Dongfang Shipbuilding (Group) Company Limited

("Dongfang" or the "Company")

Trading updateand Director resignation

The Board of Dongfang (AIM:DFS) announces a trading updatefollowing the financial year ended 31 December2011.

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 thatupdate,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 aswork in progress, the two largest contracts totalling approximately US$52.6m have been cancelled following the failure to finalise the technical contracts and secure therequired banking finance and performance bonds.

Furthermore,it was previously announced thatthe Company hadsigned contracts for eight 6,700DWT bulk carriers worth approximately US$14.5million in total, but thatthe 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 theycome in.

Whilst shipbuilding remains challenging,the shipping business remains consistent in its performance and theboard is exploring certain strategic partnerships in terms ofservices that can best utilise its assets such as ship repair,and alternativeproducts other than chemical tankers and will provide further updates toshareholders as and when appropriate.

- Ends -


For further information:
Dongfang Shipbuilding
Chen Tongkao, Chief Executive Officer

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AKM Ismail, Finance Director Tel: +44 (0) 7786 712 459

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Northland Capital Partners Limited

Luke Cairns / Edward Hutton Tel: +44 (0) 20 7796 8800

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Abchurch Communications Limited

Joanne Shears / Quincy Allan Tel: +44 (0) 20 7398 7709
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