Chairman's Message

"The Group has delivered record revenue and earnings on the back of strong growth in all three business segments. This is a testament to the Group's overall strategy and direction."

Dear Shareholders,

On behalf of the board, I am pleased to report to you that the Group has achieved another record performance for the financial year ended 30 June 2007 ("FY2007").

5TH CONSECUTIVE YEAR OF RECORD EARNINGS

FY2007 is the fifth consecutive year of record earnings that the Group has chalked up since its listing in March 2003.

The Group recorded a 61.1% rise in revenue to $318.4 million in FY2007. The growth was broad-based with all three business segments recording higher revenue and profitability. This boosted the increase in net profit margin from 11.7% in FY2006 to 12.6% in FY2007. The Group's net profit attributable to equity holders surged 74.5% to $40.2 million and return on equity improved from 19.0% in FY2006 to 25.7% in FY2007.

Over the past three years, the Group has achieved compounded annual growth rate of 51.3% and 72.1% for its revenue and net profit respectively.

Based on the weighted average number of shares, the Group's fully diluted earnings per share grew by approximately 51% to 14.66 cents while net asset value per share increased from 47.91 cents to 59.68 cents.

Riding on the positive business environment, the key success factors for the sustainable growth are the continued focus on improving our shipbuilding and shiprepair capabilities as well as expanding and upgrading of vessels for our fleet. Shipbuilding operations continued to be the main contributor to the Group's turnover with a record outstanding order book of $622 million as at 30 June 2007. The Group also secured an additional $48 million shipbuilding orders subsequent to 30 June 2007.

As the Group improves its shipbuilding capabilities and capacity, we are taking on higher value and more sophisticated projects. Shipbuilding projects executed during the year including Emergency Response & Rescue vessels, Anchor Handling Towing and Supply vessels, chemical tankers and floating coal terminal barge.

Since the operation of the 20,000 dwt floating dock in May 2005 and our new 150,000 dwt graving dry dock in August 2006, our shiprepair division has been taking on more and bigger shiprepair and conversion jobs. We have also added a 220m finger pier to expand berthing capacity and two units traveling luffing cranes to enhance our operation efficiency. Over the past 12 months, shiprepair projects undertaken include repair jobs for several Aframax tankers and a jackup oil rig, conversion of cargo barge to pipelay barge as well as lengthening an accommodation barge.

For shipchartering division, we expanded our fleet of 126 vessels as at 30 June 2006 to 158 vessels as at 30 June 2007. These vessels continued to generate strong earnings by working in various industries including the offshore oil and gas sector, marine infrastructure & construction and cargoes transportation.

The Group's jointly-controlled entity, ASL Energy Pte Ltd ("ASL Energy") is disposing of its entire interests (50.2%) in Tabang Coal Concession at book value as at 31 December 2006. Going forward, it will focus on its shipchartering operation which has a total of 32 tugs and 32 barges and a 65,000 dwt floating terminal as at 30 June 2007.

EXCITING TIMES AHEAD

The outlook remains positive for the general marine industry, the offshore oil & gas exploration and production market as well as the offshore/ marine infrastructure development market in the region.

To explore the potential of the buoyant marine industry, it is important that we continue to work hard to improve operational efficiency and maintain a lean business structure.

During the past 12 months, the Group has announced new shipbuilding contracts worth a total of $435 million including Offshore Construction vessels such as 161m Heavy Lift cum Pipelay Vessel and 90m DP-2 Subsea Operation Vessel which are scheduled to complete in 2009. This is testament to our increasingly recognised shipbuilding capabilities as well as the confidence that our customers have in us.

Our 60% owned shipyard in Guangdong, had commenced shipbuilding activities in May 2007. While the shipyard will focus initially on building tugs and barges for the shipchartering division's use, it will seek to move up the value chain to higher valued vessels as its shipbuilding capability and infrastructure improves.

We also plan to further strengthen our shipchartering fleet by taking delivery of 37 vessels worth approximately $85 million in FY2008 including towing tug, Azimuth Stern Drive Tug, Straight Supply Vessel, Anchor Handling Towing/ Supply Vessel and Anchor Handling Tug.

A WORD OF THANKS

To reward our shareholders for their continued support and confidence in ASL Marine, the Board is recommending a first and final tax-exempt dividend of 2.5 cents per ordinary share and a special dividend of 0.3 cents for FY2007. This represents a 27.2% increase over the 2.2 cents per share declared for the previous year. If approved at our annual general meeting on 19 October 2007, the dividends will be paid out on 12 November 2007.

On behalf of the Board, I wish to thank all our staff for their contributions to our performance. I would also like to express my gratitude to our shareholders, customers, bankers, business partners and my fellow directors for their commitment and continuous support.

I look forward to meeting you in the coming Annual General Meeting.

Ang Kok Tian
Chairman & Managing Director