Unaudited Half Year Financial Statements for the Period Ended 31 DECEMBER 2007

Balance Sheet

Review of Performance

REVIEW OF OPERATING PERFORMANCE FOR THE HALF YEAR ENDED 31 DECEMBER 2007

Revenue

The Group's total revenue increased by 23.7% from $156.4 million for period ended 31 DECEMBER 2006 ("1H FY2007") to $193.4 million for period ended 31 DECEMBER 2007 ("1H FY2008"). The Group achieved higher revenue in all three segments with revenue from shipbuilding, shiprepair and shipchartering increasing by 16.7%, 52.9% and 26.0% respectively.

Revenue from shipbuilding operations for 1H FY2008 was $16.8 million higher as compared to 1H FY2007. The higher revenue was primarily attributable to the progressive recognition of higher value shipbuilding projects undertaken.

Revenue from shiprepair and other marine related services for 1H FY2008 was 52.9% higher as compared to 1H FY2007. This was mainly attributed to an increase in the number of shiprepair and ship conversion jobs undertaken.

Revenue from shipchartering and rental operations for 1H FY2008 was $9.0 million higher as compared to 1H FY2007. This was mainly attributable to an increase in the Group's fleet size. The Group's fleet size increased from 146 vessels (58 tugs, 1 anchor handling tug and 87 barges) as at 31 DECEMBER 2006 to 176 vessels (62 tugs, 3 anchor handling tugs and 111 barges) as at 31 DECEMBER 2007.

Gross profit and gross profit margin

The Group's total gross profit for 1H FY2008 was 48.5% higher as compared to 1H FY2007. The Group achieved a higher overall gross margin of 18.7% in 1H FY2008 as compared to 15.6% for 1H FY2007 due to higher gross profit margins recorded by the shipbuilding and shiprepair operations.

Gross profit from shipbuilding operations for 1H FY2008 more than doubled to $12.4 million, an increase of $6.3 million as compared to 1H FY2007. Gross profit margin from shipbuilding operations surged from 6.1% in 1H FY2007 to 10.6% in 1H FY2008 attributed to progressive recognition of higher value projects undertaken as well as from improved operating efficiency.

Gross profit from shiprepair and other marine related services increased by 76.0% to $10.2 million for 1H FY2008. The Group's shiprepair operations recorded a higher gross profit margin of 31.4% in 1H FY2008 mainly attributed to higher magin shiprepair jobs undertaken during the period.

Gross profit from shipchartering and rental operations of $13.5 million in 1H FY2008 was $1.1 million higher as compared to 1H FY2007. The Group's shipchartering operations recorded lower gross profit margin of 30.9% for 1H FY2008 due to (i) lower vessel utilisation due to more of the Group's vessels under mandatory repair during the period; and (ii) a higher proportion of charter income under contract of affreightment which generally yields lower margin.

Other income

Other income of $5.2 million for 1H FY2008 was $2.5 million higher as compared to 1H FY2007.

Other income in 1H FY2008 mainly arose from a gain on disposal of plant and equipment of $3.2 million (1H FY2007: $2.2 million), miscellaneous income of $1.0 million (1H FY2007: $0.1 million) and interest income of $1.0 million (1H FY2007: $0.4 million). The gain on disposal of plant and equipment included the sale of 10 vessels (1H FY2007: 10 vessels) to third parties. The disposals are part of the Group's fleet renewal program. The miscellaneous income mainly comprised insurance claims.

Administrative expenses

Administrative expenses of $4.7 million was $0.5 million higher as compared to 1H FY2007. The increase was mainly attributed to higher manpower costs (increased by $0.3 million) as well as an increase in certain administrative expenses in line with higher business activities.

Other operating expenses

Other operating expenses of $1.5 million was $0.3 million higher as compared to 1H FY2007. The increase was mainly due to higher plant and equipment written off of $0.6 million (1HFY2007: $16,000) and mostly unrealised foreign exchange loss arising mainly from intercompany loans of $0.7 milllion (1H FY2008: $1.5 million 1H FY2007: $0.8 million), partially offset by write-back of allowance of doubtful trade receivables of $0.7 million as compared to allowance made for doubtful trade receivables of $0.3 millon in 1H FY2007.

Finance costs

Finance costs of $2.6 million in 1H FY2008 was $0.6 million higher mainly due to higher borrowings arising from the expansion of the Group's fleet from 146 vessels to 176 vessels.

Finance costs comprised mainly of $2.5 million interests for term loans and $0.1 million interests for trust receipts. Term loan interests increased by $0.6 million mainly due to increase in borrowings for fleet expansion for the shipchartering operations and yard facilities development. The Group hedges against interest rate fluctuations on its long term borrowings by way of interest rate swaps.

Share of profit of jointly-controlled entities

Share of profit of jointly-controlled entities, namely the ASL Energy Pte Ltd and its subsidiaries ('ASL Energy Group' and HKR-ASL, was $0.1 million in 1H FY2008 (1H FY2007: $0.05 million).

The share of net profit from ASL Energy Group was $0.2 million in 1H FY2008 as compared to a loss of $0.1 million in 1H FY2007. ASL Energy Group recorded higher earnings in 1H FY2008 mainly attributed to higher charter income from its fleet of vessels including a 65,000 dwt floating terminal, offset by higher bank loan interest and absence of share of profit contribution from Tabang coal concession. ASL Energy Group had in July 2007 entered a conditional agreuent to dispose its entire interests in Tabang coal concession, in the event that completion does not occur on or before 30 June 2008, the conditional agreuent will lapse.

Profit before taxation

In line wiith revenue growth and higher gross profit margins, the Group's profit before taxation of $32.5 million for 1H FY2008 was $12.9 million or 65.5% higher as compared to 1H FY2007.

Income tax expense

The Group's taxation charge rose by $2.4 million to $4.9 million in 1H FY2008 of which $0.7 million was due to an adjustment for prior year deferred tax expense. The Group's effective tax rate of 12.3% for 1H FY2008 was maginally lower than the 12.4% recorded for 1H FY2007 mainly attributed to the 2% reduction in Singapore corporate tax rate to 18% offset by higher proportion of non-exupt shipping profits in 1H FY2008.

Minority interests

Minority shareholders' share of losses amounting to $0.4 million in 1H FY2008, consequently the Group's profit attributable to equity holders for the period was $28.0 million. The reasons for the losses incurred by non-wholly owned foreign subsidiaries were due to higher foreign exchange losses, allowance for doubtful debts and initial start up costs.

Operating cash flow

Net cash inflow from operating activities of $78.4 million in 1H FY2008 was $62.9 million higher as compared to 1H FY2007. During the financial period, the Group funded its vessel fleet expansion mainly through its positive operating cash flows, external borrowings and proceeds from issuance of shares due to conversion of warrants.

REVIEW OF FINANCIAL POSITIONS AS AT 31 DECEMBER 2007

Non-current assets

Property, plant and equipment increased by $40.1 million from $216.4 million as at 30 June 2007 to $256.5 million as at 31 DECEMBER 2007. The increase was mainly due to acquisition of plant and equipment of $64.5 million (inclusive of $45.0 million for vessels and $6.1 million for plant and machinery) partially offset by disposal of plant and equipment of net book value totalling $12.3 million, depreciation charge of $10.3 million and others (including the write-off of plant and equipment) of $1.8 million.

The Group's total depreciation charge of $10.2 million in 1H FY2008 was $2.6 million higher as compared to 1H FY2007 mainly attributed to increase in fleet size from 146 vessels as at 31 DECEMBER 2006 to 176 vessels as at 31 DECEMBER 2007.

Current assets

Current assets increased by $30.7 million from $201.6 million as at 30 June 2007 to $232.3 million as at 31 DECEMBER 2007. The increase was mainly due to higher inventories, construction work-in-progress, amount due from related parties, derivative financial instruments and cash and cash equivalents offset by decrease in trade and other receivables.

Inventories increased by $10.2 million mainly due to raw material (mainly steel) purchased for shipbuilding projects.

Amount due from related parties comprised of receivables from the Group's jointlycontrolled entities, ASL Energy Pte Ltd and HKR-ASL.

The increase in derivative financial instruments assets pertained to mark-to-market gains derived mainly from foreign exchange forward contracts entered to hedge against foreign exchange rate fluctuations for trade receivables and bank borrowing. The Group entered into “plain vanilla” forward contracts to hedge against foreign currency fluctuations.

Cash and cash equivalents increased by $27.5 million to $75.2 million which comprised payments received from customers based on progress billings mainly for shipbuilding projects.

Trade and other receivables of $60.7 million comprised of trade receivables of $47.1 million and other receivables of $13.7 million. Due to improvuent in collection and lower shipbuilding milestone billings towards the end of current financial period end, average debtors turnover improved from 84 days as at 30 June 2007 to 49 days as at 31 DECEMBER 2007.

Current liabilities

Current liabilities increased by $15.7 million from $218.4 million as at 30 June 2007 to $234.2 million as at 31 DECEMBER 2007.

Trade payables and other payables increased by $2.1 million in line with the increased level of business activities.

Trust receipts decreased by $14.0 million due to repayment made during the period.

The decrease in current portion of interest-bearing liabilities of $3.4 million was mainly due to lower short term loan borrowings as at 31 DECEMBER 2007.

The decrease of derivative financial instruments liabilities was mainly due to lower markto- market losses derived mainly from foreign exchange forward contracts entered to hedge against foreign exchange rate fluctuations for trade receivables and payables.

Net current liabilities

The net current liabilities of $1.9 million as at 31 DECEMBER 2007 and $16.8 million as at 30 June 2007 included net progress billings in excess of construction work-in-progress of $46.1 million and $34.7 million respectively. The increase in net progress billings in excess of construction work-in-progress were mainly attributed to initial milestone billings received for certain shipbuilding projects. There were 46 projects as at 31 DECEMBER 2007 ( 30 June 2007 : 45 projects).

Excluding the construction work-in-progress and progress billings in excess of construction work-in-progress, the Group's net current assets as at 31 DECEMBER 2007 and 30 June 2007 was $44.2 million and $17.9 million respectively.

Non-current liabilities

Non-current liabilities increased by $10.2 million to $79.2 million as at 31 DECEMBER 2007. The increase was mainly due to higher interest bearing liabilities and deferred tax liabilities.

Non-current interest bearing liabilities rose by $7.5m. Total interest-bearing liabilities (including current and non-current interest bearing liabilities) increased by $4.0 million to $104.6 million as at 31 DECEMBER 2007. The increase was mainly due to new term loans of $40.2 million partially offset by the reduption and repayment of loans of $36.2 million in 1H FY2008.

Deferred tax rose by a net $2.3 million to $7.8 million as at 31 DECEMBER 2007.

Commentary On Current Year Prospects Overall

Based on the Group's outstanding order book for shipbuilding, expanded shiprepair capabilities and enlarged fleet size for shipchartering operations, barring any unforeseen circumstances, the Group is optimistic of achieving higher revenue and earnings in FY2008 as compared to FY2007.

Shipbuilding and Shiprepair Operations

As at 31 DECEMBER 2007, the Group had an outstanding order book for shipbuilding of approximately $609 million for the building of 46 vessels including offshore support vessels, offshore construction vessels, tugs, barges, water injection dredger and other vessels.

Barring any unforseen circumstances, approximately 25% of the order book is expected to be recognised within the six months ending 30 June 2008 (“2HFY2008”). Subsequent to 31 DECEMBER 2007, the Group secured additional shipbuilding contracts for 4 vessels worth $51 million where recognition of income is expected after FY2008. In addition, the Group has an outstanding shipbuilding order book of approximately $31 million for the building of 7 vessels for companies from within the Group.

The outlook for the Group's shiprepair operations ruains positive which is underpined by healthy duand for shiprepair, enhanced docking facilities and a newly completed finger pier in Batam.

Shipchartering Operations

The Group's shipchartering revenue consists of mainly short-term and ad-hoc contracts, with approximately 16% contribution from long term chartering contracts (meaning contracts with a duration of more than one year). As at 31 DECEMBER 2007, the Group had an outstanding order book of approximately $16 million with respect to long term shipchartering contracts.

As at 31 DECEMBER 2007, the Group had plan to increase its shipchartering fleet by taking delivery of 15 vessels worth approximately $53 million including towing tug, Azimuth Stern Drive tug, Straight Supply vessel, Anchor Handling Towing/ Supply vessel and Anchor Handling tug (of which 7 vessels worth approximately $31 million are to be built internally).