Rising Above

NOTES TO FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 200711. INCOME TAX EXPENSEIncome tax expenseTax expense attributable to profit is made up of:Group2007 2006$’000 $’000(Restated)Current income tax 12,586 4,215Underprovision in respect of prior years 92 1212,678 4,227Deferred tax (Note 27) (3,279) (1,384)9,399 2,843The tax expense on profit before tax differs from the amount that would arise using the Singapore standard rate of income taxis as follows:Group2007 2006$’000 $’000(Restated)Profit before income tax 52,088 26,110Tax calculated at a tax rate of 18% (2006: 20%) 9,376 5,222Effects of:Different tax rates (3,563) (310)Effect of reduction in tax rate (229) -Effects of partial tax exemption (55) -Expenses not deductible for tax purposes 4,062 2,557Utilisation of previously unrecognised tax losses and capital allowances (33) (695)Deferred tax assets not recognised 1,422 1,712Recognition of deferred tax assets on prior year unrecognised losses (1,673) (5,655)Underprovision of income tax in respect of prior year 92 12Income tax expense recognised in the income statement 9,399 2,843Yantai Raffles Shipyard Limited, YRS Shiplease Pte Ltd and Offshore Accomodation Pte Ltd are incorporated in Singapore andaccordingly, are subject to the income tax laws of Inland Revenue Authority of Singapore (“IRAS”) and the income tax rate is18% (2006: 20%) for the financial year ended 31 December 2007.YRS Investments Limited and Raffles Yacht Limited are incorporated in Hong Kong and are subject to the income tax laws in HongKong at corporate tax rate of 17.5% for the financial year ended 31 December 2007 (2006: 17.5%).Pelican Waters Investment Ltd, Asiatic Offshore Limited, Borneo Offshore Limited, Baratpur Limited, Coral Offshore Limited,Deep Water Offshore Limited, Evolution Offshore Ltd and Far East Drilling Ltd are incorporated under the International BusinessCompanies Act of the British Virgin Islands (“BVI”) and accordingly, are exempted from payment of BVI income taxes.Hence, the tax charge for the financial year ended 31 December 2007 relates entirely to the Company, YRS Investments Limited,YRS Shiplease Pte Ltd and its PRC subsidiaries, namely Yantai Raffles Offshore Ltd. (“YROL”) and Yantai Raffles Shipyard Co.,Ltd. (“YRSCL”)ANNUAL REPORT 2007 67