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Dear Shareholders

CEO Jaeho Ko
Dear Shareholders,

Please allow me to express my gratitude for your unwavering support as DSME continues to enjoy its position as a top tier shipbuilding and marine engineering company.

While many other shipbuilders in the world have been forced to cease operations, we have been fortunate to continue on a stable path of growth, though admittedly, we too had our share of difficult times this past year with a few high profile projects. However, in a show of steadfast work ethic and intelligence, DSME employees rose to the challenges created by highly technical issues that plagued some of the projects this year and successfully accomplished the necessary progress milestones, growing personnel capabilities and improving upon its operations and synergies with its subsidiaries.

These efforts led to DSME’s consolidated sales of 14.058 trillion KRW, net profit of 175.9 billion KRW and $14.3 billion in orders, exceeding its original goal by 30%. DSME has returned as leader in terms of orders, particularly in its offshore division whereby it was able to set a meaningful record of obtaining more than $10 billion orders for the first time in the world for a shipbuilding company.

While our accomplishments fill me with a tremendous sense of pride, complacency is not an option in today’s ultra competitive environment and new plans must be forged. Poor economic conditions seem to be lingering, but this situation is forecasted to be short term in nature with a slight improvement expected in the second half of 2013 for the commercial vessel business. Fortunately, the offshore plant business remains strong and we will further develop our facilities and capabilities in this area.

Further, we have determined that the three management policies below need to be efficiently implemented to sustain our position in the market.

Going forward in 2013, we will be focused on providing our clients with a quality of workmanship second to none while ensuring delivery schedules are met safely. We have targeted an 11% increase in revenues for 2013, or $14 trillion KRW based on non-consolidated financial statements, and with this lofty goal we will need to rely heavily on the work ethic of our people and the wisdom garnered from our many years of service to the world’s major business players.

Further, we have determined that the three management policies below need to be efficiently implemented to sustain our position in the market.

First, we shall strengthen our core competencies within each EPCIC discipline. In addition to securing the latest design, production and testing technologies for EPCIC work, we will invest in R&D and develop our personnel, particularly in terms of engineering.

Second, we shall embark on a journey of process innovation. As our product mix has shifted over the past few years, we recognize new processes and yard optimizing strategies will be paramount to our future success. DSME is known for its adaptability to the ever-changing conditions associated with serving multiple markets, thus, it has developed its process innovation methodology to accomplish this.

Third, we shall bolster and better define our organizational culture in terms of our corporate values of trust and passion. Employee understanding and acceptance of these values is crucial to the long term success of the company. It is only through cooperation and motivation to do what is right that we can resolve any issues that may arise and be able to rely on the work of others within the company to achieve our goals.

DSME will not be obsessed with short-term outcomes; rather it will take a long-term perspective, strengthening its core businesses and intelligently reducing production costs to add value for its shareholders that wish to see our company thrive for many years to come.

Even with the ongoing global economic challenges, we will abound in 2013 working harder than ever to ensure that we retain our existing clients and form new relationships with prospective ones.

Thank you again for your support and I wish you, your family, friends and, of course, your businesses, good health and happiness.

Sincerely yours,

March 22, 2013
CEO Jaeho Ko