OTTO MARINE LTD 
By
(Company Registration Number 197902647M)
(Incorporated with limited liability in the Republic of
Singapore on 5 September 1979)
1.1 The board of directors (the "Board") of Otto Marine
Limited (the "Company" and together with its subsidiaries the
"Group") refers to the announcement made by the Company on
14
November 2011, with regard to the unaudited financial results
for the third quarter ended 30
September 2011 (the "Third Quarter Results").
1.2 In connection with the Third Quarter Results, the
Singapore Exchange Securities Trading Limited (the "SGX-ST")
raised some queries on 24 November 2011. The Company is
pleased to set out the responses to the queries raised by
SGX-ST below.
2.1 SGX -ST's Query
Please elaborate on the nature of the loan receivables
(balance sheet item) on Page 3.
Company's Response
The loan receivables pertain mainly to loans extended to
outside parties, who are also investee companies, and an
associate. It also includes an amount with extended credit
term granted to a customer with interest.
2.2 SGX -ST's Query
Regarding the loans extend to the outside party, please
provide us details on the outstanding amount to date.
Company's Response
The loans extended to the outside parties, who are also
investee companies, amounted to S$40.1 million as at 30
September 2011.
2.3 SGX -ST's Query
Regarding the loan extended to the associate, it was stated
in FY2010 Annual Report that it is fully repayable in June
2011. Please provide an update if it has been fully repaid.
Company's Response
The tenure of the loan given to the associate has been
extended to 30 June 2012.
2.4 SGX -ST's Query
Regarding an amount granted to a customer with an extended
credit period and hence classified as loan as part of the
loan receivables, please provide us details of this loan, the
length of the current extended credit period, amount
outstanding and the Company's credit policy.
Company's Response
This amount with an extended credit granted to a customer of
S$5.9 million, bears interest at 2.5% per annum and is
repayable in sixteen quarterly instalments of US$0.1m
commencing August 2014 and US$2.9m with the last instalment.
This relates to the shipbuilding segment. Typically, there
are no credit terms for shipbuilding customers. As disclosed
on Page 78 of the FY2010 annual report of the Company, since
2009, as a result of the credit crunch, the Group agreed
certain settlement arrangement with their associates, after
evaluating the credit standing of these associates. The
average credit term on ship repair, conversion, chartering,
leasing, geophysical and subsea services to customer is 30
days.
2.5 SGX -ST's Query
Refer page 5 of the 3Q results, Cash Flow Statement. Please
explain what does the
S$ (6,358K) of loans receivables under 'Investing Activities'
arise from.
Company's Response
This S$6.4 million of loans receivables under "Investing
activities" in the Cash Flow Statement for Third Quarter
Results relates to the amount with an extended credit granted
to a customer, after factoring the translational difference
caused by the average foreign exchange rate for the 3 months
ended 30 September 2011 and the balance sheet rate for the
movement in the United States Dollar vis-à-vis the Singapore
Dollar.
2.6 SGX -ST's Query
We noted the Company's reply regarding the nature and purpose
of the Derivative Financial
Instruments. Please address the following in the
announcement:-
(a) to elaborate on the hedging policy of the Company;
(b) to advise whether the Company has sought approval from
the Board of Directors on the Company's hedging policy;
(c) to advise whether the Company has put in place adequate
procedures in relation to its hedging practices, and to
furnish information on such procedures; and
(d) to advise whether the Audit Committee has reviewed the
hedging instruments, process and practices in accordance with
the Company's hedging policy.
Company's Response
(a) As disclosed on page 69 of the Company's prospectus
dated 21 Nov
2008, the Company has not adopted a formal policy to hedge
its foreign exchange risk but may from time to time use
foreign currency forward contract to manage its
exposure. The Company will monitor its foreign exchange
exposure and will take appropriate measures to hedge its
exposure if required.
Since 2008, the Company has used other financial instruments
such as cross currency swaps and interest rate swaps to hedge
its currency and interest rate exposure and no formal policy
has been adopted.
(b) Please refer to response in (a) above. The Company does
not have a formal hedging policy. However, the Company has
approval from the Audit Committee and the Board for the
hedging procedures and processes.
(c) Foreign exchange contracts
The procedures on foreign currency hedging was tabled and
reviewed by the Audit Committee in the meeting of August
2009. Prior to entering into a foreign exchange contract, the
treasurer analyses the projected cash flows with regards to
currency, amounts and timing. Based on the analysis, a report
is presented to the executive directors of the Company. The
executive directors then determine the currency, amounts and
time frame for each foreign exchange forward contract. Quotes
for forward rates are obtained from at least 2 institutions.
The recommended quote from treasury is approved by at least
one executive director of the Company before entering into
the contract.
Interest rate swap
In May 2009, the Group reviewed the interest rates exposure on all the long-term borrowings which are on variable interest rates. In the Audit Committee meeting held in May 2009, it was decided that the Group should lock the interest rate for 4 years by entering into interest rate swaps to swap variable interest rates for fixed interest rates for its long-term borrowings.
MTN
The Group completed its medium term notes ("MTN") exercise in
May 2010. The MTN is repayable in Singapore dollars while the
cash flow for the Group from external parties are mainly
denominated in United States dollars and Euro. As a result,
the cross currency swap contract with similar maturity and
amount was entered into. Concurrent with the approval of the
MTN prior to issuance, the Board has approved the cross
currency swap in April 2010.
(d) Please refer to the Company's response in (c) above.
By Order of the Board
See Kian Heng
Chief Financial Officer & Company Secretary
25 September 2011
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| Documents associés | |
| Responses To SGX-St Queries In Respect Of Third Quarter Results |
