Dfs Furniture Plc Regulatory News (DFS)

Dongfang Shipbuilding (Group) Company Limited

("Dongfang" or the "Company")

Trading Update

The Board of Dongfang (AIM:DFS) announces a trading update in respect of the nine months ended 30 September 2011. As announced in the Company's interims on 20 September 2011, the third quarter started particularly slowly in the shipbuilding division, with no new shipbuilding orders having been contracted between then and 30 June 2011. More recently, the Company has signed shipbuilding contracts worth approximately US$14.5 million in total, however, to date, the Company is yet to receive any advance payment without which it will not commence work on the contracts.

Trading in the third quarter was extremely difficult. Based on the unaudited management accounts for the nine months ended 30 September 2010, revenues for the period fell some 40% compared to the same period in 2010. At the interim stage, the decline in revenues was 12%. This trading reflects the wider experience of the Chinese shipbuilding industry where new orders declined 43% in the first nine months of the year (according to the China Association of the National Shipbuilding Industry). The slow down in revenues has been compounded by higher than expected costs in the Company's shipping division as well as the impact of increased financing costs in light of the overall decline in revenues. Taken together with restructuring costs incurred in advance of the AIM admission, the costs of the AIM admission itself and the uncertainty over the global economy, particularly in Europe, where historically a large proportion of the Company's customers have been based, the directors expect that the loss in the second half of the year ending 31 December 2011 will be materially greater than the loss incurred in the first half.

The shipbuilding order book at 30 September 2011, excluding vessels being built for the Company's shipping division, amounted to US$64.7million. This will increase by approximately US$14.5 million following receipt of the advance payments pursuant to the contracts mentioned above.

Chen Tong Kao, Chief Executive Officer of Dongfang, said: "Whilst the current trading situation is challenging and disappointing, we continue to pursue sales leads and develop our shipping business wherever possible. At the same time, the directors remain focussed on refinancing the Company's bank loans to better manage the finance costs. In addition, the board is exploring joint ventures with third parties which could lead to complementary businesses utilising its facilities at the Company's shipyards as well as other alternatives to best extract the value out of our asset base. I look forward to providing further updates in due course."

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About Dongfang

With two shipyards in key shipbuilding regions in China, Dongfang is a leading manufacturer of multi-purpose container ships and chemical tankers.

The Group owns and operates two ship yards; one in Yuenqing City, Zhejiang province, and a new yard in Anqing, Anhui province which was established in 2007, giving the business capacity for considerable growth. Across the two shipyards, the Group occupies 814,000 sq. m. of land along 2,400m of usable coastline.

Dongfang's expertise are focused on the construction of ships between 3,000 DWT to 50,000 DWT size vessels such as chemical tankers, container vessels, multi-purpose cargo vessels and bulk vessels. In addition to this well established shipbuilding business, Dongfang operates a shipping charter business through its subsidiaries in Hong Kong and Singapore. The shipping business focuses on delivering specialised cargo such as wind turbines and chemical products, which would ordinarily be difficult and costly to ship.

Dongfang was established in 1986, and is now one of the Top 500 Chinese Machinery Enterprises.

For more information, please see: www.dongfangship.com.cn