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THE CREDIT CRUNCH AND SHIPBUILDING
World shipyards have a record order backlog. What effect will the global credit crunch have?

No effect
A slow down in new orders
Cancellation of some existing orders
Cancellation of many exisiting orders

Marine Log

April 8, 2008

Yantai Raffles profits surge

Singapore headquartered and Oslo OTC traded Yantai Raffles Shipyard Limited (YRSL), China's largest builder of semi-submersible drilling rigs, today reported a strong set of results for the full year ended December 31, 2007 ("FY2007"), boosted by the worldwide growth in shipbuilding activities during the year.

Net profit surged 74.3% to Singapore $35.9 million on the back of a 25.1% rise in revenue to S$323.4 million (about US$ 234 million). During the year in review, YRS generated S$1.0 billion (about US$724.4 million) in new orders and its order book value of December 31, 2007 stood at approximately S$2.5 billion (about US$1.8 billion). The Group's earnings per ordinary share increased from S$0.095 in FY06 to S$0.141 in FY07.

Gross profit decreased 18.1% to S$52.6 million in FY2007, with its gross profit margin dipping to 16.3%, from 24.8% previously. It says this was primarily due to a conservative approach to revenue and profit recognition.

A number of YRS' projects during the year were still in the design and engineering phases, a stage where costs incurred are generally less significant as compared to material, equipment and production labor costs incurred in the latter part of the project life cycle. The Group expects a number of projects to contribute more significantly to profits in 2008.

"I am pleased with our financial performance, in spite of operating in an environment of higher input costs," said Brian Chang, Chairman of Yantai Raffles Shipyard Limited. "We have kicked off FY2008 on a strong note with an order book amounting to S$2.5 billion as at December 31, 2007. Looking ahead, we remain confident about our outlook, buoyed by continued growth in global demand for oil, exploration and production activities."

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