OTTO MARINE LTD 
By (Company Registration Number 197902647M)
(Incorporated with limited liability in the Republic of Singapore on 5 September 1979)
RESPONSE TO SGX'S QUERIES REGARDING THE SECOND QUARTER RESULTS ENDED 30 JUNE 2013
In response to the queries from Singapore Exchange Securities Trading Limited ("SGX") on the second quarter results ended 30 June 2013 ("Q2FY2013") announced on 14 August
2013, the Board of Directors of Otto Marine Limited (the "Company") wishes to provide the
information as set out below:
Query 1
On Page 5 of the Q2FY2013 announcement paper, the amount of group's borrowing repayable in one year or less, or on demand amounted to US$267.615 million. The cash and bank balances shown on Page 3 amounted to US$16.556 million. How will the Company fulfill its borrowing as and when they fall due?
Compan y' s r esponse
The US$267.6 million borrowing comprise project financing loans (36%), current portion of long term borrowings (39%), accounts receivables financing (4%) and other short term borrowings (21%):
a) The project financing loans which finance vessels under construction, will monetize approximately US$163 million from the current assets when the vessels are delivered to customers within 1 year.
b) The current portion of long term borrowings (which are mainly term loan for the chartering fleet) will be served using the charter income collected from vessels chartered out.
c) The accounts receivables financing will be paid using collection from accounts receivables.
d) US$50.2 million of the other short term borrowings have been repaid using the proceeds from the 2013 rights issue (as announced on 12 August 2013) and the rest will be paid using working capital.
Query 2
On Page 19, under "Leasing", it is mentioned that "The decrease in revenue (US$2.0 million) was attributable to the reduction in fleet size for the leasing segment due to sale of two vessels in Q4 2012 and option exercised for one vessel in Q1 2013 by a customer". Which are the two vessels being disposed and have this been announced?
Compan y' s r esponse
These are vessels relating to the leasing segment for which the revenue and cost of sales are recognized at the inception of the commencement of the lease. The accounting policy as reiterated below:
"For all chartering contracts signed with charterers, an assessment is performed on the terms of the charter hire contracts. For contracts containing certain terms and conditions which transferred significant risks and rewards of the vessels to the lessees, the profits of the vessels are recognized immediately upon the commencement of the charter hire and the finance lease interest income is subsequently recognized over the lease period. Such finance lease interest income is termed "leasing" revenue"
The phrase "sale of two vessels in Q4 2012" could have been phrased as
"monetization of finance lease receivables in relation to two vessels in Q4
2012".
Query 3
On Page 22 under Item 13, please provide details as to the "advance from the controlling shareholder to a subsidiary as at 30 June 2013".
Compan y' s r esponse
The advance from the controlling shareholder to a subsidiary as at 30 June 2013 is non- interest bearing and has no fixed repayment terms.
Michael See Kian Heng
Executive Director & Group CFO
2 September 2013
|
distributed by
|
