheet by repaying debt and paying dividends to shareholders while downstream players have not had the same opportunities as oil majors to enjoy the higher oil prices.

Alternative fuel remains an area of focus for the maritime sector with the Maritime and Port Authority of Singapore putting into place plans and infrastructure for ammonia and methanol. However, there is still some way to go for alternative fuel technologies, availability of alternative fuels, safety policies and procedures and storage capabilities and infrastructure to develop and mature. In a global industry, countries with ports have to work closely to provide long term plans for companies in this sector to confidently adopt green strategies for vessel upgrades and new vessels.

Similar to FY2022, FY2023 is a mixed pot of opportunities and risks: increased capital investments, higher demand and more balanced supply and demand on one hand and war, recession and higher costs on the other hand. To remain agile to seize opportunities, we continue to manage our operations in a cost-effective way and sharpen the use of our capital while focusing on building on our strengths and our core capabilities for long-term growth.

SUSTAINABILITY

We embrace the energy transition and the commitment required to deliver on the promises made to achieve a

1.5 degree Celsius scenario. As global demand for green energy grows and the regulatory environment becomes more challenging in this respect, we have to continually identify opportunities within the low carbon sector to expand our revenue base. We are committed to identifying ways to reduce our carbon footprint while also increasing our productivity and efficiency. We have put in place some sustainability initiatives involving education and training in relation to the environment and governance amongst others, green exercises including recycling and look forward to developing and growing such initiatives through 2023.

Our PRIME core values (Passion, Respect, Integrity and Honesty, Monetary Discipline and Excellence) together with our “Do No Harm” mindset form the backbone of the CHO way and are integrated into our Group policies and procedures. The CHO way ensures that we do no harm to ourselves and to those involved and are affected by our operations, to the environment in which we operate and to our relationships with clients, subcontractors, customers, shareholders and other stakeholders.

As a service provider, we are reliant on our people who are our most critical assets and therefore we place strong emphasis on fair employment, training and development and health and safety. We encourage diversity across the various departments including at the board level and do not condone any form of discrimination. We encourage

team building and deepening of employee engagement and are pleased to have been able to organise a few social gatherings including our year-end celebration. As part of our “Do No Harm” mindset, I am pleased to share that we have consistently achieved our zero-fatality target. We also believe in the betterment of the community and the society that we operate in and as such have made a number of donations to various charities with a particular focus on youth.

As a company operating globally with clients including multinational corporations and national oil companies, good corporate governance practices is crucial to gaining the trust and support of our clients to develop long term relationships for a sustainable business. We continue to improve our corporate governance practices and encourage our stakeholders to maintain high corporate governance standards alongside us.

IN APPRECIATION

On behalf of my fellow Board members, I am very grateful to our management and employees for their hard work and commitment in dealing with the uncertainties of 2022 and delivering a high level of service and quality to our clients. To our shareholders, valued customers, suppliers and other stakeholders, I would like to thank them for supporting us unwaveringly and working closely with us to navigate the challenging market. Last but certainly not least, I am deeply grateful to my fellow Directors for their wise counsel and guidance through the year.

I look forward to a better year ahead as we strengthen and grow our business.