Dfs Furniture Plc Regulatory News (DFS)

Dongfang Shipbuilding (Group) Company Limited

("Dongfang" or the "Company")

Trading update and Director resignation

The Board of Dongfang (AIM:DFS) announces a trading update following the financial year ended 31 December 2011.

As detailed in the Company's trading update of 17 November 2011, shipbuilding work slowed dramatically in the second half of 2011 leading the directors to conclude that the loss for the second half of the year ending 31 December 2011 will be materially greater than the loss incurred in the first half.

Since that trading update, the directors regret to announce that the outlook has not improved for the Company's shipbuilding division. As market conditions have worsened, it has been increasingly difficult to secure the relevant banking finance for the execution of the contracts to allow commencement of work.

At the time of that update, the Company had an order book of approximately US$64.7m. Whilst a small proportion of this order book has either been completed or remains as work in progress, the two largest contracts totalling approximately US$52.6m have been cancelled following the failure to finalise the technical contracts and secure the required banking finance and performance bonds.

Furthermore, it was previously announced that the Company had signed contracts for eight 6,700DWT bulk carriers worth approximately US$14.5 million in total, but that the Company had yet to receive any advance payment without which it would not commence work on the contracts. It has now become clear that the customer does not intend to proceed with these contracts given the reduction in ship charter rates.

Therefore, the live order book has been reduced to US$5.7 million for delivery in July 2012.

Following the significant reduction in order book, Mr Sun Xiaoming, Chief Operating Officer has resigned from the Board with immediate effect.

Whilst the board is extremely concerned about the fall in order book and the poor state of the shipbuilding market in general, it has made progress in its discussions with its banks and should be better placed to undertake any new orders as they come in.

Whilst shipbuilding remains challenging, the shipping business remains consistent in its performance and the board is exploring certain strategic partnerships in terms of services that can best utilise its assets such as ship repair, and alternative products other than chemical tankers and will provide further updates to shareholders as and when appropriate.

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