9 Tem a sek Bo ule v a r d # 33-01 Su nt ec To wer Two, Si ng
a pore 03 8 9 89
Te l: 68 63 23 66 Fax : 62 38 6 8 48
Re gn No : 19 790 26 47M
The Board of Directors of Otto Marine Limited (the "Company") wishes to announce that the Company has received a letter dated 6 March 2012 from the Singapore Exchange requesting for further information to the results announcement released on 23 February 2012. The queries by the Singapore Exchange and the responses by the Company are as follows: -
Query (a):
We note that "Trade receivables" increased significantly by
195.9% from S$39.2m to S$116.2m. In respect of the following,
to provide the following information:-
(i) Reasons for the significant increase in "Trade
receivables"
(ii) Whether the significant increase in "Trade receivables"
relates to any major customers; and
(iii) Directors' views on whether provision for doubtful debt
is adequate and the basis for their views.
Response to Query (a):
(i) The increase in "Trade receivables" of S$77.0m from
S$39.2m as at 31 December
2010 to S$116.2m as at 31 December 2011 was primarily due to
the consolidation of the "Trade receivables" of Go Marine
Group Pty Ltd, a subsidiary acquired in the Financial Year
(FY) 2011. This contributed to S$62.6m of the increase.
(ii) Three customers contributed 53% to the increase in
"Trade receivables" in FY 2011.
Two of the three customers are added to the Group in FY 2011
and contributed 37.9% to the increase of S$77.0m. The other
customer contributed 15.2% to the increase of S$77.0m.
(iii) The Directors are of the view that the provision for
doubtful debt is adequate after undertaking a review of the
collectability of the customer debts.
Query (b):
We note that "Inventories" increased significantly by 54.8%
from S$301.6m to S$466.7m. In respect of the following, to
provide the following information:-
(i) Breakdown of material items contributing to the increase
in "Inventories"; and
(ii) Directors' views on the risk of inventory obsolescence
or diminution in value and the basis for their views.
Response to Query (b):
(i) The increase in inventories of S$165.1m from S$301.6m as
at 31 December 2010 to S$466.7m as at 31 December 2011
resulted primarily from the reclassification (of two vessels
for which the sales contracts had been terminated during the
year) from gross amount due from customers for contract work
to inventories, and additional costs incurred in the
construction of the inventoried vessels partially offset by
sale of completed vessels.
(ii) As inventories of S$466.7m comprised primarily of
vessels in various stages of completion, the directors have
reviewed the cost of these vessels against their market
value. Based on the review, the Directors are of the view
that currently the risk of inventory obsolescence or
diminution in value is low.
Query (c):
We note that "Other Payables" increased by 222% from S$24.5m to S$79m. In respect of the above, please provide a breakdown of material items contributing to the increase, and explain the reasons for such increase.
Response to Query (c):
The increase in "Other Payables" of S$54.5m from S$24.5m as
at 31 December 2010 to S$79.0m as at 31 December 2011 was
primarily due to the consolidation of the "Other payables" of
Go Marine, a subsidiary acquired in 2011. Go Marine's "Other
Payables" balance, which consisted primarily of
salary-related accruals, contributed S$15.7 million to the
increase. The other contributors to the increase were
primarily advance billings to customers in accordance with
contracts, accrued interests from increased loan balances and
the provision for the expected cancellation of a vessel (as
disclosed in the corrigendum to the full year announcement on
23
February 2012).
By Order of the Board Marjorie Wee Company Secretary
7 March 2012
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