Rising Above

DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 20075. Share options (Continued)Under the Scheme, share options are granted to employees of the Group selected by the Remuneration Committee. The exerciseprice of the granted options is based on the arithmetic average of the daily volume weighted average price in Norwegian Kroner(“NOK”) of the Company’s shares traded on the Norwegian OTC during the period of three trading days ending on the daybefore the date of grant. Where they are issued in currency other than NOK, it is based on the prevailing spot exchange ratequoted by the Company’s bank. Share options shall be exercisable in whole or in part in respect of 1,000 shares or any multiplethereof, subject to the vesting period as described by the Remuneration Committee in its absolute discretion.During the financial year ended 31 December 2007, share options in respect of 6,890,289 were granted to certain seniormanagement staff and employees, including certain directors, at an exercise price between NOK10.50 to NOK26.00 per share(the “2007 Share Options”). The 2007 Share Options are exercisable from 16 January 2009 to 18 September 2017.Details of all the share options to subscribe for ordinary shares of the Company pursuant to the Scheme as at 31 December 2007are as follows:Expiry date Exercise price Number of share options31 July 2010 $2.54 to $2.80 525,00016 January 2011 US$1.64 100,0001 February 2011 NOK 10.50 100,00013 April 2011 NOK 16.50 600,00022 May 2011 US$1.64 to US$3.05 1,186,78918 September 2012 NOK 26.00 1,103,50018 September 2017 NOK 26.00 3,600,000Total 7,215,289Since the commencement of the Scheme till the end of the financial year:• No share options that entitle the holder to participate, by virtue of the options, in any share issue of any other corporationhave been granted, and• Other than 1,154,003 share options that were granted to certain senior executives, none of whom are directors, ata discount of 46% to market average price at time of grant, there were no other share options that were issued at adiscount.The number of share options granted to directors of the Company pursuant to the Scheme and which remain outstanding as at31 December 2007 are as disclosed in paragraph 3 in this report.6. AuditorsErnst & Young have expressed their willingness to accept reappointment as auditors.On behalf of the board of directors,CHANG YEE MENG, MALCOLMDirectorMICHAEL LINDSAY SHARPDirector25 March 200836 YANTAI RAFFLES SHIPYARD LIMITED