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Unaudited First Quarter Financial Statement Announcement for the Financial Period Ended 31 March 2008

Review of Performance

Overview

The Group continued to register strong growth in Q1 2008 on broad-based expansion across all key businesses supported by buoyant order book. Group net profit attributable to equity holders doubled to $83.9 million in Q1 2008 on 102% growth in turnover to $717.7 million.

Turnover

Group turnover surged 102% to $717.7 million in Q1 2008 fueled by solid performances across all key business segments.

Turnover by activities

Ship repair, ship building and marine engineering operations delivered a robust 113% jump in turnover to $653.1 million in Q1 2008. This was on the back of progressive revenue recognition for the Group's healthy stream of high-value offshore marine engineering and ship conversion projects, as well as contribution from the ship building segment which began recognizing revenue for its first dry bulk carrier in Q3 2007. The 2 new dry docks which became operational at COSCO Zhoushan in 1H 2007 also contributed considerably to the increase in revenue.

Turnover from dry bulk shipping business jumped 36% to $59.2 million in Q1 2008 boosted by higher charter-hire rates.

Ship repair, ship building & marine engineering business remained the largest revenue contributor, representing 91% of Group turnover in Q1 2008. Dry bulk shipping and shipping agency and others accounted for the remaining 9%.

Profitability

Gross profit surged 117% from $92.5 million in Q1 2007 to $200.6 million in Q1 2008, lifted by higher turnover and gross margin improvement from 26.0% to 28.0%.

Other gains comprised gain from the disposal of scrap metal, interest income, net loss on disposal of property, plant & equipment and foreign exchange differences. Other gains fell 63% to $6.0 million in Q1 2008 mainly due to foreign exchange loss resulting from the weakening of United States Dollar (�USD�) against Singapore Dollar (�SGD�) and Chinese-Yuan

Distribution and administrative costs rose in line with the expanding business volume, kept in check with effective cost management. Interest expense decreased 49% due to reduction in bank borrowings in Q1 2008 compared to Q1 2007.

Income tax expense rose due to higher profit and change in income tax rate for some of the Company's subsidiaries in the People's Republic of China (�PRC�) as a result of changes in China Income Tax Law effective from 1 January 2008.

Minority interests increased due to higher contributions from its PRC subsidiaries involved in ship repair, ship building and marine engineering operations.

Overall, net profit attributable to equity holders of the Company jumped two-fold from $42.0 million in Q1 2007 to $83.9 million in Q1 2008 on successful business expansion.

Balance Sheet and Cash Flow

Cash and cash equivalents increased from $1.1 billion as at 31 December 2007 to $1.2 million in Q1 2008 mainly due to more advances received from customers as the Group secured more offshore marine and shipbuilding contracts. Please refer to item 1(c) Cash Flow Statement for more details.

The increases in trade and other receivables, inventories and construction contract work-in-progress are mainly due to the increase in volume of ship repair, ship building and marine engineering businesses.

Property, plant and equipment increased from $1.5 billion as at 31 December 2007 to $1.6 billion in Q1 2008 as a result of facilities expansion of the major shipyards in COSCO Shipyard Group Co., Ltd (�CSG�).

Trade and other payables rose from $2.4 billion as at 31 December 2007 to $3.1 billion in Q1 2008 as more advances were collected from ship building and offshore marine engineering projects. Total borrowings increased from $176.4 million as at 31 December 2007 to $185.2 million in Q1 2008 due to additional funding procured for business expansion.

Shareholders' equity rose from $939.9 million as at 31 December 2007 to $1.0 billion in Q1 2008 mainly due to the transfer of Q1 2008 profits to retained earnings.

Commentary

A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months.

Recent business climate has been marked by rising steel and labour costs and depreciating USD - the Group's traditional currency of denomination for its contracts. Against such backdrop, the Group is cautiously optimistic of its ability to continue to deliver growth and profitability in 2008.

The Group has a healthy year-to-date order book of US$7.085 billion for progressive delivery up to 2011. The Group will continue to focus on building its strong order book and expand its shipyard capabilities and efficiencies, while keeping a vigilant eye on the rapidly changing operating environment and ensuring prompt and decisive actions where necessary.

Capacity expansion is on track to support expanding order book. The Group announced on 4 January 2008 that it has set up a joint venture (�JV�) with the Port of Authority of Lianyungang with CSG owning 60% of the equity. The JV has a registered capital of RMB180 million (S$36 million) and operates a shipyard in Lianyungang, Jiangsu. It has three new berths of 220 metres each and a land area of 220,000 square metres. The yard had started its ship repair and conversion operations immediately following the date of joint venture. It has added one 80,000 dwt floating dock to bring in additional ship repair and conversion revenue. The Group expects this new yard to contribute to its earnings in FY2008.

In addition, contributions from the two new Zhoushan dry docks with total capacity of 380,000 dwt (that commenced operations in the 1H FY2007) will also increase as they begin their first full-year contributions in FY2008.

On 16 January 2008, the Group announced that through Cosco (Nantong) Shipyard, it had acquired a piece of land at Qidong, Jiangsu province. When fully developed in 4 phases by 2011, it will have 8 new berths for ship repair, conversion and offshore operations.

To tackle increasing labour and steel costs, the Group will factor such rising costs in its pricing for future projects. To diversify foreign currency exposure, the Group seeks to quote future contracts in Chinese- Yuan or Euro-Dollars in addition to US Dollars. Customers would have the option of settling Yuandenominated contracts in US Dollars at the exchange rate prevailing at the time of payment.

Barring unforeseen circumstances, the Board of Directors is confident of the Group's prospects in FY2008.

Balance Sheet