O TTO M ARINE L IMITED - Microsoft Internet Explorer - SGX

OTTO MARINE LIMITED 

PROSPECTUS DATED 

21 NOVEMBER 2008 

(Registered by 

the Monetary Authority of Singapore 

on 21 November 2008) 

(Company Registration Number 197902647M) 

(Incorporated with limited liability in the Republic of Singapore on 5 September 1979) 

Offering in respect of 235,295,000 Offering Shares 

Offering Price: S$0.51 per Offering Share 

This document is important. If you are in any doubt as to the action you should take, you should consult your legal, 

financial, tax or other professional adviser. 

This is an initial public offering of our ordinary shares (the “Shares”). Otto Marine Limited (the “Company”) is issuing 

and making an offering of 206,045,000 Shares (the “New Shares”) and CEO Technology Asia Limited and Lee Kok Wah 

(the “Vendors”) are making an offering of 29,250,000 Shares (the “Vendor Shares” and together with the New Shares, the 

“Offering Shares”) for subscription and/or purchase by investors at the Offering Price (as defined herein). The Offering (as 

defined herein) consists of: (i) an international placement of 234,295,000 Offering Shares to investors, including institutional 

and other investors in Singapore and the Cornerstone Investors (as defined herein), including 8,915,000 Shares (the “Reserved 

Shares”) reserved for our employees who have contributed to our success and development (to be determined by us at our 

sole discretion) (the “Placement”); and (ii) an offering of 1,000,000 Offering Shares to the public in Singapore (the “Public Offer” 

and together with the Placement, the “Offering”). 

Each of Bangkok Bank Public Company Limited (“Bangkok Bank”), Maju Holdings Sdn Bhd (“Maju Holdings”) and Standard 

Chartered Private Equity Limited (“SCPEL”) (collectively, the “Cornerstone Investors”) has entered into a cornerstone share 

subscription agreement with our Company (collectively, the “Cornerstone Share Subscription Agreements”) to subscribe and/or 

purchase an aggregate of 146,234,000 Offering Shares, at the Offering Price, conditional upon the Placement Agreement and Offer 

Agreement (both as defined herein) having been entered into and not having been terminated pursuant to their terms on or prior 

to the Listing Date (as defined herein). 

The Offering will be fully underwritten by United Overseas Bank Limited (“UOB” or the “Underwriter”) at the Offering Price. Prior 

to the Offering, there has been no public market for our Shares. Application has been made to the Singapore Exchange Securities 

Trading Limited (the “SGX-ST”) for permission to list all our issued Shares (including the Vendor Shares), the New Shares and the 

Award Shares (as defined herein) on the Main Board of the SGX-ST. Such permission for the listing of our Shares will be granted when 

we have been admitted to the Official List of the SGX-ST. 

Acceptance of applications will be conditional upon, inter alia, permission being granted to deal in, and for listing and quotation of, 

all our issued Shares (including the Vendor Shares), the New Shares and the Award Shares. If the completion of the Offering does not 

occur because the SGX-ST’s permission is not granted or for any other reason, monies paid in respect of any application accepted will 

be returned to the investors, at each investor’s own risk, without interest or any share of revenue or other benefit arising therefrom, 

and without any right or claim against us, the Issue Managers, the Vendors, the Underwriter or any other party. 

We have received a letter of eligibility from the SGX-ST for the listing and quotation of all our issued Shares (including the Vendor 

Shares), the New Shares and the Award Shares on the Main Board of the SGX-ST. The SGX-ST assumes no responsibility for the 

correctness of any statements or opinions made or reports contained in this Prospectus. You should not view our eligibility to list on, 

and admission to, the Official List of the SGX-ST as an indication of the merits of the Offering, our Company and our subsidiaries, 

our Shares, the Offering Shares or the Award Shares. 

A copy of this Prospectus has been lodged with and registered by the Authority on 5 September 2008 and 21 November 2008, 

respectively. The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the 

Authority does not imply that the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act” or 

“SFA”), or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered 

the merits of the Offering Shares being offered or in respect of which an offer is made for investment. 

See “Risk Factors” of this Prospectus for a discussion of certain factors to be considered in connection with an investment 

in our Shares. 

THE SHARES IN THE OFFERING HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES 

ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND, SUBJECT TO CERTAIN EXCEPTIONS, MAY NOT 

BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, US 

PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”)). THE SHARES 

IN THE OFFERING ARE BEING OFFERED AND SOLD OUTSIDE THE UNITED STATES TO NON-US PERSONS 

(INCLUDING INSTITUTIONAL AND OTHER INVESTORS IN SINGAPORE) IN RELIANCE ON REGULATION S 

UNDER THE SECURITIES ACT. FOR FURTHER DETAILS ABOUT RESTRICTIONS ON OFFERS, SALES AND 

TRANSFERS OF OUR SHARES, SEE “PLAN OF DISTRIBUTION” AND “TRANSFER RESTRICTIONS”. 

No Shares shall be allotted or allocated on the basis of this Prospectus later than six months after the 

date of registration of this Prospectus by the Authority. 

References in this Prospectus to “this document” should be construed as being references to 

this Prospectus. 

Issue Manager, Global Coordinator, Underwriter 

and Bookrunner 

Issue Manager 

Primary Sub-Underwriter and Primary Sub-Placement Agent

Otto Marine Limited 

We are an offshore marine group engaged in shipbuilding, ship repair and 

conversion and ship chartering. Headquartered in Singapore, we own and 

operate what we believe is one of the largest shipbuilding yards in Batam, 

Indonesia. We have a strategic focus on, and have gained recognition in, the 

construction of high-specification offshore support vessels. Our customers 

are primarily fleet operators who provide logistics support to offshore services 

and equipment companies operating globally in the oil and gas industry. 

Our Business Segments 

ShiPBUilDiNg ShiP ChARTERiNg ShiP REPAiR 

AND CONVERSiON 

• Strategic focus on the 

construction of high specification 

offshore support vessels 

• Provide customers with turnkey 

solutions 

• Capability to build a range 

of small, medium and large 

offshore support vessels: 

> Anchor Handling Tug Supply 

(“AHTS”) vessels 

> Platform Supply Vessels 

(“PSV”) 

> Work barges with 

accommodation for 300 

people 

> Work maintenance boats 

• Order book of S$937.1 million as 

at 8 August 2008 

• Selective outsourcing to China 

shipyards 

• Launched in April 2007 

• Largely focused on the 

chartering of offshore support 

vessels 

• Two types of business models: 

Own charters 

> Current fleet: five tugboats 

and five barges 

> Nine vessels being built, to 

be completed by 2009 

Strategic partnerships 

> We own minority interests in 

the vessels 

> One vessel currently in 

operation 

> Nine vessels under 

construction, sold to 

strategic partners 

> 10 vessels under 

construction, intended for 

sale to strategic partners 

• Our Batam shipyard offers 

comprehensive “one stop” 

facilities for both ship repair and 

conversion works 

• Service a wide range of vessels 

including offshore support 

vessels, ocean-going tugs, car 

ferries and general cargo ships

Our Financial Highlights 

Over the last three financial years ended 31 December 2007, our revenue grew at a compounded annual growth rate of 139.6% 

per annum from S$54.7 million in FY2005 to S$314.0 million in FY2007. 

Revenue 

S$ million 

350 

300 

250 

200 

150 

100 

50 

0 

54.7 

FY2005 

147.3 

FY2006 

Industry Prospects 

The outlook for offshore marine industry is positive driven by the following factors: 

• Growing demand for energy and oil products worldwide, resulting in higher activity level in offshore oil exploration, 

development and production. 

• The exhaustion/maturing of economically viable oil and gas fields has led to the increase of deep sea exploration activities 

and the subsequent demand for offshore vessels. 

• Offshore oil and gas exploration is taking place in many geographic areas of the world and well over 95.0% of all cargo 

going to offshore drilling units and platforms is transported by vessel. 

Source: Braemar Seascope Offshore 

314.0 

FY2007 

86.3 

5M2007 

219.5 

5M2008 

Profit Attributable to Equity Holders 

S$ million 

45 

40 

35 

30 

25 

20 

15 

10 

5 

0 

3.1 

FY2005 

20.2 

FY2006 

41.9 

9.0 

32.7 

FY2007 5M2007 5M2008 

Financial year ended 31 December (“FY”) 

Five months ended 31 May (“5M”)

Our Strengths 

Specialised focus on complex, sophisticated and environment friendly offshore support vessels 

• Strategic focus on the construction and engineering of offshore support vessels which comply with technical 

specifications required to operate in the North Sea. This focus has been beneficial to us as these vessels have 

generally produced higher margins for us than less complex vessels. 

• Specialised focus allows us to improve production quality and efficiency and develop a competitive cost structure. 

An efficient and strategically located shipyard 

• We believe we have one of the largest shipyards in Batam, with approximately 40 hectares of land area and 450 metres 

of usable waterfront. 

• Strategically located shipyard allows for easy access to Singapore’s marine and offshore support and expertise, and 

Indonesia’s ready supply of workers. 

• Shipyard equipped with Syncrolift® which enables completion of construction and repair of vessels in greater numbers 

within a shorter timeframe thus increasing productivity and economies of scale. 

Strong engineering and technical capabilities and turnkey approach 

• Turnkey approach enables provision of value-added customised solutions that command higher margins. 

• Ability to deliver turnkey solutions due to established relationships with suppliers and strong engineering and 

technical capabilities. 

• In-house capability in operation of TRIBON® software allows for a more efficient shipbuilding process through the 

development of a precise virtual model of vessels for review and testing prior to production thereby minimising 

errors. 

Experienced management team 

• Key executive officers with operating functions have in-depth experience in the offshore marine industry, with an 

average of 34 years of experience. 

• Management has developed strong relationships with our customers, designers and suppliers. 

• Reputation for quality service and high operational standards.

Our Strategies 

We intend to consolidate our current market position by 

capitalising on opportunities in the global marine and 

offshore industry and to enhance our competitiveness. 

Key elements of our business strategy include: 

Diversify sources of income by expanding ship chartering 

• Expanding ship chartering business that we expect will provide 

us with a long-term stable source of income. 

• Building nine vessels to be completed by 2009 for our own 

charter fleet. 

• Building 10 vessels, to be completed by 2010, for sale to 

strategic partners. 

• Reallocate our resources and capacity to increase our 

ship repair and conversion business in the event of a 

slowdown in the shipbuilding business. 

Upgrading technology and processes 

• Continuously upgrade technical capabilities in order 

to strengthen overall competitiveness, shorten the 

vessel delivery period and minimise project costs. 

• Invest further in advanced equipment and 

technology to enhance processes and improve 

efficiency and productivity through better project 

management control. 

Increasing capacity 

• Progressively increase shipyard capacity to take 

on more and larger projects and to carry out the 

projects already recorded in our expanding order 

book. 

• Expand the usable waterfront of Batam shipyard from 

450 metres to approximately 800 metres and extend 

our Syncrolift® berthside by 32 metres x 245 metres, 

among other upgrades to our Batam shipyard facilities 

by end FY2009. 

• Pending relevant approvals and our evalution of 

commercial viability of building a shipyard in China, we 

may build a shipyard in China. 

Strengthening engineering and middle-level management teams 

• Recruiting, developing and retaining talent through aggressive 

recruiting policy, training programmes and mentoring schemes, 

as well as competitive compensation packages and career 

opportunities. 

Enhancing competitive cost structure through selective outsourcing 

• Increase capacity and maintain competitive cost structure by outsourcing 

certain shipbuilding work to regional shipyards. 

• Deploy our personnel to monitor the construction to ensure adherence to 

stringent quality controls and procedures. 

• Allows our Batam shipyard to focus on more complex and sophisticated vessels.

Use of Proceeds 

Based on the Offering Price of S$0.51 for each Offering Share, our net proceeds from the Offering are estimated to be 

approximately S$97.7 million. 

Use of net proceeds: 

• S$43.4 million for funding of strategic investments; 

• S$27.2 million for funding of the expansion of our fleet of vessels for charter; 

• S$23.1 million for capital expenditure related to the development of our yard, infrastructure facilities and equipment; and 

• S$4.0 million the balance for general working capital requirements. 

Indicative IPO Timetable 

Date and Time Event 

22 November 2008 at 9.00 a.m. Opening date and time for the Public Offer 

26 November 2008 at 12.00 noon Closing date and time for the Application List 

28 November 2008 at 9.00 a.m. Commence trading on a “ready” basis 

Applications for the Shares in the Public Offer may be made through: 

• ATMs of DBS Bank (including POSB), OCBC and UOB Group; 

• internet banking websites of DBS Bank and UOB Group; or 

• printed application forms which form part of the Prospectus.

NOTICE TO INVESTORS. .................. ii 

CORPORATE INFORMATION ................ v 

SUMMARY ........................... 1 

RISK FACTORS ........................ 12 

USE OF PROCEEDS ..................... 30 

DIVIDEND POLICY. ..................... 32 

EXCHANGE RATES AND EXCHANGE CONTROLS ... 33 

CAPITALISATION AND INDEBTEDNESS. ......... 35 

DILUTION ........................... 36 

SELECTED CONSOLIDATED FINANCIAL 

INFORMATION ....................... 38 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF 

FINANCIAL CONDITION AND RESULTS OF 

OPERATIONS ........................ 41 

INDUSTRY OVERVIEW. ................... 73 

OUR RESTRUCTURING AND CORPORATE 

STRUCTURE ........................ 94 

OUR BUSINESS ........................ 100 

DIRECTORS AND SENIOR MANAGEMENT ....... 127 

SHARE AWARD SCHEME .................. 137 

SUBSTANTIAL SHAREHOLDERS AND VENDORS .... 143 

INTERESTED PERSON TRANSACTIONS AND 

CONFLICTS OF INTERESTS ............... 150 

DESCRIPTION OF SHARE CAPITAL. ........... 170 

DESCRIPTION OF OUR SHARES ............. 173 

TAXATION ........................... 177 

PLAN OF DISTRIBUTION .................. 179 

TRANSFER RESTRICTIONS ................. 187 

TABLE OF CONTENTS 

i 

CLEARANCE AND SETTLEMENT ............. 188 

LEGAL MATTERS ...................... 189 

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. . 190 

GENERAL AND STATUTORY INFORMATION ...... 191 

DEFINITIONS ......................... 203 

GLOSSARY OF TECHNICAL TERMS ........... 211 

APPENDIX 1—INDEPENDENT AUDITORS’ REPORT 

AND THE CONSOLIDATED FINANCIAL 

STATEMENTS FOR THE YEARS ENDED 

DECEMBER 31, 2005, DECEMBER 31, 2006 

AND DECEMBER 31,2007.............. A1-1 

APPENDIX 2—INDEPENDENT AUDITORS’ 

REVIEW REPORT AND THE CONDENSED 

CONSOLIDATED FINANCIAL STATEMENTS FOR 

THE FIVE MONTHS ENDED MAY 31, 2008 . . . A2-1 

APPENDIX 3—SUMMARY OF OUR 

MEMORANDUM AND ARTICLES OF 

ASSOCIATION ....................... A3-1 

APPENDIX 4—SUMMARY OF THE RELEVANT 

LAWS AND REGULATIONS APPLICABLE TO 

US .............................. A4-1 

APPENDIX 5—RULES OF THE OTTO MARINE 

SHARE AWARD SCHEME ................ A5-1 

APPENDIX 6—LETTER FROM INDEPENDENT 

FINANCIAL ADVISER TO THE INDEPENDENT 

DIRECTORS ........................ A6-1 

APPENDIX 7—TERMS, CONDITIONS AND 

PROCEDURES FOR APPLICATION AND 

ACCEPTANCE ....................... A7-1

NOTICE TO INVESTORS 

You should rely only on the information contained in this document or to which we have referred 

you. We have not authorised anyone to provide you with information that is different. This document 

may only be used where it is legal to sell our Shares. The information in this document may only be 

accurate on the date of this document. 

No person is authorised to give any information or to make any representation not contained in this 

document and any information or representation not so contained must not be relied upon as having been 

authorised by or on behalf of us, the Vendors, the Issue Managers or the Underwriter. Neither the delivery of 

this document nor any offer, sale or transfer made hereunder shall under any circumstances imply that the 

information herein is correct as at any date subsequent to the date hereof or constitute a representation that 

there has been no change or development reasonably likely to involve a material adverse change in our or the 

Vendors’ affairs, conditions and prospects or our Shares since the date hereof. Where such changes occur and 

are material or required to be disclosed by law, the SGX-ST and/or any other regulatory or supervisory body 

or agency, we and/or the Vendors will make an announcement of the same to the SGX-ST and, if required, 

issue and lodge an amendment to this document or a supplementary document or replacement document 

pursuant to Section 240 or, as the case may be, Section 241 of the Securities and Futures Act and take 

immediate steps to comply with the said sections. Investors should take notice of such announcements and 

documents and, upon release of such announcements or documents, shall be deemed to have notice of such 

changes. No representation, warranty or covenant, express or implied, is made by us, the Vendors, the Issue 

Managers or the Underwriter or any of our or their respective affiliates, directors, officers, employees, agents, 

representatives or advisers as to the accuracy or completeness of the information contained herein, and nothing 

contained in this document is, or shall be relied upon as, a promise, representation or covenant by us, the 

Vendors, the Issue Managers or the Underwriter or their affiliates, directors, officers, employees, agents, 

representatives or advisers. 

None of us, the Vendors, the Issue Managers or the Underwriter nor any of our or their respective 

affiliates, directors, officers, employees, agents, representatives or advisers are making any representation or 

undertaking to any investors in our Shares regarding the legality of an investment by such investor under 

relevant securities, investment or similar laws. The Issue Managers and the Underwriter have not independently 

verified the information contained in this document and no representation or warranty is made as to its 

accuracy. The information should not be assumed to have been updated at any time after the date shown on 

the cover of this document. In addition, investors in our Shares should not construe the contents of this 

document as legal, business, financial or tax advice. Investors should be aware that they may be required to 

bear the financial risks of an investment in our Shares for an indefinite period of time. Investors should consult 

their own professional advisers as to the legal, tax, business, financial and related aspects of an investment in 

our Shares. 

The distribution of this document and the offering, purchase, sale or transfer of our Shares in certain 

jurisdictions may be restricted by law. We, the Vendors, the Issue Managers and the Underwriter require 

persons into whose possession this document comes to inform themselves about and to observe any such 

restrictions at their own expense and without liability to us, the Vendors, the Issue Managers or the 

Underwriter. This document does not constitute an offer of, or an invitation to purchase, any of our Shares in 

any jurisdiction in which such offer or invitation would be unlawful. Persons to whom a copy of this document 

has been issued shall not circulate to any other person, reproduce or otherwise distribute this document or any 

information herein for any purpose whatsoever nor permit or cause the same to occur. 

USE OF CERTAIN TERMS 

In this document, all references to our “Company” are to Otto Marine Limited, without its consolidated 

subsidiaries and associated companies. The terms “Group”, “we”, “us”, “our” and “our Group” refer to Otto 

Marine Limited, its consolidated subsidiaries and its associated companies. Unless the context otherwise 

requires, references to “Management” are to the directors and executive officers and senior management team 

of Otto Marine Limited as at the date of this document, and statements in this document as to beliefs, 

expectations, estimates and opinions of Otto Marine Limited are those of the Management. 

As used in this document, all references to “Indonesia” are references to the Republic of Indonesia, and 

all references to “Singapore” are references to the Republic of Singapore. As used in this document, all 

references to “Rupiah”, “IDR” and “Rp” are to Indonesian Rupiah, the lawful currency of Indonesia, all 

references to “US$”, “USD” and “US Dollars” are to the lawful currency of the United States of America, and 

all references to “S$”, “SGD” and “Singapore Dollars” are to the lawful currency of Singapore. 

ii

All references to the “Latest Practicable Date” are to 22 August 2008, being the Latest Practicable Date 

prior to the lodgement of this document with the Authority. The term “Period Under Review” refers to the the 

last three financial years ended 31 December 2007 and the period from 1 January 2008 to the Latest 

Practicable Date. 

The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the same meanings 

ascribed to them, respectively, in Section 130A of the Companies Act, Chapter 50 of Singapore (the “Act”). 

Any reference to a time of day in this document refers to Singapore time unless otherwise stated. 

Words importing the singular shall, where applicable, include the plural and vice versa. Words importing 

the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. 

References to persons shall, where applicable, include corporations. 

PRESENTATION OF FINANCIAL AND OTHER DATA 

Financial Data 

Our consolidated financial statements presented in this document are prepared and presented in 

accordance with financial reporting standards in Singapore (“SFRS”). 

We maintain our accounts in Singapore Dollars. Solely for the convenience of the reader, certain 

Singapore Dollar amounts presented in this document have been translated into US Dollars at specified rates. 

Unless otherwise indicated, US Dollar equivalent information for amounts in Singapore Dollars is based on 

the Noon Buying Rate in New York as at 31 May 2008, which was S$1.36 to US$1.00. No representation is 

made that the US Dollar or Singapore Dollar amounts shown herein could have been or could be converted 

into US Dollars or Singapore Dollars, as the case may be, at any particular rate or at all. See “Exchange Rates 

and Exchange Controls”. 

Any discrepancies in the tables included herein between the listed amounts and the totals thereof are due 

to rounding; accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the 

figures that precede them. 

Non-GAAP Financial Measures 

EBITDA refers to income (loss) from operations before interest, taxation, depreciation and amortisation. 

EBITDA and related ratios presented in this document are supplemental measures of our performance and 

liquidity that are not required by, or presented in accordance with, SFRS, International Financial Reporting 

Standards (“IFRS”). Further, EBITDA is not a measurement of our financial performance or liquidity under 

SFRS or IFRS and should not be considered as an alternative to net income, operating income or any other 

performance measures derived in accordance with SFRS or IFRS or as an alternative to cash flow from 

operations or as a measure of our liquidity. 

We believe EBITDA facilitates operating performance comparisons from period to period and from 

company to company by eliminating potential differences caused by variations in capital structures (affecting 

interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates 

or net operating losses) and the age and book depreciation of tangible assets (affecting relative depreciation 

expense). In particular, EBITDA eliminates non-cash depreciation expense that arises from the capital-intensive 

nature of our business. We also believe that EBITDA is a supplemental measure of our ability to meet debt 

service requirements. Finally, we present EBITDA and related ratios because we believe these measures are 

frequently used by securities analysts and investors in evaluating similar issuers. 

Industry Data 

Industry data and certain other information used throughout this document were obtained from the 

Braemar Seascope Limited report set out in the section “Industry Overview” of this document, internal 

surveys, market research, publicly available information, government data and industry publications. Industry 

publications generally state that the information that they contain has been obtained from sources believed to 

be reliable but that the accuracy and completeness of that information is not guaranteed. Similarly, internal 

surveys and market research, while believed to be reliable, have not been independently verified, and none of 

us, the Vendors, the Issue Managers or the Underwriter make any representation as to the accuracy or 

completeness of this information. 

iii

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS 

All statements contained in this document, statements made in press releases and oral statements that may 

be made by us or our Directors, Executive Officers or employees acting on our behalf that are not statements 

of historical fact constitute “forward-looking statements”. Some of these statements can be identified by 

forward-looking terms such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “if”, “intend”, “may”, 

“plan”, “possible”, “probable”, “project”, “should”, “will” and “would” or similar words. However, these 

words are not the exclusive means of identifying forward-looking statements. All statements regarding our 

expected financial position, business strategies, plans and prospects and the future prospects of our industry 

are also forward-looking statements. These forward-looking statements, including but not limited to statements 

as to our revenue and profitability, prospects, future plans, other expected industry trends and other matters 

discussed in this document regarding matters that are not historic facts, are only predictions. 

These forward-looking statements involve known and unknown risks, uncertainties and other factors that 

may cause our actual future results, performance or achievements to be materially different from any future 

results, performance or achievements expected, expressed or implied by such forward-looking statements. 

These factors include, amongst others, global economic conditions, political and regulatory conditions, 

currency exchange fluctuations, adverse conditions in the oil and gas and offshore marine industry, changes in 

the political, social and economic conditions and regulatory environment in Singapore, Indonesia, China and 

other countries where we may conduct our business, changes in competitive conditions and other factors 

beyond our control. Some of these factors are discussed in more detail in “Management’s Discussion and 

Analysis of Financial Condition and Results of Operations” and “Risk Factors”. 

All forward-looking statements made by or attributable to us or persons acting on our behalf, contained in 

this document are expressly qualified in their entirety by such factors. Given the risks and uncertainties that 

may cause our actual future results, performance or achievements to be materially different from that expected, 

expressed or implied by the forward-looking statements in this document, undue reliance must not be placed 

on these statements. Our actual results may differ materially from those anticipated in these forward-looking 

statements. 

Neither we, the Vendors, the Issue Managers, the Underwriter, their respective advisers nor any other 

person represents or warrants that our actual future results, performance or achievements will be as discussed 

in these forward-looking statements. 

These forward-looking statements speak only as at the date of this document. Further, we, the Vendors, 

the Issue Managers and the Underwriter disclaim any responsibility to update any of these forward-looking 

statements or publicly announce any revisions to these forward-looking statements to reflect future developments, 

events or circumstances, even if new information becomes available or other events occur in the future. 

We are, however, subject to the provisions of the Securities and Futures Act and the Listing Manual regarding 

corporate disclosure. In particular, pursuant to Section 241 of the Securities and Futures Act, if, after this 

document is registered but before the close of this Offering, we become aware of: (i) a false or misleading 

statement or matter in this document; (ii) an omission from this document of any information that should have 

been included in it under Section 243 of the Securities and Futures Act; or (iii) a new circumstance that has 

arisen since this document was lodged with the Authority and would have been required by Section 243 of the 

Securities and Futures Act to be included in this document, if it had arisen before this document was lodged 

and that is materially adverse from the point of view of an investor, we may lodge a supplementary or 

replacement prospectus with the Authority. 

iv

CORPORATE INFORMATION 

Board of Directors ................ YawChee Siew (Executive Chairman) 

Lee Kok Wah (Group Managing Director) 

William Edward Alastair Morrison (Non-executive Director) 

Craig Foster Pickett (Non-executive Director) 

Reggie Thein (Independent Director) 

Ng Chee Keong (Independent Director) 

Joint Company Secretaries ......... LoKimSeng, LLB (Hons) 

See Kian Heng, CPA 

Registered Office and Principal Place 

of Business ...................... 9Temasek Boulevard 

#33-01 Suntec Tower Two 

Singapore 038989 

Company Registration Number ...... 197902647M 

Vendors ........................ LeeKokWah 

22 Ramsgate Road 


CEO Technology Asia Limited 

OMC Chambers 

P.O. Box 3152 

Road Town, Tortola 

British Virgin Islands 

Share Registrar and Share Transfer 

Agent .......................... M&CServices Private Limited 

138 Robinson Road 

#17-00 The Corporate Office 


Global Coordinator, Underwriter and 

Bookrunner ..................... United Overseas Bank Limited 

80 Raffles Place 

UOB Plaza 


Issue Managers .................. United Overseas Bank Limited 


UOB Plaza 


Credit Suisse (Singapore) Limited 

1 Raffles Link #03/#04-01 

South Lobby 


Primary Sub-Underwriter and 

Primary Sub-Placement Agent ...... UOBKayHian Private Limited 


#30-01 UOB Plaza 1 


Independent Auditors and Reporting 

Accountants ..................... Deloitte & Touche LLP 

6 Shenton Way 

#32-00 DBS Building Tower 2 


Partner-in-charge: Ng Peck Hoon 

(a member of the Institute of Certified Public Accountants of 

Singapore) 

v

Legal Advisers to our Company as to 

Singapore law ................... Arfat Selvam Alliance LLC 

55 Market Street 

#08-01 


Legal Advisers to the Issue Managers, 


Bookrunner as to Singapore law ..... TSMPLawCorporation 

6 Battery Road 

#33-01 




Bookrunner as to New York and US 

federal securities law .............. Clifford Chance Wong Pte Ltd 

One George Street 

19th Floor 


Legal Advisers to our Company as to 

Indonesian law. .................. Adnan Kelana Haryanto and Hermanto 

Chase Plaza, 18th Floor 

Jl. Jendral Sudirman Kav. 21 

Jakarta 12920 

Indonesia 

Yudha Bahri Sihombing & Setiawan 

Sona Topas Tower, 8th Floor 

Jl. Jendral Sudirman Kav. 26 

Jakarta 12920 

Indonesia 



Bookrunner as to Indonesian law .... Bahar & Partners 

Menara Prima, 18th Floor 

Jl Lingkar Mega Kuningan Blok 6.2. 

Jakarta 12950 

Indonesia 

Principal Bankers ................ Bangkok Bank Public Company Limited 

180 Cecil Street 

Bangkok Bank Building 


The HongKong & Shanghai Banking Corporation 

21 Collyer Quay 

#14-01 HSBC Building 


Standard Chartered Bank 

6 Battery Road 

Standard Chartered Bank Building 


CIMB Bank Berhad 


#09-01 Singapore Land Tower 


vi

United Overseas Bank Limited 


UOB Plaza 


PT Bank CIMB Niaga, Tbk 

Graha Niaga LT.6 

JL. Jendral Sudirman Kav. 58 

Jakarta 12190 

Indonesia 

RHB Bank Berhad 


#03-00 RHB Bank Building 


Receiving Bank .................. United Overseas Bank Limited 


UOB Plaza 


Independent Financial Adviser ...... Provenance Capital Pte. Ltd. 


#09-01 Cecil Court 


vii

(This page is intentionally left blank)

SUMMARY 

The following summary is qualified in its entirety by, and is subject to, the more detailed information and 

the financial information contained or referred to elsewhere in this document. The meanings of terms not 

defined in this summary can be found elsewhere in this document. 

Introduction 

We are an offshore marine group engaged in shipbuilding, ship repair and conversion and ship chartering. 

Our customers are primarily fleet operators who provide logistics support to offshore services and equipment 

companies operating globally in the oil and gas industry. 

We are headquartered in Singapore and we own and operate what we believe to be one of the largest 

shipbuilding yards in Batam, Indonesia. Our location provides us with a strategic advantage as a result of 

Singapore’s position as a hub for the regional marine and offshore industry and enables us to tap into a ready 

supply of workers from Indonesia and management talent and marine and offshore support and expertise from 

Singapore. Our shipyard has a well-organised infrastructure along with comprehensive facilities, advanced 

equipment and an experienced team of engineers. 

We build a range of small, medium and large offshore support vessels at our shipyard in Batam, Indonesia 

and outsourced third party shipyards in China. Our strategic focus is on building offshore support vessels such 

as AHTS vessels and PSVs which comply with the technical specifications required to operate in the North 

Sea, including the requirements of Norwegian Maritime Directorate and Det Norske Veritas. We also construct 

other types of offshore support vessels including, work barges with accommodation for 300 people as well as 

work maintenance boats and plan to build offshore construction vessels. In addition, we provide ship repair 

and conversion services primarily for offshore support vessels. We have recently signed agreements to build 

offshore construction vessels. 

Our specialised focus has allowed us to build up our expertise in constructing high-specification offshore 

support vessels, to improve our production quality and efficiency and to develop a competitive cost structure. 

It has also enabled us to gain recognition in the construction of complex and sophisticated offshore vessels. 

We retain ownership and charter out some of the vessels that we build. In addition, through our associated 

companies, we hold minority interests in some of the vessels that we sell to our strategic partners for 

chartering purposes. 

Over the last three financial years ended 31 December 2007, our revenue grew at a compounded annual 

growth rate of 139.6% per annum, from S$54.7 million in FY2005 to S$314.0 million in FY2007. Over the 

same period, the profit attributable to our Shareholders grew from S$3.1 million in FY2005 to S$41.9 million 

in FY2007. For the five months ended 31 May 2008, our revenue and profit attributable to our Shareholders 

was S$219.5 million and S$32.7 million, respectively, compared to revenue and profit attributable to our 

Shareholders of S$86.3 million and S$9.0 million, respectively, for the same period in 2007. 

As at 8 August 2008, our order book was S$937.1 million. 

Our Strengths and Strategies 

Strengths 

We have a history in shipbuilding and ship repair and conversion dating back to the early 1980s. Since 

2004, we have specialised in the building of offshore support vessels. We believe that we benefit from a 

number of strengths that together differentiate us from our competitors in the offshore marine industry. They 

include the following: 

Specialised focus on complex, sophisticated and environment friendly offshore support vessels. 

We focus on the construction and engineering of complex, sophisticated and environment friendly 

offshore support vessels which comply with technical specifications required to operate in the North 

Sea, including the requirements of Norwegian Maritime Directorate and Det Norske Veritas. This focus 

has been beneficial to us as these vessels have generally produced higher margins for us than less 

complex vessels. 

We believe that the demand for offshore support vessels will continue to shift towards vessels that are 

larger and more sophisticated in terms of their engine capacity, bollard pull and navigational equipment, 

as the search for and production of offshore oil and gas become more demanding both in terms of 

1

increasing water depths and severe weather conditions. In addition, current industry trends call for 

vessels with improved design on stability capabilities and inherently safer and environment friendly 

operation. We believe these favourable industry trends will provide strong support for the vessels that 

we build. 

We work with Norwegian ship design firms to tap into their expertise in the design of sophisticated 

offshore support vessels. We believe that our shipbuilding yard is the only one in Asia which builds 

21,000 bhp AHTS vessels on a turnkey basis using the VS491 design from renowned Norwegian ship 

design house Vik-Sandvik. In addition, we have entered into an arrangement with Marin Teknikk AS 

for the exclusive use of one of their proprietary PSV designs in selected countries in Asia and the 

Middle East until December 2008. 

Our specialised focus has allowed us to build up our expertise in constructing high-specification 

offshore support vessels, to improve our production quality and efficiency and to develop a competitive 

cost structure. It has also enabled us to gain recognition in the construction of complex and 

sophisticated offshore vessels. We have been able to build a sizable order book which, as at 8 August 

2008 was S$937.1 million. 

An efficient and strategically located shipyard. 

We believe we have one of the largest shipyards in Batam, an island in Indonesia located approximately 

20 kilometres from Singapore. Our shipyard has approximately 40 hectares of land area and 450 metres 


Batam is a major hub for the shipbuilding industry in South-east Asia. Our proximity to Singapore 

provides us with a strategic advantage as a result of Singapore’s position as a hub for the regional 

marine and offshore industry, which provides us with access to the marine and offshore support and 

expertise from Singapore. Our location in Batam also enables us to tap into a ready supply of workers 

from Indonesia. 

Our Syncrolift» allows for the construction of up to twelve 5,000 bhp to 10,800 bhp vessels at any one 

time. More importantly, the Syncrolift» is able to move vessels in and out of the water efficiently for 

test launches, ship repair or underwater works. As a result, we are able to complete the construction of 

a larger number of newbuildings and the repair of vessels in greater numbers within a shorter 

timeframe. Consequently, we enjoy higher productivity and economies of scale. 

Strong engineering and technical capabilities and turnkey approach. 

We adopt a proactive, total solutions approach, in which we provide our customers with turnkey 

solutions, ranging from the selection of design to project specification, procurement, construction, 

system installation and integration, testing, commissioning to warranty support. We believe that our 

turnkey approach enables us to provide value-added customised solutions that command higher margins 

and which distinguish us from our competitors. 

We are able to deliver our turnkey solutions as a result of our established relationships with our 

suppliers and our strong engineering and technical capabilities. 

Our operations benefit from a dedicated, skilled and experienced team of naval architects and engineers 

who are specially trained to operate the TRIBON» software, a three-dimensional product model naval 

architecture programme originally created for designing commercial and naval vessels. This in-house 

capability enables us to build a precise virtual model of the vessel, which can be reviewed and tested 

prior to production, thereby minimising errors and resulting in a more efficient shipbuilding process. 

Experienced management team. 

Our key executive officers with operating function have in-depth experience in the offshore marine 

industry, with an average of 34 years of experience. 

Our management team remains focused on continually identifying market opportunities and achieving 

improved operating efficiency and returns. 

Through the years, our management team has developed strong relationships with our customers, 

designers and our suppliers. We have also established a reputation among our customers for providing 

quality service and maintaining high operational standards. This reputation has benefited our shipbuilding 

and ship repair and conversion businesses in terms of quality and on the execution of our 

customers’ delivery schedules. 

2

Strategies 

We intend to consolidate our current market position by capitalising on opportunities in the global marine 

and offshore industry and to enhance our competitiveness. Key elements of our business strategy are as 

follows: 

Diversify sources of income by expanding ship chartering while maintaining focus on construction of 

higher value vessels. 

While shipbuilding remains our main focus, we intend to diversify our sources of income by expanding 

our ship chartering business. 

As at the Latest Practicable Date, our chartering fleet comprises five 3,600 bhp tugboats and five 

10,000 dwt high deck loading barges. We are building nine vessels to be completed by 2009, which we 

intend to add to our chartering fleet. We intend to retain ownership of these vessels and deploy them 

on bareboat or time charters. 

We currently have one work barge with accommodation for 300 people in operation with a strategic 

partner. We are also building nine vessels that we have sold to our strategic partners to be completed 

by 2010. In addition, we are building 10 vessels to be completed by 2010 that we intend to sell to our 


We expect that our ship chartering business will provide us with a source of income that is more stable 

over the long term than shipbuilding alone. In addition, in the event of a slowdown in the shipbuilding 

business, we intend to reallocate our resources and capacity to increase our ship repair and conversion 

business. 

With regard to our shipbuilding operations, we intend to continue expanding our operations with a 

particular focus on complex, sophisticated and environment friendly offshore support vessels, which we 

believe will continue to command higher prices within the industry. 

Upgrading technology and processes to enhance our competitive position. 

We plan to continuously upgrade our technical capabilities in order to strengthen our overall 

competitiveness. We are also constantly seeking to shorten the vessel delivery period and minimise 

project costs. 

We also intend to invest further in advanced equipment and technology and to enhance our production 

planning, sequencing, and inventory management processes. We have acquired a project management 

software which enables us to track project management schedules and the progress in the construction 

of vessels efficiently. This in turn will increase our efficiency and productivity in terms of project 


Increasing capacity to construct more higher value vessels. 

We intend to progressively increase our shipyard capacity in order to be able to take on more and 

larger projects and to carry out the projects already recorded in our expanding order book. See “Our 

Business — Significant Shipbuilding Projects — Order Book”. 

We intend to expand the usable waterfront of our Batam shipyard from 450 metres to approximately 

800 metres, extend our Syncrolift» berthside by 32 metres � 245 metres and purchase additional 

gantry cranes, among other upgrades to our Batam shipyard facilities. We have also commenced 

construction of one slipway. All of these will enable us to increase our shipbuilding capacity in Batam. 

We intend to complete the expansion and installation of these facilities by the end of FY2009. 

We are currently evaluating the commercial viability of building a shipyard in China. Subject to our 

evaluation of the commercial viability of the project and us obtaining all relevant approvals, licenses 

and permits, we may build a shipyard in China (see “Our Business — Expansion and Upgrading 

Plans”). 

Strengthening our engineering and middle-level management teams to support our expanding 

operations. 

We believe that our strong engineering and management teams have been critical factors in building 

the reputation we have in the market. As our operations expand, we will need to strengthen our 

engineering and middle-level management team by recruiting, developing and retaining talent. 

3

We believe we have an aggressive recruiting policy both laterally in the industry and at the entry level 

from Indonesian universities. We intend to continue offering training programmes and mentoring 

schemes to our staff and new recruits. In addition, we intend to offer competitive compensation 

packages and career opportunities to performing engineers and middle-level managers. 

Enhancing competitive cost structure through selective outsourcing. 

We strive to increase our capacity and maintain our competitive cost structure particularly in the 

offshore support vessels market by outsourcing certain shipbuilding work to other regional shipyards in 

South-east Asia and China. To ensure that our stringent procedures and quality controls are properly 

observed, we deploy our personnel to such other shipyards to monitor the construction through to precommissioning 

and delivery. 

We expect that this strategy will enable us to build more vessels and to allocate our resources and 

capacity more efficiently by allowing us to focus on more complex and sophisticated vessels in our 

Batam shipyard. 

In order to support the work that we outsource to shipyards in China, we established a representative 

office in Foshan, China in 2007. 

Company Background 

We were incorporated in Singapore on 5 September 1979 under the Act as a private limited company 

under the name of “Otto Industrial Co (Pte) Ltd”. With effect from 5 October 2006, we changed our name to 

“Otto Marine Pte. Ltd.”. On 17 March 2008, we converted to a public limited company and changed our name 

to “Otto Marine Limited”. Our registered address and principal place of business is 9 Temasek Boulevard, 

#33-01 Suntec Tower Two, Singapore 038989. Our telephone and fax numbers are (65) 6863 2366 and 

(65) 6863 1127, respectively. Our registration number is 197902647M. Our website address is 

http://www.ottomarine.com. Information contained in our website does not constitute part of this document. 

4

The Offering 

The Issuer ...................... Otto Marine Limited, a company incorporated with limited liability 

under the laws of Singapore. 

The Vendors. .................... LeeKokWahandCEOTechnology Asia Limited. 

The Offering .................... 235,295,000 Offering Shares offered through the Placement and the 

Public Offer, comprising 206,045,000 New Shares and 29,250,000 

Vendor Shares. 

The completion of the Public Offer is conditional upon the completion 

of the Placement. The Shares in the Offering are being offered 

and sold outside the United States to non-US persons (including 

Cornerstone Investors, institutional and other investors in Singapore) 

in reliance on Regulation S under the Securities Act. The 

Shares in the Offering have not been and will not be registered 

under the Securities Act and, subject to certain exceptions, may not 

be offered or sold within the United States or to, or for the account 

or benefit of, US persons (as defined in Regulation S). 

Offering Price ................... S$0.51 for each Offering Share. The Offering Price was determined 

by agreement among our Company, the Vendors and the Underwriter. 

See “Plan of Distribution”. 

Purchasers of and subscribers for the Offering Shares may be 

required to pay a brokerage fee (and, if so required, such brokerage 

fee will be up to 1.0% of the Offering Price). 

Cornerstone Investors ............. Each of Bangkok Bank Public Company Limited (“Bangkok 

Bank”), Maju Holdings Sdn Bhd (“Maju Holdings”) and Standard 

Chartered Private Equity Limited (“SCPEL”) (collectively, the 

“Cornerstone Investors”) has entered into a cornerstone share subscription 

agreement with our Company (collectively, the “Cornerstone 

Share Subscription Agreements”) to subscribe and/or 

purchase an aggregate of 146,234,000 Offering Shares, at the 

Offering Price, conditional, inter alia, upon the Placement Agreement 

and Offer Agreement (both as defined herein) having been 

entered into and not having been terminated pursuant to their terms 

on or prior to the date of listing of our Shares on the SGX-ST 

(“Listing Date”). 

The Placement ................... 234,295,000 Offering Shares offered by way of an international 

placement to investors at the Offering Price, including institutional 

and other investors in Singapore and the Cornerstone Investors. 

The Placement will include the Reserved Shares. 

The Public Offer ................. 1,000,000 Offering Shares offered in Singapore at the Offering 

Price by way of an offering to the public in Singapore. The completion 

of the Public Offer is conditional upon the completion of 

the Placement. 

The Reserved Shares .............. 8,915,000 Offering Shares will be reserved for our employees who 

have contributed to our success and development (to be determined 

by us at our sole discretion). 

Clawback and re-allocation ......... Offering Shares may be re-allocated between the Placement and 

the Public Offer at the sole discretion of the Underwriter. 

Application Procedures in Singapore. . Investors applying for the Offering Shares under the Public Offer 

must follow the application procedures set out in “Appendix 7 — 

Terms, Conditions and Procedures for Application and Acceptance” 

which constitutes part of this document registered with the Authority. 

Applications must be paid for in Singapore Dollars. The minimum 

initial application is for 1,000 Offering Shares. An applicant 

5

may apply for a larger number of Shares in integral multiples of 

1,000 Offering Shares. 

Lock-ups ....................... Wehaveagreed that we will not, subject to certain exceptions, 

issue, offer, sell, contract to sell, pledge or otherwise dispose of, 

directly or indirectly, or file with the United States Securities and 

Exchange Commission a registration statement under the Securities 

Act relating to, any Shares or securities convertible into or 

exchangeable or exercisable for any Shares or warrants or other 

rights to purchase or subscribe for Shares, or enter into a transaction 

which would have the same effect, or enter into any swap, 

hedge or other arrangement that transfers, in whole or in part, any 

of the economic consequences of ownership of our Shares, whether 

any of these transactions are to be settled by delivery of our Shares 

or such other securities, in cash or otherwise, or publicly disclose 

our intention to make any offer, sale, pledge, disposition or filing, 

without, in each case, the prior written consent of the Issue Managers 

until six months after the Listing Date. 

Certain of our Shareholders have also agreed that, subject to certain 

exceptions, they will not offer, sell, contract to sell, pledge or otherwise 

dispose of, directly or indirectly, any Shares, without, in 

each case, the prior written consent of the Issue Managers until six 

months after the Listing Date. See “Plan of Distribution — Restrictions 

on Disposals and Issue of Shares”. 

Dividends ....................... Inconsidering the level of dividend payments, if any, we intend to 

take into account various factors, including (but not limited to): 

the level of our cash, gearing, return on equity and retained 

earnings; 

our expected financial performance; 

our projected levels of capital expenditure and other investment 

plans; 

tax positions of our Company and our subsidiaries; 

laws or regulations in issuing dividends; and 

any restrictions on payment of dividends that may be imposed on 

us by our financing arrangements. 

See “Dividend Policy” for a description of our dividend policy. 

Listing and Trading ............... Prior to the Offering, there has been no public market for our 

Shares. Application has been made to the SGX-ST for permission 

to list all our issued Shares (including the Vendor Shares), the New 

Shares and the Award Shares on the Main Board of the SGX-ST. 

Such permission will be granted when we have been admitted to 

the Official List of the SGX-ST. Acceptance of applications for the 

Offering Shares will be conditional upon, among other things, permission 

being granted to deal in and for quotation for all our issued 

Shares (including the Vendor Shares), the New Shares and the 

Award Shares. We have not applied to any other exchange to list 

our Shares. 

Our Shares are expected to commence trading on a “ready” basis 

as early as 9.00 a.m. on 28 November 2008 (Singapore time). See 

“— Indicative Timetable”. 

Our Shares will, upon their issue, listing and quotation on the 

SGX-ST, be traded on the SGX-ST under the book-entry (scripless) 

settlement system of CDP. Dealing in and quotation of our Shares 

6

on the SGX-ST will be in Singapore Dollars. Our Shares will be 

traded in board lot sizes of 1,000 Shares on the SGX-ST. 

Voting rights .................... Registered owners of our Shares will be entitled to full voting 

rights, as described in “Description of our Shares”. 

Settlement ...................... WeandtheVendors expect to receive payment for all the Offering 

Shares in the Placement and the Public Offer on or about 

28 November 2008. We will, and we expect the Vendors will, 

deliver global share certificates representing the Offering Shares to 

CDP for deposit into the securities accounts of successful applicants 

on or about 28 November 2008. See “Clearance and 

Settlement”. 

Transfer Restrictions .............. TheShares will be subject to certain restrictions described in 

“Transfer Restrictions”. 

Use of Proceeds .................. Based on the Offering Price of S$0.51 for each Offering Share, our 

net proceeds from the issuance of the New Shares after deducting 

our share of the underwriting fees, commissions and other estimated 

expenses payable in relation to the Offering are estimated to 

be approximately S$97.7 million. We intend to use these net proceeds 

to fund our strategic investments, our fleet expansion of vessels 

available for charter and to develop our yard, infrastructure 

facilities and equipment, and the remainder for general working 

requirements purposes. We will not receive any of the proceeds 

from the sale of Vendor Shares. See “Use of Proceeds”. 

Risk Factors. .................... Prospective investors should carefully consider certain risks connected 

with an investment in our Shares as discussed under “Risk 

Factors”. 

7

SUMMARY CONSOLIDATED FINANCIAL INFORMATION 

The following tables present our selected consolidated financial information as at and for the years ended 

31 December 2005, 2006, 2007 and the five months ended 31 May 2007 and 2008. The following discussion 

should be read in conjunction with our audited consolidated financial statements for FY2005, FY2006 and 

FY2007 and the notes thereto and our unaudited condensed consolidated financial statements for the five 

months ended 31 May 2008 and the related notes thereto and all other financial information which are 

included elsewhere in this document. You should also see the section of this document entitled “Management’s 

Discussion and Analysis of Financial Condition and Results of Operations”. We derived the summary financial 

information presented below from our audited consolidated financial statements for FY2005, FY2006 and 

FY2007 and our unaudited condensed consolidated financial statements for the five months ended 31 May 

2007 and 2008. Our condensed consolidated financial statements for the five months ended 31 May 2007 have 

not been audited or reviewed. Prospective investors should note that our results for the five months ended 

31 May 2008 are not necessarily indicative of the results that we will achieve for the year ending 31 December 

2008. Our unaudited condensed consolidated financial statements for the five months ended 31 May 2007 and 

2008 have been prepared on the same basis as our audited consolidated financial statements for FY2005, 

FY2006 and FY2007. Our consolidated financial statements were prepared and presented in accordance with 

SFRS. 

We have prepared our financial statements in accordance with SFRS, which may differ in certain 

significant respects from generally accepted accounting principles in other countries. 

Consolidated Profit and Loss Statements 

Financial Years Ended 31 December Five Months Ended 31 May 

2005 2006 2007 2007 2007 2008 

S$ S$ S$ US$ 

(Unaudited) 

S$ 

(Unaudited) 

S$ 

(Unaudited) 

(In thousands except per Share data) 

Revenue. ................... 54,689 147,255 314,024 230,900 86,308 219,533 

Cost of sales . ................ (48,591) (125,879) (232,326) (170,828) (71,293) (162,467) 

Gross profit ................. 6,098 21,376 81,698 60,072 15,015 57,066 

Other income (expense). ........ (969) 429 (8,045) (5,916) 1,554 (12,853) 

Administration expenses ........ 

Share of profits (losses) of 

(3,034) (5,270) (12,356) (9,085) (4,753) (7,448) 

associates . ................ — — (268) (197) — 4,571 

Finance costs ................ (2,042) (2,383) (5,905) (4,342) (1,067) (4,919) 

Profit before income tax ....... 53 14,152 55,124 40,532 10,749 36,417 

Income tax expense. ........... (462) (449) (1,449) (1,065) (649) (500) 

Profit (Loss) for the period ..... (409) 13,703 53,675 39,467 10,100 35,917 

Attributable to Equity holders of 

our Company .............. 3,082 20,200 41,927 30,829 8,964 32,711 

Minority interests ............. (3,491) (6,497) 11,748 8,638 1,136 3,206 

(409) 13,703 53,675 39,467 10,100 35,917 

Earnings per Share (1) attributable 

to equity holders of our 

Company (expressed in cents 

per Share) 

Basic ...................... 0.32 2.07 4.30 3.16 0.92 3.35 

Diluted (2) ................... 0.26 1.71 3.55 2.61 0.76 2.77 

Notes: 

(1) We calculated our earnings per Share based on the number of Shares outstanding prior to the completion 

of the Offering and after (i) deducting the amount of our profit attributable to minority interests and 

(ii) giving effect to the Share Split described in the section “Description of Share Capital”. 

(2) As adjusted for the issue of 206,045,000 New Shares. 

8

Consolidated Balance Sheets 

As at 

As at 31 December 

31 May 

2005 2006 2007 2007 2008 

S$ S$ S$ US$ S$ 

(Unaudited) (Unaudited) 


ASSETS 

Current assets 

Cash and bank balances ....................... 1,285 14,238 18,186 13,372 10,082 

Pledged deposits ............................. 138 40,969 195,718 143,910 151,183 

Trade receivables ............................ 20,430 4,239 25,538 18,778 19,370 

Gross amount due from customers for contract work . . — 27,418 94,300 69,338 177,055 

Deposits, prepayments and other receivables ........ 7,675 21,803 61,757 45,410 115,503 

Inventories ................................. 21,373 25,769 81,465 59,901 67,056 

Total current assets ........................... 

Non-current assets 

50,901 134,436 476,964 350,709 540,249 

Investments in associates ....................... — — 4,709 3,463 8,692 

Available-for-sale investments ................... — — 4,080 3,000 4,187 

Goodwill .................................. — 922 5,101 3,750 40,370 

Property, plant and equipment ................... 11,717 18,527 91,011 66,920 96,123 

Total non-current assets ....................... 11,717 19,449 104,901 77,133 149,372 

Total assets ................................ 62,618 153,885 581,865 427,842 689,621 

LIABILITIES AND EQUITY 

Current liabilities 

Loans and overdraft .......................... 25,754 38,237 136,847 100,623 134,426 

Trade payables .............................. 20,619 39,594 168,765 124,092 224,603 

Gross amount due to customers for contract work .... 277 35,070 97,341 71,574 84,637 

Other payables .............................. 3,805 6,210 6,561 4,824 7,152 

Deferred gain — short term ..................... — — 482 354 482 

Current portion of finance leases ................. — 25 80 60 80 

Income tax payable ........................... 513 905 2,122 1,560 2,005 

Total current liabilities ........................ 

Non-current liabilities 

50,968 120,041 412,198 303,087 453,385 

Loans and overdraft .......................... — — 47,516 34,938 41,526 

Deferred gain — long term ..................... — — 12,619 9,279 12,218 

Loan from related parties ...................... 52,170 27,872 51,381 37,780 102,828 

Finance leases ............................... — 170 347 255 315 

Total non-current liabilities ..................... 

Capital, reserves and minority interests 

52,170 28,042 111,863 82,252 156,887 

Issued capital ............................... 500 32,500 32,500 23,897 32,500 

Capital reserve .............................. 294 1,162 1,656 1,218 1,666 

Translation reserve ........................... 13 (1,158) (5,249) (3,860) (20,441) 

Accumulated profits (losses) .................... 

Equity attributable to equity holders of our 

(29,223) (9,023) 32,904 24,194 65,615 

Company ................................ (28,416) 23,481 61,811 45,449 79,340 

Minority interests ............................ (12,104) (17,679) (4,007) (2,946) 9 

Total equity (capital deficiency) .................. (40,520) 5,802 57,804 42,503 79,349 

Total liabilities and equity ..................... 62,618 153,885 581,865 427,842 689,621 

9

As at 


31 May 

2005 2006 2007 2007 2008 

S$ S$ S$ US$ 

(Unaudited) 

S$ 

(Unaudited) 


NAV per Share (1) (in cents) ..................... (2.91) 2.41 6.34 4.66 8.14 

NTA per Share (2) (in cents) ..................... (2.91) 2.31 5.82 4.28 4.00 

Notes: 

(1) We calculated our NAV per Share based on the number of Shares outstanding prior to the completion of 

the Offering and after (i) deducting the amount attributable to minority interests and (ii) giving effect to 

the Share Split described in the section “Description of Share Capital”. 

(2) We calculated our NTA per Share based on the number of Shares outstanding prior to the completion of 

the Offering and after (i) deducting the amount attributable to minority interests and goodwill and (ii) giving 

effect to the Share Split described in the section “Description of Share Capital”. 

Consolidated Statements of Cash Flows 


2005 2006 2007 2007 2007 2008 

S$ S$ S$ US$ 

(Unaudited) 

(In thousands) 

S$ 

(Unaudited) 

S$ 

(Unaudited) 

Net cash (used in) from operating 

activities .................... (12,460) 43,067 71,865 52,842 89,361 (43,281) 

Net cash used in investing activities . . (8,320) (7,938) (76,862) (56,517) (10,136) (16,782) 

Net cash from financing activities . . . 

Net increase (decrease) in cash and 

21,848 21,902 165,457 121,660 12,100 14,671 

cash equivalents. .............. 

Cash and cash equivalents at 

1,068 57,031 160,460 117,985 91,325 (45,392) 

beginning of period ............ 

Effects of exchange rate changes on 

the balance of cash held in foreign 

(4,643) (3,575) 53,456 39,306 53,456 213,904 

currencies ................... 

Cash and cash equivalents at end of 

— — (12) (9) 1 (7,247) 

period. ..................... (3,575) 53,456 213,904 157,282 144,782 161,265 

10

INDICATIVE TIMETABLE 

The indicative timetable for trading in our Shares is set out below for reference of applicants for our 

Shares in Singapore: 

Date and Time (Singapore) 

Event 

22 November 2008 at 9.00 a.m. Opening date and time for the Public Offer. 

26 November 2008 at 12.00 noon Close of Application List. 

27 November 2008 Balloting of applications, if necessary (in the event of over-subscription 

for the Offer Shares). 

28 November 2008 at 9.00 a.m. Commence trading on a “ready” basis. 

3 December 2008 Settlement date for all trades done on a “ready” basis on 28 November 

2008. 

The above timetable is only indicative as it assumes that the date of closing of the Application List is 

26 November 2008, the date of admission of our Company to the Official List of the SGX-ST is 28 November 

2008, the SGX-ST’s shareholding spread requirement will be complied with and the New Shares will be issued 

and fully paid-up prior to 9.00 a.m. on 28 November 2008. 

The above timetable and procedures may be subject to such modification as the SGX-ST may, in its 

absolute discretion, decide, including the commencement of trading on a “ready” basis. 

We and the Vendors, with the agreement of the Underwriter, may at our discretion, subject to all 

applicable laws and regulations and the rules of the SGX-ST, agree to extend or shorten the period during 

which the Offering is open. 

In the event of any changes in the closure of the Application List or the time period during which the 

Offering is open, we will publicly announce the same: 

(i) through an SGXNET announcement to be posted on the internet at the SGX-ST website 

http://www.sgx.com; and 

(ii) in a local newspaper(s). 

We and the Vendors will publicly announce the level of subscription and the results of the distribution of 

the Offering Shares pursuant to the Offering as soon as it is practicable after the close of the Application List 

through the channels in (i) and (ii) above. 

Investors should consult the SGX-ST’s announcement on the “ready” trading date on the SGX-ST website 

at http://www.sgx.com or the newspapers or check with their brokers on the date on which trading on a 

“ready” basis will commence. 

We and the Vendors reserve the right to reject or accept, in whole or in part, or to scale down or ballot 

any application for the Offering Shares, without assigning any reason therefor, and no enquiry and/or 

correspondence on our and the Vendors’ decision will be entertained. In deciding the basis of allocation, due 

consideration will be given to the desirability of allocating our Shares to a reasonable number of applicants 

with a view to establishing an adequate market for our Shares. 

Application monies received by us and the Vendors in respect of applications will be placed in a separate 

non-interest bearing account with the Receiving Bank. In the ordinary course of business, the Receiving Bank 

will deploy these monies in the interbank money markets. All profits derived from the deployment of such 

monies will accrue to the Receiving Bank. Any refund of all or part of the application monies to unsuccessful 

or partially successful applicants will be made without interest or any share of revenue or any other benefit 

arising therefrom. 

11

RISK FACTORS 

You should consider and evaluate carefully each of the following risk factors and all other information 

set forth in this document before deciding to invest in our Shares. The risks described below are not the only 

ones we face. Additional risks not presently known to us or that we currently deem immaterial may also impair 

our business operations. Our business, financial condition, results of operations and prospects could be 

materially and adversely affected by any of these risks. The market price of our Shares could decline due to 

any of these risks and you could lose all or part of your investment. 

This document also contains forward-looking statements that involve risks and uncertainties. The actual 

results of our operations could differ materially from those anticipated in these forward-looking statements as 

a result of certain factors, including the risks we face as described below and elsewhere in this document. You 

should also consider the warning regarding forward-looking statements in “Notice to Investors — Cautionary 

Note on Forward-Looking Statements”. 

Before deciding to invest in our Shares, you should seek professional advice from your advisers about 

your particular circumstances. 

Risks Relating to the Industries in Which We Operate 

We are dependent on the oil and gas and offshore marine industries, which are subject to business fluctuations 

and cyclical changes. 

As our customers operate mainly in the offshore oil and gas industry, our operations are dependent on the 

level of activities in the exploration, development and production of oil. Such activities are affected by factors 

such as the demand for oil, fluctuations in oil prices, the number and locations of oil fields, the demand for 

and supply of alternative fuels or energy supply, the prices of alternative fuels or energy supply, changes in 

capital expenditure by customers in the offshore oil and gas industry, and general economic, social and 

political conditions. These activities are also affected by laws, regulations, policies and directives relating to 

energy, investment and taxation and other laws and regulations promulgated by the various governments from 

which licences and permits must be obtained in order to engage in the exploration, development and 

production of oil and natural gas or other forms of energy supply. 

In the event that there is a deterioration in the oil and gas industry and offshore marine industries, or in 

global or regional economic conditions, ship owners may defer the building or procurement of new vessels 

and/or the execution of maintenance and repair and conversion work on existing vessels and/or reduce the 

demand for our vessels available for charter. This may result in a decrease in our business activities, and as a 

result, our operations and financial position would be adversely affected. In recent weeks there has been a 

drastic fall in oil price, in connection with the global economic crisis. This would likely have a negative 

impact on the oil and gas industry and affect the offshore marine industry if oil price remains unstable. In 

addition, the prevailing credit crunch may inhibit offshore marine players who are our existing or potential 

customers from raising the requisite financing to acquire offshore vessels. This could have an adverse effect on 

our business, profitability and prospects. 

Further, we are dependent on the offshore marine industry, which has traditionally been affected by 

changes in demand and supply of vessels, freight and charter rates and capacity utilisation. These factors may 

contribute to volatility in our financial performance, as these factors can affect our customers’ continued 

demand for our products and services. 

We are affected by the supply of and demand for vessels in the offshore marine industry. 

The supply of vessels in the offshore marine industry is affected by the level of capacity in the 

shipbuilding industry. Over-supply of existing vessels may adversely affect the demand for new vessels. 

There is a lag between the time vessels are ordered and their delivery. The number of vessels ordered is 

typically based on the estimated demand for such vessels in the future. A downturn in general economic 

condition or other factors may reduce the actual demand at the time of delivery of these vessels, thereby 

creating an over-supply of vessels. 

The over-supply of vessels may depress the selling price of and charter rates for our vessels and adversely 

affect our shipbuilding and ship chartering business. 

12

Risks Relating to Our Business and Operations 

Our businesses may be adversely affected by the current disruption in the global credit markets and associated 

impacts. 

Since the second half of 2007, disruption in the global credit markets, coupled with the repricing of credit 

risks, and the United States and United Kingdom housing market deterioration and a slowdown in the global 

economy have created increasingly difficult conditions in the financial markets. These conditions have resulted 

in historic volatility, less liquidity, widening of credit spreads and a lack of price transparency in certain 

markets. Most recently, these conditions have resulted in the failures of a number of financial institutions in 

the United States and unprecedented action by governmental authorities and central banks around the world. It 

is difficult to predict how long these conditions will exist and how our markets, products and businesses will 

be adversely affected. These conditions may be exacerbated by persisting volatility in the financial sector and 

the capital markets, or concerns about, or a default by, one or more institutions, which could lead to significant 

market wide liquidity problems, losses or defaults by other institutions. Accordingly, these conditions could 

adversely affect our consolidated financial condition or results of operations in future periods. In addition, we 

may become subject to litigation and regulatory or governmental scrutiny, or may be subject to changes in 

applicable regulatory regimes that may be materially adverse to us and our prospects. Furthermore, it is not 

possible to predict what structural and/or regulatory changes may result from the current market conditions or 

whether such changes may be materially adverse to us and our prospects. Conditions in the capital markets 

could also adversely affect the Offering and limit or reduce the number of investors in our Shares, thereby 

adversely affecting the liquidity and potentially the price of our Shares. See “— Risks Relating to Ownership 

of Our Shares — Our Shares have never been publicly traded and the Offering may not result in an active or 

liquid market for our Shares, which could adversely affect the price of our Shares”. 

Our business is dependent upon the availability of financing. 

We operate in a capital-intensive industry. Our shipbuilding operations require significant investments 

during the construction phase. We presently source such capital for our business primarily through a 

combination of internal cash, trade finance and external debt financing. Our growth strategy and the further 

expansion of our business will require significant additional investments and capital. 

Our shipbuilding operations and expansion plans are dependent upon and limited by our ability to secure 

additional financing, on commercially favourably terms or at all. The terms of our debt financing arrangements 

may require us to pledge collateral to the lenders and may contain restrictive financial covenants or covenants 

which increase our costs or restrict our business and operations. In addition, any equity funding that we are 

able to secure may only be possible if this is offered at a discount to the prevailing market price. See “— We 

may require additional equity funding which may dilute your interests”. We may not be able to raise the 

additional capital required to fund our operations and our growth, which would have a material adverse effect 

on our business, results of operations and prospects. 

The financing agreements of our Group contain certain restrictive covenants requiring us to maintain, 

among other things, certain security margins and/or financial ratios. Further, under the terms of the vessel 

construction loan from Caterpillar Financial and UOB, Yaw Chee Siew’s shareholding in our Company is not 

allowed to go below 30% of the paid up share capital of our Company. See “Management’s Discussion and 

Analysis of Financial Condition and Results of Operations — Borrowings”. These covenants may limit our 

ability to operate or expand our business in the manner we would otherwise choose. Further, should our Group 

breach any financial or other covenants contained in any of our financing agreements, we may be required to 

immediately repay our borrowings together with any related costs, which could adversely impact our business, 

results of operations and prospects. In addition, disruptions, uncertainty or volatility in the stock and credit 

markets may limit our access to capital. These market conditions may limit our ability to replace, in a timely 

manner, maturing liabilities and access the capital necessary to grow our business. 

While we have so far been able to borrow the funds necessary to finance operations in the current market 

environment, prolonged disruptions to the credit markets could limit our ability to borrow funds from our 

current funding sources or cause our continued access to funds to become more expensive. As such, we may 

be forced to delay raising capital or pay unattractive interest rates, thereby, increasing our interest expense, 

decreasing our profitability and significantly reducing our financial flexibility. 

13

We have substantial amounts of indebtedness, and we may not be able to meet our payment obligations 

under this indebtedness. 

We have and after the Offering will continue to have a substantial amount of indebtedness. As at 

31 December 2007 and 31 May 2008, our total outstanding indebtedness amounted to S$236.2 million and 

S$279.2 million respectively, and total trade payables amounted to S$168.8 million and S$224.6 million, 

respectively. As at 31 July 2008, our total outstanding indebtedness amounted to S$386.9 million and our debt 

to equity ratio (the ratio of total outstanding indebtedness to shareholders’ equity) based on our capitalisation 

and indebtedness as at 31 July 2008 is 4.4:1. In addition, our net debt to equity ratio (the ratio of total 

outstanding indebtedness net of cash and cash equivalents to shareholders’ equity) based on our capitalisation 

and indebtedness as at 31 July 2008 is 2.4:1. Our debt to equity ratio and net debt to equity ratio immediately 

following the Offering and based on our capitalisation and indebtedness as at 31 July 2008 will be 2.1:1 and 

0.6:1, respectively, based on the sale of 206,045,000 New Shares at the Offering Price. 

We have historically serviced our obligations under this indebtedness through cash generated from our 

operations and our obligations under these trade payables mainly through cash generated from our operations, 

as well as through additional financing activities. There can be no assurance that our cash flow will be 

sufficient to meet our payment obligations under our outstanding indebtedness or our trade payables in the 

future. We may be required to dedicate a substantial portion of our cash flow from operations to making 

payments on our indebtedness, thereby reducing the availability of cash for other corporate purposes. We may 

also be more vulnerable than our less leveraged competitors to economic downturns, tightening of credit 

controls in financial markets or other adverse developments in our business. Also, our operating cashflow for 

the 5 months ended 31 May 2008 was negative. This was primarily due to the difference in timing between 

receiving the full contract sum from our customers and incurring costs for construction of vessels. As a result 

of these timing differences, substantial amounts of cash are expended for each vessel before we receive 

payment for the full contract value of the vessel. See “Management’s Discussion and Analysis of Financial 

Condition and Results of Operations — Liquidity and Capital Resources — Net cash (used in) from operating 

activities”. If we are unable to generate sufficient cash from our operations to meet our payment obligations as 

and when they fall due or to raise additional funds at commercially acceptable rates when necessary or at all, 

we may default on these obligations which would in turn have an adverse effect on our business, operations, 

financial condition, results of operations and prospects. We have defaulted on a loan in the past (see 

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Borrowings”), 

and we cannot assure you that such a default will not occur in the future. 

Prior to undertaking our corporate restructuring exercise, we defaulted on three loans, which have since 

been fully repaid. See “Our Restructuring and our Corporate Structure” and “Management’s Discussion and 

Analysis of Financial Condition and Results of Operations — Borrowings”. There can be no assurance that 

such defaults will not occur in the future. A default on any one of our loans may trigger a default under the 

terms of our other loans. In addition, our loans are generally secured by mortgages over vessels under 

construction and other security over various assets and earnings, including our earnings from vessels under 

charter, as well as personal guarantees by our Executive Chairman and Controlling Shareholder, Yaw Chee 

Siew. Any default under any of our loans or trade payables may result in our lenders enforcing their security 

or our suppliers terminating their relationships with us and could restrict our ability to raise future financing 

on favourable terms or at all. Any such event could have a material adverse effect on our business, financial 

condition and results of operations. 

Most of our indebtedness is subject to floating interest rates, which would result in our interest expense 

increasing if interest rates rise. 

Borrowings under our short-term revolving loan, project finance facilities and term loans bear interest at 

variable rates. Changes in economic conditions could result in higher interest rates, thereby increasing our 

interest expense and reducing funds available for operations or other purposes. Accordingly, we may 

experience economic losses and a negative impact on earnings as a result of interest rates fluctuations. We do 

not currently have any hedging arrangements or interest-rates swaps to adjust interest-rate risk exposures. See 

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk”. 

Our shipbuilding business is dependent on a few major customers. 

Our shipbuilding business is a project-based business, and individual contracts can have a significant 

contribution to our revenues. In addition, single customers frequently place multiple orders for vessels with us. 

As at 8 August 2008, we had an order book of approximately S$937.1 million consisting of 27 vessels. Five 

14

companies and their affiliates accounted for more than 50.0% of our order book. If any one of our major 

customers is unable to make payments for vessels it has ordered or otherwise defaults on its payment 

obligations or ceases to have business dealings with us or materially reduces the level or frequency of its 

orders for new vessels from us and we are unable to secure new orders from other sources to replace such a 

loss or reduction, our shipbuilding business, financial condition, results of operations and prospects will be 

materially adversely affected. See “Our Business — Our Major Customers”. 

We are exposed to default by our customers and/or payment delays. 

Our customers may be unable to meet their contractual payment obligations to us, either in a timely 

manner or at all, or may otherwise default on these obligations. The reasons for such non-payment or payment 

delays may include the customer’s insolvency or bankruptcy, a general down-turn in the market for vessels and 

in demand for offshore support services, an inability by the customer to raise sufficient financing for the 

purchase of the vessel, and strategic or other business-related decisions by the customer. For example, in 2008, 

we entered into agreements with one of our customers for the construction and sale of small AHTS vessels. 

Since this customer did not make the payment of the down payments for these vessels within the time 

stipulated in the agreements, we have cancelled the construction contracts for these vessels and we intend to 

sell these vessels to other buyers. We have other contracts for vessel construction which remain in effect with 

the same customer. The amount at risk in relation to these contracts entered into with that customer amounts 

to S$48.3 million, which constitutes approximately 5.2% of our order book as at 8 August 2008. While we 

have received the corresponding down payments for these vessels, there is no assurance that this customer will 

be able to complete its contractual payment obligations to us according to the terms of the construction 

contracts. 

In addition, we face the possibility that our customers may be unable to honour their contractual 

obligations to us. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, 

operational failure or other reasons resulting from the current disruption in the global credit markets and 

slowdown in the global economy. 

While we generally require down payments of 20.0% to 30.0% of the contract value for our shipbuilding 

contracts, the remainder of the contract price is typically payable only after trial and commissioning and 

shortly before delivery of the vessel. See “Our Business — Our Operations — Shipbuilding”. For our ship 

repair and conversion services and our ship chartering business, we usually extend a credit term of 

approximately 30 days to our customers. As a result, we incur costs, primarily for equipment, which can be of 

significant value, and for direct labour related to shipbuilding, before our customers are obligated to make 

corresponding payments. Any failure by our customers to meet their contractual payment obligations to us 

could cause us to run into cashflow problems or make significant losses on a contract or several contracts, in 

particular, if we do not have adequate financing available or are unable to sell the vessel or vessels in question 

to another customer, either at a comparable price or in a timely manner or at all. In addition, we may not be 

able to enforce our contractual rights to receive payment through legal proceedings. Such events could have a 

material adverse effect on our financial condition and results of operations. 

The industries we operate in are highly competitive and require us to continuously upgrade our shipbuilding 

and ship repair capabilities and our fleet of vessels available for charter. 

The shipbuilding, ship repair and conversion and ship chartering industries are highly competitive. The 

primary bases for competition are the matching of the customer’s demands with the capabilities and capacity 

of a shipyard, the type and quality of vessel, price, delivery schedule/availability and the type of equipment. 

We expect to face increased competition from existing competitors and new entrants into these industries in 

the future. See “Industry Overview”. 

To maintain our competitive edge, we need to continuously upgrade our shipbuilding and ship repair and 

conversion facilities and our fleet of vessels available for charter to match those offered by our competitors. 

As many of our competitors are larger players in the industry than we are and may have greater resources to 

keep abreast of technological changes and to maintain bigger and more advanced shipyards and fleets, we 

cannot assure you that we will be able to compete successfully against our competitors as well as new market 

entrants in the future. Our failure to remain competitive may adversely affect our business and growth and 

could have an adverse impact on our financial performance. See “Our Business — Competition”. 

Our competitors may also have longer operating histories and greater financial, technical, marketing and 

other resources than us, as well as greater access to capital. In addition, we may compete directly with some 

of our customers when we engage in our ship chartering business. 

15

Should our existing or new competitors offer services at a lower cost or engage in aggressive pricing in 

order to increase market share, our turnover may decline if we are not able to match their costs or aggressive 

pricing. We may have to provide more competitive pricing in our shipbuilding, ship repair and conversion and 

ship chartering operations in order to attract new customers and retain our existing customers. A reduction in 

our pricing without any corresponding cost reduction will adversely affect our profitability and financial 

condition. 

We rely on third parties for the procurement of materials and the provision of certain services. 

In undertaking shipbuilding and ship repair and conversion projects, we procure materials and equipment 

from third-party manufacturers and suppliers. We may also outsource certain jobs such as fabrication works, 

blasting, painting, electrical, piping works and the production of certain vessel sub-assemblies and structural 

sections to subcontractors. 

Depending on the specifications of our customers, we are at times required to acquire specialised 

materials and equipment. At times, such specialised materials and equipment may only be sourced from a 

single or a limited number of manufacturers and suppliers. 

Should our subcontractors default on their contractual obligations and work specifications, we may not be 

able to perform our services for our customers or at all in accordance with agreed quality and/or timing 

specifications. These subcontractors may use poor quality or defective sub-components or less skilled workers. 

In addition, they may not report safety concerns to us. See also “— Labour problems may disrupt our 

operations in Batam”. 

Therefore, we may face the risk of our manufacturers, suppliers or sub-contractors not being able to 

deliver the requisite materials, equipment and services on a timely basis or at all or in accordance with our 

customers’ requirements. There have been some incidents of delays by certain shipyards in China to whom 

certain of our shipbuilding work is outsourced, mainly attributed to the delayed delivery of the critical 

equipment from equipment suppliers. In the event we are unable to find alternative manufacturers, suppliers or 

subcontractors on commercially favourable terms or at all, this may adversely affect our obligations to and our 

relationships with our customers, and consequently, our business and results of operations. 

In addition, the success of our business depends in part on our ability to offer our customers vessels built 

to modern designs with high technical specifications, which we purchase from third-party designers, including 

designers from Norway and other European countries. There can be no assurance that we will be able to 

purchase a particular design for vessels to be built in the future. Similarly, there can be no assurance that, as 

designers adapt and improve designs and as new designs or technical improvements in materials and 

equipment come to market, we will be able to purchase the latest and most competitive designs, materials or 

technology. If we are unable to do so, our competitors may be able to offer vessel designs that we are unable 

to offer as well as vessels with higher technical specifications than our vessels, which could have a material 

adverse effect on our business and results of operations. 

We are reliant upon a small number of manufacturers and suppliers. 

We rely on a limited number of manufacturers and suppliers for the equipment used in our shipbuilding 

business. There are only a few manufacturers of major equipment such as engines, propellers, bulk tanks, 

compressors, winches, generator sets and consumables and direct materials which meet the requirements of the 

high specification vessels we build, and the supply of such major equipment is limited. In the event that our 

manufacturers and suppliers are unable to provide us with the equipment we need for our shipbuilding 

business, we may encounter delays in securing or may be unable to secure alternative manufacturers and 

suppliers on favourable terms or at all. As a result, the cost of our equipment may increase or we may not be 

able to undertake or to complete a particular project at all. If we are unable to undertake a project or to 

complete a project for which we have already signed a contract, it could have a material adverse effect on our 

revenues, profits and reputation and we may be subject to contractual claims by our customers. 

Supplies purchased through LSH Group comprised approximately 19.7%, 37.0% and 41.5% of our 

purchases in FY2006, FY2007 and for the five months ended 31 May 2008, respectively. LSH Group provides 

us with credit for our purchases of supplies and equipment and assists us in managing various other aspects of 

the procurement process. See “Our Business — Our Major Suppliers” and “Interested Person Transactions and 

Conflicts of Interests — Other Transactions”. 

If we were no longer able to procure supplies and equipment through or from LSH Group, our overall 

costs for purchases may increase and our procurement process may be disrupted, as we may have to perform 

16

more of the administrative tasks and logistics relating to in-house procurement, and may have to hire and train 

additional staff and set up additional internal systems to manage all aspects of the procurement process. In 

addition, if we were to lose the credit provided by LSH Group, we may not be able to obtain similar credit 

period and terms either from another supplier or directly from the manufacturer, which could have a material 

adverse effect on our cash flows. A disruption of our procurement process or an increase in our costs for 

purchases could have a material adverse effect on our financial condition and results of operations. 

We are dependent on our strategic partnerships for the management, operation and purchase of certain 

of our vessels. 

We have entered into strategic partnerships whereby we establish associated companies in which we hold 

minority stakes for the purchase, management and operation of certain types of vessels. See “Our Business — 

Our Operations — Ship Chartering”. These associated companies are generally established to purchase vessels 

from us and to charter these vessels to customers. Our strategic partners own the majority stakes in these 

associated companies and are responsible for the management and operation of the fleets. As a result, we do 

not control the operations of these associated companies, and the share of profit we derive from these 

associated companies depends largely on the ability of our partners to market the vessels to customers and to 

manage the operations of the fleets owned by these associated companies. In addition, we depend on these 

associated companies to fulfill their contractual obligations to purchase and pay for the vessels we are 

constructing for them. A disagreement or dispute between our strategic partners and us could have a material 

adverse effect on our financial condition and our results of operations. 

We are exposed to possible increases in the price of our raw materials resulting from shortages. 

The major components of our purchases include engines, propellers, bulk tanks, compressors, winches, 

generator sets, and consumables and direct materials such as steel plates, cabling, piping systems and other 

materials for our shipbuilding activities. Shortages in the supply of the raw materials we use in our business 

may result in an increase in the price of these raw materials. In the event that our raw materials increase in 

price and we are not able to pass these price increases to our customers on our existing and new contracts, our 

business, financial condition, results of operations and prospects could be adversely affected. See “— We may 

incur losses under our fixed price contracts as a result of cost overruns, delays in delivery, failure to meet 

contract specifications or other breaches of contract and warranty claims” for risks relating to our fixed price 

contracts. 

We depend on our senior management and key personnel and on our ability to hire and retain sufficient 

skilled workers for the continued growth and success of our business. 

Our business operations depend greatly upon the continued service of our key personnel. Our Executive 

Chairman, Yaw Chee Siew, our Group Managing Director, Lee Kok Wah, and our Group General Manager 

(Operation), Lum Kin Wah, have each played a significant part in our growth and still play crucial roles in our 

sustained development. 

Our plans for growth and our operations require us to strengthen our engineering and middle management 

teams by recruiting, developing and retaining talent. Our shipyard operations in Batam require experienced 

management and skilled personnel such as engineers, welders, mechanics, electricians and heavy equipment 

operators. Some skilled workers we employ in Batam are foreign workers and are governed by the laws and 

regulations in Indonesia on employment of foreign workers. 

In the event that we are unable to hire, in a timely fashion, and/or retain the services of key management 

or skilled workers, we may not be able to meet our customers’ orders, and our ability to grow could be 

limited, thus affecting our financial performance. We do not carry any key-man life insurance on any of our 

personnel. 

Information relating to our order book may not be representative of our future results. 

The contracts that make up our order book have a significant impact on our future revenues and profits. 

Our order book as at 31 December 2005, 2006 and 2007 was S$1.8 million, S$411.0 million and 

S$730.6 million, respectively. As at 8 August 2008, we had an order book of S$937.1 million, comprising 18 

AHTS vessels, four PSVs, three utility vessels, one offshore construction vessel and one work barge with 

accommodation for 300 people, which we expect to deliver between 2008 and 2011. The increase in value of 

new contracts from FY2005 to FY2006, FY2007 and as at 8 August 2008 was mainly due to the increase in 

the number of vessels we contracted and particularly from the larger and higher specification vessels, which 

17

are of higher value. Our order book as of any date represents the total stated contract value of orders not yet 

delivered less the portion of revenue in respect of these orders that we have recognized using the percentageof-completion 

method, all as translated into Singapore Dollars, our reporting currency. See “Management’s 

Discussion and Analysis of Financial Condition and Results of Operations — Order Book”. 

Our order book includes vessels sold to our strategic partners of which we retain 49% interest. As of 

8 August 2008, the nine vessels sold to our strategic partners amounted to S$207.9 million in order book. 

The order book amount contained in this document does not necessarily indicate future earnings related 

to our performance. If we do not achieve our expected margins or suffer losses on one or more of these 

contracts, our income would be reduced. Although projects in the order book represent business that we 

consider firm, defaults or scope adjustments by the customers or other unforeseen delays may occur. Because 

of these uncertainties, we cannot predict when or if the projects in our order book will be performed and will 

generate revenue. In addition, even where a project proceeds as scheduled, it is possible that contracting 

parties may default and fail to pay amounts owed or dispute the amounts owed to us. There is no assurance 

that we would be able to recover against such defaulting parties. There may also be delays associated with 

collection of receivables from clients. Any delay, cancellation or payment default could materially harm our 

cash flow position, revenues or profits and adversely affect the trading price of our Shares. Investors are 

cautioned against placing undue reliance on the information relating to our order book included in this 

document. 

We may incur losses under our fixed price contracts as a result of cost overruns, delays in delivery, failure 

to meet contract specifications or other breaches of contract and warranty claims. 

All our shipbuilding contracts are fixed price contracts, and any unexpected increase in our costs will 

reduce our profits. Our costs incurred and profits realised in respect of our shipbuilding and ship repair and 

conversion businesses are dependent on factors such as: 

unanticipated variations in labour and equipment productivity over the term of a contract; 

unanticipated increases in costs of labour, raw materials, subcontracting and overheads, including 

consequences of bad weather; 

unanticipated delays in delivery of supplies for construction, repair or conversion of vessels; and 

delivery delays and corrective measures for poor workmanship. 

The risk of such events occurring is increased with respect to construction of large and complex vessels 

and vessels with which we have limited experience. In the event of a material breach by us of a shipbuilding 

or ship repair and conversion contract, our customers may elect to rescind the contract while work is in 

progress. In such cases, we are typically required to refund all the progress payments under the shipbuilding 

contract made by the customer and are left with the progress work/vessel for which we could complete 

construction and sell it in the open market or retain it for our ship chartering business. In such circumstances, 

our financial performance may be adversely affected. 

We may be exposed to potential liabilities arising from defects in the vessels which we construct, repair 

or modify. We extend a warranty for a period of up to 12 months from the time of delivery or handover to our 

customers for new vessels built by us and a six-month warranty for workmanship and equipment in respect of 

our ship repair and conversion works. We may experience warranty claims from our customers that may 

adversely affect our profitability. 

We frequently initiate the building of vessels before securing a shipbuilding contract. 

We do not build all of our vessels on a secured contract basis. We frequently initiate the building of our 

vessels in anticipation of procuring sales contract for these vessels at a later stage in the shipbuilding process. 

If no buyers are secured for these vessels by the time of their completion and if the offshore marine industry 

experiences a slow-down, we would have to either sell the vessels at reduced prices or add them to our 

chartering fleet. Should we be unable to charter or obtain favourable chartering rates for these vessels, or 

should we be forced to sell these vessels at reduced prices or be unable to sell them at all, our revenues and 

profits may be adversely affected. 

18

Labour problems may disrupt our operations in Batam. 

We generally enjoy healthy relationships with our workforce and the labour union, Unit LEM (Logam, 

Elektrik, Mesin) PT Batamec, of which the employees of our subsidiary, PT Batamec, are members. In the 

event of any concerted union actions such as work stoppages, operation at our shipyard may be disrupted. In 

such a case, our business would be adversely affected. 

In addition, we have outsourced some of our activities to subcontractors. Any dispute between our 

subcontractors and their workers or work stoppages may disrupt our operations. 

We may be affected by any change in current taxation regulations. 

By a series of Indonesian Presidential decrees, Batam has been classified as a bonded zone. The 

classification of Batam as a bonded zone provides businesses operating within this zone the benefit of 

exemptions from customs duties, import/export taxes and value-added tax. If Batam were to lose its 

classification as a bonded zone, we will have to pay such duties and taxes in respect of our operations in 

Batam. Currently, PT Batamec is exempted from such duties and taxes under Government Regulation No. 40 

of 2002, Indonesia. Should the tax incentive exemption for companies operating within the bonded zone not 

be extended, we may have to pay import duty on our imports into Batam, value-added tax, luxury tax and/or 

income tax or other such duties and taxes. In the event we are unable to pass on to our customers the 

increased costs of operations arising from the payment of such duties and taxes, our financial results and 

financial condition may be adversely affected. 

Currently, the shipping income we derive from the operation of our Singapore-flagged vessels in 

international waters is exempted from Singapore income tax pursuant to Section 13A of the Income Tax Act, 

Chapter 134 of Singapore. This exemption applies to income derived from the chartering of our vessels to our 

customers. Any change in the current tax and/or the rules and regulations applicable to the taxation of shipping 

income may adversely affect our tax-exempt status and, correspondingly, our financial results and financial 

condition. 

Any changes in the interpretation of the current tax regime and/or other investment incentives, and/or 

laws, rules and regulations pertaining to the taxation of companies, whether in Singapore or Batam (such as 

the revocation of the bonded zone classification by the Indonesian government) or elsewhere, which have a 

retrospective, current and/or prospective effect would affect the tax paid or payable by us arising from a tax 

reassessment on our financial results. 

Additionally, the tax laws in Labuan in respect of the offshore business activities of Otto Offshore and 

Otto Investment, provide us with substantial tax savings. Our profits and financial condition may be adversely 

affected by any change in tax legislation, rules and laws impacting upon the tax position of Otto Offshore and 

Otto Investment, or the interpretations thereof, whether on a retrospective basis or not. 

We operate in regions with volatile and unpredictable political, legal, regulatory and economic 

environments. 

We are an international business, and certain of our operations are located in regions or countries where 

the political, legal, regulatory, social and economic environments can be volatile and unpredictable. In 

particular, a number of the vessels in our chartering fleet are deployed to countries in the Middle East, and we 

have a branch office in the UAE. We also outsource some of our shipbuilding activities to shipyards in China 

and maintain a representative office in Foshan, China. See “Our Business — Our Operations — Shipbuilding 

— Outsourcing”. Our operations in these and other international markets are subject to risks relating to 

political and social instability, war or civil unrest, terrorist activity, general downturns in economic conditions, 

governmental actions or interventions (including tariffs, protectionist measures and subsidies), regulatory and 

taxation changes, difficulties or delays in obtaining or renewing relevant permits or consents, cancellation of 

contractual rights and a difficulty or inability to enforce these rights or to obtain redress in the relevant courts, 

expropriation of assets, and an inability to repatriate profits or dividends. Our activities in China are subject to 

the particular risks inherent in doing business in China, such as changes in the policies adopted by the Chinese 

governmental authorities that could adversely affect our business. We may also be unable to obtain adequate 

redress in Chinese courts in the event of a legal dispute in which we are involved, as the legal system in China 

has inherent uncertainties, and we may be unable to enforce judgments obtained in non-Chinese courts against 

our counterparties in China. The occurrence of any of the above events or of any other similar events relating 

to our international business activities could have a material adverse effect on our business, financial condition 

and results of operations. 

19

We are affected by environmental and other laws and regulations governing our business operations. 

Our operations are subject to numerous national and supra-national environmental, health and safety laws, 

regulations, treaties and conventions (together, “Regulations”), including, inter alia, those controlling the 

discharge of materials into the environment, requiring removal and clean-up of environmental contamination, 

establishing certification, licensing, health and safety, taxes, labour and training standards, or otherwise relating 

to the protection of human health and the environment. The amendment or modification of existing 

Regulations or the adoption of new Regulations curtailing or further regulating our business could have a 

material adverse effect on our operating results or financial condition. We cannot predict the extent to which 

future earnings may be affected due to compliance with such new Regulations. 

In order to carry on our shipbuilding and ship repair and conversion businesses, we are required to obtain 

various licences, permits and approvals for our operations, including a shipyard licence and a jetty permit 

which are granted by the Indonesian government. There is no assurance that our existing licences will be 

renewed or will not be revoked in the event that we fail to comply with any of the requirements laid down by 

the Indonesian government in respect thereof or for any other reason. Furthermore, we may be required to 

renew our existing licenses and permits in the future or to apply for new licences and permits or operate under 

new laws or regulations that may impose onerous conditions on the manner in which we conduct our 

operations. Should any of our licences, permits or approvals be suspended, revoked or not renewed or should 

we fail to comply with any applicable laws or regulations, our business and performance may be adversely 

affected. 

In addition, we may be subject to significant fines and penalties for non-compliance with environmental 

laws and regulations, many of them relating to the discharge of hazardous substances and the protection of the 

environment. Pursuant to these laws and regulations, we could be held liable for remediation of some types of 

pollution, hazardous substances and debris from production, as well as other assets owned or operated by us or 

our customers or our subcontractors. Environmental remediation costs could be significant and could have a 

material adverse effect on our financial condition and results of our operations. 

We may not have adequate insurance to cover all risks we face, and we may suffer an uninsured loss. 

Our assets and business are subject to certain risks including natural disasters such as floods, earthquakes, 

typhoons, tsunamis and tidal waves and accidents such as fire and explosions resulting in work stoppages and 

death. In particular, our shipyard is located in Batam, near Sumatra in Indonesia. The Indonesian archipelago 

is one of the most volcanically active regions in the world and as such, it is subject to significant seismic 

activity which may adversely affect our shipyard. 

In addition, our vessels operate under harsh weather and environmental conditions. Adverse changes in 

weather and environmental conditions may damage our vessels. Moreover, as our customers are in possession 

of and exercise control over our vessels which have been chartered to them, our customers may expose our 

vessels to attacks by pirates, arrests or other impounding actions in different jurisdictions, which may lead to 

damage, destruction or a loss of use of our vessels. 

Our operations also expose us to claims from third parties including product liability claims and claims 

arising from accidents and hazards incident to our business. 

While we maintain a number of separate insurance policies to protect our businesses and assets against 

risks such as material damage, liability, business interruption, product liability, workers’ compensation and 

employee liability, professional indemnity, and directors and officers’ liability, we cannot assure you that our 

insurance coverage would be sufficient to cover all of our potential risks or losses. Our insurance policies 

provide for limitations on the maximum amounts that may be recovered for any one loss event or any series of 

losses, and recovery is generally dependent on the insured first making payment of the appropriate excess or 

deductible. 

In addition, any deterioration of the security conditions in the countries or regions where we or our 

customers operate or past incidence of claims made against our insurance policies are likely to attract higher 

premiums for the coverage of the same risk in the future or, under certain circumstances, withdrawal by our 

insurers from providing the insurance coverage. 

Our results of operations, business and financial condition could be materially adversely affected in the 

event of an uninsured loss, a loss that exceeds insured limits, a succession of such losses or substantially 

higher insurance premiums. 

20

Our operations may be adversely affected if there is any significant downtime of our shipyard equipment 

or vessels. 

Our operations are subject to risks including the breakdown, failure or sub-standard performance of 

machinery or of our vessels, which may result in operational disruptions and downtime. This may be so when 

we operate at or close to maximum capacity and our equipment or vessel has to be sent for extensive servicing 

or repair instead of being utilised for our business. In such an event, we may be unable to meet our contractual 

obligations with our customers and our operations and financial performance may be adversely affected. 

We may not be able to manage our expansion successfully. 

Our future operating results will depend on our Management’s ability to manage our growth, which 

includes recruiting and retaining qualified employees, controlling costs and expanding our fleet of vessels and 

facilities and their capacity utilisation. As part of our future plans, we intend to expand our shipbuilding 

operations in Batam and to develop our chartering business by increasing and renewing our fleet of vessels. 

We have only limited experience in operating outside of Indonesia or in managing large-scale ship owning and 

ship chartering operations, but we intend to expand our business, both geographically and operationally. Any 

such expansion carries with it inherent risks and uncertainties and requires significant management attention 

and company resources and may not yield the results we expect. 

We have a limited track record in the ship chartering business, as we only commenced our chartering 

operations in April 2007, and there can be no assurance that we will be successful in this business. 

We are considering establishing a new shipyard in China and for this purpose we have entered into a 

capital investment agreement with China Jiangsu Province Qidong City People’s Government. The execution 

of our expansion plans in China is dependent on us obtaining the relevant approvals, licences, operating 

permits and authorisations from the Chinese authorities and our evaluation of the commercial viability of the 

project. See “Our Business — Expansion and Upgrading Plans”. We cannot assure you that we will be able to 

obtain any of these approvals, licenses, permits or authorisations or that, once obtained, we will be able to 

renew them or they will not be revoked. In addition, there can be no assurance that any expansion we 

undertake in China will be or will remain commercially viable. 

The expansion of our operations in China will expose us to risks relating to investments in China. We 

have limited experience in our new business ventures, including ship chartering business and operating in 

China or elsewhere. 

Any future international expansion may also fail due to other difficulties inherent in foreign operations, 

including: 

unexpected changes in international and foreign regulatory requirements and tariffs; 

difficulties in staffing and managing foreign operations; 

potential adverse tax consequences; 

cultural differences; 

price controls or other restrictions on foreign currency; and 

difficulties in obtaining export and import licenses. 

There is no assurance that our business expansion will be successful or lead to an increase in our profits. 

We expect to incur depreciation expense and other expenses in connection with the acquisition of new vessels 

or facilities to expand our capacity. Our expansion could also result in an increase in the fixed costs of our 

operations. Our ability to maintain or increase our profitability will continue to depend, in part, on our ability 

to generate increasing revenues and to maintain or increase the utilisation rates of our facilities and vessels. In 

addition, the growth of our operations will place additional demands on our management team, our in-house 

design and technical production teams, and our procurement and our financial reporting and information 

technology teams and systems. As our production of vessels grows, we may not have sufficient skilled workers 

or managers at our shipyard, as it may be difficult to train or hire personnel who possess the expertise required 

for our operations. The expansion of our operations will also require significant attention from our 

Management and other human resources and may divert such resources from other aspects of our business. We 

may also not be able to find qualified high-level management to oversee our expansion into new markets or to 

find managers who will understand and be able to integrate into our corporate culture. Furthermore, as we 

expand our production facilities in Batam and elsewhere, we may experience unanticipated difficulties or 

21

delays in operating these new facilities, either pre-start-up or post-start-up. In addition, we will have to 

integrate all of our reporting, logistics, accounting, financial and fulfillment systems or functions across our 

locations. If we do not manage the expansion of our facilities and fleet of vessels effectively, our business, 

financial condition and results of operations could be materially adversely affected. 

Shipbuilding and ship repair and conversion expose us to potential liabilities that may not be covered by 

insurance. 

Our shipbuilding and ship repair and conversion operations are subject to inherent risks such as equipment 

defects, malfunctions and failures, equipment misuse, accidents that can result in uncontrollable flow of gas or 

fluids, fires and explosions. Substantial portions of our activities involve the fabrication and refurbishment of 

large steel structures, the operation of cranes and other heavy machinery and other operating hazards which 

may cause accidents occurring to our employees, to workers hired by our contractors or third parties or to 

third parties’ properties, either in our or in third parties’ premises and vessels and to areas where such work is 

done. These risks could expose us to substantial liability for personal injury, wrongful death, product liability, 

property damage, pollution and other environmental damages. Although we have obtained insurance for our 

employees and/or third parties, as well as our major properties and assets, our insurance may not cover or may 

not be adequate to cover all potential liabilities. Further, we cannot assure you that insurance will be generally 

available in the future or, if available, that the premiums will not increase or remain commercially justifiable. 

If we incur substantial liability and the insurance does not or is insufficient to cover the damages, our business, 

financial condition, results of operations and prospects may be materially adversely affected. 

We may be unable to maintain our health, safety and environmental standards. 

Our operations are subject to laws and regulations that relate directly or indirectly to the oil and gas and 

offshore marine industries, including those relating to the discharge of oil or other contaminants into the 

environment and protection of the environment. We are required by our customers, governments and regulatory 

agencies to maintain health, safety and environmental standards in the course of providing our services. In the 

event of any change in these standards, we may have to incur additional expenses to comply with such 

changes. Any failure to maintain standards may result in the cancellation of our present contracts, not being 

awarded new contracts or regulatory authorities imposing fines, penalties or sanctions on us, revoking our 

licenses and permits or prohibiting us from continuing our operations, each of which could have an adverse 

effect on us. A failure to maintain health, safety and environmental standards could also result in injuries, 

death, damage to property and to the environment, and liability or damage to our reputation. 

We may be dependent upon continued support from our Controlling Shareholder for obtaining financing. 

Historically, our Controlling Shareholder, Yaw Chee Siew has provided guarantees and other security to 

our lenders as support for making financing available to us. Some of the facilities that we have received from 

banks and financial institutions also require that Yaw Chee Siew maintains no less than a 30% interest in our 

Company (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — 

Borrowings”). We may in the future continue to depend on this support. If this support is not available in the 

future, we may not be able to obtain additional financing, either on commercially favourable terms, or at all, 

and we may be forced to repay or refinance some or all of our existing financing facilities. This may result in 

increased cost or non-availability of financing which would have a material adverse effect on our operations, 

our operating results and our financial condition. 

There could be a change in control of our Company if the lender under the Exchangeable Loan Agreement 

exercises its exchange rights. 

Yaw Chee Siew, Business Companion Investments and SCPEL entered into the Exchangeable Loan 

Agreement on 8 April 2008, pursuant to which SCPEL provided a loan in the amount of S$70.0 million to 

Business Companion Investments in two tranches of S$35.0 million. See “Substantial Shareholders and 

Vendors — Exchangeable Loan Agreement”. Business Companion Investments is an investment holding 

company incorporated in BVI, the sole shareholder of which is Yaw Chee Siew. Under the Exchangeable Loan 

Agreement, SCPEL may acquire Shares owned by Business Companion Investments by electing to exchange 

the Exchangeable Loan, along with accrued interest, at certain pre-determined periods of time and at exchange 

prices based on certain pre-determined exchange formulas. The Exchangeable Loan Agreement expressly 

precludes prepayment of the loan by Business Companion Investments. 

22

The exchange price for the first tranche of S$35.0 million is 93% of the Offering Price, which equates to 

S$0.4743 per Share. The formula for determining the exchange price for the second tranche of S$35.0 million 

is pegged to our earnings, calculated based on the audited consolidated financial statements of our Company 

for FY2008 with certain adjustments as set out in the Exchangeable Loan Agreement (“Earnings”). In the case 

where SCPEL has exchanged the first tranche of S$35.0 million (excluding accrued interest) at an exchange 

price of S$0.4743 and where our Earnings for FY2008 are below approximately S$9.6 million, SCPEL may 

acquire such number of Shares that may result in Yaw Chee Siew ceasing to be our majority Shareholder 

(assuming that from the Listing Date up to the date of exchange for the second tranche of S$35.0 million 

(i) there is no issue of Shares awarded under the Share Award Scheme; (ii) we have not undertaken any capital 

actions that would change our share capital, including any reduction, bonus issue, stock split or capital 

distribution or the creation, allotment, issue, acquisition, repayment or redemption of Shares or other securities 

or the granting of options, warrants or other securities convertible into Shares; and (iii) we have not undertaken 

any other acts that would dilute the interest of Business Companion Investments in our Company or vary the 

rights attaching to any of the Shares.) Similarly, even if SCPEL does not exchange the Exchangeable Loan 

into Shares, but if Business Companion Investments sells our Shares in order to finance the repayment of the 

Exchangeable Loan, depending on the number of Shares that would be sold by Business Companion 

Investments, Yaw Chee Siew could potentially cease to be our majority Shareholder. As a result of such a 

change in control, SCPEL could have the ability to significantly influence or control actions that require the 

vote of our Shareholders and could therefore make changes to our management and the direction of our 

business. 

In addition, our Controlling Shareholder may withdraw his financial support from us if there is a change 

in control. Further, such a change in control could cause us to breach our undertaking to Caterpillar Financial 

and UOB under loan facilities from the respective financial institution that Yaw Chee Siew will maintain a 

minimum 30% interest in our Company. See “Management’s Discussion and Analysis of Financial Condition 

and Results of Operations — Borrowings” and “Risk Factors — Our business is dependent upon the availability 

of financing”. A breach of these undertaking will result in an event of default under the vessel construction 

loan from Caterpillar Financial. A default would permit lenders to accelerate the maturity of the debts and 

demand payment under these agreements and to foreclose upon collateral securing the debts. Under these 

circumstances, we may not have sufficient funds available to satisfy all of our obligations, including our 

obligations under the outstanding debts. Any of the above developments could have a material adverse effect 

on our operations, financial performance, financial condition and prospects. 

Potential conflicts of interest may arise under the Exchangeable Loan Agreement with SCPEL. 

Under the terms of the Exchangeable Loan Agreement, SCPEL has acquired certain indirect interests in 

our Shares and may, in the future, acquire a significant direct interest in our Shares. See “Substantial 

Shareholders and Vendors — Exchangeable Loan Agreement”. One of our Non-executive Directors, William 

Edward Alastair Morrison, is also the managing director of SCPEL. See “Interested Person Transactions and 

Conflicts of Interests — Potential Conflicts of Interest”. 

The principal business of SCPEL is to undertake private equity investments, and SCPEL may from time 

to time invest in ventures that carry on businesses that are similar to or compete with the businesses of our 

Company. In the event SCPEL acquires a significant direct interest in our Company, there can be no assurance 

that we will be able to take advantage of business opportunities and strategies at commercially favourable 

terms or at all, in circumstances where our interests differ from other companies in which SCPEL has an 

interest, which may have a material adverse effect on our business, results of operations and prospects. 

Our future growth may be limited by our production capacity. 

Our production capacity is limited by the size of our shipyard, the number, size and capacities of our 

Syncrolift», slipways, berths, docks and equipment, as well as by the extent and possibility of outsourcing 

operations to compatible third-party shipyards. 

In the event that we are unable to increase our production capabilities to enable us to construct vessels to 

meet the requirements of our existing and potential customers, some of them may charter or commission 

vessels from our competitors and, as a result, we may lose business opportunities and our operations, results of 

operation, financial condition and prospects may be adversely affected. To date, we have been able to 

successfully secure adequate shipbuilding capacity in China to support our operations. If in the future we are 

unable to secure such shipbuilding capacity upon terms acceptable to us, our shipbuilding capacity could be 

affected. See “Our Business — Our Operations — Outsourcing”. 

23

We are exposed to fluctuations in charter rates. 

We derive part of our revenue from the chartering out of vessels to third parties, either directly or through 

our strategic partnerships. The tenure of these charter contracts typically ranges from one to five years. Rates 

for these charters are determined principally by the balance of supply and demand in the market for the 

relevant type of vessel. A decrease in the demand for the type of vessels we charter, or an increase in supply 

of vessels, would decrease the rates that we and our strategic partners would be able to charge for vessels 

under new contracts (and, potentially, the utilisation rate of the fleet). Depending on market conditions 

prevailing at the time a charter contract for the vessels terminates, we and our strategic partners may not be 

able to enter into a new contract on commercially similar terms or at all. Any significant decline in charter 

rates would likely have an adverse effect on our revenue, share of profits of our strategic partnerships through 

associated companies and results of operations. 

We may be affected by foreign exchange fluctuations. 

Our foreign exchange risk arises mainly from the mismatch between the currency of our receipts and the 

currency of the payments we make. To the extent that our receipts and payments are not denominated in the 

same currency, we may be exposed to foreign exchange fluctuations. Any significant fluctuations in the 

exchange rates of the currencies in which we transact business could cause us to incur foreign exchange 

losses. We may enter into foreign currency forward contracts, where necessary, to hedge our exposure to 

foreign currency fluctuations. However, there is no assurance that we will be able to successfully hedge all 

foreign currency exposures. 

As our books of accounts and records are recorded in Singapore Dollars, any fluctuations in currency 

exchange rates will also result in exchange gains or losses arising from transactions carried out in foreign 

currencies as well as translations of foreign currency monetary assets and liabilities as at the balance sheet 

dates. All resultant exchange differences are dealt with through the respective profit and loss account in each 

entity under our Group. 

For the purpose of presenting consolidated financial statements, the assets and liabilities of our Group’s 

foreign operations (including comparatives) are expressed in Singapore Dollars using exchange rates prevailing 

on the balance sheet date. Income and expense items (including comparatives) are translated at the average 

exchange rates for the period. Exchange differences arising, if any, are classified as equity and transferred to 

our Group’s translation reserve. Such translation differences are recognised in profit or loss in the period in 

which the foreign operation is disposed of. 

On consolidation, exchange differences arising from the translation of the net investment in foreign 

entities (including monetary items that, in substance, form part of the net investment in foreign entities), and 

of borrowings are taken to the foreign currency translation reserve. 

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market 

Risk — Foreign Exchange Risk”. 

Risks Relating to Indonesia 

Almost all of our operations and substantially all of our property and assets are located in Indonesia. As a 

result, future political, economic, legal and social conditions including social unrests, strikes and terrorist 

attacks in Indonesia as well as certain actions and policies the Indonesian government may or may not take or 

adopt could have a material adverse effect on our business, financial condition, results of operations and 

prospects. 

Political and social instability in Indonesia may adversely affect our business, financial condition, results 

of operations, cash flows and prospects. 

Since the collapse of President Soeharto’s regime in 1998, Indonesia has experienced a process of 

democratic change, resulting in political and social events that have highlighted the unpredictable nature of 

Indonesia’s changing political landscape. These events have resulted in political instability as well as general 

social and civil unrest on certain occasions in recent years. 

For example, since 2000, thousands of Indonesians have participated in demonstrations in Jakarta and 

other Indonesian cities both for and against former President Wahid, former President Megawati, and current 

President Yudhoyono as well as in response to specific issues, including fuel subsidy reductions, privatisation 

of state-owned enterprises, anti-corruption measures, decentralisation and provincial autonomy, and the 

24

American-led military campaigns in Afghanistan and Iraq. Although these demonstrations have generally been 

peaceful, some have been violent. Political and related social developments in Indonesia have been unpredictable 

in the past, and social and civil disturbances may occur in the future and on a wider scale. We cannot 

assure you that any such disturbances will not have a direct or indirect material adverse effect on our business, 

financial condition, results of operations and prospects. 

Destabilising events such as terrorist attacks could disrupt our business. 

The terrorist attacks in the United States on 11 September 2001, together with the military response by 

the United States and its allies in Afghanistan and continuing military activities in Iraq, have resulted in 

substantial and continuing economic volatility and social unrests in South-east Asia. Any additional significant 

military or other action by the United States and its allies or any further terrorist activities could also have a 

material adverse effect on international financial markets and the Indonesian economy. 

During the last five years in Indonesia, there have been various bombing incidents directed towards the 

Indonesian and foreign governments and public and commercial buildings frequented by foreigners, including 

the Jakarta Stock Exchange Building and Jakarta’s Soekarno-Hatta International Airport. On 1 October 2005, 

bomb blasts in Bali killed 23 people and injured over 100 others. Indonesian, Australian and US government 

officials have indicated that these bombings may be linked to an international terrorist organisation. 

Demonstrations have also taken place in Indonesia in response to United States, British and Australian military 

action in Iraq. 

There can be no assurance that terrorist acts may not occur in the future. Following the military 

involvement of the United States and its allies in Iraq, a number of governments issued warnings to their 

citizens in relation to a perceived increase in the possibility of terrorist activities in Indonesia, targeting foreign 

and particularly, US interests. Terrorist acts could destabilise Indonesia and increase internal divisions within 

the Indonesian government as it considers responses to such instability and unrests, thereby adversely affecting 

investors’ confidence in Indonesia and the Indonesian economy. Violent acts arising from, and leading to, 

instability and unrests have in the past, and could continue to have, a material adverse effect on investment 

and confidence in, and the performance of, the Indonesian economy and, in turn, on our business, financial 

condition, results of operations and prospects. 

We operate in a legal and regulatory system in which the application and enforcement of various laws 

and regulations may be uncertain. 

As Indonesia is a developing market, its legal and regulatory regime may be less certain than more 

developed markets and may be more susceptible to unforeseen changes. At times, the interpretation, 

application or enforcement of laws and regulations in Indonesia may be unclear and the content of applicable 

laws and regulations may not be immediately available to the public. Under such circumstances, consultation 

with the relevant authority in Indonesia may be necessary to obtain a better understanding or clarification of 

applicable laws and regulations. 

Indonesia’s legal system is a civil law system based on written statutes. Judicial decisions in Indonesia, in 

particular those rendered by its Supreme Court, are persuasive but they do not constitute binding precedents. 

They are also not as systematically and publicly available as in developed countries. Many of Indonesia’s 

commercial and civil laws and rules on judicial process are based on pre-independence Dutch law and have 

not been revised to reflect the complexities of modern financial transactions and instruments. Indonesian courts 

are often unfamiliar with sophisticated commercial or financial transactions, leading, in practice, to uncertainty 

in the interpretation and application of Indonesian legal principles. The application of many Indonesian laws 

and regulations depends, in large part, upon subjective criteria such as the good faith of the parties to the 

transaction and principles of public policy. Indonesian judges operate in an inquisitorial legal system and have 

very broad fact-finding powers and a high level of discretion in relation to the manner in which those powers 

are exercised. In practice, Indonesian court decisions may omit, or may not decide upon, a legal and factual 

analysis of the issues presented in a case. As a result, administration and enforcement of laws and regulations 

by Indonesian courts and governmental agencies may be subject to uncertainty and considerable discretion. 

Uncertainty regarding the application and enforcement of various laws and regulations to our business, our 

entitlement to the various licenses we require to operate our business, our entitlement to various land rights, or 

other legal or regulatory matters relating to our business could have a material adverse effect on our business, 


25

We may be adversely affected by the possible outbreak or re-emergence of avian influenza, severe acute 

respiratory syndrome (“SARS”) or other infectious diseases. 

We, as well as our customers and suppliers, operate in countries which may be affected by the outbreak 

or re-emergence of avian influenza, SARS or other infectious diseases. During the last three years, large parts 

of Asia experienced unprecedented outbreaks of avian influenza. As at 2 October 2007, the World Health 

Organization (“WHO”) had confirmed a total of 201 fatalities in a total number of 329 cases reported to the 

WHO, which only reports laboratory-confirmed cases of avian influenza. Of these, the Indonesian Ministry of 

Health reported to the WHO 86 fatalities in a total number of 107 cases of avian influenza in Indonesia. No 

fully effective avian influenza vaccines have been developed, and evidence that the virus causing avian 

influenza is evolving exists. An effective vaccine may not be discovered in time to protect against a potential 

avian influenza pandemic. In 2003, certain countries in Asia experienced an outbreak of SARS, a highly 

contagious form of atypical pneumonia, which seriously disrupted economic activities in the region and caused 

demand for goods and services to plummet throughout the area. 

An outbreak of avian influenza, SARS or other contagious diseases, or the perception that such an 

outbreak may occur, or the measures taken by the governments of affected countries against such potential 

outbreaks could seriously disrupt our operations or those of our suppliers and customers and negatively impact 

economic conditions in Asia and elsewhere, which could have a material adverse effect on our business, 


Wage inflation in Indonesia may adversely affect our business. 

Our business is heavily reliant on Indonesian labour for the maintenance and upkeep of our operations. 

Any significant national inflation of wages in Indonesia would have a significant impact on our operating 

costs, which could have a material adverse effect on our business, financial condition, results of operations and 

prospects. 

Our operations are dependent on our ability to maintain and renew our current Indonesian land rights. 

We own parcels of land located in Batam, Indonesia, which we use for our shipyard facilities. Each of 

these parcels of land is registered under certificates of right to build. Our land titles over these parcels of land 

will expire on different dates, ranging from 26 March 2016 to 29 December 2027. See “Our Business — 

Properties”. Our shipbuilding and ship repair and conversion operations are dependent on our ability to 

maintain and renew our current Indonesian land rights. If we are not able to maintain or renew our land rights 

over the parcels of land in Batam after they expire, we may have to relocate our business and operations to 

another location. We may not be able to find or secure the rights to use an alternative location to move our 

shipyard facilities. In addition, we may incur costs, which could be significant, to renew our current 

Indonesian land rights or to relocate our business and operations to another location. If we are unable to 

maintain and renew our current Indonesian land rights in Batam, our operations and financial condition could 

be materially and adversely affected. 

Risks Relating to Ownership of Our Shares 

Our Shares have never been publicly traded and the Offering may not result in an active or liquid market 

for our Shares, which could adversely affect the price of our Shares. 

Prior to the Offering, there has not been a public market for our Shares. The SGX-ST listing and 

quotation do not guarantee that a trading market for our Shares will develop or, if a market does develop, the 

liquidity of that market for our Shares. Therefore we cannot predict the extent to which a trading market will 

develop or how liquid the market might become. The listing rules of the SGX-ST require that companies 

applying for listing of their equity securities on the SGX-ST meet certain minimum shareholding spread and 

distribution requirements. In our case, the rules require that we must have at least 1,000 shareholders and that 

15% of our post-Offering share capital be held by public shareholders. While we will need to meet these 

requirements in order to list our Shares on the SGX-ST, these requirements are only minimum requirements, 

and it is likely that our share distribution in the Offering and our post-Offering shareholding spread will not 

substantially exceed these limits or may even fall below these limits after the Offering. In the case where the 

percentage of our post-Offering share capital held by public shareholders is less than 10%, the SGX-ST may 

suspend trading of our Shares. As a result, the liquidity of our Shares could be materially curtailed and there 

may be no or limited trading in our Shares, and you may not be able to acquire Shares or sell your Shares in 

our Company, either at a favourable price or at all. In addition, if shares, such as our Shares, have only limited 

26

liquidity, the price of such shares could fluctuate significantly as a result of only one or a small number of 

trades in these shares. 

The Offering Price may not be indicative of prices that will prevail in the trading market. The Offering 

Price was determined by us and the Vendors, in consultation with the Underwriter, based on market conditions 

and estimated market demand for our Shares. The Offering Price is the same for all Offering Shares and is 

payable in full on application. You should not take the listing as an indication of the merits of the Offering, 

our Group and our Shares. 

There will be no stabilization activity in our Shares, and the price of our Shares could fluctuate and 

decline significantly after the Offering. 

Neither we the Issue Managers, the Underwriter nor any other party will engage in any over-allotments of 

our Shares or any other transactions that would stabilize or maintain the market price of our Shares at levels 

that might otherwise not prevail in the open market. As a result, the price of our Shares in the open market 

following the Offering may be highly volatile and may experience significant fluctuations and material 

declines. 

Our Share price may be volatile which could result in substantial losses for investors acquiring Shares in 

the Offering. 

The market price of our Shares may fluctuate significantly and rapidly as a result of the following factors, 

among others, some of which are beyond our control: 

variations of our operating results; 

changes in securities analysts’ estimates of our financial performance; 

announcement by us of significant acquisitions, strategic alliances or joint ventures; 

additions or departure of key personnel; 

fluctuations in stock market prices and volume; 

involvement in litigation; 

general economic and stock market conditions; 

foreign exchange fluctuations and translations; and 

negative publicity on us or on any of our Directors, Executive Officers, Substantial Shareholders or 

Controlling Shareholders. 

The Singapore securities market is relatively small which may cause the market price of our Shares to be 

more volatile. 

The SGX-ST is relatively small and may be more volatile than stock exchanges in the United States and 

certain other countries. As at 31 October 2008, there were 632 and 138 companies listed and quoted on the 

Main Board of the SGX-ST and Catalist, respectively, and the aggregate market capitalisation of listed equity 

securities of these companies was approximately S$382.9 billion. The relatively small market capitalisation of, 

and trading volume on, the SGX-ST, compared to certain other global stock exchanges, may cause the market 

price of securities listed on the SGX-ST, including our Shares, to fluctuate more than those listed on larger 

global stock exchanges. 

Singapore law may not protect Shareholders as extensively as other jurisdictions. 

Our corporate affairs are governed by our Memorandum and Articles of Association, by the laws 

governing corporations incorporated in Singapore and will be governed by the Listing Manual upon our 

admission to the Main Board of the SGX-ST. The rights of our Shareholders and the responsibilities of our 

Management and the Board of Directors under Singapore law may be different from those applicable to a 

company incorporated in another jurisdiction. Principal shareholders of Singapore companies do not owe 

fiduciary duties to minority shareholders, as compared, for example, to controlling shareholders in the United 

States. Our public shareholders may have more difficulty in protecting their interests in connection with 

actions taken by our Management, members of our Board of Directors or our principal Shareholders than they 

would as shareholders of a company incorporated in another jurisdiction. See “Description of Our Shares — 

Minority Rights”. 

27

We may not be able to pay dividends to our Shareholders. 

A significant part of our operations are conducted through our subsidiaries. Accordingly, an important 

source of our income, and consequently an important factor in our ability to pay dividends on our Shares, are 

the dividends received from our subsidiaries. Our subsidiaries’ ability to pay dividends will in turn depend on 

their earnings and cash flows and will be subject to laws and regulations (including tax laws) in each 

jurisdiction and any restrictive loan covenants applicable to them. For a description of our dividend policy, see 

“Dividend Policy”. 

We may require additional equity funding which may dilute your interests. 

We may require additional equity funding for our future equity or equity linked growth, investments, 

capital expenditure and working capital. An issue of Shares or other securities to raise funds will dilute 

Shareholders’ equity interests and may, in the case of a rights issue, require additional investments by 

Shareholders. Further, an issue of Shares below the then prevailing market price will also affect the value of 

the Shares then held by an investor. Dilution may occur in shareholding terms even if the issue of shares is at 

a premium to the market price. If we are unable to secure additional funds when required to meet our business 

requirements, we may not be able to fully implement our future plans. 

Substantial future sale of Shares could adversely affect the market price of our Shares. 

Immediately following the Offering, 1,181,045,000 of our Shares would be issued and paid-up. Such 

Shares, except for those under moratorium, may be sold in the public market in Singapore immediately after 

the Offering. Any future sale or availability of our Shares in the public market can have a downward pressure 

on our Share price. The sale of a significant amount of Shares in the public market after the Offering, or the 

perception that such sale may occur, (including a sale by our Controlling Shareholder entered into in order to 

raise funds to repay the Exchangeable Loan; see “Substantial Shareholders and Vendors — Exchangeable Loan 

Agreement”) could materially and adversely affect the market price of our Shares. 

Except as otherwise described in this document, there will be no restriction on the ability of our 

Substantial Shareholders and SCPEL to sell their Shares either in the public market or otherwise. If our 

Substantial Shareholders and/or SCPEL sell substantial amounts of our Shares in the public market following 

the expiry of the moratorium or pursuant to an exemption from the moratorium or otherwise, the market price 

of our Shares could fall. See “Plan of Distribution — Restrictions on Disposals and Issue of Shares”. 

Our Controlling Shareholder may have interests that are different from those of us and our other 

Shareholders. 

Following the completion of the Offering, we expect that our Controlling Shareholder, namely Yaw Chee 

Siew, will own approximately 72.6% of our Shares, our Controlling Shareholder will continue to control 

actions at our Company requiring the approval of our Shareholders, such as the power to elect our Directors, 

the adoption of amendments to our Articles of Association or the approval of a merger or sale of substantially 

all of our assets. Control of a majority of our Shares could delay, defer or prevent a future take-over or a 

change in control of our Company and could make some transactions more difficult or impossible to complete 

without the support of the Controlling Shareholder. See “Substantial Shareholders and Vendors”. 

Investors in our Shares are buying our Shares at a price higher than the NAV per Share. 

The Offering Price of our Shares is higher than the value of our NAV per Share as at 31 May 2008. 

Investors who acquire our Shares in the Offering will therefore experience immediate and significant dilution 

of 36.01 cents per Share. See “Dilution”. 

In addition, we may grant Award Shares as defined in this document under our Share Award Scheme to 

our Directors and employees. If and when such awards are granted and are ultimately vested, there may be a 

dilution to the investors in the Offering. 

Singapore laws contain provisions that could discourage a take-over of us. 

We are subject to the Singapore Code on Take-Overs and Mergers (the “Singapore Take-Over Code”). 

The Singapore Take-Over Code contains provisions that may delay, deter or prevent a future take-over or 

change in control of our Company. Under the Singapore Take-Over Code, any person acquiring an interest, 

either individually or together with parties acting in concert, in 30.0% or more of our voting shares may be 

required to extend a take-over offer for our remaining voting shares in accordance with the Singapore Take- 

28

Over Code. A take-over offer is also required to be made if a person holding between 30.0% and 50.0% 

inclusive of the voting rights in our Company, either individually or in concert, acquires more than 1.0% of 

our voting shares in any six-month period. Although such take-over provisions are intended to protect the 

interests of Shareholders by requiring any acquisitions of our Shares that may involve or threaten a change in 

control of our Company to also be extended to all Shareholders on the same terms, these provisions may 

discourage or prevent such transactions from taking place at all. Some of our Shareholders, which may include 

you, may therefore be disadvantaged as a transaction of that kind might have allowed the sale of Shares at a 

price above the prevailing market price. 

Overseas Shareholders may not be able to participate in future rights offerings or certain other equity 

issues we may make. 

If we offer to our Shareholders rights to subscribe for additional Shares or any right of any other nature, 

we will have the discretion as to the procedure to be followed in making the rights available to our 

Shareholders or in disposing of the rights for the benefit of our Shareholders and making the net proceeds 

available to such Shareholders. We may choose not to offer the rights to our Shareholders having an address 

outside Singapore. For example, we will not offer such rights to our Shareholders who are US persons (as 

defined in Regulation S) or who have a registered address in the United States unless: 

a registration statement is in effect, if a registration statement under the Securities Act is required in 

order for us to offer such rights to holders and sell the securities represented by such rights; or 

the offering and sale of such rights or the underlying securities to such holders are exempt from 

registration under the provisions of the Securities Act. 

We have no obligation to prepare or file any registration statement under the Securities Act. Accordingly, 

Shareholders who are US persons (as defined in Regulation S) or who have a registered address in the United 

States may be unable to participate in rights offerings and may experience a dilution in their holdings as a 

result. 

29

USE OF PROCEEDS 

Based on the Offering Price of S$0.51 for each Offering Share, our net proceeds from the Offering, after 

deducting our share of the underwriting fees, commissions and other expenses payable in relation to the 

Offering, are estimated to be approximately S$97.7 million (US$71.8 million). 

We intend to use these net proceeds for the following purposes: 

Estimated Application of Net 

Proceeds 

Amount 

Allocated for 

Each Dollar 

Raised 

from the 

Issuance of 

New Shares 

(S$ million) (US$ million) (S$) 

Funding of strategic investments .................... 

Funding of the expansion of our fleet of vessels for 

43.4 31.9 0.41 

charter ..................................... 27.2 20.0 0.26 

Capital expenditure . ............................. 23.1 17.0 0.22 

General working capital requirements ................ 4.0 2.9 0.04 

Total ........................................ 97.7 71.8 0.93 

Funding of Strategic Investments 

We have entered into three joint ventures with strategic partners. See “Our Business — Our Operations — 

Ship Chartering”. We intend to use S$43.4 million of the net proceeds from the issuance of New Shares for 

investments into these joint ventures. The joint ventures (described below) will use these funds to purchase 

additional vessels, which we are building: 

We intend to use S$22.3 million for an equity investment into our joint venture with GC Rieber, to be 

used as deposits for four PSVs. 

We intend to use S$7.8 million for an equity investment into our joint venture with Aries, to be used as 

deposits for four AHTS vessels. 

We intend to use S$3.9 million for an equity investment into WAIL, to be used as a deposit for Otto 2, 

a work barge with accommodation for 300 people. 

We intend to use S$9.4 million for equity investment into joint ventures that we are considering 

entering into with various parties. 

Funding of Our Chartering Fleet Expansion 

We intend to expand our chartering fleet. Typically, we obtain financing for up to 80% of the cost of each 

vessel to be constructed. We intend to use S$27.2 million of the net proceeds from the issuance of New Shares 

and S$3.9 million of our internal resources to fund the remaining 20.0% of the cost of nine additional vessels 

for our chartering fleet. 

Capital Expenditure 

In line with our capacity and capability enhancement programme, we intend to spend S$23.1 million of 

the net proceeds from the issuance of New Shares to develop our yard, infrastructure facilities and equipment. 

Working Capital 

We intend to use the remaining S$4.0 million for general working capital requirements. 

The foregoing discussion represents our best estimate of our allocation of the net proceeds from the 

issuance of New Shares based on our current plans and estimates regarding our anticipated expenditures. The 

actual timing and final amount of disbursements to be made for the foregoing purposes shall be determined by 

our Directors with a view to obtaining the optimum benefit for us. Future events or developments, such as 

changes in economic, political or other conditions in the locations where we propose to make investments, 

may make a change in the use of the net proceeds from that specified above necessary or desirable, subject to 

proper and timely public disclosure of such intended changes through SGXNET. In addition, we may not be 

30

able to use the net proceeds to make certain investments identified by our Board of Directors which may 

require prior Shareholder and/or regulatory approval if such approvals are not forthcoming. 

Pending the use of the net proceeds to us from the issuance of New Shares, the funds may be placed in 

short-term deposits with banks or financial institutions or invested in money market instruments as our Board 

of Directors may deem fit. 

In the reasonable opinion of our Directors, there is no minimum amount that must be raised by us from 

the Offering. 

The sale of Vendor Shares is estimated to provide the Vendors net proceeds of approximately S$14.5 million 

(US$10.7 million), after deducting the Vendors’ share of the underwriting fees and commissions. We will 

not receive any of the proceeds from the sale of Vendor Shares. 

Expenses 

The following table sets out the breakdown of our expenses, both in absolute terms and as a percentage 

of the gross proceeds from the issuance of New Shares: 

Expenses 

As a Percentage of 

the Gross 

Proceeds from the 

Issuance of New 

Shares 

(S$ million) (%) 

Underwriting fees, placement commission and brokerage. ......... 3.4 3.2 

Professional and accounting fees. ........................... 3.4 3.2 

Other expenses incurred in connection with the Offering .......... 0.6 0.6 

Total ................................................ 7.4 7.0 

For each Singapore Dollar of the proceeds from the issuance of New Shares raised by us, approximately 

S$0.07 will be used to pay for expenses incurred by us in connection with the Offering. 

In the event the Offering is completed, the underwriting fees, placement commissions and brokerage will 

be borne by us and the Vendors in proportion to the number of Offering Shares sold by each of us and the 

Vendors. All other expenses related to the Offering will be borne by us. Based on the foregoing, we expect to 

bear S$7.4 million in expenses relating to the Offering. 

31

DIVIDEND POLICY 

Statements contained in this section that are not historical facts are forward-looking statements. Such 

statements are subject to certain risks and uncertainties which could cause actual results to differ materially 

from those which may be forecast and projected. Under no circumstances should the inclusion of such 

information herein be regarded as a representation, warranty or prediction with respect to the accuracy of the 

underlying assumptions by us, the Vendors, the Issue Managers, the Underwriter or any other person. Investors 

are cautioned not to place undue reliance on these forward-looking statements which speak only as at the date 

hereof. See “Notice to Investors — Cautionary Note on Forward-Looking Statements.” 

We currently do not have a fixed dividend policy. In the future, our Board of Directors may recommend 

annual dividends, subject to the approval by our Shareholders in a general meeting. From time to time, our 

Board of Directors may declare interim dividends. As part of the preparation for the Offering, our Board of 

Directors has considered the general principles that it currently intends to apply when recommending dividends 

for approval by our Shareholders or when declaring interim dividends. The actual dividend that our Board of 

Directors may recommend or declare in respect of any particular financial year or period will be subject to the 

factors outlined below, as well as any other factors deemed relevant by our Board of Directors. These factors 

include but are not limited to: 

the level of our cash, gearing, returns on equity and retained earnings; 

our expected financial performance; 

our projected levels of capital expenditure and other investment plans; 

tax positions of our Company and our subsidiaries; 

laws or regulations regarding dividends; and 

any restrictions on the payment of dividend that may be imposed on us by our financing arrangements. 

In FY2005, FY2006, FY2007 and for the five months ended 31 May 2008, we did not declare any 

dividends. 

You should note that all of the information in this section merely consists of statements of our 

present intention and does not constitute legally binding statements in respect of our future dividends, 

which may be subject to modification (including reduction or non-declaration thereof) in our Directors’ 

sole and absolute discretion. 

No inference should or can be made from any of the foregoing statements as to our actual future 

profitability or our ability to pay dividends in any particular periods. 

We must pay all dividends out of our profits. To the extent that we declare dividends, we anticipate that 

they will be declared in Singapore Dollars. For information relating to taxes payable on dividends, see 

“Taxation”. 

32

EXCHANGE RATES AND EXCHANGE CONTROLS 

Exchange Rates 

The following table sets forth the average, high, low and period-end noon buying rate in New York for 

cable transfers in Singapore Dollars as certified for customs purposes by the Federal Reserve Bank of New 

York (the “Noon Buying Rate”) between Singapore Dollars and the US Dollars (in Singapore Dollars per 

US Dollar) for the periods indicated. No representation is made that the Singapore Dollar amounts actually 

represent such US Dollar amounts or could have been or could be converted into US Dollars at the rate 

indicated, any other rate or at all. For full years, the average figures are determined using the Noon Buying 

Rate at the end of each month. For monthly figures the average is determined using the Noon Buying Rate for 

each business day. 

At Period End Average (1) 

High (1) 

Low (1) 

Financial Year 

2003 ...................................... 1.70 1.74 1.78 1.70 

2004 ...................................... 1.63 1.69 1.73 1.63 

2005 ...................................... 1.66 1.66 1.71 1.62 

2006 ...................................... 1.53 1.58 1.65 1.53 

2007 ...................................... 1.44 1.50 1.54 1.44 

Month 

January 2008 ................................ 1.42 1.43 1.44 1.42 

February 2008 ............................... 1.39 1.41 1.42 1.39 

March 2008 ................................. 1.38 1.38 1.39 1.38 

April 2008 .................................. 1.36 1.36 1.39 1.35 

May 2008 .................................. 1.36 1.37 1.38 1.36 

June 2008 .................................. 1.36 1.37 1.38 1.36 

July 2008 .................................. 1.37 1.36 1.37 1.35 

August 2008 (through to the Latest Practicable Date) . . 1.41 1.40 1.42 1.37 

Note: 

(1) Source: Federal Reserve Bank of New York. The exchange rates have not been verified by us, the Vendors, 

Issue Managers or the Underwriter. We have included these exchange rates in their proper form and context 

in this document. The Federal Reserve Bank of New York has not consented to the inclusion of these 

exchange rates for the purposes of Section 249 of the Securities and Futures Act and is not liable for the 

exchange rate information under Sections 253 and 254 of the Securities and Futures Act. 

As at the Latest Practicable Date, the Noon Buying Rate between Singapore Dollars and US Dollars was 

US$1.00 = S$1.41. 

Exchange Controls 

Singapore 

As at the Latest Practicable Date, there are no foreign exchange controls in Singapore. 

Indonesia 

In Indonesia, foreign exchange activity is administered by the central bank (Bank Indonesia) and the 

Ministry of Finance. Under Law No. 25 of 2007 on Capital Investment, a foreign investment enterprise 

organised under the laws of and domiciled in Indonesia may repatriate proceeds from the sale of shares, 

compensation in case of nationalisation, liquidation proceeds, loan principals and interests, royalties as well as 

costs related to expatriate employment expenses without prior approval of those authorities, subject to: (i) the 

government’s authority to impose rules requiring reports on the transfer of funds; (ii) the right of the 

government to collect taxes, royalties, and other forms of state’s revenues; (iii) the laws protecting the rights 

of creditors; and (iv) law enforcement to avoid losses to the State. 

Other than (i) the obligation to report to Bank Indonesia for any remittance of funds in foreign currency 

in the amount equivalent to or in excess of US$10,000 pursuant to Bank Indonesia Regulation 

No. 1/9/PBI/1999 on Supervision of Foreign Currency Flows of Banks and Non-Bank Financial Institution and 

33

Bank Indonesia Circular Letter No. 3/13/DSM dated 13 June 2001 on Reporting of Foreign Currency Flow by 

Banks; (ii) the requirement to obtain Bank Indonesia’s approval for importing or exporting Rupiah in excess of 

IDR 0.1 billion; and (iii) the obligation to report foreign currency-denominated debts to the Ministry of 

Finance and Bank Indonesia, there are currently no exchange controls or similar laws, decrees, regulations or 

other legislation in Indonesia that may restrict the following: 

(a) the import or export of capital, including the availability of cash and cash equivalents for our 

Indonesian subsidiaries; and 

(b) the remittance of dividends, interest or other payments by our Indonesian subsidiaries to nonresident 

persons. 

Federal Territory of Labuan, Malaysia 

As at the Latest Practicable Date, there are no restrictions in Labuan on the repatriation of capital, profits, 

dividends, interest, fees or rental by foreign direct investors or portfolio investors, provided it does not involve 

transactions in the currency of the State of Israel or transactions with the State of Israel or its residents, 

authorities, instrumentalities or agencies, or entities controlled directly or indirectly by the State of Israel or its 

residents, individual or entity as listed pursuant to the United Nations Security Council Resolution (UNSCR) 

No. 1333 (2000) and No. 1267 (1999) relating to Osama bin Laden and The Taliban, UNSCR 1532 (2004) 

relating to Liberia and UNSC 1483 (2003) relating to Saddam Hussein. 

34

CAPITALISATION AND INDEBTEDNESS 

The following table sets forth our capitalisation and indebtedness as at 31 July 2008 (i) on an actual 

basis, and (ii) as adjusted to reflect the issuance and sale of the New Shares at the Offering Price, after 

deducting (a) our share of the underwriting and selling commissions and (b) all other estimated expenses 

related to the Offering. The information in this table should be read in conjunction with “Selected 

Consolidated Financial Information”, “Management’s Discussion and Analysis of Financial Condition and 

Results of Operations” and our consolidated financial statements, with the notes thereto, included elsewhere in 

this document. 

As Adjusted for the 

Actual 

Issue of New Shares 

S$ US$ 

(Unaudited) 

(’000) 

S$ US$ 

(Unaudited) 

Cash and cash equivalents ............................ 180,748 132,903 278,459 204,749 

Secured short-term indebtedness ......................... 218,770 160,860 218,770 160,860 

Secured long-term indebtedness. ......................... 74,595 54,849 74,595 54,849 

Unsecured long-term indebtedness ........................ 83,180 61,162 83,180 61,162 

Unsecured short-term indebtedness ....................... 10,400 7,647 10,400 7,647 

Total indebtedness ................................... 386,945 284,518 386,945 284,518 

Equity attributable to equity holders of our Company. ......... 87,583 64,399 185,294 136,245 

Minority interest ..................................... 15 11 15 11 

Total equity and indebtedness .......................... 474,543 348,928 572,254 420,774 

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — 

Borrowings” for a description of our borrowings. 

35

DILUTION 

Dilution is the amount by which the Offering Price paid by the subscribers and/or purchasers of our 

Shares in this Offering exceeds our NAV per Share after the Offering. Our unaudited NAV per Share as at 

31 May 2008 was 8.14 cents per Share after adjusting for the sub-division of each of our Share into 30 Shares 

which was effective on 2 September 2008 (the “Share Split”) and, before adjusting for the estimated net 

proceeds from the issue of the New Shares and based on the pre-Offering issued and paid up share capital of 

975,000,000 Shares. 

Pursuant to the Offering in respect of 206,045,000 New Shares at the Offering Price, our NAV per Share 

as at 31 May 2008, after adjusting for the Share Split and the estimated net proceeds from the Offering and 

based on the post-Offering issued and paid-up share capital of 1,181,045,000 Shares, would have been 

14.99 cents per Share. This represents an immediate increase in NAV per Share of 6.85 cents to our existing 

Shareholders and an immediate dilution in NAV per Share of 36.01 cents or approximately 70.6% to our new 

investors. 

The following table illustrates this per Share dilution in Singapore cents as described above: 

Offering Price per Share ................................................... 51.00 

Adjusted NAV per Share as at 31 May 2008 before the Offering ...................... 8.14 

Increase in NAV per Share attributable to the Offering ............................. 6.85 

Adjusted NAV per Share after the Offering . . .................................... 14.99 

Dilution in NAV per Share to new investors . .................................... 36.01 

Dilution in NAV per Share to new public investors as a percentage of Offering Price ....... 70.6% 

The issue of new Shares pursuant to the vesting of awards which may be granted under the Share Award 

Scheme may have a dilutive effect on new investors in the Offering. The total number of new Shares over 

which an Award may be granted pursuant to the Share Award Scheme is up to 15.0% of the issued share 

capital of our Company on the day preceding the relevant date of the Award. 

The following table summarises the total number of Shares (after adjusting to give effect to the Share 

Split) acquired by our Directors, Substantial Shareholders and their Associates during the period of three years 

prior to the date of lodgement of this document with the Authority, the total consideration paid by them and 

the effective cash cost per Share (after adjusting to give effect to the Share Split) to them, and by our new 

public Shareholders pursuant to the Offering: 

Number of 

Shares 

Acquired (1) 

Cents 

Total 

Consideration 

Effective Cash 

Cost per Share 

(S$) (S$ cents) 

Directors 

Yaw Chee Siew (2)(5) .......................... 60,000,000 (2) 

2,000,000 3.33 

753,750,000 (2) 25,125,000 3.33 

12,000,000 (2) 

2 nm (6) 

Lee Kok Wah (3) ............................. 

Substantial Shareholders 

97,500,000 3,250,000 3.33 

CEO Technology Asia (4)(5) ..................... 48,750,000 1,625,000 3.33 

Business Companion Investments (2)(5) ............. 828,750,000 1 nm (6) 

New Public Investors 

Cornerstone Investors 

SCPEL ................................... 58,000,000 29,580,000 51.00 

Bangkok Bank .............................. 39,215,000 19,999,650 51.00 

Maju Holdings .............................. 49,019,000 24,999,690 51.00 

Others Public Investors ...................... 89,061,000 45,421,110 51.00 

Notes: 

(1) The information has been adjusted to give effect to the Share Split whereby, on 2 September 2008, each 

Share was sub-divided into 30 Shares. 

36

(2) As at 1 January 2005, Yaw Chee Siew held 100,000 Shares. On 26 July 2006 and 30 December 2006, he 

subscribed for 2,000,000 Shares and 25,125,000 Shares respectively. On 11 January 2008, Yaw Teck Seng 

and Yaw Chee Ming transferred 250,000 Shares and 150,000 Shares respectively to Yaw Chee Siew. Following 

these transactions, Yaw Chee Siew held 27,625,000 Shares in aggregate. 

On 28 February 2008, Yaw Chee Siew transferred the entire 27,625,000 Shares held by him to Business 

Companion Investments. Business Companion Investments is an investment holding company incorporated 

in BVI on 12 November 2007, its sole shareholder is Yaw Chee Siew. Pursuant to the Share Split, Business 

Companion Investments holds 828,750,000 Shares. 

Save as disclosed above, share numbers presented in this footnote are presented without adjusting for the 

Share Split. 

(3) On 30 December 2006, Lee Kok Wah subscribed for 3,250,000 Shares. Pursuant to the Share Split, Lee 

Kok Wah holds 97,500,000 Shares. 

(4) CEO Technology Asia is an investment holding company incorporated in BVI on 28 October 2005, its sole 

shareholder is Yaw Chee Siew. On 30 December 2006, it subscribed for 1,625,000 Shares. Pursuant to the 

Share Split, CEO Technology Asia holds 48,750,000 Shares. 

(5) CEO Technology Asia and Business Companion Investments are wholly-owned by Yaw Chee Siew. Yaw 

Chee Siew is therefore deemed to be interested in the Shares held by CEO Technology Asia and Business 

Companion Investments by virtue of Section 4 of the SFA. 

(6) “nm” means “not meaningful”. 

Save as disclosed above, none of our Directors or the Substantial Shareholders of our Company or their 

respective Associates have acquired any Shares during the period of three years prior to the date of lodgement 

of this Prospectus. 

For details of the interests of our Directors in the Shares see “Substantial Shareholders and Vendors — 

Shareholders”. 

37

SELECTED CONSOLIDATED FINANCIAL INFORMATION 

The following tables present our selected consolidated financial information as at and for the years ended 

31 December 2005, 2006, 2007 and the five months ended 31 May 2007 and 2008. The following discussion 

should be read in conjunction with our audited consolidated financial statements for FY2005, FY2006 and 

FY2007 and the notes thereto and our unaudited condensed consolidated financial statements for the five 

months ended 31 May 2008 and the related notes thereto and all other financial information which are 

included elsewhere in this document. You should also see the section of this document entitled “Management’s 

Discussion and Analysis of Financial Condition and Results of Operations”. We derived the summary financial 

information presented below from our audited consolidated financial statements for FY2005, FY2006 and 

FY2007 and our unaudited condensed consolidated financial statements for the five months ended 31 May 

2007 and 2008. Our condensed consolidated financial statements for the five months ended 31 May 2007 have 

not been audited or reviewed. Prospective investors should note that our results for the five months ended 

31 May 2008 are not necessarily indicative of the results that we will achieve for the year ending 31 December 

2008. Our unaudited condensed consolidated financial statements for the five months ended 31 May 2007 and 

2008 have been prepared on the same basis as our audited consolidated financial statements for FY2005, 

FY2006 and FY2007. Our consolidated financial statements were prepared and presented in accordance with 

SFRS. 



Consolidated Profit and Loss Statements 

Financial Years Ended 31 December 

Five Months Financial 

Period Ended 31 May 

2005 2006 2007 2007 2007 2008 

S$ S$ S$ US$ S$ 



S$ 

(Unaudited) 

Revenue. ................... 54,689 147,255 314,024 230,900 86,308 219,533 

Cost of sales . ................ (48,591) (125,879) (232,326) (170,828) (71,293) (162,467) 

Gross profit ................. 6,098 21,376 81,698 60,072 15,015 57,066 

Other income (expense). ........ (969) 429 (8,045) (5,916) 1,554 (12,853) 

Administration expenses ........ 

Share of profits (losses) of 

(3,034) (5,270) (12,356) (9,085) (4,753) (7,448) 

associates . ................ — — (268) (197) — 4,571 

Finance costs ................ (2,042) (2,383) (5,905) (4,342) (1,067) (4,919) 

Profit before income tax ....... 53 14,152 55,124 40,532 10,749 36,417 

Income tax expense. ........... (462) (449) (1,449) (1,065) (649) (500) 

Profit (Loss) for the period ..... 

Attributable to Equity holders of 

(409) 13,703 53,675 39,467 10,100 35,917 

our Company .............. 3,082 20,200 41,927 30,829 8,964 32,711 

Minority interests ............. (3,491) (6,497) 11,748 8,638 1,136 3,206 

Earnings per Share 

(409) 13,703 53,675 39,467 10,100 35,917 

(1) attributable 

to equity holders of our 

Company (expressed in cents 

per Share). 

Basic ...................... 0.32 2.07 4.30 3.16 0.92 3.35 

Diluted (2) ................... 0.26 1.71 3.55 2.61 0.76 2.77 

Notes: 

(1) We calculated our earnings per Share based on the number of Shares outstanding prior to the completion 

of the Offering and after (i) deducting the amount of our profit attributable to minority interests and 

(ii) giving effect to the Share Split described in the section “Description of Share Capital”. 

(2) As adjusted for the issue of 206,045,000 New Shares. 

38

Consolidated Balance Sheets 

As at 


31 May 

2005 2006 2007 2007 2008 

S$ S$ S$ US$ S$ 

(Unaudited) 


(Unaudited) 

ASSETS 


Cash and bank balances .................... 1,285 14,238 18,186 13,372 10,082 

Pledged deposits ......................... 138 40,969 195,718 143,910 151,183 

Trade receivables ......................... 

Gross amount due from customers for contract 

20,430 4,239 25,538 18,778 19,370 

work ................................ — 27,418 94,300 69,338 177,055 

Deposits, prepayments and other receivables ..... 7,675 21,803 61,757 45,410 115,503 

Inventories. ............................. 21,373 25,769 81,465 59,901 67,056 

Total current assets ....................... 


50,901 134,436 476,964 350,709 540,249 

Investments in associates ................... — — 4,709 3,463 8,692 

Available-for-sale investments ............... — — 4,080 3,000 4,187 

Goodwill ............................... — 922 5,101 3,750 40,370 

Property, plant and equipment ............... 11,717 18,527 91,011 66,920 96,123 

Total non-current assets .................... 11,717 19,449 104,901 77,133 149,372 

Total assets ............................. 62,618 153,885 581,865 427,842 689,621 



Loans and overdraft ....................... 25,754 38,237 136,847 100,623 134,426 

Trade payables. .......................... 

Gross amount due to customers for contract 

20,619 39,594 168,765 124,092 224,603 

work ................................ 277 35,070 97,341 71,574 84,637 

Other payables. .......................... 3,805 6,210 6,561 4,824 7,152 

Deferred gain — short term ................. — — 482 354 482 

Current portion of finance leases ............. — 25 80 60 80 

Income tax payable ....................... 513 905 2,122 1,560 2,005 

Total current liabilities ..................... 


50,968 120,041 412,198 303,087 453,385 

Loans and overdraft ....................... — — 47,516 34,938 41,526 

Deferred gain — long-term. ................. — — 12,619 9,279 12,218 

Loan from related parties ................... 52,170 27,872 51,381 37,780 102,828 

Finance leases ........................... — 170 347 255 315 

Total non-current liabilities ................. 


52,170 28,042 111,863 82,252 156,887 

Issued capital. ........................... 500 32,500 32,500 23,897 32,500 

Capital reserve. .......................... 294 1,162 1,656 1,218 1,666 

Translation reserve. ....................... 13 (1,158) (5,249) (3,860) (20,441) 

Accumulated profits (losses). ................ 

Equity attributable to equity holders of our 

(29,223) (9,023) 32,904 24,194 65,615 

Company ............................ (28,416) 23,481 61,811 45,449 79,340 

39

As at 


31 May 

2005 2006 2007 2007 2008 

S$ S$ S$ US$ S$ 

(Unaudited) 


(Unaudited) 

Minority interests. ........................ (12,104) (17,679) (4,007) (2,946) 9 

Total equity (capital deficiency) .............. (40,520) 5,802 57,804 42,503 79,349 

Total liabilities and equity ................. 62,618 153,885 581,865 427,842 689,621 

NAV per Share (1) (in cents) ................. (2.91) 2.41 6.34 4.66 8.14 

NTA per Share (2) (in cents) ................. (2.91) 2.31 5.82 4.28 4.00 

Notes: 

(1) We calculated our NAV per Share based on the number of Shares outstanding prior to the completion of 

the Offering and after (i) deducting the amount attributable to minority interests and (ii) giving effect to 

the Share Split described in the section “Description of Share Capital”. 

(2) We calculated our NTA per Share based on the number of Shares outstanding prior to the completion of 

the Offering and after (i) deducting the amount attributable to minority interests and goodwill and (ii) giving 

effect to the Share Split described in the section “Description of Share Capital”. 

Selected Consolidated Statements of Cash Flows 

Five Months 


Ended 31 May 

2005 2006 2007 2007 2007 2008 

S$ S$ S$ US$ 

(Unaudited) 


S$ 

(Unaudited) 

S$ 

(Unaudited) 


activities .................... (12,460) 43,067 71,865 52,842 89,361 (43,281) 




21,848 21,902 165,457 121,660 12,100 14,671 



1,068 57,031 160,460 117,985 91,325 (45,392) 




(4,643) (3,575) 53,456 39,306 53,456 213,904 

currencies ................... 


— — (12) (9) 1 (7,247) 

period. ..................... (3,575) 53,456 213,904 157,282 144,782 161,265 

40

MANAGEMENT’S DISCUSSION AND ANALYSIS OF 

FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

The following discussion should be read in conjunction with our audited consolidated financial statements 

for FY2005, FY2006 and FY2007 and unaudited condensed consolidated financial statements for the five 

months ended 31 May 2008 and the notes thereto. Our condensed consolidated financial statements for the 

five months ended 31 May 2007 have not been audited or reviewed. Prospective investors should note that our 

results for the five months ended 31 May 2008 are not necessarily indicative of the results that we will achieve 

for the year ending 31 December 2008. Our unaudited condensed consolidated financial statements for the 

five months ended 31 May 2007 and 2008 have been prepared on the same basis as our audited consolidated 

financial statements for FY2005, FY2006 and FY2007. This discussion contains forward-looking statements 

that involve risks and uncertainties. Our actual results may differ significantly from those forecasted or 

projected in the forward-looking statements. Factors that might cause future results to differ significantly from 

those forecasted or projected in the forward-looking statements include, but are not limited to, those discussed 

below and elsewhere in this document, particularly in “Risk Factors” and “Notice to Investors — Cautionary 

Note on Forward-Looking Statements”. 



Overview 

We are an offshore marine group engaged in shipbuilding, ship repair and conversion, and ship chartering. 






supply of workers from Indonesia as well as management talent, marine and offshore support and expertise 

from Singapore. Our shipyard has a well-organised infrastructure along with comprehensive facilities, 

advanced equipment and an experienced team of engineers. 


and at outsourced third party shipyards in China. Our strategic focus is on building offshore support vessels 

such as AHTS vessels and PSVs which comply with the technical specifications required to operate in the 

North Sea, including the requirements of Norwegian Maritime Directorate and Det Norske Veritas. We also 

construct other types of offshore support vessels including work barges with accommodation for 300 people 

and work maintenance boats and plan to build offshore construction vessels. In addition, we provide ship 

repair and conversion services primarily for offshore support vessels. We have recently signed agreements to 

build offshore construction vessels. 



It has also enabled us to gain recognition in the construction of complex and sophisticated offshore support 

vessels. 

In 2007, in preparation for the commencement of our ship chartering business, we incorporated ten 

wholly-owned subsidiary companies in Singapore to own one vessel each. We commenced our ship chartering 

business in April 2007. In October 2007 and December 2007, we acquired a total of five tugboats and five 

barges, which we had previously leased from Yawson, at a total cost of S$33.6 million. These vessels form 

part of our fleet of vessels for chartering. See “Interested Person Transactions and Conflicts of Interests — 

Past Interested Person Transactions — Transactions with Yawson”. 

In May 2007, we incorporated a subsidiary, Otto Investment, to hold a minority interest in a vessel that 

we had sold to our strategic partner who is involved in the ship chartering business. 


growth rate of 139.6% per annum from S$54.7 million in FY2005 to S$314.0 million in FY2007. Over the 





41

Order Book 

Our order book as at any date represents the total stated contract value of orders not yet delivered less the 

portion of revenue in respect of these orders that we have recognised using the percentage-of-completion 

method, all as translated into Singapore Dollars, our reporting currency. 

Our order book has a significant impact on our future revenues and profits. Our order book as at 

31 December 2005, 2006 and 2007 was S$1.8 million, S$411.0 million and S$730.6 million, respectively. As 

at 8 August 2008, we have an order book of S$937.1 million, comprising 18 AHTS vessels, four PSVs, three 

utility vessels, one offshore construction vessel and one work barge with accommodation for 300 people which 

we expect to deliver between 2008 and 2011. We typically take between 16 and 18 months to construct and 

deliver a vessel to our customers. See “Our Business — Our Operations — Shipbuilding” and “Our Business 

— Significant Shipbuilding Projects”. Our order book includes vessels sold to our strategic partners of 

which we retain 49% interest. As at 8 August 2008, the nine vessels sold to our strategic partners amounted to 

S$207.9 million in order book. 

The new contracts that we secured in FY2005 had a total contract value of S$32.0 million and comprised 

two AHTS vessels. In FY2006, we secured new contracts with a total contract value of S$532.1 million, which 

comprised 16 AHTS vessels, one work barge with accommodation for 300 people and three flat top barges. 

The increase in value of new contracts from FY2005 to FY2006 was mainly due to the increase in the number 

of vessels we contracted and particularly from the larger and higher specification vessels, which are of higher 

value. In FY2007, we secured new contracts with a total contract value of S$616.2 million which comprised 

eight AHTS vessels, one work barge with accommodation for 300 people, five tugs and two flat top barges. 

Between 1 January 2008 and 31 May 2008, we secured new contracts with a total contract value of 

S$276.9 million which comprised one utility vessel, four PSVs and one work barge with accommodation for 

300 people. Between 1 June 2008 and 8 August 2008, we secured new contracts with a total contract value of 

S$233.6 million which comprised three utility vessels and one offshore construction vessel. 

Because of the effect of foreign currency translations on the calculation of new orders for financial 

statement purposes, the amount of new orders for any period will not necessarily reflect the stated contract 

value of those new orders in the currency of such orders. The state of our order book at any particular date is 

not indicative of the revenue or costs we will recognise in any particular future period as we recognise our 

shipbuilding revenue and costs on the percentage-of-completion method. See “— Critical Accounting 

Policies — Revenue and Cost of Sales Recognition”. 

Factors Affecting Our Business, Financial Condition and Results of Operations 

A number of important factors have affected, and we expect will continue to affect, our business, 

financial condition, results of operations and prospects. These factors include the following: 

Activity Levels in the Oil and Gas Industry 

The actual and anticipated price of oil and gas and the resultant impact on the level of activity in offshore 

oil and gas exploration, development and production have a significant effect on the demand for new offshore 

support vessels and the charter rates of existing vessels. We generally expect higher oil prices to result in 

higher activity levels in offshore oil exploration, development and production, which in turn would increase 

our customers’ actual and planned capital expenditures for new orders of offshore support vessels and their 

existing and planned chartering of vessels from us. Conversely, a sustained period of low oil prices would 

generally have a negative impact on the level of oil exploration, development and production which, in turn, 

would have an adverse effect on the offshore marine industry that we support. These movements in oil prices 

have a significant effect on our business, results of operations and financial condition. 

In recent weeks there has been a drastic fall in oil price, in connection with the global economic crisis. 

This would likely have a negative impact on the oil and gas industry, if oil price remains unstable and affect 

the offshore marine industry. In addition, the prevailing credit crunch may inhibit offshore marine players who 

are our existing or potential customers from raising the requisite financing to acquire offshore vessels. This 

could have an adverse effect on our business, profitability and prospects. 

We have a strategic focus on building offshore support vessels, especially vessels with high technical 

specifications. With many oil fields maturing, oil and gas companies are moving into deeper seas and areas 

with severe weather conditions to undertake oil exploration, development and production. Such exploration, 

development and production work is technically more demanding, which we expect to lead to higher demand 

for offshore support vessels with higher technical specifications. We generally generate higher margins from 

42

uilding such vessels. Higher demand for vessels with higher specifications from our customers may increase 

our profit margins, while lower demand for such vessels from our customers generally results in lower profit 

margins. 

Other factors that significantly affect the demand for vessels in the offshore marine industry include the 

following: 

the age and condition of the existing global fleet of offshore support vessels and the actual and planned 

replacement of such vessels; 

the cost of building new vessels compared to the cost of purchasing and/or repairing existing vessels 

and/or the charter rates of vessels available for charter; and 

changes in laws and regulations that affect the technical specifications required of offshore support 

vessels. 

The Supply of Vessels in the Offshore Marine Industry 

Our results of operations are also affected by the supply of vessels in the market. An increase in the 

supply of vessels could result in our customers placing fewer orders for vessels with us or paying lower prices 

for vessels that they do order, either of which would have an adverse effect on our revenues. The number of 

vessels ordered is usually based on the estimated demand for such vessels in the future. As there is a lag 

between the time new vessels are ordered and the time of their actual delivery, there could be a mismatch in 

demand and supply when fleet owners take delivery of the vessels. 

The entry into the market of new vessels or vessels on charter would increase market supply. During 

periods of low demand, such an increase in supply would intensify competition and may curtail the 

strengthening of or reduce the selling prices of new vessels and the charter rates of vessels. Customers may 

reduce their capital expenditures for newbuildings or default on their existing orders with us or may 

renegotiate or terminate their existing charter party contracts with us if they are able to secure lower rates 

elsewhere. We would expect any of these events to have an adverse effect on our businesses and results of 

operations. 

On the other hand, when there is a shortage of vessels in the market, the demand, selling prices and 

charter rates for vessels may increase which would, in turn, be expected to have a positive impact on our 

revenue and profitability. 

Our Production Capacity 

Our results of operations and financial condition are affected by the extent to which we successfully 

manage our actual and planned production capacity to match with the actual and anticipated demand 

conditions for offshore support vessels and the types and sizes of such vessels. If we do not have sufficient 

production capacity to meet market demand, we may lose out on shipbuilding contracts that may instead be 

awarded to our competitors, which would cause us to forego potential revenues and impede the growth of our 

business. Increasing our capacity would increase our costs, but in periods of high demand, we would expect 

this cost increase to be more than offset by increased revenues. Conversely, excess capacity during periods of 

reduced demand would leave us with high fixed costs but lower revenues, thereby reducing our profitability 

and margins. 

Our production capacity is dependent on several factors that include: (i) the size of our shipyard in 

Batam, Indonesia, (ii) the number, size and capacities of our Syncrolift», slipways, berths and docks, (iii) our 

plant and equipment, and (iv) the extent to which we are able to outsource our shipbuilding operations to 

suitable third-party shipyards. Our Syncrolift» has the capacity to construct vessels of up to 100 metres length 

overall (LOA) and 20 metres in breadth with 3,500 tonnes displacement. Our existing drydock has the capacity 

to construct vessels of up to 140 metres LOA � 35 metres in breadth. 

We intend to undertake the following upgrading works to our Batam shipyard facilities to increase our 

production capacity: (i) expand the usable waterfront of our Batam shipyard from 450 metres to 800 metres, 

(ii) extend our Syncrolift» berthside by 32 metres � 245 metres, and (iii) purchase additional gantry cranes. 

We have commenced construction of one slipway. We intend to complete these expansion and installation 

works by end of the FY2009, which would significantly increase our production capacity. 

As at 8 August 2008, we were building 26 vessels in our outsourced shipyards in China with a total 

outsourced contract value of S$207.2 million, of which 18 vessels with an outsourced contract value of 

43

S$145.0 million, have not been sold. As at 8 August 2008, we have secured project financing from banks and 

financial institutions for the eight vessels that have been sold and four of these unsold vessels. The remaining 

14 vessels are currently being financed from our own internal resources and we may obtain project financing 

for these vessels. These 26 vessels include three vessels that we have sold to third parties, five vessels that we 

have sold to our strategic partners, nine vessels that we intend to sell to other strategic partners, one vessel 

that we intend to sell to a third party and eight vessels that we intend to add to our own chartering fleet. See 

“Our Business — Our Operations — Shipbuilding — Outsourcing”. To date, we have been able to successfully 

secure adequate shipbuilding capacity in China to support our operations. If in the future we are unable to 

secure such shipbuilding capacity upon terms acceptable to us, our shipbuilding capacity could be adversely 

affected. See “Our Business — Our Operations — Shipbuilding — Outsourcing” and “Risk Factors — Risks 

Relating to Our Business and Operations — Our future growth may be limited by our production capacity”. 

Demand for and Supply of Equipment and Direct Materials 

The demand for and supply of equipment and direct materials have an effect on the price and the delivery 

time of such equipment and materials. The major components of our cost of sales are equipment such as 

engines, propellers and bulk tanks and direct materials such as steel plates, pipes and other materials. 

Equipment as a percentage of our cost of sales amounted to 30.0%, 39.6% and 39.4% in FY2005, FY2006 and 

FY2007, respectively. Direct materials as a percentage of our cost of sales amounted to 36.4%, 30.7% and 

27.8% in FY2005, FY2006 and FY2007, respectively. Equipment as a percentage of our cost of sales 

amounted to 29.5% and 54.8% for the five months ended 31 May 2007 and 2008, respectively. Direct 

materials as a percentage of our cost of sales amounted to 17.3% and 13.8% for the five months ended 

31 May 2007 and 2008, respectively. 

In times when demand is high and there is a shortage of such equipment and materials in the market, 

their price may rise and the time to delivery could become protracted. Our profit margins would be adversely 

affected if we are unable to pass the increases in costs to our customers. Our business, results of operations 

and financial condition could also be adversely affected if our suppliers are unable to deliver the equipment 

and materials that we require in a timely fashion or at all, as this could result in delays of our delivery of 

vessels and also breaches of our contractual obligations with our customers. In particular, over the last several 

years there has been a shortage of diesel engines for the types of vessels we construct. To date, we have been 

able to secure adequate supply of such engines in a timely manner. We cannot give any assurance that we will 

continue to be able to secure adequate supply of such engines in a timely manner and upon terms acceptable 

to us. See “Risk Factors — Risks Relating to Our Business and Operations — We are exposed to possible 

increases in the price of our raw materials resulting from shortages” and “Risk Factors — Risks Relating to 

Our Business and Operations — We rely on third parties for the procurement of materials and the provision of 

certain services”. 

Fluctuations in Foreign Currency Exchange Rates 

Substantially all of our revenue has been denominated in US Dollars and Euros. Based on our current 

order book, we expect all of our revenue to be denominated in US Dollars and Euros in the future. The 

majority of our cost of sales is in US Dollars, Euros and Singapore Dollars. To the extent our revenue and 

costs are not denominated in Singapore Dollars, our reporting currency, we are exposed to fluctuations in 

currency exchange rates. As a result, any increase in the value of the Singapore Dollar relative to the US Dollar 

or Euros would reduce our revenue, as reported in Singapore Dollars and increase our costs as a percentage of 

total sales (as only part of our costs are subject to currency fluctuations), thereby adversely affecting our 

results of operations. We would expect a decrease in the value of the Singapore Dollar to have the opposite 

effect. Further, as certain of our assets and liabilities are maintained in currencies other than the functional 

currencies of the respective entities that hold these assets and liabilities, we may be subject to foreign currency 

translation exposure to the extent that these foreign currency-based assets and liabilities are not evenly 

matched. Our foreign currency-based assets consist mainly of pledged deposits placed with certain financial 

institutions under restricted contractual arrangements to secure refund guarantees issued by such financial 

institutions to our customers and our trade receivables. Our foreign currency-based liabilities consist mainly of 

our trade payables and our bank loans. Our operating results and financial condition could be adversely 

affected if the Singapore Dollar value of the foreign currency liabilities upon translation is larger than the 

Singapore Dollar value of the foreign currency assets. See “— Market Risk — Foreign Exchange Risk”. 

44

Demand for and Supply of Skilled Labour 

The demand for and supply of skilled shipyard and subcontract labour have an effect on their cost and 

their availability. These could, in turn, have an effect on our cost of sales, profit margins, productivity and our 

ability to deliver our services on time and to the satisfaction of our customers. 

Our business and results of operations could be adversely affected if the cost of skilled labour increases 

because of competition for scarce resources within the industry, especially as we increase the scale of our 

operations. Our business and results of operations could also be adversely impacted if we are unable to attract 

or retain adequate skilled labour for our business such that our productivity and the quality of our services 

decline and we are unable to fulfill our contractual obligations to our customers. 

Fleet Size, Utilisation Rates and Charter Rates of Our Vessels Available for Charter 

A larger fleet size will enable us to enter into more charter contracts, which would increase our revenue. 

Our revenue will also be affected by the utilisation rate of our fleet as well as the charter rates for our vessels 

available for charter. The number of days our vessels are utilised and the charter rates received are largely 

dependent on the supply and demand for our services. In practice, the demand for our vessels depends on 

factors such as age, quality and suitability of our vessels. 

Our utilisation rates may be adversely affected during periods when our vessels are required to be taken 

out of service for routine maintenance and repair. Our vessels are dry-docked from time to time for routine 

maintenance and repair and special periodic survey (“SPS”), which is a class requirement. Under the class 

requirement, our vessels have to be dry-docked for SPS every five years. As our vessels are relatively young, 

there has not been any dry-docking for SPS. Five of our vessels are scheduled for dry-docking in 2011 and 

another five in 2012. Our vessels will not be available for hire when they are dry-docked and will not be able 

to generate revenue during that time. 

Our ship chartering business commenced in April 2007. Our current charter contracts are all time charter 

contracts. We may also enter into bareboat or voyage charters in the future. Generally, time charter contracts 

yield a higher profit margin vis-à-vis other charter contracts. To the extent that our mix of charter contracts 

comprises a lower proportion of time charters, our profit margins would be adversely affected and vice versa. 

See “Our Business — Our Operations — Ship Chartering” for details of our vessels available for charter. See 

“Industry Overview — Ship Chartering” for the nature of different charter contracts. See also, “Risk Factors — 

Risks Relating to Our Business and Operations — We are exposed to fluctuations in charter rates” and “Risk 

Factors — Risks Relating to Our Business and Operations — We may not be able to manage our expansion 

successfully”. 

Critical Accounting Policies 

Preparation of our audited consolidated financial statements requires our Management to make estimates 

and judgements that affect the reported amounts of assets, liabilities, revenue and expenses and disclosures of 

contingent assets and liabilities. We base our estimates on historical experience and on various other 

assumptions that our Management believes are reasonable under the circumstances. Our actual results may 

differ significantly under different assumptions or conditions. The accounting policies that we believe are the 

most critical to a full understanding and evaluation of our reported financial results are those described below. 

See also “Appendix 1 — Independent Auditors’ Report and the Consolidated Financial Statements for the 

Years Ended December 31, 2005, December 31, 2006 and December 31, 2007 — Notes 2 and 3”. 

Revenue and Cost of Sales Recognition 

Shipbuilding 

We construct various types of vessels for third parties as well as for our own use. 

We use the percentage-of-completion method to recognise our revenue and the cost of sales we incur for 

vessels with construction periods of more than one year that we build pursuant to contracts signed with third 

parties. We recognise revenue and cost of sales based on the stage of completion of the contract activity at the 

balance sheet date, as measured by completion of certain construction milestones. Typically these milestones 

are: 

design and engineering; 

keel laying; 

45

installation of below-deck equipment (for AHTS vessels and PSVs) and generators (for work barges 

with accommodation for 300 people); 

installation of main engine (for AHTS vessels and PSVs) and crane (for work barges with accommodation 

for 300 people); 

completion of superstructure; 

installation of winches; 

commissioning and launch; 

basin trial; and 

delivery. 

Under this method, we recognise revenue only after we are satisfied that the economic benefits associated 

with the transaction will flow to us. 

For construction of vessels with construction periods of up to one year, we recognise all of our revenue 

and cost of sales on the delivery of the vessels to the third parties. 

While we recognise revenue and cost of sales on the percentage-of-completion method for long-term 

contracts, we typically bill our customers for the vessels under long-term contracts on the following basis: 

20.0% to 30.0% of the contract value upon signing of the contract and upon keel laying; and 

the remainder before delivery of the vessel. 

The difference between the sum of the cost incurred and gross profit and the amount billed is recorded 

under gross amount due from customers for contract work (for contracts where the sum of the cost incurred 

and gross profit is higher than the amount billed) or gross amount due to customers for contract work (for 

contracts where the sum of the cost incurred and gross profit is lower than the amount billed). The gross 

amount due from customers for contract work amounted to S$177.1 million and S$235.1 million, as at 

31 May 2008 and the Latest Practicable Date, respectively. 

In addition, we bill our customers for 20%-30% of the contract value upon signing of the contracts and 

the rest upon delivery, whereas revenue is recognised based on the percentage-of-completion method. 

Therefore, at any point in time there may be a difference between revenue recognised and the amount billed. 

This difference is reflected as part of the gross amount due from/to customers for contract work in the balance 

sheet. The billing and collection of the remaining amount correlate to the delivery of the vessels. The delivery 

schedule of the vessels that we are constructing for our customers is disclosed in “Our Business — Significant 

Shipbuilding Projects — Order Book.” 

Ship Repair and Conversion 

For ship repair and conversion, revenue and cost of sales are typically recognised upon completion of the 

ship repair contract. Our ship repair and conversion contracts are typically short-term contracts with duration 

of less than one year. 

Ship Chartering 

We recognise our ship chartering revenue over the duration of the charter on a straight-line basis while 

cost of sales is recognised on an actual-cost-incurred basis. 

Purchases and Cost of Sales 

Our purchases consist primarily of engines, propellers, bulk tanks, compressors, winches, generator sets 

and consumables and direct materials such as steel plates, cabling, piping systems and other materials for our 

shipbuilding activities. We also purchase equipment for our shipyard. The value of these purchases is recorded 

in our books when we receive the goods. Our total purchases for a financial period differ from our cost of 

sales for that period because our total purchases include capital expenditures (excluding land and building) and 

expenditures for vessels for which contracts have not been secured and are not recorded using the percentageof-completion 

method. 

46

Deferred Gain 

Deferred gain arises when we construct and sell vessels to our associated companies involved in the ship 

chartering business. We recognise revenue, cost of sales and profit from such sales on the percentage-ofcompletion 

method. The profit arising from such sales is reduced proportionately to our shareholding in the 

associated companies by recording it as a deferred gain. 

Subsequent to the delivery of these vessels, the deferred gain is amortised over the useful lives of these 

vessels on a straight-line basis. The amortisation is adjusted through our share of associated companies’ 

results. See “— Overview of Revenue and Expenses — Share of Profits (Losses) of Associates”. 

Goodwill and Impairment of Goodwill 

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess 

of the cost of the business combination over our Group’s interest in the net fair value of the identifiable assets, 

liabilities and contingent liabilities recognised. 

Determining whether goodwill is impaired and whether its carrying value must be written down requires 

an estimation of the value-in-use of the cash-generating units to which goodwill has been allocated. The 

value-in-use calculation requires us to estimate the future cash flows expected to arise from the cashgenerating 

unit and a suitable discount rate in order to calculate present value. If the value-in-use is lower than 

the carrying value, goodwill is impaired and its carrying value will be written down. We conduct an annual 

assessment of the value-in-use or more frequently if there is an indication of impairment. 

As at 31 May 2008, the goodwill of S$40.4 million consisted S$35.3 million arising from the acquisition 

of an additional 44% equity interest in PT Batamec during the five months ended 31 May 2008 and 

S$5.1 million arising from the acquisitions of equity interests in PT Lestari in 2007 and PT Batamec in 2006 

and 2007. For the period under review from 1 January 2005 to 31 May 2008, we did not record any 

impairment loss on goodwill. 

Useful Lives and Residual Value of Plant and Equipment 

Management exercises its judgement in estimating the useful lives of the depreciable assets as well as the 

residual value of such assets. 

Depreciation is provided to write off the cost of plant and equipment (including vessels for charter) over 

their estimated useful lives, using the straight-line method. 

Overview of Revenue and Expenses 

Our revenue and cost of sales for any financial period comprises revenue and cost of sales which we 

generate or incur, as the case may be, primarily from new construction contracts secured in that period and 

from on-going construction contracts commenced in prior years. In FY2005, FY2006 and FY2007, we 

commenced construction of seven, 17 and 21 vessels, respectively, and delivered seven, seven and 10 vessels, 

respectively. For the five months ended 31 May 2007 and 2008, we commenced construction of four and seven 

vessels, respectively, and delivered nine and two vessels, respectively. See “Our Business — Our Operations — 

Significant Shipbuilding Projects”. 

We recognise revenue and cost of sales from vessels with construction periods of more than one year 

based on the percentage-of-completion method whilst revenue and cost of sales from delivery of vessels with 

construction periods of up to one year is recognised upon the delivery of the vessels. As a result, the timing 

and recognition of our revenue and cost of sales differs from the timing of our actual contract billings and 

actual cost payment. Depending on the pace of construction and other factors, this may vary from period to 

period. See “— Critical Accounting Policies — Revenue and Cost of Sales Recognition”. 

Revenue 

Our revenue consists of revenue from ship construction contracts, revenue from ship repair and conversion 

and chartering income from our ship chartering business. 

47

The following table shows our revenue for each of our business segments for the periods indicated: 

2005 


2006 2007 

S$ % S$ % 

(In millions) 

S$ US$ 

(Unaudited) 

% 

Shipbuilding ................. 37.5 68.6 131.6 89.3 286.0 210.3 91.1 

Ship repair and conversion . . .... 17.2 31.4 15.7 10.7 18.7 13.8 6.0 

Ship chartering ............... — — — — 9.3 6.8 2.9 

Total. ...................... 54.7 100.0 147.3 100.0 314.0 230.9 100.0 

Five Months Ended 31 May 

2007 2008 

S$ 

(Unaudited) 

% S$ 

(Unaudited) 

(In millions) 

% 

Shipbuilding ................................. 78.6 91.1 206.4 94.0 

Ship repair and conversion. ...................... 6.6 7.6 7.0 3.2 

Ship chartering ............................... 1.1 1.3 6.1 2.8 

Total ....................................... 86.3 100.0 219.5 100.0 

The revenue by geographical segments is based on the location of the customers that we contracted with. 

The following table shows the geographical breakdown of our revenue for the periods indicated: 


2005 2006 2007 

S$ % S$ % 

(In millions) 

S$ US$ 

Unaudited 

% 

Asia Pacific ..................... 23.4 42.8 61.1 41.5 229.0 168.4 72.9 

North America. .................. 31.3 57.2 7.3 5.0 48.1 35.4 15.3 

Europe ........................ — — 46.3 31.4 27.7 20.3 8.8 

Middle East ..................... — — 32.6 22.1 9.2 6.8 3.0 

Total .......................... 54.7 100.0 147.3 100.0 314.0 230.9 100.0 


2007 2008 

S$ 

Unaudited 

% S$ 

Unaudited 

(In millions) 

% 

Asia Pacific ................................... 81.7 94.7 161.4 73.5 

North America ................................. — — 21.2 9.7 

Europe ....................................... 3.5 4.0 30.8 14.0 

Middle East ................................... 1.1 1.3 6.1 2.8 

Total ......................................... 86.3 100.0 219.5 100.0 

48

Cost of Sales 

Our cost of sales consists of direct costs and production overheads relating to our shipbuilding, ship repair 

and conversion and ship chartering businesses. The following table shows our cost of sales from each of our 

business segments for the periods indicated: 


2005 2006 2007 

S$ % S$ % S$ 

(In millions) 

US$ 

(Unaudited) 

% 

Shipbuilding ................. 33.6 69.1 111.8 88.8 214.0 157.4 92.1 

Ship repair and conversion . . .... 15.0 30.9 14.1 11.2 12.3 9.0 5.3 

Ship chartering ............... — — — — 6.0 4.4 2.6 

Total. ...................... 48.6 100.0 125.9 100.0 232.3 170.8 100.0 


2007 2008 

S$ % S$ % 


(In millions) 

Shipbuilding ................................. 64.7 90.7 158.2 97.4 

Ship repair and conversion. ...................... 5.6 7.9 3.5 2.2 

Ship chartering ............................... 1.0 1.4 0.8 0.4 

Total ....................................... 71.3 100.0 162.5 100.0 

Shipbuilding 

The following table sets out the principal components of our cost of sales relating to our shipbuilding 

business for the periods indicated. 

2005 


2006 2007 

S$ % S$ % S$ US$ % 

(In millions) 

(Unaudited) 

Cost of sales 

Equipment (1) ................. 14.6 43.5 49.8 44.5 91.5 67.3 42.8 

Materials (2) .................. 7.3 21.7 28.1 25.1 57.6 42.4 26.9 

Subcontract costs (3) ............ 2.9 8.6 9.1 8.1 20.7 15.2 9.6 

Labour ..................... 0.7 2.1 3.4 3.1 6.2 4.6 2.9 

Overheads (4) ................. 8.1 24.1 21.4 19.2 38.0 27.9 17.8 

Total. ...................... 33.6 100.0 111.8 100.0 214.0 157.4 100.0 


2007 2008 

S$ % S$ % 


(In millions) 

Equipment (1) ................................. 21.0 32.4 89.1 56.3 

Materials (2) .................................. 8.8 13.6 20.9 13.2 

Subcontract costs (3) ............................ 24.3 37.6 36.2 22.9 

Labour . . . .................................. 2.0 3.1 4.9 3.1 

Overheads (4) ................................. 8.6 13.3 7.1 4.5 

Total ....................................... 64.7 100.0 158.2 100.0 

Notes: 

(1) “Equipment” includes mainly engines, propellers, pumps, winches, bulk tanks and navigation systems. 

(2) “Materials” include mainly steel plates and consumables, cabling and piping systems. 

49

(3) “Subcontract costs” include all costs relating to subcontracting work performed by third parties. 

(4) “Overheads” include mainly depreciation of property, plant and equipment that is attributable to our shipyard 

operations, rental equipment, diesel, electricity and costs relating to the upkeep and maintenance of 

our shipyard. 


The following table sets out the principal components of our cost of sales relating to our ship repair and 

conversion business for the periods indicated. 


2005 2006 2007 

S$ % S$ % S$ 

(In millions) 

US$ 

(Unaudited) 

% 

Cost of sales 

Materials (1) .................... 10.4 69.3 10.5 74.5 6.9 5.1 56.1 

Subcontract costs (2) .............. 2.0 13.3 1.0 7.1 3.1 2.3 25.2 

Labour ....................... 0.5 3.3 0.2 1.4 0.4 0.3 3.3 

Overheads (3) ................... 2.1 14.1 2.4 17.0 1.9 1.3 15.4 

Total ........................ 15.0 100.0 14.1 100.0 12.3 9.0 100.0 


2007 2008 

S$ 

(Unaudited) 

% S$ 

(Unaudited) 

(In millions) 

% 

Materials (1) .................................. 3.5 62.5 1.6 45.7 

Subcontract costs (2) ............................ 0.8 14.3 0.7 20.0 

Labour . . . .................................. 0.3 5.4 0.7 20.0 

Overheads (3) ................................. 1.0 17.8 0.5 14.3 

Total ....................................... 5.6 100.0 3.5 100.0 

Notes: 

(1) “Materials” include mainly steel plates and consumables, cabling and piping systems. 

(2) “Subcontract costs” include all costs relating to subcontracting work performed by third parties. 

(3) “Overheads” include mainly depreciation of property, plant and equipment that is attributable to our shipyard 

operations, rental equipment, diesel, electricity and costs relating to the upkeep and maintenance of 

our shipyard. 


We commenced our ship chartering business in April 2007. The principal components of our cost of sales 

relating to ship chartering for FY2007 included chartering expenses and other operating costs including ship 

management expenses and depreciation. These chartering expenses were paid to Yawson for vessels chartered 

to us. Upon our acquisition of vessels for our ship chartering operations in October 2007 and December 2007, 

we ceased our ship chartering arrangement with Yawson (see “Interested Person Transactions and Conflicts of 

Interests — Past Interested Person Transactions — Transactions with Yawson”) and no longer incurred chartering 

expenses. The ship management and depreciation expenses we subsequently incurred related to our own 

vessels chartered to our customers. For FY2007, the five months ended 31 May 2007 and the five months 

ended 31 May 2008, the total cost of sales relating to ship chartering was S$6.0 million, S$1.0 million and 

S$0.8 million, respectively. 

Other Income (Expense) 

Our other income consists of interest income from our fixed deposits, rental income arising from the 

rental of our equipment to our subcontractors to undertake our shipbuilding projects and net foreign exchange 

gains. Other expenses consist of net foreign exchange losses and deferred gain from sales of vessels to our 

49.0%-owned associated companies. See “— Critical Accounting Policies — Revenue and Cost of Sales 

50

Recognition — Deferred Gain”. Our foreign exchange gains/losses arise from the translation of foreign 

currency assets and liabilities into the respective functional currencies of the companies within our Group. See 

“— Factors Affecting Our Business, Financial Condition and Results of Operations — Fluctuations in Foreign 

Currency Exchange Rates”. 

Administration Expenses 

Our administration expenses consist mainly of employee benefit expenses (including wages and salaries) 

for administrative personnel, bank charges, traveling expenses, legal and other professional expenses and office 

rental. 

Share of Profits (Losses) of Associates 

Our share of profits (losses) of associates consists of our proportionate share of the results of our 49%owned 

associated companies, after accounting for the amortisation of the deferred gain arising from our 

construction and sale of vessels to these companies, which are involved in the ship chartering business. See 

“— Critical Accounting Policies — Revenue and Cost of Sales Recognition — Deferred Gain”. 

Finance Costs 

Our finance costs consist of interest expense on loans from related parties, bank loans and finance leases. 

While the loans from related parties are free of interest, we impute an interest charge based on the prevailing 

market interest rates. The imputed interest charge is credited to our capital reserves. 

Income Tax Expense 

Our income tax expense represents the sum of the current tax payable and deferred tax. Our current tax 

payable is determined based on our taxable income for the applicable year and the tax rates that have been 

enacted in the countries where we operate on the balance sheet date. We have not had any deferred tax 

liability for each of FY2005, FY2006, FY2007 and for the five months ended 31 May 2008. Any deferred tax 

we have in future will be recognised on temporary differences between the carrying amounts of assets and 

liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit 

as accounted for using the balance sheet liability method. 

The following table sets out our effective tax rate for the periods indicated: 

Five Months 

Financial Years Ended 31 December Ended 31 May 

2005 2006 2007 2007 2007 2008 

S$’000 S$’000 S$’000 US$’000 S$’000 S$’000 

Profit before taxation ............... 53 14,152 55,124 40,532 10,749 36,417 

Tax expense. ..................... (462) (449) (1,449) (1,065) (649) (500) 

Effective tax rates ................ 871.7% 3.2% 2.6% 2.6% 6.0% 1.4% 

Historically, our effective tax rates have been lower than the statutory rates in Singapore due to the 

utilisation of tax losses carried forward in prior years and certain offshore income which is subject to lower 

tax rates. All our tax losses have been fully utilised and therefore we expect that, going forward, we will have 

to pay the prevailing corporate tax rates. 

Profit (Loss) for the Year Attributable to Minority Interests 

Our profit (loss) attributable to minority interests arises from the minority shareholding in our subsidiary 

PT Batamec for FY2005 to FY2007. The total minority interest in PT Batamec consisted of two shareholders 

holding 51.1% and 3.3% as at 31 December 2005 and 49.7% and 4.8% as at 31 December 2006. The minority 

shareholder holding 51.1% and 49.7% as at 31 December 2005 and 2006, respectively, shared in the losses of 

PT Batamec in excess of its interest in the subsidiary’s equity because it had undertaken to provide continuing 

financial support. The loss for the year attributable to minority interest increased by S$3.0 million from 

S$3.5 million in FY2005 to S$6.5 million in FY2006, resulting from an increase in the loss incurred by 

PT Batamec. 

In FY2007, the shareholding of the two minority shareholders of PT Batamec changed from 49.7% and 

4.8% as at 31 December 2006 to 44.2% and 4.8% respectively as at 31 December 2007. The minority 

shareholder holding 49.7% and 44.2% as at 31 December 2006 and 31 December 2007, respectively, who had 

51

undertaken to provide continuing financial support, shared in the profit of PT Batamec in FY2007. The profit 

attributable to minority interests is solely contributed by PT Batamec. 

We started consolidating the accounts of PT Lestari with the rest of our Group from 5 December 2007. 

The contribution from PT Lestari to our results is not significant. 

See “Our Restructuring Exercise and Corporate Structure”. 

On 26 March 2008, pursuant to the Restructuring Exercise, we acquired 44.2% of the shareholding in 

PT Batamec from one of the minority shareholders for S$34.5 million. As a result, the shareholding of the two 

minority shareholders of PT Batamec changed from 44.2% and 4.8% as at 31 December 2007 to 0.0% and 

4.8%, respectively. The minority shareholder who previously held 44.2% shared in the profit of PT Batamec 

from 1 January 2008 to 26 March 2008. 

Review of Prior Results of Operations 

Five Months Ended 31 May 2008 Compared to Five Months Ended 31 May 2007 

Revenue by Business Segment 

Our revenue increased by 154.4% from S$86.3 million in the five months ended 31 May 2007 to 

S$219.5 million in the five months ended 31 May 2008. Although all of our business segments contributed to 

the revenue increase, revenue derived from our shipbuilding business was the main contributor. 

Our revenue from shipbuilding increased by 162.6% from S$78.6 million in the five months ended 

31 May 2007 to S$206.4 million in the five months ended 31 May 2008 mainly due to the increase in the 

number of vessels we constructed and particularly, from the construction of larger and higher specification 

vessels, which are of higher value. In the five months ended 31 May 2008, S$109.0 million of our revenue 

was attributable to revenue recognised from new contracts secured during the period while S$97.4 million was 

attributable to revenue recognised from existing contracts. In the five months ended 31 May 2007, the total 

revenue from shipbuilding of S$78.6 million was attributable to revenue recognised from existing contracts. 

The new contracts we secured in the five months ended 31 May 2008 were for the construction of four 3,200 

tonnes PSVs, one work barge with accommodation for 300 people and one 55 metre utility vessel. See “Our 

Business — Significant Shipbuilding Projects”. 

Our revenue from ship repair and conversion increased by 6.1% from S$6.6 million in the five months 

ended 31 May 2007 to S$7.0 million in the five months ended 31 May 2008 mainly due to the fact that, 

during the course of the five months ended 31 May 2008, we undertook more projects for vessel conversion, 

in addition to the customary ship repair. Vessel conversion work is generally of higher value than ship repair 

work. Revenue from these ship conversion projects was S$1.4 million and S$3.4 million in the five months 

ended 31 May 2007 and the five months ended 31 May 2008, respectively. 

We commenced our ship chartering business in April 2007. Our revenue from chartering increased by 

454.5% from S$1.1 million in the five months ended 31 May 2007 to S$6.1 million in the five months ended 

31 May 2008 due to the fact that we only had two months of ship chartering operations in the five months 

ended 31 May 2007 and our fleet consisted of only two pairs of tugs and barges. As at the Latest Practicable 

Date, our fleet of 10 vessels comprises five 3,600 bhp tugboats and five 10,000 dwt high deck loading barges. 

Revenue by Geographical Segment 

Our revenue from the Asia Pacific region increased by 97.6% from S$81.7 million in the five months 

ended 31 May 2007 to S$161.4 million in the five months ended 31 May 2008 primarily attributable to 

revenue recognised from new contracts secured for shipbuilding and the revenue recognised for existing 

contracts for shipbuilding with customers located in this region. 

In the five months ended 31 May 2008, we secured a new contract for shipbuilding with a customer 

located in the North America region. 

Our revenue from the Europe region increased by 780.0% from S$3.5 million in the five months ended 

31 May 2007 to S$30.8 million in the five months ended 31 May 2008 primarily attributable to revenue 

recognised on the construction of larger and higher specification vessels of higher value for existing contracts 

for shipbuilding with customers located in the Europe region. 

Our revenue from the Middle East region was attributable to our ship chartering business for the five 

months ended 31 May 2007 and 2008. We commenced our ship chartering business in April 2007. Our 

52

evenue from the Middle East region increased by 454.5% from S$1.1 million in the five months ended 

31 May 2007 to S$6.1 million in the five months ended 31 May 2008 due to the fact that we only had two 

months of ship chartering operations in the five months ended 31 May 2007 and our fleet consisted of only 

two pairs of tugs and barges. 

Cost of Sales 

Our cost of sales increased by 127.9% from S$71.3 million in the five months ended 31 May 2007 to 

S$162.5 million in the five months ended 31 May 2008. The increase in cost of sales was primarily 

attributable to our shipbuilding business, in line with the increase in the number of vessels we constructed and 

particularly the construction of larger and higher specification vessels. The cost of sales for ship repair and 

conversion was lower as a result of a higher proportion of conversion orders which utilised fewer direct 

materials. 

Gross Profit and Gross Profit Margin 

As a result of the foregoing, our gross profit increased by 280.1% from S$15.0 million in the five months 

ended 31 May 2007 to S$57.1 million in the five months ended 31 May 2008. Our gross profit margin 

increased from 17.4% in the five months ended 31 May 2007 to 26.0% in the five months ended 31 May 

2008. The improved gross profit margin was primarily due to a sales mix that included a larger proportion of 

higher specification vessels we constructed and a proportionately smaller increase in fixed costs compared to 

the increase in revenues. 


Our other income (expense) changed from an income of S$1.6 million in the five months ended 31 May 

2007 to an expense of S$12.9 million in the five months ended 31 May 2008. The expense in the five months 

ended 31 May 2008 was the result of a deferred gain of S$17.0 million from the sale of nine vessels to our 

associated companies, partially offset by an interest income of S$2.3 million and a net foreign exchange gain 

of S$1.8 million. The income in the five months ended 31 May 2007 was the result of an interest income of 

S$1.9 million, partially offset by a net foreign exchange loss of S$0.3 million. 


Our administration expenses increased by 56.7% from S$4.8 million in the five months ended 31 May 

2007 to S$7.4 million in the five months ended 31 May 2008 primarily due to increases in bank charges, 

professional costs and employee benefit expenses of S$1.0 million, S$0.9 million and S$0.5 million 

respectively. The increase in bank charges resulted from an increase in refund guarantees issued to our 

customers and in bank charges in relation to acceptance of banking facilities. The increase in professional 

costs resulted from costs incurred in connection with this Offering. The higher employee benefit expenses 

were due to an increase in the number of corporate staff to support our growth and a general increase in 

salaries and bonuses. 


Our share of profits of associates for the five months ended 31 May 2008 amounted to S$4.6 million, 

attributable to our interest in Otto 1 Ltd. 

Finance Costs 

Our finance costs increased by 361.0% from S$1.1 million in the five months ended 31 May 2007 to 

S$4.9 million in the five months ended 31 May 2008 due mainly to an increase in interest payable to banks as 

a result of higher borrowings. 

Profit Before Income Tax 

As a result of the foregoing, our profit before income tax increased by 238.8% from S$10.7 million in the 

five months ended 31 May 2007 to S$36.4 million in the five months ended 31 May 2008. 


Our income tax expense amounted to S$0.6 million in the five months ended 31 May 2007 compared to 

S$0.5 million in the five months ended 31 May 2008. Our effective tax rate decreased in the five months 

53

ended 31 May 2008 compared to the five months ended 31 May 2007, as substantially all of the increase in 

our profits before income tax was derived from our subsidiaries, Otto Offshore and Otto Investment, both of 

which are tax resident in Labuan. 

Profit for the Period 

As a result of the foregoing, our profit for the period increased by 255.6% from S$10.1 million in the 

five months ended 31 May 2007 to S$35.9 million in the five months ended 31 May 2008. 

Profit for the Period Attributable to Our Equity Holders 

Our profit attributable to our equity holders increased by 264.9% from S$9.0 million in the five months 

ended 31 May 2007 to S$32.7 million in the five months ended 31 May 2008. 

Profit for the Period Attributable to Minority Interests 

In the five months ended 31 May 2008, the profit attributable to minority interests increased by 182.2% 

from S$1.1 million in the five months ended 31 May 2007 to S$3.2 million in the five months ended 31 May 

2008. The increase in the minority interests was mainly attributable to minority interests’ share of profits in 

our subsidiary PT Batamec. 

FY2007 Compared to FY2006 

Revenue by Business Segments 

In FY2007, our revenue increased by 113.3% from S$147.3 million in FY2006 to S$314.0 million in 

FY2007. Although all of our business segments contributed to the revenue increase, revenue derived from our 

shipbuilding business was the main contributor. 

Our revenue from shipbuilding increased by 117.3% from S$131.6 million in FY2006 to S$286.0 million 

in FY2007 mainly due to the increase in the number of vessels we constructed and particularly, from the 

construction of larger and higher specification vessels, which are of higher value. In FY2007, S$65.8 million 

of our revenue was attributable to revenue recognised from new contracts secured during the year while 

S$220.2 million was attributable to revenue recognised from contracts carried over from the prior year. In 

FY2006, S$119.1 million was attributable to revenue recognised from new contracts secured during the year 

while S$12.5 million was attributable to revenue recognised from contracts carried over from the prior year. 

Of the new contracts we secured in FY2007, four orders were for the construction of 5,150 bhp AHTS vessels 

and one order was for the construction of a work barge with accommodation for 300 people. See “Our 

Business — Significant Shipbuilding Projects”. 

Our revenue from ship repair and conversion increased by 19.1% from S$15.7 million in FY2006 to 

S$18.7 million in FY2007 mainly due to the fact that, during the course of FY2007, we undertook more 

projects for vessel conversion, in addition to the customary ship repair. Vessel conversion work is generally of 

higher value than ship repair work. Revenue from these vessel conversion projects was S$1.4 million and 

S$8.8 million in FY2006 and FY2007, respectively. 

We commenced our ship chartering business in April 2007. Ship chartering contributed S$9.3 million to 

our revenues in FY2007. 


Our revenue from the Asia Pacific region increased by 274.8% from S$61.1 million in FY2006 to 

S$229.0 million in FY2007 primarily attributable to revenue recognised from new contracts secured for 

shipbuilding, revenue recognised from an increase in the number of vessels constructed and revenue recognised 

for existing contracts for shipbuilding with customers located in this region. 

Our revenue from the North America region increased by 558.9% from S$7.3 million in FY2006 to 

S$48.1 million in FY2007 primarily attributable to revenue recognised from a new contract for shipbuilding 

secured with a customer located in this region. 

Our revenue from the Europe region decreased by 40.2% from S$46.3 million in FY2006 to S$27.7 million 

in FY2007 primarily attributable to a decrease in revenue recognised on existing contracts for shipbuilding 

with customers located in this region due to the delivery of vessels in the early part of 2007. 

54

In FY2007, our revenue from the Middle East region was attributable to our ship chartering while in 

FY2006 our revenue from the Middle East region was attributable to revenue recognised from new contracts 

secured for shipbuilding with a customer located in the region. 

Cost of Sales 

Our cost of sales increased by 84.6% from S$125.9 million in FY2006 to S$232.3 million in FY2007. 

The increase in cost of sales was primarily attributable to our shipbuilding business, in line with the increase 

in the number of vessels we constructed and particularly the construction of larger and higher specification 

vessels and with the growth of our chartering business, which commenced in April 2007. The increases in cost 

of sales for shipbuilding were in line with the revenue growth, except for cost of overheads, which increased 

at a slower rate due to greater economies of scale. However, the cost of sales for ship repair and conversion 

was lower as a result of a higher proportion of conversion orders which utilised fewer direct materials. 


As a result of the foregoing, our gross profit increased by 282.2% from S$21.4 million in FY2006 to 

S$81.7 million in FY2007. Our gross profit margin increased from 14.5% in FY2006 to 26.0% in FY2007. 

The improved gross profit margin was primarily due to increased demand, better sales mix and a proportionately 

smaller increase in fixed costs compared to the increase in revenues. The increase in demand for the type 

of vessels that we build enabled us to command higher selling prices. The sales mix from sales of higher 

specification vessels yielded higher margins. Also, in FY2007, our overhead component per sale dollar was 

lower as a result of more vessels being built, all of which contributed to our higher gross profit margin. 


Our other income (expense) changed from an income of S$0.4 million in FY2006 to an expense of 

S$8.0 million in FY2007. This change was primarily attributable to deferred gain from the sale of vessels to 

our associated companies of S$13.1 million and a net foreign exchange loss adjustment of S$1.9 million which 

were only partially offset by an increase in interest income of S$6.8 million as a result of the higher fixed 

deposits placed with banks. Other expenses consist of net foreign exchange losses and deferred gain from sale 

of vessels to our associated companies. The foreign exchange loss in FY2007 arose mainly from the 

depreciation of the US Dollar vis-à-vis the Singapore Dollar while in FY2006, we recorded a foreign exchange 

gain of S$0.3 million arising mainly from our transactions with our customers and suppliers. 


Our administration expenses increased by 134.5% from S$5.3 million in FY2006 to S$12.4 million in 

FY2007 primarily due to higher employee benefit expenses and professional costs, including costs incurred in 

connection with this Offering. Employee benefits expenses increased by 75.7% from S$3.9 million in FY2006 

to S$6.8 million in FY2007 due to an increase in salaries and bonuses and an increase in the number of 

corporate staff to support our growth. 


Our share of losses of associates for FY2007 amounted to S$0.3 million, attributable to our interest in 

Otto 1 Ltd. 

Finance Costs 

Our finance costs increased by 147.8% from S$2.4 million in FY2006 to S$5.9 million in FY2007 due 

mainly to an increase in interest expense of S$4.3 million payable to banks as a result of higher borrowings, 

which was partially offset by the decrease in interest expense of S$0.8 million in connection with the loans 

from companies related to Yaw Chee Siew. 


As a result of the foregoing, our profit before income tax increased by 289.5% from S$14.2 million in 

FY2006 to S$55.1 million in FY2007. 

55


Our income tax expense increased by 222.7% from S$0.4 million in FY2006 to S$1.4 million in FY2007 

as a result of higher taxable profit. Our effective tax rate is lower than the nominal tax rate as a result of the 

tax exemption for the shipping income we derive from the operation of our Singapore-flagged vessels in 

international waters and the low tax rates we derive from the tax laws in Labuan, the tax-residence of Otto 

Offshore and Otto Investment. 

Profit for the Year 

As a result of the foregoing, our profit for the year increased by 291.7% from S$13.7 million in FY2006 

to S$53.7 million in FY2007. 

Profit for the Year Attributable to Our Equity Holders 

In FY2007, our profit attributable to our equity holders increased by 107.6% from S$20.2 million in 

FY2006 to S$41.9 million in FY2007. The increase was mainly attributable to our share of the increase in the 

profit of our subsidiaries. 


The profit (loss) attributable to minority interests increased from a loss of S$6.5 million in FY2006 to a 

profit of S$11.7 million in FY2007. This increase was mainly attributable to minority interests’ share of profits 

and losses in our subsidiary PT Batamec. 

FY2006 Compared to FY2005 

Revenue by Business Segments 

In FY2006, our revenue increased by 169.3% from S$54.7 million in FY2005 to S$147.3 million in 

FY2006. Revenue derived from our shipbuilding business was the main contributor to the increase, partially 

offset by a decrease in revenue from our ship repair and conversion business. 

Our revenue from shipbuilding business increased by 250.9% from S$37.5 million in FY2005 to 

S$131.6 million in FY2006 mainly due to the increase in the number of vessels we constructed and 

particularly from the construction of larger and higher specification vessels, which are of higher value. In 

FY2006, S$119.1 million of our revenue was attributable to revenue recognised from new contracts secured 

during the year while S$12.5 million was attributable to revenue recognised from contracts carried over from 

prior year. In FY2005, S$31.4 million was attributable to revenue recognised from new contracts secured 

during the year while S$6.1 million was attributable to revenue recognised from contracts carried over from 

the prior year. Of the new contracts we secured in FY2006, eight orders were for the construction of our first 

units of 10,800 bhp AHTS vessels with DP2. These were our first orders of sophisticated deep water vessels 

which utilise dynamic positioning navigation systems, see “Our Business — Our History”, for conducting 

offshore support services in deep waters. See “Our Business — Significant Shipbuilding Projects”. 

Our revenue from ship repair and conversion decreased by 8.8% from S$17.2 million in FY2005 to 

S$15.7 million in FY2006 mainly due to a shift of our resources to new shipbuilding projects. 


Our revenue from the Asia Pacific region increased by 161.1% from S$23.4 million in FY2005 to 

S$61.1 million in FY2006 primarily attributable to revenue recognised from new contracts secured for 

shipbuilding, revenue recognised from an increase in the number of vessels constructed and revenue recognised 

for existing contracts for shipbuilding for customers located in this region. 

Our revenue from the North America region decreased by 76.7% from S$31.3 million in FY2005 to 

S$7.3 million in FY2006 primarily attributable to a decrease in the revenue recognised for an existing contract 

for shipbuilding for a customer located in this region due to the delivery of vessels in the early part of 2006. 

In FY2006, we secured new contracts for shipbuilding from customers located in the Europe and Middle 

East regions. 

56

Cost of Sales 

Our cost of sales increased by 159.1% from S$48.6 million in FY2005 to S$125.9 million in FY2006. 

The increase in cost of sales was primarily attributable to our shipbuilding business, in line with the increase 

in the number of vessels we constructed and particularly the construction of larger and higher specification 

vessels, partially offset by a decline in cost of sales attributable to ship repair and conversion in line with the 

decline in our ship repair and conversion operations. The increase in cost of sales for shipbuilding was in line 

with the revenue growth, except for cost of overheads, which increased at a slower rate due to greater 

economies of scale. 


Our gross profit increased by 250.5% from S$6.1 million in FY2005 to S$21.4 million in FY2006. Our 

gross profit margin increased from 11.2% in FY2005 to 14.5% in FY2006. 


Our other income (expense) improved from an expense of S$1.0 million in FY2005 to income of 

S$0.4 million in FY2006. In FY2006, we recorded a foreign exchange gain of S$0.3 million arising mainly 

from our foreign currency transactions with our customers and suppliers. In FY2005, we incurred a foreign 

exchange loss of S$1.3 million, which arose mainly from the movement of the US Dollar vis-à-vis the 

Singapore Dollar in relation to our US Dollar-denominated trade receivables and bank loans. 


Our administration expenses increased by 73.7% from S$3.0 million in FY2005 to S$5.3 million in 

FY2006 primarily due to the increase in our employee benefits expenses. Employee benefits expenses 

increased by 75.5% from S$2.2 million in FY2005 to S$3.9 million in FY2006 due to an increase in salaries 

and bonuses and an increase in the number of corporate staff to support our growth. Bank charges and 

travelling expenses increased by S$0.4 million in FY2006. 

Finance Costs 

Our finance costs increased from S$2.0 million in FY2005 to S$2.4 million in FY2006 due mainly to an 

increase in interest expense of S$0.6 million payable pursuant to an increase in the amount of loans from 

companies related to Yaw Chee Siew, which was partially offset by a decline in interest expense of 

S$0.2 million payable to banks. 


Our profit before income tax increased by S$14.1 million from S$53,000 in FY2005 to S$14.2 million in 

FY2006. 


Our income tax expense in FY2005 was S$0.5 million and in FY2006 was S$0.4 million. 

Profit for the Year 

Our profit for the year changed from a loss position of S$0.4 million in FY2005 to a profit of 

S$13.7 million in FY2006. 

Profit for the Year Attributable to Our Equity Holders 

In FY2006, our profit attributable to our equity holders increased by S$17.1 million from S$3.1 million 

in FY2005 to S$20.2 million in FY2006. The increase was mainly attributable to our share of the increase in 

the profit of our subsidiaries. 


The loss attributable to minority interests increased from S$3.5 million in FY2005 to S$6.5 million in 

FY2006. This increase was mainly attributable to minority interests’ share of losses in our subsidiary 

PT Batamec. 

57

Liquidity and Capital Resources 

Our historical sources of funds have primarily been cash generated by operating activities (including 

downpayments from customers), borrowings from financial institutions and capital contributions from our 

Controlling Shareholder. Our historical uses of funds have principally been to the financing of working capital 

requirements, acquisition of property, plant and equipment and the repayment of borrowings. 

The following table sets forth a summary of our statement of cash flows for the periods indicated. 


2005 2006 2007 2007 2007 2008 

S$ S$ S$ US$ S$ S$ 

(Unaudited) 




activities .................... (12,460) 43,067 71,865 52,842 89,361 (43,281) 




21,848 21,902 165,457 121,660 12,100 14,671 



1,068 57,031 160,460 117,985 91,325 (45,392) 




(4,643) (3,575) 53,456 39,306 53,456 213,904 

currencies ................... 


— — (12) (9) 1 (7,247) 

period. ..................... (3,575) 53,456 213,904 157,282 144,782 161,265 

Net Cash (Used in) from Operating Activities 

Our net cash provided by and used in our operating activities includes funds generated from our operating 

activities and net cash inflows or outflows from changes in our operating assets and liabilities which comprise 

our working capital. 

In FY2005, our net cash used in operating activities amounted to S$12.5 million consisting of operating 

cashflow before working capital changes of S$4.4 million and net outflows from working capital changes of 

S$16.9 million. 

Cash outflows from changes in working capital of S$16.9 million were primarily due to increases in trade 

receivables of S$15.7 million, other receivables of S$5.2 million and inventories of S$7.7 million. The 

increases in trade receivables and inventories were attributable to an increase in revenues and the number of 

vessels constructed over the year. The increase in other receivables was due to an increase in prepayments and 

deposits made to suppliers attributable to the increase in the number of vessels constructed. These amounts 

were partially offset by a decrease in construction work-in-progress of S$1.3 million, an increase in trade 

payables of S$7.8 million and an increase in other payables of S$2.5 million. The decrease in construction 

work-in-progress was due to the higher progress billings received in excess of revenue recognised while the 

increase in trade payables and other payables are in line with the increases in the number of vessels 

constructed. 

In FY2006, our net cash from operating activities amounted to S$43.1 million consisting of operating 

cashflow before working capital changes of S$17.3 million and net inflows from working capital changes of 

S$25.6 million, income tax paid of S$57,000 and interest received of S$0.2 million. 

Cash inflows from changes in working capital of S$25.6 million were primarily due to decreases in trade 

receivables of S$16.2 million and construction work-in-progress of S$6.6 million, and increases in trade 

payables of S$19.0 million and other payables of S$2.4 million. These were offset by increases in other 

receivables of S$14.1 million and inventories of S$4.4 million. The decrease in trade receivables was due to 

the receipt of balance payments due to us upon the delivery of vessels. The decrease in construction 

work-in-progress was due to the higher progress billings received in excess of revenue recognised. The 

increase in trade payables was in line with the increase in the number of vessels constructed. The increase in 

other receivables was due to an increase in prepayments and deposits made to suppliers attributable to the 

increase in the number of vessels constructed. The increase in inventories was attributable to an increase in the 

number of vessels constructed over the year. 

58

In FY2007, our net cash from operating activities amounted to S$71.9 million consisting of operating 

cashflow before working capital changes of S$68.5 million and net cash outflow from working capital changes 

of S$3.3 million, income tax paid of S$0.2 million and interest received of S$6.9 million. 

Cash outflows from changes in working capital of S$3.3 million were primarily due to increases in trade 

receivables of S$36.6 million, other receivables of S$44.6 million and inventories of S$60.7 million and a 

decrease in other payables of S$0.6 million. The increase in trade receivables was attributable to an increase 

in revenues while the increase in inventories was due to an increase in the number of vessels constructed over 

the year. The increase in other receivables was due to an increase in prepayments and deposits made to 

suppliers attributable to the increase in the number of vessels constructed. These amounts were partially offset 

by a decrease in construction work-in-progress of S$9.8 million, and increase in trade payables of S$129.3 million. 

The decrease in construction work-in-progress was due to the higher progress billings received in excess 

of revenue recognised. The increase in trade payables was in line with the increase in the number of vessels 

constructed. 

In the five months ended 31 May 2008, our net cash used in operating activities amounted to 

S$43.3 million consisting of operating cashflow before working capital changes of S$52.5 million and net cash 

outflow from working capital changes of S$97.5 million, income tax paid of S$0.6 million and interest 

received of S$2.3 million. 

Cash outflows from changes in working capital of S$97.5 million were primarily due to increases in other 

receivables of S$74.7 million, construction work-in-progress of S$61.8 million and inventories of S$24.6 million, 

which were partially offset by cash inflows from an increase in trade payables of S$55.2 million, a 

decrease in trade receivables of S$7.7 million and an increase in other payables of S$0.7 million. 

The increase in other receivables of S$74.7 million was primarily attributable to deposits placed with our 

equipment suppliers to secure the supply of equipment at current market prices even though the delivery of the 

equipment is not immediate. The amount of these deposits increased due to the growth of our business and 

due to the fact that we secured supply of higher value equipment. The cash outflows resulting from an increase 

in construction work-in-progress of S$61.8 million were primarily attributable to the time lag between the 

incurrence of costs of constructing vessels for which contracts have been signed and the collection of the full 

contract amount from our customers. See “Our Business — Credit Management”. The cash outflows resulting 

from an increase in inventories of S$24.6 million was contributed primarily by the costs incurred to construct 

vessels for which no contract for sales had been secured. The increase in construction work-in-progress and 

inventories was due to the increase in the number of vessels and higher specification vessels we constructed. 

The cash inflows resulting from an increase in trade payables and other payables of S$55.2 million and 

S$0.7 million, respectively, were attributable to the general growth of our business. The cash inflows resulting 

from a decrease in trade receivables of S$7.7 million were attributable to the collection of amounts invoiced to 

customers. 

We incur substantial costs for vessel construction, including purchases of equipment and shipyard costs, 

in the early stages of the construction process. We collect down payment for our vessels only upon the signing 

of the relevant contracts, and we collect the full payment only upon delivery of the vessels. See “Our 

Business — Our Operations — Shipbuilding”. As a result of these timing differences, we expend substantial 

amounts of cash for each vessel before receiving cash for the full contract value of the vessel. In addition, we 

have, in recent years, significantly increased the number of vessels we construct and have focused increasingly 

on constructing larger and higher specification vessels, thereby increasing our cash expenditures. As a result, 

our cash outflows have exceeded our cash inflows from our operating activities in the five months ended 

31 May 2008. We are currently building 27 vessels in our order book that we expect to deliver between 2008 

and 2011. Upon delivery and collection of the full contract value, proceeds from the sale of these vessels will 

contribute to cash inflows from our operating activities. We have also recently secured additional banking 

facilities. See “— Borrowings”. 

Cash Flow Used in Investing Activities 

In FY2005, our net cash used in investing activities amounted to S$8.3 million primarily due to the 

purchase of property, plant and equipment for S$8.4 million, which was partially offset by the proceeds from 

disposal of plant and equipment for S$0.1 million. 

In FY2006, our net cash used in investing activities amounted to S$7.9 million which was used for the 

purchase of property, plant and equipment. 

59

In FY2007, our net cash used in investing activities amounted to S$76.9 million which was used primarily 

for the purchase of property, plant and equipment amounting to S$65.9 million, our investment in WAIL of 

S$5.0 million, our purchase of quoted investments of S$3.6 million and our S$2.2 million acquisition of 

PT Lestari pursuant to the Restructuring Exercise. 

In the five months ended 31 May 2008, our net cash used in investing activities amounted to 

S$16.8 million which was used for the purchase of property, plant and equipment. 

See “— Capital Expenditures”. 

Cash Flow from Financing Activities 

In FY2005, our net cash from financing activities amounted to S$21.8 million, which consisted of 

proceeds from loans amounting to S$98.7 million from related parties, which were companies related to our 

Controlling Shareholder, Yaw Chee Siew, partially offset by repayments of loans to this related party of 

S$80.4 million and proceeds from bank loans of S$39.3 million, partially offset by repayments of bank loans 

amounting to S$34.0 million and by interest paid of S$1.7 million. The loans from related parties were used 

for working capital purposes. The proceeds from bank loans were used to finance vessel construction. 

In FY2006, our net cash from financing activities amounted to S$21.9 million which consisted of 

proceeds from a loan in the amount of S$169.1 million from a related party, which was a company related to 

our Controlling Shareholder, Yaw Chee Siew, partially offset by repayments of a loan to this related party 

amounting to S$166.3 million, proceeds from the issue of shares of S$4.9 million, and proceeds from bank 

loans of S$49.0 million, partially offset by repayments of bank loans of S$33.3 million and by interest paid of 

S$1.5 million. The loan from the related party was used for working capital purposes. The proceeds from bank 

loans were used to finance vessel construction. 

In FY2007, our net cash from financing activities amounted to S$165.5 million consisting of proceeds 

from bank loans and a loan from a related party amounting to S$179.3 million and S$86.7 million, 

respectively, partially offset by repayments of bank loans and related party loans of S$31.5 million and 

S$63.2 million, respectively, and interest payments of S$5.9 million. The loan from the related party, which is 

a company related to our Controlling Shareholder, Yaw Chee Siew, was used for working capital purposes. 

The proceeds from the bank loans were used to finance vessel construction. 

In the five months ended 31 May 2008, our net cash from financing activities amounted to S$14.7 million 

consisting of proceeds from bank loans and a loan from a related party amounting to S$41.7 million and 

S$25.3 million, respectively, which were partially offset by repayments of bank loans and of a related party 

loan of S$39.1 million and S$8.3 million, respectively, and interest payments of S$4.9 million. The loan from 

the related party, which is a company related to our Controlling Shareholder, Yaw Chee Siew, was used for 

working capital purposes. The proceeds from bank loans were used to finance vessel construction. 

Borrowings 

As at the Latest Practicable Date, our cash and cash equivalents amounted to S$175.7 million, out of 

which S$139.7 million has been pledged with banks in support of the refund guarantees. Our borrowings 

consist of project finance facilities and term loans. The project finance facilities are for the construction of 

vessels and the term loans for vessels bought for our own chartering. The project finance facilities are repaid 

upon completion and delivery of the vessels and the term loans are repaid according to their respective 

repayment schedules over the period of their respective terms. Details of our borrowings granted to us by 

financial institutions and other third parties as at 31 May 2008 are set out in the table below. 

Facility Lender 

Amount of 

Facility 

Granted as at 

31 May 2008 

Amount 

Utilised as at 

31 May 2008 

(In millions) 

Amount 

Unutilised as 

at 31 May 2008 

Amount 

Outstanding as 

at the Latest 

Practicable Date Term/Expiration Date 

Short-term 

revolving loan. . . Bangkok Bank US$2.5 US$2.5 — US$2.5 — 

Project finance 

facilities . . . . . . . Bangkok Bank US$28.0 (1)(3) 


facilities . . . . . . . Bangkok Bank US$38.4 (1) 

US$28.0 — — 22 months/ 

June 2008 

US$32.0 US$6.4 US$32.0 15 months/ 

March 2009 

60

Facility Lender 

Amount of 

Facility 

Granted as at 

31 May 2008 

Amount 

Utilised as at 

31 May 2008 

(In millions) 

Amount 

Unutilised as 

at 31 May 2008 

Amount 

Outstanding as 

at the Latest 

Practicable Date Term/Expiration Date 


facilities . . . . . . . Bangkok Bank US$16.8 (1) 

US$12.7 (4) 

— — 15 months/ 

February 2008 

Term loan . . . . . . . Bangkok Bank US$14.4 US$12.3 — (2) 


US$10.6 84 months/ 

October 2014 

facilities . . . . . . . 


Bank Niaga US$30.0 US$30.0 — US$30.0 3 years/ 

June 2010 

facilities . . . . . . . Bank Niaga US$23.0 US$23.0 — US$23.0 24 months/ 

December 2009 

Shipping loan (term 

loan) . . . . . . . . . Hong Leong 

Finance 


(term loan) . . . . . Caterpillar 

Financial 

S$3.0 S$3.0 — S$2.7 60 months/ 

February 2013 

US$40.4 US$9.4 US$31.0 US$25.7 — (5) 


(term loan) . . . . . UOB US$21.0 US$5.0 US$16.0 US$4.0 — (6) 

Net amount owing 

to interested 

person . . . . . . . . Brizill 

International 

S$102.8 S$102.8 — S$93.6 — 

Notes: 

(1) The aggregate of these facilities utilised shall not exceed US$60.0 million under the terms of the loan 

agreement with Bangkok Bank. 

(2) Out of the US$12.3 million of the term loan facility utilised, US$1.3 million was repaid and US$11.0 million 

was outstanding as at 31 May 2008. Under the terms of the facility the remainder amount cannot be 

utilised. 

(3) Out of the project finance facility of US$28.0 million, US$14.0 million was repaid in April 2008 and 

US$14.0 million was repaid in June 2008. There was no amount outstanding as at the Latest Practicable 

Date. 

(4) This has been repaid in February 2008. 

(5) We have obtained loans from Caterpillar Financial in the aggregate amount of US$40.4 million for the 

construction of two work barges with accommodation for 300 people and two AHTS vessels. Each of 

these loans can be converted into a term loan of 84 months upon completion of construction of the relevant 

vessel. We have contracted to sell the two AHTS vessels and one of the work barges. We expect the 

barges and vessels to be completed by May 2009. We intend to repay each of these construction loans 

upon delivery of the relevant vessel. 

(6) We have obtained loans from UOB in the aggregate amount of US$21.0 million for the construction of 

five utility vessels. Each of these loans can be converted into a term loan of 48 months upon completion 

of construction of the relevant vessel. We expect the vessels to be completed by December 2008. We have 

contracted to sell four of these vessels and have entered into a letter of intent to sell one of the vessels. 

We intend to repay each of these construction loans upon delivery of the vessels. 

Short-term Revolving Loan 

As at 31 May 2008, we had a short-term revolving loan facility of US$2.5 million from Bangkok Bank, 

which we had fully utilised. This facility can be drawn either in US Dollars or Singapore Dollars or both. The 

facility is secured by (i) a pledge of certain shares owned by Victon, Brizill International and our former 

Director, Taikichi Ito (see “Interested Person Transactions and Conflicts of Interests — Other Transactions”); 

(ii) a personal guarantee by Yaw Chee Siew (see “Interested Person Transactions and Conflicts of Interests — 

Present and Ongoing Interested Person Transactions — Personal Guarantee and Other Undertaking Provided 

by Yaw Chee Siew”); (iii) a mortgage over the vessels being financed; (iv) assignment of insurances and 

charter earnings in respect of those vessels; and (v) charge over operating accounts. These securities constitute 

61

a common pool of securities for all facilities granted by Bangkok Bank. Under the terms of the facilities, 

shareholders loan by Yaw Chee Siew is subordinated to any monies outstanding to Bangkok Bank. The facility 

carries a floating interest rate based on Bangkok Bank’s prime lending rate. The interest rate for the US Dollar 

part of the facility was 5.51% per annum and for the Singapore Dollar part was 6.00% per annum, as at 

31 May 2008. The facility is rolled over on a quarterly basis for the US Dollar part of the facility and monthly 

basis for the Singapore Dollar part. We use the short-term revolving loan for our working capital purposes. 

Project Finance Facilities 

We utilise project finance facilities from Bangkok Bank and Bank Niaga to finance the construction of 

vessels under long-term contracts with our customers. The facilities consist of: 

Facilities from Bangkok Bank 

We have project finance facilities of US$28.0 million and US$38.4 million, subject to an aggregate limit 

of US$60.0 million, from Bangkok Bank, of which we had utilised US$28.0 million and US$32.0 million, 

respectively, as at 31 May 2008. Out of the amount utilised as at 31 May 2008, we repaid US$14.0 million in 

April 2008 and further US$14.0 million in June 2008. The amount outstanding as at the Latest Practicable 

Date is US$32.0 million and it matures in March 2009. The facilities are secured by (i) pledge of certain 

shares owned by Victon, Brizill International and our former Director, Taikichi Ito (see “Interested Person 

Transactions and Conflicts of Interests — Other Transactions”); (ii) personal guarantee by Yaw Chee Siew (see 

“Interested Person Transactions and Conflicts of Interests — Present and Ongoing Interested Person Transactions 

— Personal Guarantee and Other Undertaking Provided by Yaw Chee Siew”); (iii) mortgage over the 

vessels being financed; (iv) assignment of insurances and charter earnings in respect of those vessels; (v) charge 

over operating accounts, project accounts and cash deposits; (vi) assignment of shipbuilding contracts; and 

(vii) assignment of sale and purchase agreements in respect of those vessels. Under the terms of the facilities, 

shareholders loan by Yaw Chee Siew is subordinated to any monies outstanding to Bangkok Bank. These 

facilities carry a floating interest rate of 0.5% per annum below Bangkok Bank’s US Dollar prime lending 

rate. The interest rate for these facilities was 5.01% per annum as at 31 May 2008. 

Facilities from Bank Niaga 

We have project finance facilities of US$30.0 million and US$23.0 million from Bank Niaga which we 

had utilised completely as at 31 May 2008. The facilities are secured over our shipyard assets in Batam, a 

corporate guarantee granted by us and proceeds from the sale of vessels financed by these facilities. The 

facility is also subject to financial covenants that requires our subsidiary PT Batamec to maintain (i) a gearing 

ratio of not more than five times; and (ii) the ratio of its total receivables to indebtedness from Bank Niaga at 

143%. We have received a confirmation from Bank Niaga that as of 31 October 2008, there is no breach of 

covenants in accordance with the credit agreement which was entered into between PT Batamec and Bank 

Niaga. The facilities carry a floating interest rate based on the lender’s in-house cost of financing, which is 

8.0% per annum as at 31 May 2008. US$30.0 million and US$23.0 million of the facilities mature in June 

2010 and December 2009, respectively. 

Term Loan 

Bangkok Bank 

We have a term loan of US$14.4 million from Bangkok Bank which we had utilised fully as at 31 May 

2008 to purchase tugs and barges from Yawson for our ship chartering business. As at 31 May 2008, 

US$11.0 million of this term loan was outstanding and as at the Latest Practicable Date, US$10.6 million was 

outstanding. See “Interested Person Transactions and Conflicts of Interests — Past Interested Person Transactions”. 

The facility is secured by (i) pledge of certain shares owned by Victon, Brizill International and our 

former Director, Taikichi Ito (see “Interested Person Transactions and Conflicts of Interests — Other Transactions”); 

(ii) personal guarantee by Yaw Chee Siew (see “Interested Person Transactions and Conflicts of 

Interests — Present and Ongoing Interested Person Transactions — Personal Guarantee and Other Undertaking 

Provided by Yaw Chee Siew”); (iii) mortgage over the vessels being financed; (iv) assignment of insurances 

and charter earnings in respect of those vessels; and (v) charge over operating accounts. Under the terms of 

the facilities, shareholders loan by Yaw Chee Siew is subordinated to any monies outstanding to Bangkok 

Bank. The facility carries a floating interest rate of 1.0% per annum below Bangkok Bank’s US Dollar prime 

lending rate. The interest rate for the facility was 4.51% per annum as at 31 May 2008. The facility matures 

in October 2014. 

62

Hong Leong Finance 

We have obtained a five-year term loan of S$3.0 million from Hong Leong Finance for the financing of a 

flat top barge. This facility from Hong Leong Finance is secured by a corporate guarantee granted by our 

Company, mortgage on the barge, a personal guarantee provided by Yaw Chee Siew and assignments to Hong 

Leong Finance of the insurance and charter income of the barge. The facility carries a floating interest rate 

based on the Hong Leong Finance’s enterprise base rate, which is 4.5% per annum as at 31 May 2008. The 

amount outstanding under this facility as at the Latest Practicable Date is S$2.7 million. 

UOB 

We have obtained loans in the aggregate amount of US$21.0 million for the construction of five utility 

vessels from UOB. Each of these loans can be converted at our option into a term loan of 48 months upon 

completion of construction of the relevant vessel. We expect the vessels to be completed by December 2008. 

We have contracted to sell four of these vessels and have entered into a letter of intent to sell one vessel. We 

intend to repay each of these construction loans upon delivery of the vessels. This facility is secured by an 

assignment of corporate guarantees and refund guarantees issued to us by one of our suppliers, an assignment 

to UOB of the relevant shipbuilding contracts, charter contracts, insurance policies and warrant guarantees, a 

mortgage over relevant vessels and a charge over the earnings accounts of the vessels. The facility is subjected 

to the condition that Yaw Chee Siew maintains no less than a 30% interest in our Company. The facility is 

also subject to financial covenants that require us to maintain a minimum tangible net worth of S$200.0 million 

after the Offering and a minimum debt service coverage ratio of 1.20 (where debt service ratio is defined as 

EBITDA over interest expense and current portion of long-term debt). The facility carries a floating interest 

rate based on US Dollar LIBOR plus a margin of 1.5% per annum. The amount outstanding under this facility 

as at the Latest Practicable Date is US$4.0 million. 

Caterpillar Financial 

We have obtained loans from Caterpillar Financial in the aggregate amount of US$40.4 million for the 

construction of two work barges with accommodation for 300 people and two AHTS vessels. Each of these 

loans can be converted into a term loan of 84 months upon completion of construction of the relevant vessel. 

We have contracted to sell the two AHTS vessels and one of the work barges. We expect the barges and 

vessels to be completed by May 2009. We intend to repay each of these construction loans upon delivery of 

the vessels. The facilities from Caterpillar Financial are secured by a corporate guarantee granted by our 

subsidiary Otto Offshore, a personal guarantee provided by Yaw Chee Siew, an assignment to Caterpillar 

Financial of the relevant shipbuilding contracts and insurance policies, a mortgage over relevant vessels and an 

assignment to Caterpillar Financial of refund guarantees from the relevant suppliers. The facilities include a 

provision subordinating our indebtedness owing to our Shareholders and our affiliates to the amounts owing to 

Caterpillar Financial. The facilities are subject to the condition that Yaw Chee Siew maintain no less than a 

30% interest in our Company. The facilities carry a floating interest rate based on US Dollar LIBOR (one 

month) plus a margin of 1.85% per annum. The amount outstanding under the facilities, as at the Latest 

Practicable Date was US$25.7 million. 

Net Amount Owing to Interested Person 

From time to time in the past, Brizill International made collections on our behalf from our customers in 

relation to sales we had made and also made payments on our behalf for procurement of equipment and raw 

materials from our suppliers. As at 31 May 2008, the net amount owing to Brizill International was 

S$102.8 million. As at the Latest Practicable Date, the net amount owing to Brizill International was 

S$93.6 million. See “Interested Person Transactions and Conflicts of Interests — Present and Ongoing 

Interested Person Transactions”. In June 2008, we converted S$52.0 million of the amounts due from us to 

Brizill International into a five-year interest-bearing term loan (the “Brizill Term Loan”). The Brizill Term 

Loan is unsecured and bears interest at 2.0% above the prime lending rate of HSBC Bank (Singapore Branch), 

which is 5.5% per annum as at the Latest Practicable Date, or, 7.0%, whichever is higher. The Brizill Term 

Loan is to be repaid in 20 equal quarterly instalments of S$2.6 million together with all accrued and unpaid 

interest thereon. We are entitled to prepay the whole or any part of the Brizill Term Loan, without incurring 

any penalty, by giving 10 days prior notice. Under the terms of the refund guarantee facility granted by 

Standard Chartered Bank, any repayment of any loans from our Shareholders and Interested Persons, including 

the Brizill Term Loan, is subject to prior written consent of Standard Chartered Bank, if such repayment were 

to reduce these shareholder loans to an amount below S$51.4 million while any facilities granted by Standard 

Chartered Bank to our Company remain outstanding. See “Interested Person Transactions and Conflicts of 

63

Interests — Present and Ongoing Interested Person Transactions — Inter-company Balances Between Us and 

Brizill International, Advances to Us From Brizill International and the Brizill Term Loan” and “Interested 

Person Transactions and Conflicts of Interests — Present and Ongoing Interested Person Transactions — 

Personal Guarantee and Other Undertaking Provided by Yaw Chee Siew”. 

Refund Guarantees 

As at 31 May 2008, banks had issued refund guarantees to our customers for an aggregate amount of 

US$135.9 million and Euros 17.3 million under restricted bank account arrangements in connection with 

shipbuilding contracts we had entered into with these customers. As at 31 December 2007 and 31 May 2008, 

we had restricted fixed deposits in banks to support refund guarantees issued by banks to our customers of 

S$195.7 million and S$151.2 million, respectively. As at 31 December 2005 and 2006, we had restricted fixed 

deposits of nil and S$40.8 million, respectively, in banks to support refund guarantees. 

Our obligations to banks in respect of refund guarantees issued by them to our customers are not 

generally required to be recognised as liabilities on our balance sheet. Other than the refund guarantees, we do 

not have any other off-balance sheet arrangements that we believe have or are reasonably likely to have a 

material effect on our business, financial condition, results of operations or prospects. 

In particular, the refund guarantee facility from Standard Chartered Bank is subject to the condition that 

Yaw Chee Siew maintains no less than a 30% interest in our Company. 

As at the Latest Practicable Date, banks had issued refund guarantees to our customers for an aggregate 

amount of US$122.7 million and Euros 29.3 million under restricted bank account arrangements in connection 

with shipbuilding contracts we had entered into with these customers. 

Past Loan Default 

In 1996, Sumikin Bussan Corporation (“Sumikin”), an unrelated third party, extended a loan of Yen 

950.0 million to us secured against the personal guarantees of our former directors, Yaw Teck Seng and 

Taikichi Ito (the “Guarantors”) for the construction of a Syncrolift@ facility at our shipyard in Batam, 

Indonesia. 

We encountered difficulties in meeting our payment obligations under the loan and arising from this, we 

agreed with Sumikin to a debt restructuring in 1999 and again on two other occasions in 2001. In 2003, 

Sumikin filed letters of demand against us, the amounts of which we disputed. In 2004, Sumikin filed a claim 

against the Guarantors. In 2005, Sumikin, the Guarantors and we agreed to a settlement of the dispute. We 

paid the full settlement sum of US$6.3 million between July 2005 and April 2006 and were fully discharged. 

In 1998, HSBC Bank extended certain trade finance facilities to us for our business secured against, 

among others, the personal guarantees jointly provided by our former directors Yaw Teck Seng, Yaw Chee 

Ming and Taikichi Ito. 

In 1999, we encountered difficulties in meeting our payment obligations of S$2,464,405 (“Tranche A”) 

and Yen 249,000,000 (“Tranche B”) under these facilities and arising from this, we agreed with HSBC Bank 

to a debt restructuring in 1999 (“1999 Repayment Schedule”) under which we successfully repaid Tranche A 

in accordance with the 1999 Repayment Schedule. However, we failed to observe the 1999 Repayment 

Schedule in relation to Tranche B and we only paid part of it. In 2001, HSBC Bank agreed with us to revise 

the 1999 Repayment Schedule for the outstanding sum of Yen 207,500,000 under Tranche B (“2001 

Repayment Schedule”). 

In order to manage our cashflow position, we requested that HSBC Bank grant us a six-week grace 

period for each repayment instalment under the 2001 Repayment Schedule. HSBC Bank acceded to our 

request and we made the instalment payments within the applicable grace periods. We made the last instalment 

payment for Tranche B on 31 March 2004. 

In FY2005, we breached one of the financial covenants under a facility provided by Bank Mandiri, under 

which we owed US$9.0 million as at 31 December 2005. Under the terms of the facility, we were required to 

maintain a debt to equity ratio of 2.33 times. As at 31 December 2005 the ratio was 2.35 times. The loan was 

fully repaid in FY2006. 

Since Yaw Chee Siew became the Executive Chairman of our Company in 2001, our management team 

and reporting structures have gone through major changes. Most of the current key executive officers are new 

64

staff members who were hired from 2002 onwards in line with the revised management and reporting structure 

and new business focus of our Group. In 2004, we started building offshore marine vessels. 

Save as disclosed above, to the best of our Directors’ knowledge, we are not in any breach of any terms 

and conditions or covenants associated with any credit arrangements or bank loans which could materially 

affect our financial position and results or business operations or the investments of our Shareholders. 

Indebtedness Since 31 May 2008 to the Latest Practicable Date 

As at the Latest Practicable Date, we have obtained a vessel construction loan of US$85.0 million from 

UOB, a revolving credit facility of S$20.0 million, two vessel construction facilities in an aggregate amount of 

US$29.0 million from RHB Bank Berhad, and an overdraft facility of S$1.0 million from HSBC. In June 

2008, we converted S$52.0 million of the amounts due from us to Brizill International into the Brizill Term 

Loan. See “— Borrowings — Net Amount Owing to Interested Person”. 

The loan facility of US$85.0 million from UOB is in relation to the construction of four vessels. The 

respective tranche in relation to each vessel is (a) US$20.0 million which expires on 28 February 2009, 

(b) US$20.0 million which expires on 30 April 2009, (c) US$22.5 million which expires on 30 September 

2009 and, (d) US$22.5 million which expires on 31 December 2009. This facility is secured by a charge over 

certain of our foreign currency fixed deposits placed with UOB and an assignment to UOB of the relevant 

shipbuilding contracts, sale proceeds and proceeds from builder risk insurance policies. The facility is subject 

to the condition that Yaw Chee Siew maintains no less than a 30% interest in our Company. The facility 

carries a floating interest rate based on SIBOR plus a margin of 1.75% per annum. The amount utilised under 

this facility, as at the Latest Practicable Date was US$56.7 million. 

The revolving credit facility of S$20.0 million from RHB Bank Berhad is secured by a personal guarantee 

provided by Yaw Chee Siew. This facility carries a floating interest rate based on SIBOR plus a margin of 

2.375% per annum. The amount utilised under this facility, as at the Latest Practicable Date was 

S$20.0 million. 

We have obtained two vessel construction loans in an aggregate amount of US$14.0 million from RHB 

Bank Berhad for the construction of two AHTS vessels which will expire on 10 July 2009. These loans can be 

converted into term loans of 48 months upon completion of construction of the relevant vessel. We expect the 

vessels to be completed by March 2009. We have contracted to sell both of these vessels. We intend to repay 

each of these construction loans upon delivery of the vessels. This facility is secured by a personal guarantee 

provided by Yaw Chee Siew, a mortgage over the vessels, an assignment of the relevant shipbuilding contracts, 

insurance proceeds, charter contracts and banker’s guarantees issued by the charterers and a charge over any 

operating accounts we may maintain with RHB Bank Berhad for the charter income of the relevant vessel in 

the event we do end up chartering either of these vessels. The facility carries a floating interest rate based on 

US Dollar LIBOR plus a margin of 2% per annum. The amount utilised under this facility, as at the Latest 


We have obtained two vessel construction loans in an aggregate amount of US$15.0 million from RHB 

Bank Berhad for the construction of two maintenance vessels which will expire on 10 July 2009. These loans 

can be converted into term loans of 48 months upon completion of construction of the relevant vessel. We 

expect the vessels to be completed by June 2009. We intend to retain these vessels for our ship chartering 

fleet. This facility is secured by a personal guarantee provided by Yaw Chee Siew, a mortgage over the 

vessels, an assignment of the relevant shipbuilding contracts, insurance proceeds, charter contracts and 

banker’s guarantees issued by the charterers and a charge over operating accounts maintained with RHB Bank 

Berhad for the charter income of the relevant vessels. The facility carries a floating interest rate based on 

US Dollar LIBOR plus a margin of 1.75% per annum. The amount utilised under this facility, as at the Latest 


The overdraft banking facility of S$1.0 million from HSBC which is subject to review by 31 May 2009 is 

secured by an undertaking given by Yaw Chee Siew who is obliged to provide a personal guarantee in the 

event that we are unable to list on the SGX-ST by 30 November 2008. This facility carries a floating interest 

rate based on the prevailing prime lending rate of HSBC. The facility is subject to financial covenants that 

require us to maintain a minimum consolidated net worth of S$200.0 million after the Offering and a 

maximum consolidated gearing ratio of 2.00. This facility has not been utilised as at the Latest Practicable 

Date. 

We have signed terms sheets for banking facilities from CIMB and IFS Capital in July and June 2008, 

respectively. We are in the process of negotiating and finalising the documentation for these facilities and 

65

expect to sign definitive facility agreements by the end of December 2008. The reason for the delay in the 

finalisation of these banking facilities is because (a) these are new relationships and (b) there is a cross-border 

element as the security package involves assets in Indonesia. 

According to the term sheet, the facility from CIMB will include: (i) letter of credit and trust receipt 

facilities of up to US$2.0 million and carries a floating interest rate based on 1.5% per annum above CIMB’s 

cost of funds; (ii) refund guarantee facilities of up to US$10.0 million; and (iii) a treasury line of up to 

US$1.0 million. These facilities are secured by a pledge of foreign currency deposits and a personal guarantee 

provided by Yaw Chee Siew. 

According to the term sheet, the facility from IFS Capital will consist of a term loan of up to 

S$10.0 million and is secured by a fixed charge over two units of gantry cranes at our shipyard in Batam and 

a personal guarantee by Yaw Chee Siew. This facility carries a floating rate of interest based on 1.25% above 

IFS Capital’s base rate per annum or 3.0% above the one-month Singapore Dollar swap rate, whichever is 

higher. 

Our Directors are of the opinion that, after taking into account our present banking facilities, our existing 

cash and cash equivalents, the cash flow generated from our operations and the net proceeds from the New 

Shares, we have adequate working capital for our present requirements and anticipated capital expenditures for 

the next 12 months. 

Our future cash flow will be enhanced pursuant to income from our different business activities, including 

sales proceeds upon delivery of vessels, our chartering business and our strategic partnerships. In addition, if 

required, we will be able to tap on the working capital requirements allocation derived from the proceeds of 

the Offering. Barring any unforeseen circumstances, the Directors believe that there will be no difficulties in 

meeting repayment schedules. 

We have been in dialogue with several financial institutions about obtaining additional facilities. Based on 

these discussions and currently available information, the Directors believe that we will be able to secure 

additional facilities to meet our funding requirements for our shipbuilding and other business activities. 

However, we will only commence further discussions with our financiers at a later point in time if we require 

additional funding. 

We may raise additional funds through debt or equity offerings or the sale or other disposition of shares 

or assets. Please see “Risk Factors — Risks Relating to Ownership of Our Shares — We may require additional 

equity funding which may dilute your interests”. 

Capital Expenditures 

The table below sets out our significant capital expenditures for the historical periods indicated: 

Financial Years 

Ended 31 December 

Description 2005 2006 2007 

1 January 2008 

to 31 May 2008 

S$ S$ S$ 


S$ 

Leasehold land and buildings ..................... 285 2,181 — — 

Vessels ..................................... — — 35,559 — 

Office equipment, furniture and fittings ............. 150 216 326 228 

Motor vehicles. ............................... 270 279 479 — 

Machinery and equipment ....................... 2,932 3,444 1,479 1,101 

Construction-in-progress (1) ....................... 4,788 2,028 28,349 15,453 

Total. ...................................... 8,425 8,148 66,192 16,782 

Note: 

(1) Construction-in-progress refers to capital expenditures incurred by us for construction which is still in 

progress as at the end of each of the respective financial periods. 

Our capital expenditures in FY2005 related primarily to improvement to the facilities at our shipyard in 

Batam, Indonesia. These improvements consisted primarily of construction-in-progress and machinery and 

equipment. Capital expenditures classified as construction-in-progress consisted of yard and workshop 

improvement, amounting to S$2.5 million and the concrete flooring and wiring to the Syncrolift» area 

66

amounting to S$2.3 million. Capital expenditures for machinery and equipment consisted mainly of the 

installation of a slewing crane for S$1.5 million. 

Our capital expenditures in FY2006 related primarily to improvement to the facilities at our shipyard in 

Batam, Indonesia. These improvements consisted primarily of machinery and equipment, leasehold land and 

buildings, construction-in-progress. Capital expenditures for machinery and equipment consisted mainly of 

improvements to the Syncrolift» of S$1.8 million and the installation of a CNC machine amounting to 

S$0.4 million. Capital expenditures for leasehold land and buildings related primarily to workshop improvements. 

Capital expenditures classified as construction-in-progress consisted of the installation of a gantry crane 

amounting to S$1.7 million. 

Our capital expenditures in FY2007 related primarily to the acquisition of the five tugboats and five highdeck 

loading barges for our chartering business. Capital expenditures classified as construction-in-progress 

consisted of yard and workshop improvements, amounting to S$6.7 million and the construction of five utility 

vessels and two maintenance vessels of S$21.6 million for our chartering fleet. 

Our capital expenditure for the five months ended 31 May 2008 related primarily to our construction-inprogress 

of S$15.5 million. Capital expenditures classified as construction-in-progress consisted of expenditures 

in relation to the construction of our chartering fleet of S$11.5 million and yard and workshop 

improvements S$4.0 million. 

We expect the full-year impact of our ship chartering business which we commenced in April 2007 to be 

reflected in FY2008. In particular, we expect our depreciation expenses to increase as a result of the full year 

depreciation in FY2008 of the vessels that we acquired for our ship chartering business in October 2007 and 

another high-deck loading barge we acquired in December 2007. 

Contractual Obligations and Commitments and Contingent Liabilities 

Contractual Obligations and Commitments 

The following table summarises our material contractual cash obligations and commitments as at the 

Latest Practicable Date. 

Payment Due by Period 

From 1 Year 

and Up to 

From 3 Years 

and Up to 

Total 

Less Than 

1 Year 

Less Than 

3 Years 

Less Than 

5 Years 

5 Years 

and Above 

S$ S$ S$ S$ S$ 

Committed capital expenditures ...... 28.5 28.5 

(In millions) 

— — — 

Operating leases. ................. 0.8 0.4 0.4 — — 

Total .......................... 29.3 28.9 0.4 — — 

As at the Latest Practicable Date, we had committed capital expenditures of S$28.5 million as follows: 

S$6.3 million for shipyard improvement; and 

S$22.2 million for the payment of equipment and shipyard costs for the construction of vessels for our 

chartering fleet. 

As at the Latest Practicable Date, we had operating lease commitments of S$0.8 million relating to our 

rental of office premises at 9 Temasek Boulevard, #33-01 Suntec Tower Two, Singapore 038989. 

We intend to finance the above capital expenditures and operating leases out of our working capital and 

use of proceeds. 

Our actual capital expenditures may differ from the amounts set out above due to several factors, 

including our future cash flows, results of operations and financial conditions, the availability of financing on 

terms acceptable to us, and changes in economic, political or other conditions in the locations where we 

conduct business. No assurances can be given that any of these projects will be completed in the expected 

timeframe or within the estimated budget or at all. See “Risk Factors”. 

Contingent Liabilities 

As at 31 December 2007, we had provided two corporate guarantees in respect of banking facilities given 

to certain banks amounting to S$2.1 million and up to US$53.0 million respectively. See “Interested Person 

67

Transactions and Conflicts of Interests — Past Interested Person Transactions” and “Capitalisation and 

Indebtedness”. As at the Latest Practicable Date, the corporate guarantee amounting to S$2.1 million has been 

fully discharged. 

Save for refund guarantees issued by banks to our customers as disclosed in “— Borrowings — Refund 

Guarantees”, the corporate guarantees discussed above and the arbitration disclosed in “Our Business — 

Litigation and Arbitration Proceedings”, we presently do not have any other contingent liabilities. Save as 

disclosed above, there has not been any material change in our contingent liabilities between 31 December 

2007 and the Latest Practicable Date. 

On 10 September 2008, we entered into a settlement agreement with the Malaysian company that 

commenced the arbitration proceedings against us. See “Our Business — Litigation and Arbitration Proceedings”. 

Accordingly, the contingent liability which we have made provision for in relation to the arbitration 

proceedings has been extinguished. 

Taxes 

Profits booked through our Singapore incorporated group companies are subject to Singapore corporate 

income tax at the rate of 20.0% for 2005 and 2006 and 18.0% for 2007 while that derived from our ship 

chartering business in respect of our Singapore registered vessels is tax exempt pursuant to Section 13A of the 

Income Tax Act, Chapter 134 of Singapore. Our subsidiaries PT Batamec and PT Lestari are subject to 

Indonesian corporate tax at a rate of between 15.0% and 30.0% depending on the taxable income. Further, as 

they are located in Batam, Indonesia which has been classified as a bonded zone, they are currently exempted 

from customs duties, import/export taxes and value-added tax. Our subsidiaries Otto Offshore and Otto 

Investment, which are incorporated in Labuan, also enjoy preferential tax rates. 

We make all of our arrangements for the construction of newbuildings, except certain barges, through our 

wholly owned subsidiary Otto Offshore. When we receive an order for a newbuilding from a customer 

(including from our Company, for vessels that we intend to keep for our chartering fleet), we enter into a 

vessel purchase agreement with the customer through Otto Offshore. Otto Offshore then places a vessel 

construction order with PT Batamec, and when the vessel is completed, PT Batamec sells the vessel to Otto 

Offshore for further on-sale to the end customer (which could include our Company). 

Changes in Accounting Policies 

We have not made any significant changes in our accounting policies during the last three financial years 

ended 31 December 2007 and for the five months ended 31 May 2008. 

Market Risk 

We are exposed to various types of market risk in the ordinary course of business, including foreign 

exchange risk, credit risk, interest rate risk and liquidity risk. Our risk management strategy aims to minimise 

the adverse effects of financial risk to our financial performance. 

Foreign Exchange Risk 

Our results of operations and financial condition are exposed to transaction and translation risks relating 

to foreign currency exchange rates. Our foreign currency exchange risk arises mainly from foreign currencydenominated 

sales and purchases. See “— Factors Affecting Our Business, Financial Condition and Results of 

Operations — Fluctuations in Foreign Currency Exchange Rates” and “Risk Factors — Risks Relating to Our 

Business and Operations — We may be affected by foreign exchange fluctuations”. 

68

The percentage of our revenue denominated in various currencies for the three financial years ended 

31 December 2007 and the five months ended 31 May 2008 is as follows: 

Five 

Months 

Financial Years Ended 

31 December 

Ended 

31 May 

As a % to Group Revenue 2005 2006 2007 2008 

% % % % 

Euros ............................................ — — — 34.1 

USD............................................. 57.4 80.1 92.4 63.1 

SGD............................................. 42.5 19.9 7.6 2.8 

IDR ............................................. 0.1 — — — 

100.0 100.0 100.0 100.0 

Substantially all of our revenue had been in US Dollars and Euros. Based on our current order book, we 

expect all of our revenue to be denominated in US Dollars and Euros in the future. The majority of our cost of 

sales is denominated in US Dollars, Euros and Singapore Dollars. Our gross profit is primarily denominated in 

US Dollars and we manage this exposure arising from our net cash flow by entering into foreign currency 

forward contracts as discussed below. 

As our books of accounts and records are recorded in Singapore Dollars, any fluctuations in foreign 

currency exchange rates will result in exchange gains or losses arising from transactions carried out in foreign 

currencies as well as translations of foreign currency monetary assets and liabilities as at the balance sheet 

dates. 

Our net foreign exchange loss/gain are set forth below for the periods indicated. 

Five Months 

Financial Years Ended 31 Ended 

December 

31 May 

2005 2006 2007 2008 

Net foreign exchange (loss)/gain (S$’000) ............. (1,276) 265 (1,937) 1,832 

Percentage of revenue (%) ........................ (2.3) 0.2 (0.6) 0.8 

Percentage of profit before income tax (%) ............ (2,407.5) 1.9 (3.5) 5.0 

We have not adopted a formal policy to hedge our foreign exchange risk but we may from time to time 

use foreign currency forward contracts to manage our foreign exchange exposure. As at 31 December 2007 

and 31 May 2008, we had the following outstanding forward currency contract for the sale of US Dollars to 

buy Euros. Details of this sale contract is set out below: 

Settlement Dates 

Contract 

Amount Description 

US$ millions 

As at 31 December 2007 

19 September 2008 .......... 1.4 Sale of US$ at exchange rate of A1.00 = US$1.4445 

As at 31 May 2008 


10 December 2008 .......... 7.4 Sale of US$ at exchange rate of A1.00 = US$1.4757 







05 May 2009 .............. 3.1 Sale of US$ at exchange rate of A1.00 = US$1.5315 

We will continue to monitor our foreign exchange exposure and will take appropriate measures to hedge 

our exposure, if required. 

Prior to engaging in any foreign exchange hedging transaction, we will adopt the following measures: 

(i) seek Board approval on the policy for entering into any foreign exchange hedging transactions; 

69

(ii) put in place adequate procedures which must be reviewed and approved by our Audit 

Committee; and 

(iii) our Audit Committee will monitor the implementation of the policy, including reviewing the 

instruments, processes and practices in accordance with the policy approved by our Board. 

Credit Risk 

Our Customers 

For our sales to customers in respect of our shipbuilding business, we generally require a down payment 

of 20.0% of the contract value within 10 days of signing the memorandum of sale agreement. We provide a 

refund guarantee for the down-payment paid to us. A further 10.0% of the contract value may be required to 

be paid as progress payment upon keel laying. The remainder of the contract price is typically paid after trial 

and commissioning and before delivery of the vessel. As a policy, we only commence negotiations with 

customers of good repute. Before signing the sales contract with our customers, we screen the financial 

standing of our customers and deal with customers of sound financial standing. In addition, prior to the release 

of the vessels from the shipyard, we would collect the full amount billed in relation to shipbuilding projects 

and the majority of the amount billed in relation to ship repair and conversion projects. In the past three 

financial years ended 31 December 2007 and the five months ended 31 May 2008, there has not been any 

material bad debts recorded. 

For ship repair and conversion and other shipping services, the billings are generally issued upon 

completion and delivery of the project or provision of the service. We normally grant credit terms of 30 days 

to our ship repair and conversion customers. 

For ship chartering, our customers are required to provide one month payment in advance and one month 

deposit payment. Customers have 30 days to make payment after they are invoiced. 

On a case-by-case basis, our Directors may vary the credit terms based on commercial considerations 

such as the size and duration of the project, the customer’s creditworthiness and the strength of our 

relationship with the customers. 

To the best of their knowledge and based on currently available information, our Directors are not aware 

of any information that may lead them to believe that any of the customers may not be able to meet their 

contractual payment obligations in a timely manner or that they may default on any obligations. 

We do not have a policy of making provisions for any general debts. However, we will provide for 

specific debts if we consider its collection to be doubtful. We had written off bad debts of S$0.3 million, 

S$0.4 million and S$1.3 million for FY2005, FY2006 and FY2007, respectively. For the five months ended 

31 May 2008, we recovered S$0.1 million in debts written off. We did not experience any significant impact 

on our financial performance arising from payment delays and/or default by our customers in FY2005, 

FY2006, FY2007 and for the five months ended 31 May 2008. 

Our average debtors’ turnover in days for FY2005, FY2006, FY2007 and for the five months ended 

31 May 2008 were 136 days, 11 days, 30 days and 13 days respectively. See “Our Business — Credit 

Management”. In the event our customers face cash flow problems, it may impair their ability to settle 

promptly trade debts due to us or we may not even be able to collect any amounts due to us from them. This 

may have an adverse impact on our financial performance and financial position. See “Risk Factors — Risks 

Relating to Our Business and Operations — We are exposed to default by our customers and/or payment 

delays” and “Risk Factors — Risks Relating to Our Business and Operations — Our shipbuilding business is 

dependent on a few major customers”. 

Our Suppliers 

We are exposed to the credit risk of our suppliers arising from the non-performance of subcontractors for 

which we have made prepayments to and from the non-delivery of equipment by our suppliers for which we 

have made downpayments. We have not experienced significant losses arising from non-performance of our 

suppliers. See “Our Business — Our Major Suppliers”. 

Interest Rate Risk 

Our profitability is affected by changes in interest rates and the amount of our floating rate debt. As at 

the Latest Practicable Date, all our interest bearing liabilities are based on floating interest rates and they 

70

ange from 3.75% per annum to 8.0% per annum. We do not currently have any hedging arrangements or 

interest-rate swaps to adjust interest-rate risk exposures, but we may enter into such arrangements or swaps in 

the future. 

Liquidity Risk 

We are dependent on the continuing financial support from Yaw Chee Siew, in the form of loans from 

Brizill International and personal guarantees granted to financial institutions for credit facilities extended to us. 

A withdrawal of such support would likely result in us having difficulty in meeting our short-term obligations 

and successfully executing our expansion plans. 

Recent SFRS Pronouncements 

Certain new standards, amendments and interpretations to existing standards have been published that are 

mandatory for our accounting periods beginning on or after 31 December 2007 or later periods but which we 

have not adopted before then, are as follows: 

FRS 23 (Borrowing Costs) 

The revised FRS 23 requires capitalisation of borrowing costs directly attributable to the acquisition, 

construction, or production of a qualifying asset as part of the cost of that asset. The option of immediately 

recognising those borrowing costs as an expense has been removed. 

FRS 107 (Financial Instruments: Disclosure) 

FRS 107 requires an expansion of the disclosure of our Group’s financial instruments to include summary 

of quantitative data about exposure of our Group to its financial risks at the reporting date that an entity may 

provide internally to key management. 

FRS 108 (Operating Segments) 

FRS 108 replaces FRS 14 (Segment Reporting), and is applicable for entities whose equity or debt 

securities are publicly traded and entities that are in the process of issuing equity and debt securities in public 

securities markets. 

The key changes from FRS 14 include: 

identification of operating segments on the basis of internal reports about components of the entity that 

are regularly reviewed by the chief operating decision maker in order to allocate resources and assess 

performance; 

more discretion in defining segment information, limited only by an entity’s internal reporting practice, 

with explanation of bases and provision of entity-wide disclosures when an entity has only one 

reportable segment, including information about each product and service or groups of products and 

services; and 

analyses of revenues and certain non-current assets by geographical area — with an expanded requirement 

to disclose revenues/assets by individual foreign country (if material), irrespective of the 

identification of operating segments. If such analyses are not available due to excessive costs, the facts 

must be disclosed. 

INT FRS 111 FRS 102 (Group and Treasury Share Transactions) 

INT FRS 111 FRS 102 provides guidance on applying FRS 102 in three circumstances: 

When an entity receives services as consideration for rights to its own equity instruments, the 

transaction should be accounted for as equity-settled. 

When a parent grants rights to its own equity instruments to employees of its subsidiary and the parent 

has the obligation to deliver the equity instrument, the subsidiary should record the expense and a 

corresponding capital contribution in equity. 

When a subsidiary grants rights to equity instruments of its parent to its employees and the subsidiary 

has the obligation to deliver the equity instruments of its parent to its employees, the subsidiary should 

account for the transaction as cash-settled. 

71

Inflation 

According to the Indonesian Bureau of Statistics, Indonesia’s annual overall inflation rate as measured by 

the consumer price index was approximately 17.1%, 6.6% and 6.6% in 2005, 2006 and 2007, respectively. We 

cannot assure you that the inflation rate in Indonesia will decrease or will not increase in the future. We 

cannot predict the impact that a sustained increase in inflation will have on our business, financial conditions, 

results of operations or prospects. 

Seasonality 

We generally do not experience any seasonality in our shipbuilding, ship repair and conversion, and ship 

chartering businesses. However, we are affected by business cycles. See “Risk Factors — Risks Relating to the 

Industries in Which We Operate”. 

Trends and Prospects 

We expect to continue to grow our business during 2008. Our operations will continue to be affected by 

conditions in the markets we operate, specifically, the conditions in the oil and gas industry and other factors 

discussed under “— Factors Affecting Our Business, Financial Condition and Results of Operations”. In recent 

weeks there has been a drastic fall in oil price, in connection with the global economic crisis. This would 

likely have a negative impact on the oil and gas industry, if oil price remains unstable and affect the offshore 

marine industry. In addition, the prevailing credit crunch may inhibit offshore marine players who are our 

existing or potential customers from raising the requisite financing to acquire offshore vessels. Other factors 

affecting our business would include the following: 

We expect to continue our shipbuilding activities and the completion and delivery of more vessels. 

We expect to expand our ship chartering business, and we have nine new vessels presently under 

construction two of which we expect to be delivered in 2008 and seven in 2009. 

We are considering establishing a shipyard in China and have entered into a capital investment 

agreement with the People’s Government of Qidong City of Jiangsu Province, China for the construction 

of a shipyard in China. We are currently evaluating the commercial viability of building a shipyard 

in China and are in the process of applying for the relevant licences, operating permits and 

authorisations from the provincial and the central Chinese authorities for a wholly foreign-owned 

enterprise in China. Subject to our evaluation of the commercial viability of the project and us 

obtaining all relevant approvals, licenses and permits, we may commence construction on the project 

and we will be incurring the relevant capital expenditure. 

We expect to expand our shipyard in Batam, Indonesia and will consequently be incurring capital 

expenditure. This will increase our production capacity. 

We expect to sell more vessels to our strategic partnerships in which we retain minority interests. 

72

INDUSTRY OVERVIEW 

This section is provided by Braemar Seascope Offshore (“Seascope”). The statistical and graphical 

information contained herein is drawn from Seascope’s database and other sources. Graphs and tables are all 

prepared from information contained in Seascopes own data bases unless an alternative source is indicated 

underneath the relevant graph or table. In connection therewith, Seascope has advised that: (i) certain 

information in its’ database is derived from estimates or subjective judgments; (ii) the information in the 

databases of other maritime data collection agencies may differ from the information in Seascope’s database; 

(iii) whilst Seascope has taken reasonable care in the compilation of the statistical and graphical information 

and believes it to be accurate and correct, data compilation is subject to limited audit and validation 

procedures and may accordingly contain errors. 

Seascope further advise that you should also be aware that since 1 September 2008, (the date of 

Seascope’s general overview), there may have been changes in the shipping industry and the various sectors 

therein which could affect the accuracy or completeness of the information in this section. 

1.0 Introduction 

The World Energy Outlook 2007 report released by the International Energy Agency (IEA) forecasts that 

the global primary energy demand will increase at an average annual rate of 1.8% between 2005 and 2030, 

with global oil demand reaching 116 million barrels per day in 2030, an increase of 37% up on 2006. More 

than 70% of this increase comes from developing countries. 

World Energy Outlook 2007 projected that two-thirds of the increment would be used in the transportation 

sector, where petroleum remains to be widely used since there are few competitive alternatives at present. 

Less than one-third of the projected increase would be from the industrial sector, which is mainly used in 

chemical and petrochemical processes. Much of the overall increase in consumption was anticipated to come 

from nations where strong economic growth is expected, especially in Asia. 

The latest report by the BP Statistical Review of World Energy June 2008 cites that two-thirds of global 

energy consumption growth was from the Asia-Pacific region. Even though Chinese growth of 7.7% was the 

weakest since 2002, China is accountable for half the global energy consumption growth, ahead of the US and 

India. 

Demand for oil and gas is dependent on a variety of factors, one of which is the winter weather. Since a 

great proportion of energy is used for heating homes, there will be less demand and thus a decline in energy 

prices during mild winters. Population growth, robust economic growth and the resulting burgeoning industrial 

activity as exhibited particularly by China and India, and rapidly expanding transportation especially in recent 

years of low-cost airlines are also responsible for increased demand for energy and subsequently higher prices. 

Political developments which are adversely affecting production in oil rich nations such as Iran, Iraq and 

more recently Nigeria, are also responsible for the shortage of supply and thus a higher price. Graph 1 

illustrates that the price of crude oil is directly correlated to world events, where the price of crude oil is 

higher than normal during periods of political unrest (reflected in the spikes of oil prices). Supply shortages, 

for example caused by hurricanes, as well as low levels of oil and gas inventories also result in higher prices. 

In recent years however, some of the early discovered economically viable oil and gas fields are maturing 

and/or are close to being exhausted. Even with EOR (Enhanced Oil Recovery) technology to increase the 

amount of oil which can be extracted from an oil field, the substantial costs involved for this process offsets 

the profits and revenues are dependent on prevailing oil prices. The North Sea is a good example of an area 

where the production is in decline because of exhaustion as well as for geological reasons and this declining 

trend does not seem to be reversible despite EOR and the current high oil price. This has led to the increase of 

deep sea exploration activities and the subsequent demand for offshore vessels in order to meet the worldwide 

demand for oil and gas. 

Offshore oil and gas exploration is taking place in many geographic areas of the world and well over 

95% of all cargo going to offshore drilling units and platforms is transported by vessel. The range of offshore 

support vessels is therefore diverse in size and function, with more than 20 types of specifically designed 

vessels that comprised a total of about 5,691 vessels in the entire worldwide fleet in January 2008. 

Transportation services of cargo and supplies to offshore drilling rigs, fixed and floating platforms is the main 

workscope but other services include transport of personnel to, from and between offshore installations, towing 

rigs to location and placing or retrieving their anchors, providing safety and emergency response services, and 

supporting offshore construction projects. This latter workscope covers a multitude of different vessels 

73

including crane barges, diving vessels, accommodation units, rock dumpers and survey vessels. Offshore oil 

and gas exploration follows a certain sequential order, and the various types of vessels that are needed at 

various times are shown in Table 1. 

As demonstrated by the age profiles presented later in this section, there is a need for modern as well as 

larger tonnage to cope with the oil and gas companies’ demand. The high oil price has led to a large number 

of new rigs being ordered, and the present high charter rates of both rigs and vessels show the continued 

demand for good modern tonnage. 

Graph 1: Crude oil prices in US dollars per barrel, 1861-2007 

Source: BP Statistical Review of World Energy June 2008 

Table 1: Types of Vessel required for the various stages of Offshore Oil and Gas 

Survey Exploration Development Production Decommissioning 

a) Seismic Survey vessel a) Jack-up drilling rig a) Jacket/Platform Installation a) From Jacket/Platform a) Removal of Jacket/Platform 

i) Supply/chase boats i) Supply Vessel i) Accommodation unit i) Supply Vessel i) Diving Vessel 

ii) Anchorhandlers ii) Supply Vessels ii) Standby Vessel (if manned) ii) Heavy Lift Crane Vessel 

iii) Standby Vessels iii) Anchorhandling Vessels iii) Crew boat Anchorhandlers 

If survey shows 

promising results 

then proceed to 

Exploration phase 

iv) Crew boats iv) Standby Vessels Supply Vessels 

v) Positioning tugs v) Heavy Lift crane vessel b) From FPSO/FSO Tugs/Barges 

Barges with modules i) Off-take tankers iii) Accommodation Unit 

b) Semi Submersible drilling rig Towing tugs ii) Safety-standby/towing vessel Anchorhandlers 

i) Supply Vessel Anchorhandling vessels iii) Crew boat Supply Vessels 

ii) Anchorhandlers vi) Diving Vessel - seabed work iv) Platform maintenance/repair Standby Vessel 

iii) Standby Vessels vii) Construction Vessel Diving Vessel 

iv) Crew boats viii) Pipelay Barge Construction Vessel b) Removal of FPSO/FSO 

v) Positioning tugs Anchorhandlers i) FPSO/FSO towed away 

Pipelay Vessels c) From Subsea Installation Tugs 

c) Drillship i) occasional diving Vessel Anchorhandlers 

i) Supply Vessel b) FPSO/FSO inspection ii) Removal of Moorings 

ii) Anchorhandlers i) Anchorhandling vessels repairs Diving Vessel 

iii) Standby Vessels ii) Diving Vessels Anchorhandlers 

iv) Crew boats iii) Riser Removal 

v) Positioning tugs c) Subsea Installation 

Once Production has finished 

Diving/Construction Vessel 

Providing Exploration 

yields economic 

discovery then proceed 

to Development 

i) Diving Vessel 

ii) Pipelay Vessel 

when Development is 

completed it is reclassified 

as a Field and Production 

commences 

and the field becomes 

uneconomic, then the field is 

Decommissioned 

Heavy-lift Crane Vessel 

c) Subsea Completion 

i) Diving Vessel 

ii) Heavy Lift Crane Vessel 

74

2.0 Description of Vessel Types 

2.1 Tugs 

Tugs are usually small but extremely powerful boats whose main role is to pull or push much larger 

vessels, non self-propelled units, or other floating structures. Their scope of work includes towage, salvage and 

assistance. Modern tugs have also fire fighting, ice-breaking and oil dispersal capabilities. However, their main 

offshore use is for towing barges, structures and rigs as well as being used for the accurate positioning of 

offshore Jackets and Jack-Up drilling rigs. Many of the newer built tugs are designed with Azimuth Stern 

Drive (ASD), Voith Schneider or other sophisticated propulsion systems so as to be highly manoeuvrable. Tugs 

for offshore use range between 4,000 and 20,000 BHP. 

2.2 Anchor Handling Tugs 

Anchor Handling Tugs (AHT) are essentially tugs fitted with anchor handling winches enabling the vessel 

to perform anchor handling operations and the towing and positioning of drilling rigs. They are shorter than 

AHTS vessels and do not carry cargo but, due to their increased maneuverability, are often also used for 

anchor handling during pipe laying operations and construction projects where the vessel length can be 

critical. 

2.3 Anchor Handling Tug Supply Vessels 

Anchor Handling Tug Supply (AHTS) vessels combine the role of supply vessels and anchor handling 

tugs. They are the backbone of offshore operations and constitute the largest proportion of offshore vessels, 

being approximately 30% of the current total offshore fleet. Not only do they deliver supplies such as deck 

cargo, water, fuel, dry bulk and mud to oil rigs and platforms, they are specially designed to provide anchor 

handling services, towage duties and in some cases also serve as an Emergency Towing Rescue and Recovery 

Vessel (ETRRV). Some modern AHTS vessels are also equipped for fire fighting, rescue operations and oil 

recovery to enable them to have a more multi-role capability. 

Winches are fitted for towing and anchor handling, with an open stern to allow the decking of anchors. 

With the increase in deep-water exploration, it is necessary for vessels to be designed with higher horsepower 

and a larger beam to be able to handle the heavier gear required to operate at such depths. Vessels in this 

category range from 4,000 to 27,000 BHP and work in different areas of the world, although the smaller ones 

often do not perform any anchor handling. 

Vessels operating in the North Sea typically range from 150 to 270 tonnes bollard pull (BP), are suitable 

for harsh weather environments and have winches with 350 to 500 tonnes line pull. However, in view of the 

Bourbon Dolphin incident which occurred in April 2007 when the AHTS vessel capsized during rig move 

operations resulting in the loss of eight crew members, it is envisaged by several shipowners that there will be 

an increasing demand for larger vessels of minimum 265 tonnes BP and 20m beam. 

2.4 Supply Vessels 

Platform Supply Vessels (PSV) are designed specifically to transport cargo to offshore oil rigs and 

platforms and when converted can perform a variety of tasks to support offshore operations. PSVs are similar 

to AHTS vessels, except that PSVs do not have winches, have a closed stern and generally have large decks. 

Supply vessels range from under 1,000 tonnes deadweight to around 4,500 tonnes deadweight. 

Cargoes are mostly carried both above and below deck, in order to maintain the stability of the vessel. 

Drilling pipes and general cargo in containers are carried above deck for efficiency and safety of transport 

whilst bulk cargo used in the drilling process, such as mud and cement, fuel and water, are carried in tanks 

below deck with the cargo subsequently pumped up to the rigs and platforms. 

Some PSVs have been purpose built or converted to undertake a particular job such as seismic survey, 

flexible pipe laying or repair operations and may have helidecks to enable passenger transport to and from the 

vessel, especially in remote locations. 

2.5 Barges 

Offshore barges are flat-bottomed, non self-propelled units of shallow draft, designed for the transport of 

heavy or voluminous cargo on deck. Barges range in length from around 30m to 200m and need to be towed 

to and from location. Some barges are submersible so cargo can be floated on and off and then transported in 

a ‘dry tow’ mode with a tug towing the barge. 

75

3.0 Ship Chartering 

The majority of chartering opportunities for offshore support vessels generally originate from the oil and 

gas exploration companies, construction contractors such as platform installation and maintenance companies 

and pipe-lay contractors. Ship chartering generally involves the hiring of a vessel for a specified period (which 

can be for a specific time period ie for example 3 months or for the duration of the drilling of a well, or a 

number of wells, which is not a defined period in terms of the actual number of days) at a specific day rate, 

with terms agreed between the shipowner and the charterer on a specific contract form called a charterparty. 

Many oil companies have their own preferred charterparty and there are also independent charterparties drawn 

up by BIMCO (The Baltic and International Maritime Council) organisation. 

3.1 Types of Ship Charters Available 

3.1.1 Spot Charter 

Spot Charters are the employment of vessels on a short term basis (day by day period) of up to (usually) 

30 days duration. The vessels earn the going rate in the market at the time and are dependent on the demand 

for, and supply of vessels on the day. Since the employment of the vessels is unpredictable, so are the revenues 

generated, but especially in the North Sea, many of the charterers like to rely on the spot market to cover ad 

hoc requirements. Owners may well have periods when the vessel is off hire between spot jobs. 

3.1.2 Term Charter 

Term Charters involve the employment of the vessel for a period of time, which could be medium or long 

term. Although there are no specific definitions of medium term and long term charters as different owners 

have different ideas on medium and long term, medium term charters can be defined as lasting from 1 to 

6 months and long term charters are for more than 6 months and may be up to 5 years or longer. Similarly, as 

stated above, vessels may be chartered for a period defined as the duration of the drilling of a number of wells 

and this would also be a term charter — the number of wells and the expected duration would then determine 

whether it is medium or long term. 

Vessels operating on term charter have continuous employment and are paid continuously whilst on 

charter so owners are much more able to predict their earnings and potential profit. 

3.1.3 Bareboat Charter 

Under a bareboat charter, the charterer (who may be another owner) will supply all the officers and crew 

and will operate and manage the vessel. The owner will know what his income is going to be as any 

breakdown is for the bareboat charterers’ account generally. Short term bareboat charters are very unusual with 

normal periods generally being for a minimum of 1 year. The only exception to this is any contracts in 

Australia and New Zealand which require full local officers and crew and for which vessels are bareboat 

chartered by local operators for the period required. 

4.0 Description of Rig Types 

With the decreasing supply of oil and gas that can be easily extracted onshore (land-based) and in shallow 

offshore regions, exploration and production of oil and gas have ventured into previously untapped reserves in 

deeper offshore areas. Rigs are now drilling in deeper water and in more remote offshore locations than 

previously as technical innovation linked with high oil prices has made it commercially viable to do so. There 

are different main types of offshore rigs of which the most common are jack-ups and semisubmersibles. Graph 

2 shows the primary types of offshore rigs that are in service worldwide. 

76

Graph 2: Primary types of offshore rigs in service worldwide 

Semisubmersibles 

27% 

Drillships 

7% 

Source: RIGZONE website — http://www.rigzone.com 

4.1 Jack-ups 

Jack-ups are self-elevating, bottom-supported drilling units that are generally non-propelled. They have 

three or four supporting columns or ‘legs’ (piles) which enable them to rest on the sea floor and the whole 

drilling deck and accommodation can be jacked up to keep clear of the water. Other applications may also 

include use for accommodation purposes. 

Jack-ups are towed to the drill site by several towboats or placed on heavy-lift vessels for transport over 

long distances. They are then lowered to the water level, their legs are jacked downwards through the water, 

and then made to rest on the sea floor on spudcans. 

4.2 Semisubmersibles 

Semisubmersibles are floating units and unlike jack-up rigs, do not rest on the sea floor. The working 

deck sits atop giant pontoons and hollow columns, floating ballasted high out of the water when the rig is 

moved. When it is towed to the drill site, ballast is pumped into the pontoons and columns in order to stabilize 

the rig and large anchor/mooring spreads are used to secure them in position. The semisubmersible thus 

becomes a stable platform for drilling since the pontoons and columns are partially below the water’s surface, 

moving only slightly with wind and currents. Some semisubmersibles also operate on DP (Dynamic 

Positioning) to keep on location and in this mode of operation, the rig does not need to set anchors. 

77 

Jack-ups 

66%

4.3 Overview 

Table 2 below illustrates the number of Jack-up and Semisubmersible rigs in the worldwide fleet and their 

utilisation as at May 2008. On average the rigs have a high utilisation rate which denotes a high demand. 

Coupled with high oil prices, the result has been the increased activity in new buildings of rigs, see “Section 7: 

Newbuilding Rigs by Numbers”. Since the rigs are dependent on offshore vessels for their towage, supply of 

cargo and personnel, construction and maintenance, the demand for modern offshore vessels will increase as 

older vessels may not be capable or reliable enough to support these deep-water operations. 

Table 2: Number of Jack-up and Semisubmersible rigs in worldwide fleet and their utilisation 

Jack-ups Semisubmersibles 

Working Total Utilisation Working Total Utilisation 

May 2008 ................................. 340 371 91.6% 142 157 90.4% 

April 2008 ................................. 336 370 90.8% 141 157 89.8% 

March 2008 ................................ 342 368 92.9% 140 157 89.2% 

February 2008 .............................. 336 366 91.8% 135 157 86.0% 

January 2008 ............................... 333 365 91.2% 135 156 86.5% 

December 2007 ............................. 332 362 91.7% 136 155 87.7% 


5.0 Geographical Exploration Areas 

With the demand for energy rising constantly and reserves in existing fields starting to dwindle, 

exploration for oil and gas is continually carried out worldwide, from Alaska to Australia, in every possible 

corner of the globe. As a result, exploration has been taken out from continental shelves, venturing further out 

into deep-water and previously unexplored regions. 

The type of vessel required to support the offshore exploration of oil and gas is dependent on the types of 

rigs that are used for such exploration in different parts of the world. Generally, AHTS vessels are needed 

across the world to support exploration activities. PSVs tend to be employed in the North Sea, Brazil, West 

Africa, India and in some cases, Australia. Crew boats are primarily used in the U.S. Gulf, Arabian Gulf and 

West Africa. Standby Safety vessels are mainly found in the North Sea due to regulatory requirements, whilst 

tugs and barges are utilised worldwide. 

Rigs are used worldwide and Graph 3 below illustrates the breakdown of rigs in each geographical area. 

Graph 3: Number of rigs according to geographical area at March 2008 and under construction 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

Northern Europe 

North America 

South America 

West Africa 

Mediterranean 

Middle East 

The Caspian 

Southern Asia 

South East Asia 

Far East 

Australia 

JU now JU under construction SS now SS under construction 


78

5.1 Main Markets for Offshore Marine Operations 

5.1.1 West Africa 

Mainly Angola, Cameroon, Equatorial Guinea, Gabon, Mauretania and Nigeria. 

This is a major offshore region covering a large geographical area and attracting tonnage of all shapes 

and sizes. These range from the smaller AHTS vessels for shallow water Nigerian markets to some of the 

largest units around for the growing deep-water markets of Nigeria, Equatorial Guinea, Mauritania and Angola. 

Hence, a significant number of modern and more sophisticated North Sea type tonnage AHTS vessels and 

medium and large PSVs are required in this region. 

After the North Sea, this market is perhaps the largest market for medium and large AHTS vessels and 

PSVs and it has the capacity to absorb most of the high volume of tonnage on order globally but how much is 

an often considered topic for discussion. One of the challenges that have been faced in recent years is the port 

facilities of the remote and frontier drilling locations. Not all the ports from which oil and gas exploration 

projects are run have the capacity to cope with such large vessels although progress is being made in relation 

to this. Since the port facilities are somewhat underdeveloped, there has been an impetus by oil companies to 

use large vessels for certain programmes as this means the vessel can carry more cargo, resulting in fewer port 

calls and allowing the vessel to remain on location offshore for greater periods. The PSV and large anchor 

handling fleet is modern compared to other offshore regions and although the smaller AHTS vessel fleet is 

gradually being modernised, this process has some way to go. 

5.1.2 Middle East 

Emirates, Iran, Qatar and Saudi Arabia. 

This region supports a large number of Jack-Ups but few Semisubmersible rigs or Drillships due to the 

relatively shallow waters and benign conditions in the area. Consequently, the support fleet mainly consists of 

small and older PSVs or AHTS vessels of less than 8,000 BHP. These units are at present adequate to support 

the Jack-Up fleet. However there is a shift among Middle East ship owners to gradually modernise fleets by 

bringing in new tonnage to meet oil and gas company requirements. Besides the fact that most of the drilling 

is shallow water Jack-Up drilling territory, there are shorter vessel sailing distances from port to drilling 

location which means that larger vessels are generally not required. However, Seascope have during 2007 for 

the first time ever seen the fixture of medium sized modern PSVs into the Middle East market for a production 

support programme of three years duration as well as a one well drilling programme. 

The use of large PSVs has been limited to the construction support of pipelines when a fleet of large 

PSVs was used to carry the pipe joints for a 500 km subsea pipeline in Qatar for approximately 6 months. It 

is worth noting that these large PSVs were mobilised from the North Sea to perform the work. 

5.1.3 South East Asia 

Mainly Indonesia, Malaysia, Thailand and Vietnam. 

This is a large geographic area with a vast number of different vessels being utilized. Weather conditions 

vary considerably across the region, as do the types and sizes of vessels required. Moreover, there is deeper 

water drilling being initiated in Indonesia, Brunei and Malaysia, leading to an increased demand for larger 

vessels with several local owners building tonnage of this type. The concept of large PSVs in the South East 

Asian market is virtually non-existent principally because of the overall higher unit cost over and above the 

small-medium South East Asian or Chinese built AHTS vessels, although there are a small number of medium 

PSVs in the area. These smaller anchor handlers (5,000-9,000 BHP) are generally considered adequate to 

support the majority of the Jack-Up support work with medium AHTS vessels (10,000-14,000 BHP) used to 

support the standard depth Semisubmersible and some large vessels required for deeper water drilling. 

5.1.4 Far East 

Including China and Russian Federation. 

There is a limited amount of exploration off China and this is all covered by domestic tonnage much of 

which is old and bought second hand from international owners, but there are also a number of domestic 

owners building vessels in China. 

79

Huge exploration and developments are now taking place off Sakhalin on the North East coast of Russia 

which requires very specialised and expensive ice class tonnage which is now being built. Russian companies 

have gone into joint ventures with established international owners to source the necessary tonnage. 

5.1.5 South Asia 

Bangladesh and India. 

There are no domestic offshore owners in Bangladesh and as such, most of the chartering is done from 

overseas. India is a rather complicated chartering market since there are strict Director General Shipping 

guidelines which results in Indian flagged shipowners having the last opportunity to match a foreign vessel’s 

bid. Regulations are also changing in that newer vessels with DP1 are required for long term work. 

The types of tonnage required in the region are wide ranging, from the shallow water Jack-up support 

vessel of around 5,500 BHP AHTS vessels ranging up to 15,000 BHP AHTS vessels to support semis and 

drillships. 

A great deal of demand will stem from not only the renewal of the small/medium AHTS vessel fleet that 

supports the Jack-Up fleet but also from medium sized PSVs as several additional Drillships have been 

chartered for long term drilling programmes in deeper water. 

The market for large AHTS vessels (in excess of 10,000 BHP) is currently restricted to a small handful 

of units, as the main charterers appear so far to have a preference to charter Jack-ups as opposed to 

Semisubmersibles. 

Presently, there are a small number of medium sized modern PSVs in this area and Seascope believe that 

if field development continues offshore India and production increases as a result of new and large numbers of 

fields coming onstream then some of the oil and gas companies may believe that there could be benefit in 

using large PSVs. The sheer geographical size of the Indian offshore market combined with the internal 

demand for oil and gas, coupled with the relative immaturity of the domestic oil and gas exploration industry 

in relation to other areas, indicates strong future demand may come from this region for all types of vessels. 

5.1.6 Northern Europe 

Denmark, Holland, Norway, United Kingdom and Ireland. 

The North Sea and Atlantic Margin remains the largest market for modern medium and large AHTS 

vessels and PSVs with good position keeping requirements and high standards of safety required by 

governments. Consequently, oil and gas companies demand high specification tonnage from the market place. 

Moreover, weather conditions in Northern Europe, especially the North Sea, are harsh and unforgiving and so 

the majority of vessels in Northern Europe are larger and more powerful AHTS vessels and PSVs. 

The existing PSV fleet is already extremely modern so there is not a significant number of older units 

that can be displaced. In respect of AHTS vessels, the market demand for anything below 10,000 BHP can be 

covered by a small number of ships as charterers have shown a preference for higher horse power units, given 

the sea states and weather conditions and these smaller units are used for jack-up rigmoves in the Southern 

North Sea. 

A notable point is that certain operators now have size restrictions when chartering PSVs for straight 

forward platform supply duties due to the increasing age and fragility of some platforms. This is purely a 

safety precaution as in the worst case scenario — a collision with an older platform by a vessel over a certain 

lightweight may cause significant damage. Concerns from oil companies about older platforms and maturing 

fields leads on to the subject of oil companies decommissioning fields and their needs in this respect. Whilst 

the North Sea decommissioning market is still in its infancy stages it is likely that these projects may produce 

additional demand for the large PSVs and subsea construction support vessel market in future years. 

5.1.7 North America 

Canada and United States. 

Due to the Jones Act restrictions, foreign vessels are prohibited from participating in the local supply 

business carrying cargoes from U.S. ports in U.S. territorial waters. As such, domestic AHTS vessels and PSV 

demand is satisfied by U.S. built, owned and flagged vessels. U.S. flagged vessels are generally much simpler 

than those built by most international owners, especially those which do not trade internationally. 

80

Canada features a relatively small market with only a handful of large AHTS vessels and few large PSVs 

supporting drilling operations in harsh environment conditions. 

5.1.8 South America 

South America is driven primarily by the market in Brazil, with lesser/occasional activity in Argentina, 

Chile and Venezuela with quite diverse needs for tonnage in both shallow and deep water markets which 

require ships to operate in rather challenging Atlantic conditions. In recent years, we have seen Brazilian 

shipyards building deep-water tonnage which has been ordered both by domestic ship owners and international 

operators to satisfy cabotage laws. This tonnage is diverse, ranging across all sizes of vessels. The resulting 

demand from the South American market has been for all types of ships up to and including large AHTS 

vessels, PSVs and subsea construction vessels. 

5.1.9 Mediterranean 

Egypt, Italy, Libya and Tunisia. 

This region consists of a number of different countries with different chartering practices. In the Egyptian 

market, the vessels range from small old local tonnage to modern high specification PSVs as well as high 

horsepower AHTS vessels. 

A sizeable market exists for large anchor handlers and medium PSVs to support an increasing number of 

deep-water programmes especially in deep-water Egypt. In addition, a growing number of 10,000-12,000 BHP 

units are being attracted to the region to support Semisubmersibles in standard water depths and occasionally 

larger Jack-Ups. 

Libya has now opened up much more and there will be an increased need for vessels here and in Tunisia 

whilst Italy is covered by mostly older Italian Flag tonnage. 

5.1.10 The Caspian 

The Caspian is a geographically difficult area because of very restricted access in and out through the 

canals. Ice is a major problem in winter months and access through the canal system restricts the beam, draft 

and air draft of the vessel. This means that many vessels have to have their accommodation cut off to get 

through. 

The same problem applies to vessels leaving the region and as a result, many owners are unwilling to go 

through the process to enter this area or to risk some political activity stopping them from withdrawing the 

vessels subsequently. Thus, the tonnage and rigs in the area are relatively permanent, having been purpose 

built or having been sold in to the region to service the region’s needs. 

5.1.11 Australasia 

Including Australia and New Zealand. 

There is a sizable market for larger and more modern anchor handlers to support the Semisubmersible 

fleet. One of the driving forces is the strong tidal and current conditions in the areas where exploration and 

production is ongoing. As a result, AHTS vessels with high horsepower, good thrusters and station keeping 

capabilities are required. The only occasions of which Seascope is aware that large PSVs were used in 

Australian waters was on specific construction projects where pipe carrying capability was needed with vessels 

being brought in from the North Sea. A couple of older medium size PSVs have supported exploration and 

production in the Bass Straits for many years but these have now left Australian waters and there is a large 

PSV and a modern medium sized PSV supporting Bass Straight operations at present. There are also some 

modern medium sized PSVs supporting exploration on the North West Shelf. 

5.2 Singapore’s Role in the Offshore Marine Industry 

Singapore’s prime location and naturally sheltered harbour have helped to secure its place as the maritime 

hub of South East Asia. In 2007, not only was Singapore the world’s busiest container port handling 

27.9 million TEUs (Twenty foot Equivalent Units), it also maintained its leading position for bunker sales and 

total vessel calls 1 . As a main base for owners serving the expanding markets of its neighbours such as 

1 http://www.portworld.com 

81

Malaysia, Indonesia, Vietnam and Thailand, Singapore is also well positioned for supporting the fast growing 

markets of India and China. 

2007 marked a record-breaking year for the marine industry in Singapore. The industry’s turnover 

registered an all-time high of S$13.05 billion, a 33% growth from the previous year 2 . It contributes about 7% 

to the Singapore GDP and employs about 100,000 workers 3 . 

Singapore has established itself as a niche builder of specialised tonnage for the offshore industry and has 

especially excelled in drilling rig construction. In 2006, 70% of the world’s jack-up rig orders and 70% of the 

market share in the conversion of Floating Production Storage and Offloading (FPSO) platforms were awarded 

to Singaporean yards 4 . 

The growing number of major international offshore operators opening their representative offices in the 

area is evidence of Singapore’s geographical importance. Companies such as Tidewater, Groupe Bourbon, 

Seacor, Farstad and Solstad realise the necessity to be closer to the burgeoning market of South East Asia and 

Singapore equipped with the right infrastructure to support their operations is the first choice location, whilst 

Swire Pacific Offshore is now headquartered in Singapore. 

Offshore engineering, equipment manufacturing and research and development are other thriving 

industries of the Singapore maritime cluster. Global plants set up by companies such as Schlumberger and 

Halliburton, have secured Singapore’s role as the largest oilfield equipment manufacturing location in Asia- 

Pacific. In addition, Aker Kvaerner MH of Norway, which makes drilling equipment, has established its first 

Asian engineering, assembly and test and training centre in Singapore. 

To increase its profile as an offshore hub, Singapore is a regular host of international and regional 

exhibitions for the offshore industry, such as OSEA-International Oil & Gas Industry Exhibition, Asian 

Shipping and Workboat show, and OSV Singapore — International Conference on Technology & Operation of 

Offshore Support Vessels, which was introduced in 2005 and is held every two years. All the above factors 

equate to a significant and growing amount of expertise and knowledge in building, owning and operating 

offshore vessels. 

2 Association of Singapore Marine Industries 

3 http://www.seatradeasia-online.com 

4 http://www.sedb.com 

82

6.0 Fleet Sizes 

As of January 2008 there were 859 new vessels on order globally (Table 3 below), however much of the 

supply and smaller anchor handling fleet is old. Table 4 shows the average age of the total offshore global 

fleet at 22.23 years. Newer vessels are generally larger (PSVs) and more powerful (large AHTS vessels) than 

those built earlier and there is a need for modernisation of the fleet in most categories. 

Table 3: Vessels types and Global Fleet size at January 2008 and on order 

Fleet Size 

Vessel Type January 2008 Orderbook 

Anchor Handling Tugs (AHT) ................................. 522 17 

Anchor Handling Tug Supply (AHTS) ........................... 1537 421 

Diving Support (DSV) ....................................... 65 27 

Heavy Lift/Crane ........................................... 27 4 

Maintenance .............................................. 47 0 

Mooring ................................................. 13 0 

Multi-Functional Subsea Support ............................... 129 62 

Pipe Layer ............................................... 14 5 

Platform Supply (PSV) ...................................... 480 213 

ROV/Sub Support .......................................... 18 22 

Standby/Rescue ............................................ 323 34 

Seismic Survey ............................................ 162 24 

Well Stimulation ........................................... 

Misc (includes ; Crew Boats; Coastguard; Flotels; Gravel/Stone 

Discharge; Laybarges; Pollution Control; Survey; Utility Workboat; 

16 12 

Cable, Umbilicals & FP/Flowline Lay) ......................... 2338 18 

TOTAL Offshore fleet ...................................... 5691 859 

Table 4: Total Global Existing Fleet breakdown by Type, Percentage and 

Average Age at January 2008 

Vessel Type Number 

Percentage of 

Total Fleet Average Age 

Anchor Handling Tugs (AHT) ........................ 522 9.17% 23.86 

Anchor Handling Tug Supply (AHTS) .................. 1537 27.0% 21.50 

Diving Support (DSV) .............................. 65 1.14% 26.14 

Heavy Lift/Crane . . . ............................... 27 0.47% 31.15 

Maintenance ..................................... 47 0.83% 28.91 

Mooring ........................................ 13 0.23% 23.85 

Multi-Functional Subsea Support ...................... 129 2.27% 16.41 

Pipe Layer. ...................................... 14 0.25% 20.64 

Platform Supply (PSV) ............................. 480 8.43% 10.12 

ROV/Sub Support . . ............................... 18 0.32% 28.00 

Standby/Rescue ................................... 323 5.68% 23.31 

Seismic Survey ................................... 162 2.85% 28.54 

Well Stimulation . . . ............................... 16 0.28% 19.81 

Misc........................................... 2338 41.08% 23.86 

TOTAL FLEET ................................... 5691 

TOTAL AVERAGE AGE ............................ 22.23 

7.0 Newbuilding Rigs by Numbers 

With a total of 562 offshore rigs built and order in February 2008, table 5 demonstrates there is 

approximately 27% of the current drilling fleet on order. The majority of these rigs are due for delivery 

83

etween late 2008 and end 2010 and the high cost of these drilling units means high charter rates. In turn, 

Seascope believes that the high cost of the drilling units (whether Jack-ups or Semisubmersibles) will mean 

that the oil and gas companies will require good modern tonnage to support these rigs so as to minimise 

downtime and/or maximise usage time of said drilling units. The percentage breakdown of newbuild rigs by 

type is shown in Graph 4. 

Table 5: Offshore rig types and fleet size at February 2008 

Rig Type New Buildings February 2008 

Jack-ups .............................................. 80 368 

Semisubmersibles ....................................... 43 158 

Drillships. ............................................. 29 36 

TOTALS. ............................................. 152 562 

Graph 4: Percentage breakdown of new building offshore rig types at February 2008 

Semisubmersibles 

28% 

Drillships 

19% 

Jack-ups 

53% 

8.0 Newbuilding Vessels 

Increasing oil prices which in turn are catalysts for increased activity in the offshore oil and gas industry, 

coupled with a need to replace aging vessels in the global fleet are some factors which affect the demand for 

new buildings. By far, the largest number of vessels being built are AHTS vessels and PSVs. The age profiles 

of the various vessels show the past industry cycles for building offshore ships. With a large volume of vessels 

currently on order the supply of main equipment items such as main engines has been put under incredible 

strain and it is now the long lead times for these items that are constraining further newbuilding numbers in 

the next 1-2 years. 

8.1 AHTS Vessels 

The AHTS vessel concept first came to the forefront of oil and gas exploration during the late 1960’s and 

currently represents approximately 27% of the global support vessel fleet with approximately 1537 vessels of 

all sizes trading presently (see Table 4 in Section 6.0). 

AHTS vessels are generally categorized by their total engine power measured in Brake Horsepower 

(BHP) and subsequent Bollard Pull (BP) derived from the power. 

The AHTS vessel categories are displayed in Table 6 below: 

Table 6: AHTS vessel categories by BHP and BP 

AHTS Size BHP BP 

Small ............................................... � 9,999 � 120t 

Medium ............................................. 10,000 - 13,999 120t - 150t 

Large............................................... � 14,000 � 150t 

84

With many oil and gas fields maturing, oil and gas companies are moving into deeper seas for oil and gas 

exploration. As a result, a new class of ships is essentially required for deep-water work and the tendency is 

towards vessels with more horsepower and higher bollard pull. 

From the Global AHTS Fleet Age Profile in Graph 5 below, it can be determined that the overall average 

age of the fleet at January 2008 was 20.5 years. Even though there are a significant number of new building 

vessels due to enter service over the next few years, the projected average age of the overall worldwide fleet 

in 2011 is only reduced to 19.7 years (presuming little or no scrapping). The consequence of this relatively 

mature fleet has instigated shipowners in the market place to invest in new next generation tonnage for fleet 

replacement. 

Number of vessels built in given year 

200 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

1963 

1965 

1967 

1969 

1971 

1973 

1975 

Graph 5: Global AHTS Fleet Age Profile 

1977 

1979 

1981 

1983 

1985 

1987 

1989 

Year Built 

From Graph 6 below, we can see the breakdown of the total AHTS vessels existing fleet and on order. By 

comparing the 2008 - 2011 orderbook against the current fleet, we can make the following points: 

5,000 - 7,999 BHP fleet will increase by about 35% 



�14,000 BHP fleet will increase by about 90% 

These figures support the fact that since their inception, AHTS vessels have had to grow in both power 

and size as the rigs they support have gotten bigger and the Semisubmersibles in particular have increased 

their capabilities to work in ever increasing water depths with resultant bigger mooring spreads requiring the 

supporting anchor handling vessels to have larger and more powerful engines and anchor handling/towing 

winches. 

85 

1991 

1993 

1995 

1997 

1999 

2001 

2003 

2005 

2007 

2009 

2011 

2500 

2000 

1500 

1000 

500 

0 

Total Fleet Size

700 

600 

500 

400 

300 

200 

100 

0 

Graph 6: AHTS existing fleet and on order 

5,000 - 7,999 BHP 8,000 - 9,999 BHP 10,000 -13,999 BHP >14,000 BHP 

EXISTING FLEET TOTAL VESSELS ON ORDER 

Graph 7 below shows that more powerful vessels (� 10,000 BHP) are being built and that they represent 

a significant proportion of the orderbook at approximately 50%. 

>14,000 BHP 

30% 

10,000 -13,999 BHP 

20% 

Graph 7: 2008-2011 AHTS Orderbook by BHP 

5,000 - 7,999 BHP 

43% 

8,000 - 9,999 BHP 

7% 

The vast majority of the first vessels built during the 1960’s, 70’s and early 80’s are what Seascope now 

class as small AHTS vessels with less than 7,999 BHP. Traditionally this size of ship was the backbone of the 

fleet. This was at a time when oil and gas exploration within continental shelves had not ventured into the 

deep-water realms that dominate the market today. Many of the newer vessels in this fleet size are currently 

being built in South East Asia such as Jaya in Singapore and Indonesia, Britoil in Indonesia, Labroy in 

Singapore, Nam Cheong in Malaysia, Otto Marine in Singapore and Indonesia, and Pan United in Singapore 

and Indonesia. 

Ten shipyards, which have an approximate 56% market share of the global order book in AHTS vessel 

construction, are displayed in Graph 8. Of these, Dubai Drydocks, Aker and Nam Cheong have the largest 

86

share, with Dubai Drydocks combining the Singapore and Indonesia operations of both Pan-United and 

Labroy, Aker yards building in Norway, Vietnam and Brazil and Nam Cheong yards building in China and 

Malaysia. The remaining 44% of the global order book is shared by more than 35 yards, more than half of 

which are built in Asia, predominantly in China. 

Yangzhou Dayang 

(China) 

8% 

ABG Shipyard (India) 

10% 

Graph 8: Major players in AHTS vessels construction currently on order 

Kleven Verft (Norway) 

6% 

Fincantieri 

(Italy) 

6% 

Otto Marine (Singapore 

& Indonesia) 

11% 

Jaya (Indonesia, 

Singapore & China) 

5% 

Sinopacific Group 

(China) 

12% 

Dubai Drydocks (Pan- 

United & Labroy) 

15% 

Aker (Norway, Vietnam 

and Brazil) 

13% 

Nam Cheong (China and 

Malaysia) 

14% 

Graph 9 illustrates the number of small AHTS vessels from 5,000BHP but less than 7,999 BHP built 

from 1969-2007 and expected to be built from 2008-2011, while Graph 10 shows the number of small AHTS 

vessels from 8,000 BHP but less than 9,999 BHP built from 1971-2007 and expected to be built from 

2008-2011. The line graph illustrates the total fleet size between 1969-2007 and expected total fleet size 

between 2008-2011. 


100 

90 

80 

70 

60 

50 

40 

30 

20 

10 

0 

1969 

1971 

1973 

1975 

1977 

1979 

Graph 9: Age Profile AHTS 5,000 � 7,999 BHP 

1981 

1983 

1985 

1987 

1989 

1991 

Year Built 

87 

1993 

1995 

1997 

1999 

2001 

2003 

2005 

2007 

2009 

2011 

800 

700 

600 

500 

400 

300 

200 

100 

0 

Total fleet size


20 

18 

16 

14 

12 

10 

8 

6 

4 

2 

0 

1971 

1973 

1975 

1977 

1979 


1981 

1983 

1985 

1987 

1989 

1991 

Year Built 

When considering medium sized AHTS vessels, we note that this sector of the fleet at January 2008 had 

an average age of just over 13 years which is set to decrease to just under 11 years by 2011 when the 

newbuild order book is included (see Graph 11). 


45 

40 

35 

30 

25 

20 

15 

10 

5 

0 

1975 

1977 

1979 

1981 


1983 

1985 

1987 

1989 

1991 

1993 

Year Built 

The large AHTS category (Graph 12) at January 2008 had the youngest average age of any segment of 

only 8 years which is set to decrease to just over 7 years by 2011, after taking into account the newbuild 

orderbook. 

88 

1993 

1995 

1995 

1997 

1997 

1999 

1999 

2001 

2001 

2003 

2003 

2005 

2005 

2007 

2007 

2009 

2009 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

250 

200 

150 

100 

50 

0 

Total fleet size 

Total fleet size


50 

45 

40 

35 

30 

25 

20 

15 

10 

5 

0 

1979 

1981 

1983 

1985 

1987 

Graph 12: Age Profile AHTS �14,000 BHP 

1989 

1991 

1993 

1995 

Year Built 

Taking into consideration that the typical trading life of a vessel is 25 years, then an average fleet age of 

8 years is considered relatively young. This should not be surprising since this target market emerged in the 

late 1990’s as stanchions of deep-water operations. 

The early 1980’s saw the 10,000-13,999 BHP sector develop, albeit present in small numbers and the 

fleet consisted of approximately 65 units in 1990. It was not until the deep-water exploration boom in the mid/ 

late 1990’s led by the oil and gas companies that a natural demand ensued for larger types of ships capable of 

working deep-water. Since then numbers have steadily increased, notably having more modern, more capable 

and more advanced technology to support deep-water operations. 

The advancement of deep-water exploration into deeper water by the oil and gas companies rapidly made 

it apparent that a new concept of deep-water subsea installation and construction vessel was required. The 

existing fleet of deep-water capable AHTS vessels which provided drilling support was not sufficient to meet 

the demands of the oil and gas majors when it came to very deep water subsea installations. The challenge of 

developing the new deep-water capable vessel was taken up by the ship design companies. At present, large 

AHTS vessels now account for nearly 10% of the existing global AHTS fleet. 50% of the total AHTS vessels 

orderbook are for AHTS vessels over 10,000 BHP. 

It is expected that technology aboard a ship will become dated as a vessel matures. When one considers 

the modern safety requirements an oil and gas company demands for deep-water operations, then it is very 

unlikely that the technology that existed at the birth of the deep-water exploration boom will be satisfactory 

25 years later. Buoyant market conditions over the last few years have resulted in oil and gas companies 

finding alternative operations and roles for the older vessels away from mainstream anchor handling. It should 

be noted that in today’s market, the majority of the early generation vessels built during the 1970’s continue to 

be actively traded, earning reasonable day rates. This is despite the oil and gas majors’ demand for modern 

tonnage to service their rigs and platforms, primarily for safety and reliability reasons. However these 

particular work roles of the vessels tend to be supplied on an ad-hoc basis and they are generally used for 

supply duties. The winch technology for deep-water anchor handling today is far too advanced for these first 

generation vessels to be capable of performing deep-water anchor handling roles. 

89 

1997 

1999 

2001 

2003 

2005 

2007 

2009 

2011 

300 

250 

200 

150 

100 

50 

0 

Total fleet size

8.2 PSV 

The PSV fleet currently represents approximately 10% of the global support vessel fleet with approximately 

480 vessels of all sizes trading presently. For the purposes of this report, vessels with under 1,000 

DWT have not been included. The age profile is attached hereunder in Graph 13. The age profiles of PSV’s 

with a deadweight between 2,500 and 3,999 is shown in Graph 14 whilst the age profile of PSV’s with a 

deadweight of 4,000 or greater is shown in Graph 15. 



100 

90 

80 

70 

60 

50 

40 

30 

20 

10 

0 

60 

50 

40 

30 

20 

10 

0 

1971 

1976 

1973 

1978 

1975 

1980 

1977 

1982 

1979 

1984 

1981 

Graph 13: Global PSV fleet — Age Profile 

1983 

1985 

1987 

1989 

1991 

1993 

Year Built 

Graph 14: Age Profile PSV 2,500 � 3,999 DWT 

1986 

1988 

1990 

1992 

1994 

Year Built 

90 

1996 

1995 

1998 

1997 

2000 

1999 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

800 

700 

600 

500 

400 

300 

200 

100 

0 

400 

350 

300 

250 

200 

150 

100 

50 

0 

Total fleet size 

Total fleet size


35 

30 

25 

20 

15 

10 

5 

0 

1975 

1977 

1979 

1981 

1983 

Graph 15: Age Profile PSV � 4,000 DWT 

1985 

1987 

1989 

1991 

1993 

Year Built 

PSVs are generally categorized by DWT which is the deadweight carrying capacity measured in tonnes. It 

includes the crew, passengers, cargo, fuel, water and stores but not the actual weight of the vessel. 

The categories are displayed in Table 7 below: 

1995 

1997 

Table 7: PSV sizes by DWT 

PSV Size DWT 

Small. ........................................................... 1,000 - 2,499 

Medium . . ........................................................ 2,500 - 3,999 

Large............................................................ � 4,000 

400 

350 

300 

250 

200 

150 

100 

50 

0 

100 

1999 

2001 

Graph 16: PSV on order and existing fleet 

1,000 < 2,499 DWT 2,500 < 3,999 DWT > 4,000 DWT 

EXISTING FLEET TOTAL VESSELS ON ORDER 

91 

2003 

2005 

2007 

2009 

2011 

200 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

Total fleet size

There are 213 vessels due for delivery between 2008 - 2011 (see Table 3 in Section 6.0). 

From Graph 16 above, we can clearly see the breakdown of the total PSV existing fleet and on order. By 

comparing the 2008 - 2011 orderbook against the current fleet, we can make the following points: 

1,000 - 2,499 dwt fleet will increase by about 29% 

2,500 - 3,999 dwt fleet will increase by about 40% 

� 4,000 dwt fleet will increase by about 74% 

Yangzhou 

Dayang (China) 

6% 

Bharati (India) 

8% 

Graph 17: Major Shipyards in PSVs construction currently on order 

North American (US) 

6% 

Bollinger (US) 

5% 

Zhejiang (China) 

10% 

Wilson Sons 

(Brazil) 

6% Aker 

21% 

Leevac Industries 

(US) 

10% 

Sinopacific Group 

(China) 

14% 

Cochin (India) 

14% 

Graph 17 shows the ten major shipyard groups which have an approximate 62% market share of the 

global orderbook for PSVs. Out of these top ten yards, Aker yards have the biggest share at 21%, building in 

a number of shipyards which are all located in Norway. The other 38% of the market is shared by more than 

30 shipyards, with the majority of PSVs being built in Europe and in particular, Norway. 

8.3 Geographical Concentration of New Building Offshore Vessels 

Shipbuilding is an attractive industry for developing nations since it offers employment opportunities for 

a significant number of workers and the growth of related industries. Over and above, it is a source of 

generating foreign currency income due to its global nature. Where western nations such as Great Britain were 

once at the forefront of shipbuilding, increasing production costs among other factors have been attributed to 

the decline of shipbuilding activities. Instead, Asian nations such as Japan, Korea and China have emerged as 

the largest shipbuilding nations, in terms of tonnage and numbers of vessels built. 

From Graph 18 below, it is evident that in the offshore sector Asia has overtaken Europe/Norway as the 

market leader in terms of volume/numbers produced. In recent years the experience of Asian yards has grown 

to such a level that they are also now producing a volume of deep-water capable vessels which were 

traditionally only built by Norwegian yards. 

Unlike most other commercial vessels, due to their technical complexity a higher level of technical 

capability and experience is required when building specialised AHTS vessels and as a result this is a niche 

market which not all shipbuilding yards are capable of competing in. 

92

600 

500 

400 

300 

200 

100 

0 

Graph 18: Geographical Concentration of New Buildings at January 2008 

Europe Asia Americas 

AHTS PSV Mul�purpose & Other 

8.4 Geographical Concentration of Offshore Vessel Owners 

It is logical that offshore vessel owners would be based close to the area of their operations, thus the 

main offshore vessel owners are concentrated in the following areas: 

In the U.S., many of the oil and gas fields are in the U.S. Gulf of Mexico Coast, thus the owners tend to 

be located in the Houston and New Orleans area, whereas South America has only a handful of owners in 

Brazil and Argentina. 

The North Sea is a significant source of gas in the European region and owners are found mainly in 

Aberdeen (U.K.) and West coast of Norway, with a smaller number of owners in Holland, Germany, France 

and Italy. 

In the Middle East, where oil and gas is abundant but geopolitical stability is not, Dubai and Sharjah in 

the U.A.E. and Doha in Qatar are the preferred areas to operate from. 

Mumbai in India, Kuala Lumpur and Miri in Malaysia and Singapore serve as the hubs for South/South 

East Asia whilst Australia’s small number of owners is spread between Melbourne and Fremantle in Perth. 

93

OUR RESTRUCTURING AND CORPORATE STRUCTURE 

Our Restructuring Exercise 

Our shareholding structure immediately prior to the commencement of the Restructuring Exercise was as 

follows: 

100.0% 

Brizill International 

(BVI) 

Yaw Chee Siew 

83.77% 

CEO Technology Asia 

Otto 

Ventures (1) 

(Singapore) 

100.0% 

5.0% 

Blue Fin 

Subsidiaries (2) 

(Singapore) 

Yaw Teck Seng Yaw Chee Ming Lee Kok Wah 

Otto Marine Pte. Ltd. 

100% 100% 100% 

Tetra 

(3) 

Subsidiaries 

(Singapore) 

PT Lestari 

(Indonesia) 

PT Batamec 

(Indonesia) 

0.77% 0.46% 10.0% 

Otto 

Offshore 

(Malaysia) 

100% 100% 

Sea Dolphin 

Finance 

(BVI) 

49.659% 4.778% 

45.563% 

Notes: 

(1) Otto Ventures was previously known as “Rig Ventures Pte. Ltd.” and was incorporated on 28 November 

2006 by nominee shareholders (Lee Kok Wah and Ooi Kok Chye) designated by our Company. All of the 

underlying shares of Otto Ventures were transferred to our Company on 21 January 2008 and its name was 

changed to Otto Ventures Pte. Ltd. on 25 January 2008. 

(2) Blue Fin Subsidiaries, consisting of Blue Fin I, Blue Fin II, Blue Fin III, Blue Fin IV and Blue Fin V, were 

incorporated by nominee shareholders (Yaw Chee Siew and Lee Kok Wah) designated by our Company in 

January 2007 and February 2007. All the underlying shares of the Blue Fin Subsidiaries were transferred 

to our Company in April 2007. 

(3) Tetra Subsidiaries, consisting of Tetra I, Tetra II, Tetra III, Tetra IV and Tetra V, were incorporated by 

nominee shareholders (Yaw Chee Siew and Lee Kok Wah) designated by our Company in January 2007 

and February 2007. All the underlying shares of the Tetra Subsidiaries were transferred to our Company in 

April 2007. 

94

In preparation for the admission of our Company to the Official List of the SGX-ST, we undertook the 

steps below in order to streamline and rationalise our corporate structure and business activities: 

Subscription for 95.0% of the Issued Shares in PT Lestari (the “Lestari Restructuring”) 

Prior to the Lestari Restructuring 

PT Batamas, an Indonesia private domestic company which owned a shipyard, was a shareholder of 

PT Batamec since 1994. The shareholders of PT Batamas were parties unrelated to our Directors and 

Controlling Shareholders. 

PT Batamec in 1998 had entered into a ten-year lease arrangement with PT Batamas where machinery, 

equipment, land and buildings owned by PT Batamas (“Shipyard Assets”) were leased to PT Batamec under 

an Agreement for Joint Operation and Leasing of Shipyard Facilities (“Batamas Lease Agreement”) for 

PT Batamec’s shipyard business. However, in 2003, PT Batamas was declared insolvent under Indonesia laws. 

Notwithstanding that PT Batamas was declared as being insolvent, the Batamas Lease Agreement remained 

valid and legally binding, as affirmed by the Indonesia Supreme Court. 

Following the liquidation of PT Batamas, between November and December 2006, PT Lestari acquired 

all of the assets of PT Batamas, including the Shipyard Assets through public auctions conducted by the 

receiver of PT Batamas as evidenced by the minutes of auction issued by the state auctioneer of Batam 

(Kantor Pelayanan Piutang dan Lelang Negara Batam). The issued and paid-up share capital of PT Lestari 

was IDR 700.0 million and during this period, our Company had no shareholding in PT Lestari. At that time, 

the shareholders of PT Lestari were Veronia Dewi Setiawan holding 50.0% (See “Legal Matters” for a 

description of Veronia Dewi Setiawan’s past indirect interests in our Group), Syamsul Bahri Ilyas holding 

25.0% and Marianus Waka Wora Tola holding 25.0% (the “Former Lestari Shareholders”), all of whom are 

unrelated to our Directors and Controlling Shareholders. 

Upon the acquisition by PT Lestari of the assets of PT Batamas pursuant to the public auction, we 

initiated contact with PT Lestari as we wanted to re-negotiate the terms of the Batamas Lease Agreement. 

In January 2007, PT Lestari terminated the Batamas Lease Agreement and entered into two separate lease 

agreements with PT Batamec for the lease of the Shipyard Assets. See “Our Business — Properties — Leases” 

and “Interested Person Transactions and Conflicts of Interest — Past Interested Person Transactions — 

Transactions with PT Batamec — Leasing of Shipyard Facilities”. 

To further consolidate our control of the Shipyard Assets, we decided to acquire a majority stake in 

PT Lestari through the Lestari Restructuring. 

The Lestari Restructuring 

For the Lestari Restructuring, the following steps were taken: 

PT Lestari increased its authorised, issued and paid-up capital from IDR 700.0 million to IDR 

14.0 billion. 

The Former Lestari Shareholders incorporated a new Indonesian limited liability company, PT Sentratama 

to hold their shares in PT Lestari in the same shareholding structure as that of PT Lestari 

previously. 

Pursuant to a subscription agreement dated 15 March 2007 (the “Lestari Subscription Agreement”) 

entered into between PT Lestari, PT Sentratama, the Former Lestari Shareholders and our Company, we 

subscribed for 13,300 shares, representing 95.0% of the increased issued share capital of PT Lestari. 

The subscription price was IDR 1.0 million per share and the total consideration paid by our Company 

under the Lestari Subscription Agreement was IDR 13.3 billion. 

The consideration was arrived at on a “willing buyer and willing seller” basis, based on the aggregate 

par value of the share capital of PT Lestari. The consideration was fully paid by our Company to 

PT Lestari in November 2007 and we were registered as the shareholders of PT Lestari in December 

2007. 

95

The remaining 5.0% of the shares in PT Lestari was transferred by the Former Lestari Shareholders to 

PT Sentratama pursuant to the condition imposed by the Indonesian Coordinating Board of Investment 

when PT Lestari applied for their approval to convert into a PMA company, that at the minimum 5% of 

PT Lestari’s shareholding needs to be retained by Indonesian nationals or legal entities wholly owned 

by Indonesian nationals. 

Pursuant to the Lestari Restructuring, the status of PT Lestari was converted from an Indonesia private 

domestic company to an Indonesian foreign investment company, Penanaman Modal Asing (“PMA”). 

The proceeds of the Lestari Restructuring, together with a US$6.0 million loan made by our Company to 

PT Lestari, were used for repayment of US$7.5 million due by PT Lestari to Richman Singapore (“Richman 

Loan”) in December 2007. 

The Richman Loan was created pursuant to a loan agreement of 12 September 2006 entered into between 

PT Lestari and Richman BVI (an investment holding company unrelated to our Directors and Controlling 

Shareholders). The Richman Loan was utilised by PT Lestari to purchase all of PT Batamas’s assets during its 

liquidation. By virtue of a novation agreement dated 30 January 2007, Richman BVI had assigned all of its 

rights under the loan agreement to Richman Singapore (an investment holding company unrelated to our 

Directors and Controlling Shareholders). Richman Singapore was subsequently acquired by Yaw Chee Siew in 

April 2007. See “Interested Person Transactions and Conflicts of Interest — Past Interested Person Transactions 

— Novation by Richman BVI to Richman Singapore of US$7.5 million loan granted by Richman BVI 

to PT Lestari”. 

Increase in Shareholding and Transfer of Shares in PT Batamec (the “Batamec Restructuring”) 

Prior to the Batamec Restructuring 

PT Batamec was incorporated by PT Batamas as a limited liability company under Indonesian company 

law on 2 November 1994. Its principal business is shipbuilding and ship repair. In November 1996, we 

subscribed for 56,000 new shares of PT Batamec, comprising 80.0% of its entire issued share capital. As a 

result, PT Batamec was converted into a PMA company, and we became its controlling shareholder, with 

PT Batamas holding the remaining 20.0% shares of PT Batamec. In February 2001, Brizill International, a 

company wholly owned by Yaw Chee Siew, subscribed for 73,000 new shares in PT Batamec for a 

consideration of US$7.3 million, representing 51.0% of the enlarged share capital of PT Batamec. Consequently, 

our shareholding in PT Batamec was reduced to 39.2%. 

In 2006, PT Batamec issued (i) 77,500 new shares to us, and (ii) 72,500 new shares to Brizill 

International for a consideration of US$7.3 million, which resulted in an increase of our shareholding in 

PT Batamec from 39.2% to 45.563%, while the shareholding of Brizill International and PT Batamas 

decreased to 49.659% and 4.778% respectively. 

Notwithstanding that there were periods of time when our shareholding in PT Batamec dropped below 

50.0%, we always retained control of PT Batamec, as we influenced the financial and operating policies of 

PT Batamec and controlled the composition of the board of directors of PT Batamec. 

In November 2006, PT Batamas was liquidated and ceased to be a shareholder of PT Batamec. Following 

the liquidation of PT Batamas, PT Lestari acquired all 14,000 shares held by PT Batamas in PT Batamec, 

representing 4.778% shares of PT Batamec. 

The Batamec Restructuring 

Simultaneously with the Lestari Restructuring, in order to consolidate our shareholding in PT Batamec 

and to acquire all of Yaw Chee Siew’s indirect interests in PT Batamec held through Brizill International, so 

as to avoid any potential conflict of interests, our Company entered into the following agreements: 

On 28 June 2007, our Company entered into a share sale and purchase agreement with Brizill 

International whereby our Company acquired a 5.437% interest held by Brizill International in 

PT Batamec (consisting of 15,930 class A shares in PT Batamec) for a consideration of approximately 

IDR 3.3 billion (“First Batamec Restructuring”). This transaction was completed on 28 June 2007. 

On 16 August 2007, our Company entered into a share sale and purchase agreement with Brizill 


PT Batamec (consisting of 41,963 class A shares in PT Batamec) for a consideration of approximately 

IDR 8.8 billion (“Second Batamec Restructuring”). The transaction was completed on 26 March 2008. 

96

On 18 December 2007, our Company entered into a share sale and purchase agreement with Brizill 


PT Batamec (consisting of 15,107 class A shares and 72,500 class B shares in PT Batamec) for a 

consideration of approximately IDR 221.0 billion (“Third Batamec Restructuring”). The transaction was 

completed on 26 March 2008. 

The aggregate consideration for all three share purchases was arrived at on a “willing buyer and willing 

seller” basis in consideration of a number of factors, including Brizill International’s cost of investment into 

PT Batamec (which amounted to US$14.6 million) and a valuation of PT Batamec conducted by an 

independent valuer in December 2007 (which attributed a value of S$140.8 million). The aggregate consideration 

for all three share purchases has been consolidated into the amounts owing from us to Brizill 

International. See “Interested Person Transactions — Present and Ongoing Interested Person Transactions — 

Inter-company Balances Between Us and Brizill International, Advances to Us From Brizill International and 

the Brizill Term Loan”. Pursuant to these share purchases, our Company now holds 95.222% of the issued 

share capital in PT Batamec. 

On 28 June 2007, PT Lestari entered into a share sale and purchase agreement with PT Sentratama to 

transfer its 4.778% shareholding in PT Batamec (consisting of 14,000 Class A shares) to PT Sentratama for a 

consideration of IDR 2.9 billion as PT Lestari would be converted into a PMA company. The transfer was 

done so as to be in line with Indonesia market practice where such minority shareholding would be owned by 

an Indonesia private domestic company. 

The Lestari Restructuring, together with the Batamec Restructuring, were undertaken for us to consolidate 

control and ownership of the shipyard where our operating activities are carried out. 

Transfer of Shares by Yaw Chee Siew to Business Companion Investments 

On 28 February 2008, Yaw Chee Siew sold all the Shares held by him to Business Companion 

Investments for a nominal consideration of S$1.00. 

Share Split 

On 2 September 2008, our Shareholders, among other things, agreed to the sub-division of each of our 

Shares into 30 Shares. 

97

Corporate Structure 

Our corporate structure after the Restructuring Exercise and immediately before the Offering is as 

follows: 

Onshore 

Singapore 

Offshore 

100% 

Otto Fleet 

100% 

Tarpon 

Subsidiaries 

100% 

Otto Marine 

Representative 

Office (Foshan, China) 

5% 85% 

10% 

Tetra 

Subsidiaries 

49% 

100% 

Polar Marine I (1) 

Yaw Chee Siew 

CEO Technology Asia Business Companion Investments 

Lee Kok Wah 


(UAE Branch) 

(UAE) 

Sea Dolphin 

Finance 

(BVI) 


100% 100% 95% 

Otto 1 Ltd 

(Saint Vincent and 

the Grenadines) (5) 

100% 

Otto Ventures 

Polar Marine II (1) 

Otto Investment 

(Malaysia) 

49% 

100% 

WAIL 

(Saint Vincent and the Grenadines) (4) 

100% 

Blue 

Fin Subsidiaries 

49% 49% 

Aries Offshore 

Singapore (2) 

PT Lestari 

(Indonesia) 

100% 100% 

Otto 2 Ltd 

(Saint Vincent and 

the Grenadines) (5) 

Otto Strategic 

Otto Offshore 

(Malaysia) 

95.222% 

100% 

100% 

PT Batamec 

(Indonesia) 

100% 

OM Offshore 

100% 

Otto Offshore 

(Qidong) (China) (3) 

Notes: 

(1) We purchased Polar Marine I and Polar Marine II for nominal consideration, which were incorporated on 

4 February 2008, by our nominees, for use as the joint venture companies pursuant to the strategic partnership 

that we entered into with GC Rieber on 2 May 2008. We have an interest of 49% in each of Polar 

Marine I and Polar Marine II. 

(2) Aries was incorporated in Singapore on 31 December 2007 as a private company limited by shares with a 

paid up capital of S$2.00 represented by two ordinary shares. The nominee shareholders of Aries were 

Yaw Chee Siew and our Group Managing Director, Lee Kok Wah. These shares were transferred to Otto 

Investment followed by a further issue and allotment of shares to ourselves and our Norwegian joint venture 

partner such that our final shareholding in Aries is 49.0%. Subsequently, these 49.0% of issued shares 

of Aries was transferred from Otto Investment to Otto Ventures. 

(3) We are presently in the process of establishing and obtaining the relevant operating permits for a wholly 

foreign-owned enterprise in China. See “Our Business — Expansion and Upgrading Plans”. 

98

(4) WAIL was incorporated in Saint Vincent and the Grenadines on 26 June 2007 and is our associated company 

which has been formed pursuant to a joint venture agreement that we entered into with Swiss Overseas 

Invest Ltd and ABC Maritime in July 2007. We have an interest of 49% in WAIL. 

(5) Otto 1 Ltd. was incorporated in Saint Vincent and the Grenadines on 26 June 2007 and Otto 2 Ltd. was 

incorporated in Saint Vincent and the Grenadines on 26 June 2007, respectively, and are wholly-owned by 

our associated company, WAIL. They are not regarded as associated companies of our Company as defined 

by the SFR. However, in respect of contribution to our revenue according to SFRS, they are regarded as 

our associated companies. 

99

OUR BUSINESS 

Introduction 

We are an offshore marine group engaged in shipbuilding, ship repair and conversion and ship chartering. 






supply of workers from Indonesia and management talent and marine and offshore support and expertise from 

Singapore. Our shipyard has a well-organised infrastructure along with comprehensive facilities, advanced 

equipment and an experienced team of engineers. 


and outsourced third party shipyards in China. Our strategic focus is on building offshore support vessels such 

as AHTS vessels and PSVs which comply with the technical specifications required to operate in the North 

Sea, including the requirements of Norwegian Maritime Directorate and Det Norske Veritas. We also construct 

other types of offshore support vessels including work barges with accommodation for 300 people as well as 

work maintenance boats and plan to build offshore construction vessels. In addition, we provide ship repair 

and conversion services primarily for offshore support vessels. We have recently signed agreements to build 

offshore construction vessels. 



It has also enabled us to gain recognition in the construction of complex and sophisticated offshore support 

vessels. 

We retain ownership and charter out some of the vessels that we build. In addition, through our associated 

companies, we hold minority interests in some of the vessels that we sell to our strategic partners for 

chartering purposes. 


growth rate of 139.6% per annum, from S$54.7 million in FY2005 to S$314.0 million in FY2007. Over the 





As at 8 August 2008, our order book was S$937.1 million. 

Our Strengths and Strategies 

Strengths 

We have a history in shipbuilding and ship repair and conversion dating back to the early 1980s. Since 

2004, we have specialised in the building of offshore support vessels. We believe that we benefit from a 

number of strengths that together differentiate us from our competitors in the offshore marine industry. They 

include the following: 

Specialised focus on complex, sophisticated and environment friendly offshore support vessels 

We focus on the construction and engineering of complex, sophisticated and environment friendly 

offshore support vessels which comply with technical specifications required to operate in the North 

Sea, including the requirements of Norwegian Maritime Directorate and Det Norske Veritas. This focus 

has been beneficial to us as these vessels have generally produced higher margins for us than less 

complex vessels. 

We believe that the demand for offshore support vessels will continue to shift towards vessels that are 

larger and more sophisticated in terms of their engine capacity, bollard pull and navigational equipment, 

as the search for and production of offshore oil and gas become more demanding both in terms of 

increasing water depths and severe weather conditions. In addition, current industry trends call for 

vessels with improved design on stability capabilities and inherently safer and environment friendly 

100

operation. We believe these favourable industry trends will provide strong support for the vessels that 

we build. 

We work with Norwegian ship design firms to tap into their expertise in the design of sophisticated 

offshore support vessels. We believe that our shipbuilding yard is the only one in Asia which builds 

21,000 bhp AHTS vessels on a turnkey basis using the VS491 design from renowned Norwegian ship 

design house Vik-Sandvik. In addition, we have entered into an arrangement with Marin Teknikk AS 

for the exclusive use of one of their proprietary PSV designs in selected countries in Asia and the 

Middle East until December 2008. 

Our specialised focus has allowed us to build up our expertise in constructing high-specification 

offshore support vessels, to improve our production quality and efficiency and to develop a competitive 

cost structure. It has also enabled us to gain recognition in the construction of complex and 

sophisticated offshore vessels. We have been able to build a sizeable order book which, as at 8 August 

2008, was S$937.1 million. 

An efficient and strategically located shipyard 

We believe we have one of the largest shipyards in Batam, an island in Indonesia located approximately 

20 kilometres from Singapore. Our shipyard has approximately 40 hectares of land area and 450 metres 


Batam is a major hub for the shipbuilding industry in South-east Asia. Our proximity to Singapore 

provides us with a strategic advantage as a result of Singapore’s position as a hub for the regional 

marine and offshore industry, which allows us access to the marine and offshore support and expertise 

from Singapore. Our location in Batam also enables us to tap into a ready supply of workers from 

Indonesia. 

Our Syncrolift» allows for the construction of up to twelve 5,000 bhp to 10,800 bhp vessels at any one 

time. More importantly, the Syncrolift» is able to move vessels in and out of the water efficiently for 

test launches, ship repair or underwater works. As a result, we are able to complete the construction of 

a larger number of newbuildings and the repair of vessels in greater numbers within a shorter 

timeframe. Consequently, we enjoy higher productivity and economies of scale. 

Strong engineering and technical capabilities and turnkey approach 

We adopt a proactive, total solutions approach, in which we provide our customers with turnkey 

solutions, ranging from the selection of design to project specification, procurement, construction, 

system installation and integration, testing, commissioning to warranty support. We believe that our 

turnkey approach enables us to provide value-added customised solutions that command higher margins 

and which distinguish us from our competitors. 

We are able to deliver our turnkey solutions as a result of our established relationships with our 

suppliers and our strong engineering and technical capabilities. 

Our operations benefit from a dedicated, skilled and experienced team of naval architects and engineers 

who are specially trained to operate the TRIBON» software, a three-dimensional product model naval 

architecture programme originally created for designing commercial and naval vessels. This in-house 

capability enables us to build a precise virtual model of the vessel, which can be reviewed and tested 

prior to production, thereby minimising errors and resulting in a more efficient shipbuilding process. 

Experienced management team 

Our key executive officers with operating functions have in-depth experience in the offshore marine 

industry, with an average of 34 years of experience. 

Our management team remains focused on continually identifying market opportunities and achieving 

improved operating efficiency and returns. 

Through the years, our management team has developed strong relationships with our customers, 

designers and our suppliers. We have also established a reputation among our customers for providing 

quality service and maintaining high operational standards. This reputation has benefited our shipbuilding 

and ship repair and conversion businesses in terms of quality and on the execution of our 

customers’ delivery schedules. 

101

Strategies 

We intend to consolidate our current market position by capitalising on opportunities in the global marine 

and offshore industry and to enhance our competitiveness. Key elements of our business strategy are as 

follows: 

Diversify sources of income by expanding ship chartering while maintaining focus on construction of 

higher value vessels 

While shipbuilding remains our main focus, we intend to diversify our sources of income by expanding 

our ship chartering business. 

As at the Latest Practicable Date, our chartering fleet comprises five 3,600 bhp tugboats and five 

10,000 dwt high deck loading barges. We are building nine vessels to be completed by 2009, which we 

intend to add to our chartering fleet. We intend to retain ownership of these vessels and deploy them on 

bareboat or time charters. 

We currently have one work barge with accommodation for 300 people in operation with a strategic 

partner. We are also building nine vessels that we have sold to our strategic partners to be completed by 

2010. In addition, we are building 10 vessels to be completed by 2010 that we intend to sell to our 


We expect that our ship chartering business will provide us with a recurring source of income that is 

more stable over the long-term than shipbuilding alone. In addition, in the event of a slowdown in the 

shipbuilding business, we intend to reallocate our resources and capacity to increase our ship repair and 

conversion business. 

With regard to our shipbuilding operations, we intend to continue expanding our operations with a 

particular focus on complex, sophisticated and environment friendly offshore support vessels, which we 

believe will continue to command higher prices within the industry. 

Upgrading technology and processes to enhance our competitive position 

We plan to continuously upgrade our technical capabilities in order to strengthen our overall competitiveness. 

We are also constantly seeking to shorten the vessel delivery period and minimise project 

costs. 

We also intend to invest further in advanced equipment and technology and to enhance our production 

planning, sequencing, and inventory management processes. We have acquired a project management 

software which enables us to track project management schedules and the progress in the construction 

of vessels efficiently. This in turn will increase our efficiency and productivity in terms of project 


Increasing capacity to construct more higher value vessels 

We intend to progressively increase our shipyard capacity in order to be able to take on more and larger 

projects and to carry out the projects already recorded in our expanding order book. See “— Significant 

Shipbuilding Projects — Order Book”. 


800 metres, extend our Syncrolift» berthside by 32 metres � 245 metres and purchase additional gantry 

cranes, among other upgrades to our Batam shipyard facilities. We have also commenced construction 

of one slipway. All of these will enable us to increase our shipbuilding capacity in Batam. We intend to 

complete the expansion and installation of these facilities by the end of FY2009. 

We are currently evaluating the commercial viability of building a shipyard in China. Subject to our 

evaluation of the commercial viability of the project and us obtaining all relevant approvals, licenses 

and permits, and we may build a shipyard in China (see “— Expansion and Upgrading Plans”). 

Strengthening our engineering and middle-level management teams to support our expanding 

operations 

We believe that our strong engineering and management teams have been critical factors in building the 

reputation we have in the market. As our operations expand, we will need to strengthen our engineering 

and middle-level management team by recruiting, developing and retaining talent. 

102

We believe we have an aggressive recruiting policy both laterally in the industry and at the entry level 

from Indonesian universities. We intend to continue offering training programmes and mentoring 

schemes to our staff and new recruits. In addition, we intend to offer competitive compensation 

packages and career opportunities to performing engineers and middle-level managers. 

Enhancing competitive cost structure through selective outsourcing 

We strive to increase our capacity and maintain our competitive cost structure particularly in the 

offshore support vessels market by outsourcing certain shipbuilding work to other regional shipyards in 

South-east Asia and China. To ensure that our stringent procedures and quality controls are properly 

observed, we deploy our personnel to such other shipyards to monitor the construction through to precommissioning 

and delivery. 

We expect that this strategy will enable us to build more vessels and to allocate our resources and 

capacity more efficiently by allowing us to focus on more complex and sophisticated vessels in our 

Batam shipyard. 

In order to support the work that we outsource to shipyards in China, we established a representative 

office in Foshan, China in 2007. 

Our History 

Our Company was incorporated in Singapore on 5 September 1979 under the Act as a private limited 

company under the name “Otto Industrial Co (Pte) Ltd”. On 5 October 2006, our Company changed its name 

to “Otto Marine Pte. Ltd.”. On 17 March 2008, it converted to a public limited company and changed its name 

to “Otto Marine Limited”. 

In 1980, our former Directors, Yaw Teck Seng (who is also the father of Yaw Chee Siew) and Taikichi 

Ito, acquired 80.0% and 10.0% interest, respectively, in our Company from persons who were unrelated to the 

Yaw Family. The remaining 10.0% was owned by two existing shareholders who were unrelated to the Yaw 

Family. In 1981, we established a shipyard in Tuas, Singapore. 

In 1986, we expanded our operations through a contractual arrangement with PT Batamas, an Indonesian 

company owned by parties unrelated to the Yaw Family, to develop and operate a shipyard in Batam, 

Indonesia. In 1994, PT Batamas incorporated a subsidiary named PT Batamec which acquired adjoining pieces 

of land for the expansion of the shipyard. In 1996, we acquired an 80.0% shareholding in PT Batamec through 

subscription of new shares, while PT Batamas retained the remaining 20.0%. See “Our Restructuring and 

Corporate Structure”. We subsequently invested in additional facilities and equipment required for shipbuilding, 

including the construction of the Syncrolift, workshops and gantry cranes at our shipyard in Batam. In 

1998, PT Batamec also entered into a ten-year lease agreement for the shipyard, including machinery, 

equipment, land and buildings from PT Batamas. 

PT Batamas was declared insolvent in 2003 and all of its assets, including the shipyard in Batam and its 

shares in PT Batamec, were acquired by PT Lestari in 2006. In December 2007, we acquired a 95% interest in 

PT Lestari. See “Our Restructuring and Corporate Structure - Subscription for 95.0% of the issued shares in 

PT Lestari (the “Lestari Restructuring”)”. 

In 2001, Yaw Chee Siew, joined us and replaced Taikichi Ito as our Managing Director. In the same year, 

Taikichi Ito sold all of his Shares to Yaw Chee Siew, but he remained on the board of our Company in a nonexecutive 

role. 

In 2002, we engaged Lee Kok Wah as a consultant, and in 2003, he became a Director. We also hired a 

number of professionals into our technical and management team in order to focus on shipbuilding and on the 

offshore marine industry. In 2004, we commenced construction of our first AHTS vessels, which were 

delivered in 2005. 

In 2004, we divested our shipyard in Tuas, Singapore to focus on our shipbuilding operations in Batam, 

Indonesia. 

In 2006, Yaw Chee Siew and his wholly-owned investment vehicle, CEO Technology Asia acquired a 

88.8% interest in our company and Lee Kok Wah acquired a 10.0% interest in our Company by a subscription 

of Shares. 

In 2006, we secured orders for the construction of our first units of 10,000 bhp American Bureau of 

Shipping (“ABS”) class AHTS DP2 vessels. These were our first orders of sophisticated deep water offshore 

103

support vessels which utilise dynamic positioning systems when conducting offshore support services in deep 

waters. 

In April 2007, we commenced our chartering business with five tugs and five barges and incorporated ten 

wholly-owned subsidiaries in Singapore to own these vessels. We also established a branch in the UAE in 

January 2008 to further support our chartering business in the Middle East. In June 2007, we secured orders 

from an offshore operator based in Norway and started construction of large 21,000 bhp AHTS vessels using 

the latest design from Vik-Sandvik, a Norwegian design firm. We also commenced construction of four diesel 

electric driven PSVs, using the designs from Marine Teknikk. 

In May 2007, we incorporated a subsidiary, Otto Investment, to invest in strategic partnerships with fleet 

operators to leverage on their expertise and established client networks in the offshore marine industry. The 

first of these strategic partnerships was a joint venture with Swiss Overseas Invest Ltd. and ABC Maritime, 

under which we have chartered a work barge with accommodation for 300 people in the West Africa Region. 

Since then, we have entered into similar strategic partnerships with operators in different market areas. See 

“— Our Operations — Ship Chartering — Our Charters and Strategic Partnerships”. 

In October 2007, we entered into a capital investment agreement with the People’s Government of 

Qidong City of Jiangsu Province, China for the construction of a shipyard in China. We are currently 

evaluating the commercial viability of building a shipyard in China and are in the process of applying for the 

relevant licences, operating permits and authorisations from the provincial and the central Chinese authorities 

for a wholly foreign-owned enterprise in China. 

In January 2008, Yaw Chee Siew, acquired further Shares from the then existing Shareholders, Yaw Teck 

Seng and Yaw Chee Ming, and as at the Latest Practicable Date, he, together with his wholly-owned 

investment vehicle, CEO Technology Asia holds 90.0% of our Shares. 

In May 2008, we entered into a strategic partnership with GC Rieber and pursuant to the joint venture 

agreement that we entered into with GC Rieber, we are building four PSVs. 

In August 2008, we entered an agreement to build a MT6022XL-design offshore construction vessel. 

We recorded a compounded annual growth rate of 139.6% in our revenue between FY2005 and FY2007 

and increased our order book from S$1.8 million as at 31 December 2005 to S$937.1 million as at 8 August 

2008. 

Our Operations 

Shipbuilding 

We build a range of small, medium and large offshore support vessels. Our strategic focus is on building 

offshore support vessels such as AHTS vessels and PSVs which comply with the technical specifications 

required to operate in the North Sea, including the requirements of Norwegian Maritime Directorate and Det 

Norske Veritas. We also construct other types of offshore support vessels including work barges with 

accommodation for 300 people and work maintenance boats. We have recently signed agreements to build 

offshore construction vessels. We outsource the construction of small to medium offshore support vessels to 

other shipyards in China. 

We adopt a total solutions approach in which we provide our customers with turnkey solutions from the 

selection of design to project specification, procurement, construction, system installation and integration, 

testing, commissioning to warranty support. Our turnkey approach enables us to provide greater value-added 

customised solutions which command higher margins. 

We enter into shipbuilding contracts at any stage before or during the shipbuilding process. In some 

instances, we initiate the design and engineering of vessels before securing a shipbuilding contract, after we 

have assessed the market demand for vessels and the availability of major equipment for vessels with 

identified specifications. This approach helps us to manage the availability and cost of the major equipment 

required in the shipbuilding process. See “Risk Factors — We frequently initiate the building of vessels before 

securing a shipbuilding contract”. We recognise revenues from the sale of such vessels after signing of the 

contract on the basis of the percentage-of-completion method. See “Management’s Discussion and Analysis 

Financial Condition and Results of Operations — Critical Accounting Policies”. 

We secure our shipbuilding contracts through negotiations and we are awarded these contracts mainly 

based on our capacity, pricing, technical and product specifications and technical and financial capabilities. 

For our sales to customers in respect of our shipbuilding business, we generally require a downpayment of 

104

20.0% to 30.0% of the contract value within ten days of signing the sale memorandum of agreement and upon 

keel laying. The remainder of the contract price is typically paid after trial and commissioning and before 

delivery of the vessel. 

Outsourcing 

We are outsourcing the construction of small to medium offshore support vessels to third party shipyards 

in China in order for us to focus on construction of higher value offshore support vessels at our shipyard in 

Batam, Indonesia. In the past, we have also outsourced to third party shipyards in South-east Asia and we may 

do so in the future again. We do not have exclusivity arrangements with any of the shipyards in China. 

As at 8 August 2008, we have contracted with seven shipyards in China to build 26 vessels. The 

outsourced contract value in aggregate for these vessels amounted to S$207.2 million, with no more than 25% 

of the contracted value vesting with any one of the seven shipyards. These contracts are for the construction of 

hull structure, fabrication of steelworks and installation of equipment and do not include the purchase of 

owner-furnished equipment, which are procured directly by us. 

We typically outsource the construction of basic hull to the third party shipyards while we procure and 

supply the engine and main equipment to these third party shipyards. 

Prior to awarding contracts to third party shipyards, we conduct a review of their operations, including 

the review of their management teams, capacity, quality control, project scheduling and financial capabilities. 

We also deploy our personnel to such shipyards to monitor the vessel’s construction through to precommissioning 

and delivery. While majority of the monitoring team consists of engineers from our Batam 

shipyard, we also have a representative office in Foshan, China to support the outsourcing activities in China. 

The payment terms vary from shipyard to shipyard and vessel to vessel. We are expected to make down 

payment and progressive payments at different stages of construction. 

There have been some incidents of delays mainly attributed to the delayed delivery of the main equipment 

from equipment suppliers. 

The diagram below illustrates the principal stages in our shipbuilding process: 

Design and Engineering 

Basic design (external) 

Detailed engineering (inhouse) 

Project Kick-Off 

Fabrication, Assembly and 

Systems Installation 

Launching 

Commissioning and Trial 

Vessel Delivery 

Warranty Support 

(12 months) 

Quality 

Inspection 

Design and Engineering 

Our design process involves two elements: basic design (which is produced externally) and detailed 

engineering (which is produced in-house). Our design process allows us to remove uncertainties in the final 

vessel performance and concentrate on quality production. 

105

Basic Design 

We purchase basic designs from external design houses such as Khiam Chuan Marine Pte. Ltd. and 

Conan Wu & Associates Pte. Ltd. for small to medium offshore support vessels and Norwegian designers such 

as Marin Teknikk AS and Vik-Sandvik for offshore support vessels with higher technical specifications. 

The basic design defines the hull form and specifies vessel performance. This, together with hull 

structure, equipment layout and piping and electrical systems, is submitted both to us and to the relevant 

classification society for approval. 

A fee is payable for the use of the design and a further fee is payable for each subsequent vessel that is 

constructed using such design. 

Detailed Engineering 

Our in-house engineering department uses a specialised shipbuilding software, TRIBON», a threedimensional 

product model naval architecture program, to develop the basic design into production information 

for our production department. TRIBON» uses a family suite of programs that create a common set of 

databases containing the design details of the vessel. Together, these databases are used to depict a three 

dimensional model of the ship, with a complete set of embedded information for all of the parts of the design, 

from ship structural elements to pipe segments and equipment. This enables interface between the components 

to be checked before production. 

The software enables a complete three dimensional image of the ship to be reviewed and tested prior to 

production. 

Project Kick-off 

Each newbuilding project is assigned to a project manager who works closely with project engineers and 

trade supervisors. The project manager organises and initiates the kick-off meeting where the construction or 

newbuilding project schedule, major equipment and materials with long lead times, quality plans, subcontractor 

appointments as well as technical and commercial aspects of the projects are discussed and defined, with input 

from the engineering and production department. 

Regular project meetings are conducted to update progress, engineering issues, client requirements, 

comments and changes to the order as well as quality and budget issues. Corrective actions are taken, if 

needed, and reported to senior management. 

Fabrication, Assembly and Systems Installation 

The material take-off process is the process that enables us to determine the materials (with quantity and 

type) which we will require to complete the relevant newbuilding project. It is conducted by extracting 

information from the TRIBON» databank. 

Steel is cut using plasma cutting machines with the numeric control codes generated from the TRIBON» 

model. Once cut, the steel parts are welded together to form sub-assemblies which are assembled with a 

certain level of pre-outfitting of pipe, foundations and cable ways. These welding and assembly processes of 

the basic block structures are performed in sheltered workshops to minimise impact of weather elements on 

production. 

The semi-finished and finished blocks are transported for painting hull (when ready) and surface 

preservation before blocks can be erected. At the erection stage, major equipment such as the main engines, 

generators, main switchboard, thrusters, pumps, pipes, ventilation, ducting and cable way are installed. 

When the vessel takes full shape on the erection berth, auxiliary equipment such as the navigation and 

communication system, HVAC, accommodation panelling, fixtures and the wheelhouse control system are 

fitted. 

Non-destructive tests such as radiography, ultrasonic and magnetic particle inspection and air or hydro 

tests are performed on the integrity of the hull. The hull and internal surfaces of the vessel’s various tanks are 

then painted and subsequently, the vessel is prepared for launching. 

106

Launching 

The completed hull and propulsion system is then launched into the water using our Syncrolift», graving 

dock or conventional wooden beams on our other erection berths. After launching, the vessel is moored along 

our outfitting wharf with two travelling cranes. 

Commissioning and Trial 

Commissioning 

Prior to systems or equipment start-up, the emphasis is on pre-commissioning checks. Commissioning of 

the individual system and equipment is tested with the suppliers present, ensuring full warranty cover will be 

passed on to the first user (the buyer). Performance data is recorded for reference and checked for conformity 

with design specifications and class requirements. 

Commissioning typically commences two months before actual delivery. 

Basin and Sea Trials 

We carry out basin trials alongside our wharves prior to the sea trials. This is to ensure that all safetyrelated 

issues such as the fire extinguishing and detection systems, fire fighting capability, bilge and ballast 

system, steering system, emergency generator and emergency shutdown devices as well as the main propulsion 

system, main generator and navigation and communication system are in order. 

Under the sea trials, we test the vessel for maneuverability, speed, main engine performance, navigation 

and communication and bollard pull. 

These tests are witnessed by class surveyors, buyer representatives and equipment suppliers. 

Vessel Delivery 

Final Touch Up 

Upon successful sea trial, the vessel is given a final touch up whereby minor non-conformities are 

remedied and the vessel is cleaned. During this period, the classification society will issue various statutory 

and/or class certificates. 

Delivery 

Once all the required certifications are obtained, the customer will take delivery of the vessel together 

with the spares and all the related documentation. 

Warranty Support 

A 12-month warranty period is typically accorded to the first user of the delivered vessel. We provide 

warranty for materials and workmanship, whereas generally the warranty for the equipment is transferred 

directly to the buyer. 

The project manager monitors and corresponds with the buyer during this period and may pay visits to 

their operations or attend to warranty claims. This all forms part of our warranty support service. 

We make provision for warranty at a certain percentage of the contract value. This provision is made 

when the vessel is delivered and reversed the unutilised balance after the 12-month warranty period. Our 

provision for warranty made for FY2005, FY2006 and FY2007 were S$16,000, S$49,000 and S$77,000, 

respectively and the actual amounts incurred in the respective years were insignificant. 


Our shipyard offers comprehensive “one-stop” facilities for both ship repair and conversion works, 

supported by our engineering capabilities and workshop facilities. We also rely on support from third party 

equipment specialists. Our shipyard services a wide range of vessels including offshore support vessels, oceangoing 

tugs, car ferries, general cargo ships and others. 

We follow a comprehensive work instruction procedure in accordance with ISO 9001 requirements. Our 

quality assurance and quality control team conducts internal testing and checking of workmanship. 

107

Upon completion of the technical repair or conversion works, we submit a Work Done Report for the 

ship owners’ records, which forms part of the Inspection Record. 

A six-month warranty period for workmanship is typically granted to our customers in respect of our ship 

repair and conversion works. 

Quality Management and Safety Systems (QMS) 

Our shipyard in Batam has been awarded the ISO 9001 certification that is attributable to our stringent 

QMS and procedures. The ISO 9001 certification scheme provides certification for the Singapore standard ISO 

9001, which specifies the requirements for a quality management system for any firm that needs to 

demonstrate its ability to consistently provide products that meet customer and applicable regulatory requirements 

and aims to enhance customer satisfaction. It recognises companies that have demonstrated continuous 

and effective operation of a quality management system which meets the ISO 9001 standards and the terms 

and conditions of the certification scheme. 

Our QMS and procedures are observed at all stages of the shipbuilding and ship repair and conversion 

processes. An inspection and test plan is normally presented to the buyer or class representative as guidance. 

Throughout the newbuilding period, all stages of the construction processes are inspected by the classification 

society to ensure conformity to the plans that have been approved. Any non-conformity in material or 

workmanship raised by buyer’s representative or class surveyor will be rectified to ensure conformity to the 

contractual and technical specifications. 


Our ship chartering business began in April 2007 and is largely focused on the chartering of offshore 

support vessels. 

Our Charters and Strategic Partnerships 

As at the Latest Practicable Date, our fleet comprises five 3,600 bhp tugboats, and five 10,000 dwt highdeck 

loading barges. We are also building nine vessels to be completed by 2009, which we intend to add to 

our chartering fleet. These vessels consist of two maintenance vessels, five tugs and two work barges with 

accommodation for 300 people. We intend to retain ownership of these vessels and deploy them on bareboat 

or time charters. The market for our chartering activities of our tugboats and barges is currently in the Middle 

East as our main customers are based in that region. 

We have entered into three strategic partnerships with third parties, to which we sell some of the vessels 

that we build. We retain 49.0% interest in each of these three strategic partnerships and our strategic partners 

manage and operate these vessels on a time or bareboat charter basis. For example, in July 2007, we entered 

into an agreement with Swiss Overseas Invest Ltd. and ABC Maritime, to form our associated company, West 

African Invest Ltd. (“WAIL”). Swiss Overseas Invest Ltd. is a shipping investment vehicle company 

incorporated in St. Vincent and the Grenadines. ABC Maritime is a company incorporated in Switzerland and 

is a provider of international shipping related services. We sold “Otto 1” and “Otto 2”, work barges with 

accommodation for 300 people, to wholly-owned subsidiaries of WAIL which charters out Otto 1 under time 

charter in West Africa. Otto 2 is expected to be delivered by December 2008. We entered into a similar 

agreement with Aries Offshore Services Norway AS in December 2007, to form our associated company Aries 

Offshore Singapore Pte. Ltd. (“Aries”). Aries Offshore Services Norway AS is incorporated in Norway and is 

involved in various aspects of the shipping business. We sold four 5,150 bhp AHTS vessels in December 2007 

to Aries. On 2 May 2008, we entered into a similar strategic partnership with GC Rieber, and pursuant to the 

joint venture agreement that we entered into with GC Rieber, we have sold four PSVs to our associated 

companies Polar Marine I and Polar Marine II. GC Rieber is a company incorporated in Norway and it is 

listed on the Oslo stock exchange. It is involved in the business of offshore support, marine seismic operations 

and ice-strengthened support and research. See ‘‘— Significant Shipbuilding Projects — Order Book”. 

By entering into such strategic partnerships, we seek to achieve a long term steady flow of income from 

vessel charters by retaining ownership of vessels while at the same time tap into the expertise of the strategic 

partners who are involved in chartering of different types of offshore vessels in different markets and 

locations. 

According to the agreements entered into with these three strategic partners, in general, the risks and 

returns in relation to chartered income and subsequent sale of vessels will be shared between us and the 

strategic partner in the proportion of the equity interest held by each of the parties. 

108

Our initial costs of investment for the current strategic partnerships were funded through our internal 

resources. As and when there is a call for subsequent capital injection, we would fund these from the net 

proceeds from the issuance of the New Shares, internal resources or loans from financial institutions, 

whichever mode is in the best interest of our Shareholders. 

We intend to enter into such types of strategic partnerships for more offshore support vessels which we 

are currently building or will build in the future. As at the Latest Practicable Date, we are building 10 vessels, 

to be completed by 2010 that we intend to sell into these strategic partnerships. See “— Significant 

Shipbuilding Projects — Vessels Currently Not in Order Book”. We are still in the process of negotiation with 

various parties and no agreement has been concluded with them. There can be no assurance that an agreement 

on the sale of these vessels to our strategic partners would be concluded. In such event, we could sell them to 

other third parties or retain ownership of these vessels for our own chartering business based on their 

commercial merits in the best interest of our Shareholders. 

The charters we have entered into as at the Latest Practicable Date are described in more detail in the 

following table: 

Name of Vessel Type Year Built 

Tetra One .................. Tugboat 

3,600 bhp 

Tetra Two .................. Tugboat 

3,600 bhp 

Tetra Three ................. Tugboat 

3,600 bhp 

Tetra Four ................. Tugboat 

3,600 bhp 

Tetra Five .................. Tugboat 

3,600 bhp 

Blue Fin One ............... High-deck loading barge 

10,000 dwt 

Blue Fin Two ............... High-deck loading barge 

10,000 dwt 

Blue Fin Three .............. High-deck loading barge 

10,000 dwt 

Blue Fin Four ............... High-deck loading barge 

10,000 dwt 

Blue Fin Five ............... High-deck loading barge 

10,000 dwt 

Otto 1 (1) ................... Workbarge with 

accommodation for 300 people 

Type of Charter 

Contract as at 

the Latest 

Practicable Date 

2007 Time 

2007 Time 

2007 Time 

2007 Time 

2007 Time 

2006 Time 

2006 Time 

2006 Time 

2006 Time 

2006 Time 

2007 Time 

Note: 

(1) Our associated company, WAIL, has a 100.0% shareholding interest in Otto 1 Ltd., the entity which owns 

Otto 1. We own 49.0% of WAIL. 

We have also entered into time charter contracts for two 61m maintenance vessels which are still under 

construction and which are expected to be completed in 2008 and 2009, respectively. See “— Significant 

Shipbuilding Projects — Vessels for Our Own Chartering Fleet”. 

Expansion and Upgrading Plans 

As part of our future plans, we intend to expand and upgrade our shipbuilding facilities in Batam and 

develop our ship chartering business by increasing and renewing our fleet of vessels. 


800 metres, extend our Syncrolift» berthside by 32 metres � 245 metres and purchase additional gantry 

cranes, among other upgrades to our Batam shipyard facilities. We have commenced construction of one 

slipway. We intend to complete these expansion and installation works by end of FY2009. 

109

We intend to upgrade our technical capabilities and to invest further in advanced equipment and 

technology. 

In addition, we are considering establishing a shipyard in China and our wholly-owned subsidiary OM 

Offshore has entered into a capital investment agreement in October 2007 with the People’s Government of 

Qidong City of Jiangsu Province, China for the construction of a shipyard in China. We are currently 

evaluating the commercial viability of building a shipyard in China and in the process of applying for the 

relevant licences, operating permits and authorisations from the relevant Chinese authorities for a wholly 

foreign-owned enterprise in China. In particular, we are required to comply with the Medium and Long Term 

Development Plan (2006-2015) issued jointly by the National Development and Reform Commission of The 

People’s Republic of China and Commission of Science Technology and Industry for National Defense of the 

The People’s Republic of China in 2006. Although this regulation prohibits a foreign investor to own more 

than a 49% shareholding of a shipbuilding company established in China, we are in the process of seeking the 

necessary exemptions from the relevant authorities. Subject to our evaluation of the commercial viability of 

the project and the receipt of all relevant approvals, licenses and permits, we may commence establishing the 

shipyard. 

Under the terms of the capital investment agreement, we are contractually obliged: 

(a) to invest up to US$99.0 million in Qidong for building the shipyard, provided that we are 

satisfied with (i) the land parcel allocated by the People’s Government of Qidong City of Jiangsu 

Province and (ii) the commercial viability of the shipyard; 

(b) to pay a deposit of US$1.0 million to the People’s Government of Qidong City of Jiangsu 

Province within 15 working days from the date of the capital investment agreement; and 

(c) to apply for all relevant licenses, operating permits and authorisations from the relevant Chinese 

authorities for the shipyard. 

We have already paid the deposit of US$1.0 million and to date, we have complied with all of our 

obligations under the capital investment agreement. The capital investment agreement does not have a specific 

expiry date although it contains certain milestones which need to be met by the People’s Government of 

Qidong City of Jiangsu Province as part of their contractual obligations (including sourcing for a suitable 

piece of land). The People’s Government of Qidong City of Jiangsu Province is currently sourcing for a 

suitable land parcel for us to establish the shipyard. In any event, we have the right to terminate the capital 

investment agreement and recover the deposit that we paid if we are subsequently not allocated with a suitable 

land parcel to our satisfaction. 

In the event that we are allocated a suitable land parcel, we would then assess our funding options (which 

may include debt, internal resources and/or new capital injection) at the relevant time, after taking into account 

our cash flow position and our working capital requirements. We will commence work for building the 

shipyard approximately nine to 12 months after the allocation of the land and regulatory approval and upon 

completion of the construction of the infrastructure for the shipyard by the authorities in China. The shipyard 

is likely to take 14 months to construct. These are estimated timelines only and there is no assurance that we 

will be able to adhere to these timelines. 

Significant Shipbuilding Projects 

The significant shipbuilding projects which we have completed in the last three financial years and up to 

the Latest Practicable Date and our major projects in progress as at 8 August 2008 are set out in the tables 

below. 

Completed Projects 

The significant shipbuilding projects which we have completed in the last three financial years and up to 

the Latest Practicable Date and our major projects currently in progress are set out in the tables below. 

Year of 

Delivery 

Tonnage/ 

Power/ 

Capacity Type of Vessel 

Type of 

Customer 

2005 . . . . . . 2,100 dwt Flat top barge Sale to related party (1) 




110 

Date of Keel 

Laying 

Contract 

Signed 

September 2004 August 2004 

October 2004 August 2004 

January 2005 November 2004 

January 2005 November 2004

Year of 

Delivery 

Tonnage/ 

Power/ 

Capacity Type of Vessel 

Type of 

Customer 

Date of Keel 

Laying 

Contract 

Signed 


January 2005 November 2004 


May 2005 November 2004 

2005 . . . . . . 5,400 bhp AHTS Sale to third party June 2004 May 2005 

2006 . . . . . . 5,400 bhp AHTS Sale to third party June 2004 May 2005 

2006 . . . . . . 5,150 bhp AHTS Sale to third party March 2005 March 2006 

2006 . . . . . . 5,150 bhp AHTS Sale to third party April 2005 March 2006 


May 2005 November 2004 

2006 . . . . . . 10,000 dwt High-deck loading barge Sale to related party (1)(2) 

February 2006 June 2006 


February 2006 August 2006 

2006 . . . . . . 10,000 dwt High-deck loading barge Sale to related party (1)(3) March 2006 September 2006 


2006 January 2007 

2007 . . . . . . 3,600 bhp Tugboat Sale to related party (1)(3) 

2006 January 2007 


2006 January 2007 


2006 February 2007 


2006 February 2007 


2006 April 2007 


2006 April 2007 

2007 . . . . . . 5,150 bhp AHTS Sale to third party January 2006 September 2006 

2007 . . . . . . 5,150 bhp AHTS Sale to third party January 2006 September 2006 

2007 . . . . . . 300 pax Work barge with 

accommodation for 

300 people 

Sale to strategic partner July 2006 July 2007 

2008 . . . . . . 300 pax Work barge with 

accommodation 

for 300 people 

Sale to third party September 2006 November 2006 

2008 . . . . . . 10,800 bhp AHTS Sale to third party April 2006 October 2006 

2008 . . . . . . 10,800 bhp AHTS Sale to third party April 2006 October 2006 

2008 . . . . . . 55 metres Utility vessel Sale to third party Feb 2007 May 2008 

Notes: 

(1) Sales to related parties are discussed in “Interested Person Transactions and Conflicts of Interests — Past 

Interested Person Transactions”. 

(2) Sales to related parties are discussed in “Interested Person Transactions and Conflicts of Interests — Past 

Interested Person Transactions — Transactions with Brizill International”. 

(3) These vessels were sold to Yawson and we subsequently repurchased for our chartering fleet. See “Interested 

Person Transactions and Conflicts of Interests — Past Interested Person Transactions — Transactions 

with Yawson”. 

No. 

Order Book 

Tonnage/ 

Power/ 

Capacity 

Type of 

Vessel 

Type of 

Customer Shipyard 

Contract 

Signed 

Expected 

Delivery 

1 10,800 bhp AHTS Sale to third party PT Batamec December 2006 September 2008 (1) 

2 10,800 bhp AHTS Sale to third party PT Batamec December 2006 November 2008 (1) 

3 6,000 bhp AHTS Sale to third party PT Batamec November 2006 December 2008 (1) 

4 6,000 bhp AHTS Sale to third party PT Batamec November 2006 December 2008 

5 10,800 bhp AHTS Sale to third party PT Batamec December 2006 December 2008 

6 10,800 bhp AHTS Sale to third party PT Batamec December 2006 February 2009 

7 6,000 bhp AHTS Sale to third party PT Batamec November 2006 February 2009 

8 6,000 bhp AHTS Sale to third party PT Batamec November 2006 February 2009 

9 10,800 bhp AHTS Sale to third party PT Batamec December 2006 July 2009 

10 10,800 bhp AHTS Sale to third party PT Batamec December 2006 August 2009 

11 3,200 tonnes PSV Sale to strategic partner PT Batamec May 2008 March 2009 

111

No. 

Tonnage/ 

Power/ 

Capacity 

Type of 

Vessel 

Type of 

Customer Shipyard 

Contract 

Signed 

Expected 

Delivery 

12 3,200 tonnes PSV Sale to strategic partner PT Batamec May 2008 June 2009 

13 3,200 tonnes PSV Sale to strategic partner PT Batamec May 2008 March 2010 

14 3,200 tonnes PSV Sale to strategic partner PT Batamec May 2008 June 2010 

15 21,000 bhp AHTS Sale to third party PT Batamec June 2007 October 2009 

16 21,000 bhp AHTS Sale to third party PT Batamec June 2007 June 2010 

17 21,000 bhp AHTS Sale to third party PT Batamec August 2007 December 2010 

18 21,000 bhp AHTS Sale to third party PT Batamec August 2007 July 2011 

19 5,150 bhp AHTS Sale to strategic partner Outsourced December 2007 December 2008 

20 5,150 bhp AHTS Sale to strategic partner Outsourced December 2007 March 2009 

21 5,150 bhp AHTS Sale to strategic partner Outsourced December 2007 March 2009 

22 5,150 bhp AHTS Sale to strategic partner Outsourced December 2007 May 2009 

23 300 pax Work barge with 

accommodation 

for 300 people 

Sale to strategic partner Outsourced May 2008 December 2008 

24 55 metres Utility vessel Sale to third party Outsourced June 2008 December 2008 

25 55 metres Utility vessel Sale to third party Outsourced July 2008 September 2008 (1) 

26 55 metres Utility vessel Sale to third party Outsourced August 2008 September 2008 (1) 

27 115 metres Offshore 

construction 

vessel 

Sale to third party PT Batamec August 2008 February 2011 

Note: 

(1) These vessels have been delivered. 

Vessels Currently Not in Order Book 

We are also building 10 vessels that we intend to sell to strategic partners and one vessel that we intend 

to sell to third parties. The vessels intended for sale to strategic partners comprise two 10,800 bhp AHTS 

vessels, four 8,000 bhp AHTS vessels and four 6,000 bhp AHTS vessels. The vessels intended for sale to third 

parties comprise one utility vessel. 

No. 

Tonnage/ 

Power/ 

Capacity Type of Vessel Shipyard Expected Completion 

1 10,800 bhp AHTS PT Batamec April 2010 

2 10,800 bhp AHTS PT Batamec June 2010 

3 8,000 bhp AHTS Outsourced December 2009 

4 8,000 bhp AHTS Outsourced April 2010 

5 8,000 bhp AHTS Outsourced June 2010 

6 8,000 bhp AHTS Outsourced September 2010 

7 6,000 bhp AHTS Outsourced May 2009 

8 6,000 bhp AHTS Outsourced August 2009 

9 6,000 bhp AHTS Outsourced September 2009 

10 6,000 bhp AHTS Outsourced November 2009 

11 55 metres Utility vessel Outsourced December 2008 

In addition to the vessels in our order book, we have signed a conditional contract for the construction of 

one MT6022XL-design offshore construction vessel and a letter of intent for the construction of one 55 metres 

utility vessel. The agreement for the construction of one MT6022XL-design offshore construction vessel is 

conditional upon the buyer making a second payment by April 2009, and hence it is not included in the order 

book. 

112

Vessels for Our Own Chartering Fleet 

The following table shows the vessels being built for our ship chartering business: 

No. Vessel Length Overall Type of Vessel Shipyard Expected Delivery 

1 100 metres Work barge with accommodation for 

300 people 

Outsourced 2008 

2 100 metres Work barge with accommodation for 

300 people 

Outsourced 2009 

3 61 metres Maintenance Vessel Outsourced 2008 

4 61 metres Maintenance Vessel Outsourced 2009 

5 40 metres Tugboat Outsourced 2009 





Properties 

As at the Latest Practicable Date, we own the following properties: 

Shipyard Facilities 

Owner Location 

PT Lestari ..... Jalan Brigjend 

Katamso KM 85, 

Tanjung Uncang, 

Batam, Indonesia 

Total land area 

owned by our 

subsidiary, 

PT Lestari 

PT Batamec .... Jalan Brigjend 




Total land area 

owned by our 

subsidiary, 

PT Batamec 

Land Area 

(sq m) Tenure Use 

20,416 

19,906 

15,274 

12,470 

60,000 

128,066 

50,039 

30,042 

177,456 

18,500 

276,037 

23 years expiring on 26 March 2021 

18 years expiring on 15 July 2016 



21 years expiring on 23 October 2019 

23 years expiring on 16 October 2021 

22 years expiring on 26 December 2020 

29 years expiring on 29 December 2027 

11 years expiring on 26 March 2016 

Shipyard 

Shipyard 

Our other fixed assets consist mainly of tugboats and barges for charter, buildings, plant and machinery, 

office equipment, furniture and fittings. 

Our total fixed assets had a net book value as at 31 December 2007 of S$91.0 million and as at 31 May 

2008 of S$96.1 million. 

As at the Latest Practicable Date, all four parcels of land, as well as buildings and fixtures owned by our 

subsidiary, PT Batamec, are mortgaged to secure our subsidiary’s payment obligations to Bank Niaga under 

facilities in the aggregate principal amount of US$53.0 million for the purposes of financing the construction 

of vessels. 

Our shipyard was established in 1985 and developed through a series of upgrading programmes. Part of 

the land where our shipyard is located and some of the buildings and equipment in our shipyard were 

previously owned by PT Batamas, a bankrupt Indonesian company. PT Lestari purchased all of these assets in 

November and December 2006 through public auctions held by the receiver of PT Batamas as evidenced by 

the minutes of auction issued by the state auctioneer of Batam (Kantor Pelayanan Piutang dan Lelang Negara 

Batam). Titles to the land have been properly transferred to and registered under the name of PT Lestari. 

113

Our shipyard has a dry dock of 145m � 40m � 7m depth, a Syncrolift» covering a total area of 

26,000m 2 , a combined wharf length of 450m, an automated plate blasting shop and CNC being powered 

mechanical cutting devices typically used for fabricating steel components, along with a series of wellequipped 

and covered workshops. We have recently upgraded the existing workshops, added a new drydock 

shelter with an overhead crane and also added three other cranes to our facilities. 

The following image shows our shipyard facilities in Batam, Indonesia: 

114

Leases 

We currently lease the following properties: 

Location Lessor 

9 Temasek 

Boulevard, 

#33-01 Suntec 

Tower Two, 

Singapore 

038989 

Jalan Brigjend 




Samling 

Singapore 

Private 

Limited 

Land Area 

(sq ft) Tenure 

4,550 (1) 

PT Lestari 128,066 

(sq m) 

3 years from 

1 June 2007 

10 years from 


Rental Per 

Month Use 

S$36,400 Office 

US$16,000 for 

FY2007, 

US$20,000 for 

FY2008 and 

US$25,000 for 

FY2009 and 

US$25,000 

(adjusted for 

prevailing annual 

inflation rate) for 

the remaining term 

of the lease 

Shipyard 

Note: 

(1) We are currently in negotiation with Samling Singapore Private Limited for lease of additional floor space. 

Syncrolift» 

A Syncrolift» is a large lifting system, which raises and lowers a wide range of vessels in and out of the 

water for drydocking onshore. This gives us the ability to build, repair and maintain many vessels concurrently, 

maximising productivity for shipbuilding and ship repair and conversion and providing greater cost-efficiency 

in comparison with other docking systems. 

The Syncrolift» comprises two rows of hoists and a wood-decked steel platform. It has docking cradles 

for transfers or vessels can also be docked directly onto the platform. To dock a vessel, the platform and 

cradle are lowered into the water, and the vessel moves into place over the platform. 

Once in position, the Syncrolift» raises the platform to remove the vessel from the water. When removed 

from the water, work on the vessel can either be done on the platform itself or transferred ashore to a shore 

berth, leaving the Syncrolift» available to dock other vessels. On completion, the process is reversed to return 

the vessel to the water. 

Drydock 

Our drydock or graving dock is a narrow basin that can be flooded to allow a vessel to be floated in and 

then drained to allow the vessel to come to rest on a dry platform, ready for construction, repair or 

maintenance. This system allows for fine-tuning of the vessel to be done by scuba divers while the dock is 

partially flooded, or for the vessel to be freely inspected or serviced on dry land. When work on the vessel is 

finished, the drydock is flooded once again and the vessel is refloated. 

The recently added shelter for our drydock reduces the interruption of construction, repair or maintenance 

by weather conditions, thereby enabling us to provide faster service to our customers. 

Vessels 

As at the Latest Practicable Date, our fleet comprises five 3,600 bhp tugboats and five 10,000 dwt highdeck 

loading barges. The market for our ship chartering activities of our tugboats and barges is currently in 

the Middle East as our main customers are based in that region (see “— Our Operations — Ship Chartering”). 

Nine of our vessels are mortgaged to Bangkok Bank as part of the terms and conditions of a loan facility 

made available to us and one high-deck loading barge is mortgaged to Hong Leong Finance. See 

“Management’s Discussion and Analysis of Financial Condition and Result of Operations — Borrowings”. 

115

Additionally, our associated company, WAIL, has a 100.0% shareholding interest in Otto 1 Ltd., which in 

turn owns Otto 1, a work barge with accommodation for 300 people which is chartered to third parties. See 

“— Our Operations — Ship Chartering”. 

Capacity and Utilisation Rates of Our Shipyard 

We own and operate our shipyard through our subsidiaries, PT Lestari and PT Batamec. Our yard 

presently operates on one eight-hour shift per day, six days a week. We have not experienced any material 

production interruption, whether due to labour disputes, power interruptions, fire or other causes. 

The docking facilities in our shipyard consist of a Syncrolift» and graving dock. The table below 

summarises the annual production capacity of our yard for each of the last three financial years: 

Berth 

Days 

FY2005 FY2006 FY2007 

%of 

Capacity (1) 

Berth 

Days 

%of 

Capacity (1) 

Berth 

Days 

%of 

Capacity (1) 

Syncrolift» 

Berthing area A 

(seven berths) 

Maximum capacity ...................... 2520 2520 2520 

Occupied berth days ..................... 2074 82% 2097 83% 1323 53% 

Maintenance period ..................... 149 6% 101 4% 135 5% 

Vacant days ........................... 297 12% 322 13% 1062 (2) 

42% 

Berthing area B 

(four berths, increased to six berths since 

September 2007) 

Maximum capacity ...................... 1440 1440 1668 (3) 



Vacant days ........................... 211 14% 421 29% 20 1% 

Graving Dock 

Maximum capacity ...................... 365 365 365 



Vacant days ........................... 7 2% 4 1% 4 1% 

Notes: 

(1) Our maximum capacity for each berthing area is calculated based on the total number of berth days available 

in respect of all of the berths in that particular berthing area for each financial year, where one berth 

day represents one vessel being berthed in a particular berth for one day. In relation to the berthing areas, 

the number of berth days available for each financial year is 360 days and in relation to the graving dock, 

the number of available days for each financial year is 365 days. Our production capacity utilisation rate 

for each berthing area is calculated by having the total number of occupied berth days divided by the maximum 

capacity for that berth. 

(2) Berthing area A was vacant for 820 berth days for upgrading works. 

(3) The increase in maximum capacity is as a result of increase in the number of berths within berthing 

area B. 

In the shipyard industry, the utilisation rate of a yard is generally not a meaningful indicator of 

performance. This is primarily because the capacity of a shipyard varies according to many factors, including 

the availability of raw materials, equipment and other supplies, the type and size of vessels berthed in the yard 

and the type of work being undertaken. In order to minimise these variables as far as possible, we have 

measured the utilisation rates of our shipyard in terms of the proportion of the total number of available berth 

days in the yard. The number of berth days may fluctuate depending on the type of vessel we produce and our 

product mix changes. In addition, it is possible for us to alter the working hours of our production by 

subcontracting some of the assembly work to external subcontractors and thereby influencing the capacity and 

utilisation rates of our facilities. 

116

In FY2007, the production capacity utilisation rate for our berthing area A decreased by approximately 

30.0% as certain berths therein were temporarily shut down for a total of 820 berth days in 2007 for upgrading 

works. These works were undertaken to strengthen the concrete flooring of the transfer area in berthing area A 

in order to accommodate construction of larger vessels. At the same time, the maximum capacity for berthing 

area B was increased by 228 berth days as a result of the expansion of the staging area in berthing area B 

which created two new berths. 

Inventory Management 

Our inventory are steel plates and consumables maintained in our shipyard in PT Batamec. Minimal stock 

is maintained by us as materials are generally procured based on specific project requirements. 

We maintain our inventory level based on delivery lead-time and anticipated market demand derived from 

various sources such as market trends and feedback from our ship brokers. 

Our stocks are stated at the lower of cost (determined on a weighted average basis) and net realisable 

value. Our stocks are monitored through a computerised inventory system that tracks in-coming and out-going 

stocks. Our procurement team reviews monthly stock reports prepared by our inventory control personnel and 

makes purchases where necessary to maintain the desired stock level. 

We conduct internal cyclical monthly stock take as part of our review and preparation of our monthly 

stock report on a sample product basis. We perform annual stock take in the presence of our external auditors. 

Marketing Activities 

Yaw Chee Siew, our Executive Chairman, and Lee Kok Wah, our Group Managing Director, are the 

principal key management officers responsible for leading our marketing efforts. 

New customers are the result of referrals, satisfied customers, our shipyard’s reputation, experience and 

track record as well as the marketing efforts of our management team. We also work closely with our network 

of ship brokers to prospect for new contacts. 

Our marketing team is involved in identifying new markets in line with our customer base and our 

targeted geographical expansion. We believe that providing quality and reliable service and warranty support 

to our customers are key contributors to our success in securing orders. We establish links with industry 

players by participating in trade shows, seminars and conferences organised by trade experts, our customers or 

our suppliers. Our marketing tools include identifying new customers through industry magazines and referrals. 

In addition, we have a corporate website, which includes details of new vessels built and in the pipeline and 

the various services offered by us. 

We plan to increase public awareness of our activities in the overseas market through advertisement in 

major trade magazines and trade directories in Norway, the Middle East and Asia. 

Research and Development 

We do not conduct any material research and development activities. 

Intellectual Property 

We have not registered any patents or trademarks and are not materially dependent upon any patent, 

patent rights, licences, processes, intellectual property or other intangible assets for our business. Where 

appropriate, we will use patent and copyright laws to protect our intellectual property rights arising from any 

new technological process developed by us. 

117

Our Major Customers 

Our customers are primarily fleet operators who provide logistics support to offshore services and 

equipment companies operating globally in the oil and gas industry. The vessels that we build are primarily 

for use in the North Sea, Mexico, the Middle East, West Africa and Asia, and our customers either are located 

or have operations in these areas. The following table shows our customers that accounted for 5.0% or more 

of our revenue for each of the last three financial years and the five months ended 31 May 2008: 

Percentage of Total Revenue (%) 

Five Months 

Ended 

FY2005 FY2006 FY2007 31 May 2008 

Customer (1) 

Esnaad ...................................... — 23.0 — — 

Consolidated Projects Ltd. ....................... — 21.4 1.2 — 

Mt Benom Ltd. ............................... — 12.0 20.1 1.0 

Robert Knutzen Shipholdings Limited and its 

affiliate (2) .................................. — 13.1 33.6 24.8 

Marine Subsea AS ............................. — 10.0 7.6 1.1 

Tidewater Assets Inc. .......................... 57.4 0.5 0.7 0.7 

Tinjar Transport Sdn Bhd ........................ 11.2 0.7 — 

Otto 1 Ltd. (3) ................................. — — 15.3 — 

Yawson (4) .................................... — 4.4 7.6 — 

Brizill International Limited (5) 

.................... — 2.2 — — 

Aries Offshore Singapore Pte. Ltd. (6) 

............... — — 5.6 5.6 

Mosvold Supply Limited ........................ — — — 12.3 

Polar Marine Group (7) 

.......................... — — — 34.1 

Otto 2 Ltd. (3) ................................. — — — 9.7 

Falcon Energy Group Limited. .................... — — — 5.9 

Notes: 

(1) The table lists our major end customers although often the contracting party under our sale agreements is 

a financial intermediary to whom we transfer title to the vessel and the vessel is subsequently leased by 

the purchaser to the end customer. 

(2) The affiliate referred to is Asian Offshore Limited. 

(3) Otto 1 Ltd. and Otto 2 Ltd. are subsidiaries of WAIL, our 49%-owned associated company. 

(4) We sold nine vessels to Yawson between September 2006 and July 2007 which we leased back for our 

chartering business which commenced in April 2007. Between October 2007 and December 2007, we 

repurchased these vessels from Yawson. See “Interested Person Transactions — Past Interested Person 

Transactions — Transactions with Yawson”. 

(5) We sold one vessel to Brizill International in 2006. See “Interested Person Transactions — Past Interested 

Person Transactions — Transactions with Brizill International”. 

(6) Aries is our 49%-owned associated company. 

(7) Polar Marine Group refers to Polar Marine I and Polar Marine II, which are our associated companies. 

The shipbuilding business is a project-based business, and individual projects can make a significant 

contribution to our revenues in any given period. In addition, we frequently enter into more than one 

shipbuilding contract with a single customer at or about the same time, which increases that customer’s 

contribution to our revenues in any given period. See “Risk Factors — Risks Relating to Our Business and 

Operations — Our shipbuilding business is dependent on a few major customers”. As a result, the contribution 

to our revenues by any single customer can fluctuate widely from period to period, depending on the value of 

the contract or contracts we enter into with that customer and the number of vessels we construct for that 

customer during the period. 

Under our accounting policies, we recognise revenue on a percentage-of-completion method, with certain 

percentages of the contract value being payable upon signing of the related contract and upon keel laying. See 

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical 

118

Accounting Policies — Revenue and Cost of Sales Recognition”. As a result, we recognise revenue from a 

project only during the duration of a contract related to that project, which could extend over two or more 

financial reporting periods, and we do not recognise revenue during periods when we have not secured 

shipbuilding contracts. As we may begin construction of a vessel without a contract and sign a contract only 

when construction is well advanced (see ‘‘— Our Operations — Shipbuilding”), it is possible that the period 

during which we recognise revenue for a project is substantially shorter than the period of vessel construction. 

For example, we entered into contracts for the construction and delivery of two vessels with Esnaad in 2006, 

and we were able to deliver these vessels also in 2006, since construction of the vessels had been commenced 

already in 2005, prior to the signing of the contract. As a result, all of the revenue relating to these vessels and 

these contracts was recognised in 2006 and attributed to Esnaad. 

Save as disclosed in “Interested Person Transactions and Conflicts of Interest”, none of our Directors or 

Substantial Shareholders and their Associates has any interest, direct or indirect, in any of the abovementioned 

major customers. 

Our Major Suppliers 

We are dependent on a number of suppliers who supply certain equipment for our new shipbuilding and 

ship repair or conversion projects or where the equipment brand is specified by customers. See “Risk 

Factors — Risks Relating to Our Business and Operations”. The following suppliers accounted for 5.0% or 

more of our purchases for any of FY2005, FY2006 , FY2007 and the five months ended 31 May 2008: 

Percentage of Total Purchases (%) 

Five Months Ended 

Suppliers FY2005 FY2006 FY2007 31 May 2008 Items Purchased 

LSH Group (1),(3) . . . . . . . . . . . . — 19.7 37.0 41.5 Equipment and components, 

including engines, generator sets, 

winches, compressors and bulk 

tanks 

Yawson . . . . . . . . . . . . . . . . . . — — 7.9 — Vessels 

Hoe Seng Huat Pte. Ltd. . . . . . . 7.1 4.7 — 0.1 Steel 

Tractors Group (2) . . . . . . . . . . . 6.6 4.5 — 0.5 Engines and generator sets 

Asia Enterprises (Private) 

Limited . . . . . . . . . . . . . . . . 12.0 2.8 0.1 — Steel plates 

Guijiang Shipbuilding Co Ltd . . — — 2.3 6.4 Subcontracting cost for 

outsourced shipbuilding 

Europe Marine Control B.V . . . . — — 0.8 9.1 Diesel electric engine 

Notes: 

(1) LSH Group refers to Lei Shing Hong (Singapore) Pte. Ltd. (“LSH Singapore”) and Lei Shing Hong Trading 

Limited (“LSH Trading”), both of which are wholly-owned subsidiaries of Lei Shing Hong Limited 

(“LSH”). 

(2) Tractors Group refers to TSL Power Systems and Tractors Singapore Limited. TSL Power Systems is a 

sole-proprietorship, wholly-owned by Tractors Singapore Limited. 

(3) Purchases from LSH Group include items that LSH Group purchased from Hoe Seng Huat Pte. Ltd., Tractors 

Group, Asia Enterprises (Private) Limited and Europe Marine Control B.V.. 

Our purchases consist primarily of engines, propellers, bulk tanks, compressors, winches, generator sets, 

and consumables and direct materials such as steel plates, cabling, piping systems and other materials for our 

shipbuilding activities. We also purchase equipment for our shipyard. See “Management’s Discussion and 

Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Revenue and 

Cost of Sales Recognition — Purchases and Cost of Sales”. In addition, in the five months ended 31 May 

2008, we incurred substantial costs for purchases of high-value diesel electric engines and for increased 

outsourcing of vessel construction to shipyards in China, including Guijiang Shipbuilding Co Ltd. See “— Our 

Operations — Shipbuilding — Outsourcing”. 

We purchase equipment and supplies from manufacturers or through stockists and authorised dealers of 

manufacturers. In October 2006, we started using LSH Group to assist us with procurement for a number of 

our purchases. For major equipment such as engines, winches, propulsion systems and generators, we select 

the manufacturer based on vessel specifications and enter into an agreement directly with the manufacturer or 

its authorised agent. Such an agreement would typically provide that LSH Group may make payment on our 

behalf. For some of our other purchases, such as consumables, steel plates, valves and pipes, LSH Group 

119

assists us in obtaining quotes from various stockists and agents, and we select the supplier who offers us the 

most competitive terms and quality materials and services and who is able to satisfy our delivery schedules. 

LSH Group coordinates the procurement process, shipment, handling fees, logistics, bank charges and 

documentation and provides us with credit. For all purchases for which we use LSH Group, LSH Group makes 

payment on our behalf and issues us the final invoice, which includes a fee for their services. See also 

“— Credit Management” and “Risk Factor — We are reliant upon a small number of manufacturers and 

suppliers”. The fees paid to LSH are in respect of the coordination of the procurement process, shipment, 

handling fees, logistics, bank charges, documentation and provision of credit to us. The fees amounted to 

S$nil, S$1.3 million, S$7.4 million and S$2.9 million for FY2005, FY2006, FY2007 and the five months 

ended 31 May 2008 respectively. 

Purchasing through LSH Group reduced our need to employ additional procurement and accounting staff 

to perform co-ordination and support functions, especially, during FY2007, when we experienced strong 

growth in shipbuilding business. As a result, we used LSH Group extensively in FY2007 thereby reducing the 

need to manage numerous suppliers which would otherwise have put a strain on our resources. This again 

allowed us to free up our resources to build our other support functions, especially the accounting, finance and 

treasury departments. 

As a result of the arrangement with LSH Group, a significant proportion of our purchases from other 

suppliers were invoiced through the LSH Group. Consequently, the percentage of direct purchases from these 

other suppliers decreased significantly in FY2006 and FY2007. 

As at the Latest Practicable Date, our former Director, Yaw Teck Seng, who is also the father of Yaw 

Chee Siew, has an indirect minority interest of 23.1% in the issued share capital of LSH. See also “Interested 

Person Transaction and Conflicts of Interests — Other Transactions — Present and ongoing other transactions 

— Purchases by our Company from LSH Group”. 

Between October 2007 and December 2007, we repurchased ten vessels from Yawson for our chartering 

fleet. See “Interested Person Transactions — Past Interested Person Transactions and Conflicts of Interests — 

Transactions with Yawson”. 

Credit Management 

For our sales to customers in respect of our shipbuilding business, we generally require a downpayment 

of 20.0% of the contract value within ten days of signing the memorandum of sale agreement. We provide a 

refund guarantee for the downpayment paid to us. The refund guarantees can be drawn upon by our customers 

in the event we default under the sales contract and the refund guarantees expires upon the delivery of the 

vessel to the customer. Another 10.0% of the contract value may be required to be paid as progress payment 

upon achieving a designated milestone. The remainder of the contract price is typically paid after trial and 

commissioning and before delivery of the vessel. 

An instance where we may deviate from the 20%-30% down payment requirement is when we sell a 

vessel that has been completed which was originally built for our own chartering fleet. In such a case, we may 

collect 100% of the contract amount directly, instead of requiring the down payment of 20%-30% given that 

the construction of the vessel has been completed. 

The customers that we deal with are accustomed to pay only an initial deposit to the ship builders upon 

signing of agreement and the remaining balance upon taking delivery of the vessels, instead of making 

progressive payment at various stages of construction. In order to secure the contracts from such customers, 

we adopted the current practice of generally taking 20.0% of the contract value as deposit upon signing of the 

agreement. A further 10.0% of the contract value may be required to be paid as progress payment upon 

achieving a designated milestone, and the remainder upon delivery. 

We typically perform internal due diligence on customers. This includes searching publicly available 

information about the customers and obtaining information from the ship brokers. 

In addition to the normal internal due diligence carried out on our customers, we have searched publicly 

available information on our existing customers for adverse reports. On an ongoing basis, we keep ourselves 

updated of market development of our customers. In addition, we have engaged independent third party 

specialists to conduct credit checks on our existing customers. We will also continue to monitor developments 

in the offshore sector by speaking with industry players including shipbrokers and suppliers. 

Our Directors believe that the above measures will help to plan ahead in terms of our business operations 

and will, to a certain extent, mitigate the risk of cancellation and non-payment by our existing customers and 

120

the entering into new contracts with potential customers. Based on information available to our Directors, they 

are not aware of any circumstances that would lead them to believe that any customers with significant orders 

are likely to default 

For ship repair and conversion and other shipping services, generally the billings are issued upon 

completion and delivery of the project/service. We normally grant credit terms to our ship repair customers of 

30 days. 

For ship chartering, our customers are required to provide one month’s payment in advance and a deposit 

equivalent to one month’s payment. Customers have 30 days to make payment after they are invoiced. 

On a case-by-case basis, our Directors may vary the credit terms based on commercial considerations 

such as the size and duration of the project, the customer’s creditworthiness and the strength of our 

relationship with the customers. 

In relation to the executed contracts that we have entered into with our customers, we have the benefits 

of the contractual rights under the contracts and the non-refundable deposits paid by the customers. This is in 

accordance with prevailing industry practice for the market segment that we cater for. 

Barring occurrence of any unforeseen circumstances, our Directors consider our credit policies to be 

appropriate and in line with the industry practice for the particular market segment that we cater for. 

In 2008, we entered into agreements with one of our customers for the construction and sale of small 

AHTS vessels. Since this customer did not make the payment of the down payments for these vessels within 

the time stipulated in the agreements, we have cancelled the construction contracts for these vessels and we 

intend to sell these vessels to other buyers. We have other contracts for vessel construction which remain in 

effect with the same customer. The amount at risk in relation to these contracts entered into with that customer 

amounts to S$48.3 million, which constitutes approximately 5.2% of our order book as at 8 August 2008. 

While we have received the corresponding down payments for these vessels, there is no assurance that this 

customer will be able to complete its contractual payment obligations to us according to the terms of the 

construction contracts. In the event that the customer is unable to complete its contractual payment obligations, 

resulting in a cancellation of the construction contract, we could sell these vessels to other buyers where 

opportunity arises, or alternatively, retain them for our own chartering business, depending on whichever 

option is commercially and economically feasible, based on their commercial merits in the best interest of our 

Shareholders. To the best of our Directors’ knowledge and based on information available to them, our 

Directors are not aware of any circumstances that will lead them to believe that this customer will not be able 

to fulfil its obligations. 

We do not have a policy of making provision for any general debts. However, we will provide for specific 

debts if we consider its collection to be doubtful. We had written off bad debts of S$0.3 million, S$0.4 million 

and S$1.3 million for FY2005, FY2006 and FY2007, respectively. We recovered S$0.1 million for the five 

months ended 31 May 2008. We did not experience a material impact on our financial performance arising 

from payment delays or defaults by our customers in FY2005, FY2006, FY2007 and the five months ended 

31 May 2008. 

Our trade receivables’ turnover for each of FY2005, FY2006, FY2007 and the five months ended 31 May 

2008, was as follows: 

FY2005 FY2006 FY2007 

Five Months 

Ended 

31 May 2008 

Trade receivables turnover days (1) .................. 136 11 30 13 

Note: 

(1) In respect of FY2005, FY2006 and FY2007, trade receivables turnover days are computed based on the 

formula (Trade receivables turnover days = trade receivables / revenues � 365 days). In respect of the five 

months ended 31 May 2008, trade receivables turnover days are computed based on the formula (Trade 

receivables turnover days = trade receivables/revenue � 152 days). 

Our trade receivables turnover days fell from 136 days in FY2005 to 11 days in FY2006 primarily due to 

a substantial amount billed in December 2005 and not collected as at 31 December 2005. This amount related 

to the final installment, consisting of 90% of the contract value, due on a shipbuilding contract for a vessel 

delivered in January 2006. We billed this amount in December 2005 and at the same time recorded it as a 

trade receivable. This trade receivable amount was settled in January 2006. This was in relation to one of the 

121

initial AHTS vessels that we were building which was nearing completion in 2005 when it was sold. In this 

case, we only required the customer to pay a 10% deposit to book the vessel as the vessel would be delivered 

shortly (that is, in Jan 2006) and that the customer would be paying the balance upon delivery then. 

There was no deviation from our credit policy in relation to this instance as the balance was paid after 

trial and commissioning and before delivery of the vessel. 

The trade receivables turnover days in FY2006 was 11 days, which falls within the credit period that we 

extended to our customers. 

Our trade receivables turnover days increased from 11 days in FY2006 to 30 days in FY2007 primarily 

due to certain amounts billed in December 2007 and not collected as at 31 December 2007. These amounts 

related to new shipbuilding contracts for four vessels which we signed in December 2007. We billed the initial 

downpayment of 20% of the contract values upon signing of the contract and recorded it as a trade receivable. 

We collected these trade receivables in February 2008. The trade receivables turnover days in FY2007 falls 

within the credit period that we extended to our customers. 

Our trade receivables turnover days for the five months ended 31 May 2008 was 13 days, which falls 

within the credit period that we extended to our customers. 

The payment terms generally granted by our major suppliers range from 90 to 180 days, varying from 

supplier to supplier and are also dependent, inter alia, on our relationship with the suppliers and the size of 

the transactions. Only one of our major suppliers granted us credit terms of up to 360 days for FY2005, 

FY2006 and FY2007. 

It is our practice to select our suppliers based on factors such as purchase terms, reliability of the supplier 

and the quality of supplies. 

Our trade creditors’ turnover for each of FY2005, FY2006, FY2007 and the five months ended 31 May 

2008, was as follows:- 

FY2005 FY2006 FY2007 

Five Months 

Ended 

31 May 2008 

Trade payables turnover days (1) .................... 145 148 146 213 

Notes: 

(1) In respect of FY2005, FY2006 and FY2007, trade payables turnover days are computed based on the formula 

(Trade payables turnover days = Trade payables / Total purchases � 365 days). In respect of the five 

months ended 31 May 2008, trade payables turnover days are computed based on the formula (Trade payables 

turnover days = Trade payables/Total purchases � 152 days). 

We have used total purchases instead of cost of goods sold as cost of goods sold is recognised using the 

percentage-of-completion method whilst total purchases corresponds more closely with the trade payables 

balances in terms of the timing and nature for these entries in the books. 

The trade payables turnover days in FY2005, FY2006 and FY2007 were within the credit period that we 

received from our suppliers. In the five months ended 31 May 2008, our trade payables increased pending the 

finalisation of documentation for and drawdown of additional working capital facilities. Excluding the major 

supplier which granted us credit terms of up to 360 days, our trade payables turnover days are 145, 92, 98 and 

163 for FY2005, FY2006, FY2007 and the five months ended 31 May 2008. 

Save as disclosed in “Interested Person Transactions and Conflicts of Interests” of this document, none of 

our Directors or Substantial Shareholders and their Associates has any interests, direct or indirect, in any of 

the above suppliers. See “Interested Person Transactions and Conflicts of Interest — Other Transactions”. 

122

Employees 

The geographical distribution of our full-time employees as at the end of FY2005, FY2006, FY2007 and 

the five months ended 31 May 2008 was as follows: 

Number of Employees 

As at 

31 December 

2005 

As at 

31 December 

2006 

As at 

31 December 

2007 

As at 

31 May 

2008 

Full-time Employees by geographical location 

Singapore ............................. 13 16 33 37 

Indonesia ............................. 659 753 830 918 

UAE ................................ 1 1 1 1 

China ................................ — — 1 9 

Total ................................ 673 770 865 965 

The functional distribution of all our employees as at the end of FY2005, FY2006, FY2007 and the five 

months ended 31 May 2008 was as follows: 

Functions 

As at 

31 December 

2005 

As at 

31 December 

2006 

As at 

31 December 

2007 

As at 

31 May 

2008 

Management. .......................... 10 10 13 13 

Sales And Marketing .................... 0 1 0 0 

Production ............................ 583 691 732 796 

Administration ......................... 74 58 105 134 

Quality Assurance ...................... 6 10 15 22 

Sub Total ............................. 673 770 865 965 

Temporary / Contract .................... 320 472 558 647 

Total ................................ 993 1242 1423 1612 

As at 31 May 2008, we had 965 full-time employees. We employ temporary staff either on a short-term 

contract basis or we subcontract our work out to various entities. The average numbers of temporary 

employees in respect of FY2005, FY2006, FY2007 and the five months ended 31 May 2008 were 320, 472, 

558 and 647, respectively. As our operations expand, we plan to strengthen our engineering and middle 

management teams, as well as our skilled workforce by recruiting, developing and retaining more talent. 

None of the employees in Singapore are unionised. The employees of our subsidiary, PT Batamec, 

established a labour union under the name Unit LEM (Logam, Elektrik, Mesin) PT Batamec, which was 

registered with the Manpower Office in Indonesia in June 2002. The latest collective agreement entered into 

between PT Batamec and Unit LEM was dated 1 July 2007 and will be valid until 30 June 2009. 

The relationship and cooperation between our Management and our employees has been good. There has 

not been any incidence of work stoppage or labour dispute which affected our operations. 

We carry out on-the-job internal training and enroll our employees in external training courses. 

Every new employee has to undergo a compulsory one day in-company safety orientation so as to ensure 

they are aware of the safety requirements and are trained in basic shipyard safety. 

Litigation and Arbitration Proceedings 

Save as disclosed below, having made all reasonable enquiries, we are not engaged in any legal or 

arbitration proceedings either as plaintiff or defendant including those which are pending or known to be 

contemplated, which may have or have had in the last 12 months preceding the date of lodgement of this 

document with the Authority, a material effect on our profitability or financial position. 

On 20 November 2007, we received a notice of arbitration from a Malaysian company with whom we 

had entered into a sub-contracting arrangement in relation to certain dredging and reclamation work in 

Malaysia. The work concerned was completed in June 2005 and full payment of the contract price had already 

123

een made then. See “Interested Person Transactions and Conflicts of Interests — Past Interested Person 

Transactions — Transaction with Pantai Bayu”. 

The sub-contractor alleged that there was a separate express or collateral agreement to pay them 

RM4.4 million in relation to the works done by them. On 10 September 2008, we entered into a settlement 

agreement with the sub-contractor for full and final settlement of all claims made by them against us in the 

arbitration proceedings. Accordingly, Yaw Chee Siew has, in connection with the indemnity provided by him, 

reimbursed us for all costs and expenses we incurred pursuant to the settlement agreement and all legal 

expenses arising out of the arbitration proceedings. 

Government Regulations 

We have obtained all the necessary business licences and approvals for our business and operations that 

are being carried out by us. Except as disclosed in the sections entitled “Risk Factors” and “Appendix 4 — 

Summary of the Relevant Laws and Regulations Applicable to Us”, we are not subject to any governmental 

regulations in the countries where we operate other than those generally applicable to companies and 

businesses in such countries, which would have a material adverse effect on our business or operations. Our 

Directors believe, to the best of their knowledge, that we are in compliance with all laws and regulations 

applicable to us as at the date of this document, except to the extent any non-compliance would not, 

individually or in the aggregate, have any material effect on our business, financial condition, results of 

operations and prospects. As at the Latest Practicable Date, none of our permits and licences had been 

suspended or revoked. Our Directors are not aware of any facts or circumstances which would cause the 

suspension or revocation or affect the renewal of the said permits and licences. 

See “Appendix 4 — Summary of the Relevant Laws and Regulations Applicable to Us” for a summary of 

the relevant laws and regulations applicable to us. 

Permits and Licences 

We are materially dependent on the following permits and licences: 

Type Activity Date Granted Expiry Date 

Industrial Business Permit ...... Metal Industry for 

Buildings and Ship 

Construction/Repair 

Statement of Compliance of Port 

Facility .................. Loading/unloading of 

shipyard equipment 

Permanent Port License 

Specifically for Ship 

Construction/Repair Purposes at 

Tanjung Uncang, Riau Islands 

Province ................. Ship 

Construction/Repair 

Industry 

Appellation as Bonded Zone and 

Approval for the Operation of 

Bonded Zone and Entrepreneur 

within the Bonded Zone ...... Operation of Bonded 

Zone 

Decree of the Head of Batam City 

concerning Environmental 

Feasibility ................ Shipbuilding and Ship 

Construction/ Repair 

124 

21 October 2004 30 years from the date 

of commercial 

operation in January 

1998 

10 January 2005 N.A. 

11 March 2008 N.A 

31 May 2004 N.A. 

18 April 2005 N.A.

Type Activity Date Granted Expiry Date 

Letter from the State Minister of 

Environmental Affairs 

concerning Non-Objection to 

the Utilisation of Copper Slag 

for Sand Blasting ........... Utilisation of Copper 

Slag for Sand Blasting 

Limited Importer’s Identification 

Number .................. Import of Capital 

Goods 

22 August 2005 N.A. 

25 November 2004 N.A. 

Insurance 

Our shipyard facilities, vessels and equipment are insured in accordance with standard industry practice 

with insurance underwriter. We maintain several insurance policies in the course of our business, some of 

which are briefly described below. See “Risk Factors — Risks Relating to Our Business and Operations — We 

may not have adequate insurance to cover all risks we face, and we may suffer an uninsured loss”. 

Our shipyard has ship repairer’s and ship builder’s liability insurance coverage for loss or damage to 

vessels arising from perils covered under the policies including third party claims, while the vessels are being 

repaired, built, launched or undergoing sea trials. The coverage for ship repairer’s risk is limited to 

S$2.0 million in respect of any one incident. Third party claims for situations such as injury or death, or 

property damage sustained by unexpected and sudden accidents which may occur during the course of 

construction of the vessels are covered by general liability insurance which is limited to S$100,000 in respect 

of any one person, S$500,000 for any one accident and S$250,000 for property damage. 

We maintain property all-risks (including earthquake) insurance, for our equipment and machinery in our 

shipyard. We are also insured against loss resulting from interruption or interference of business arising from 

loss, destruction or damage to property and assets for up to S$13,528,283. 

For our employees working at the shipyard and the employees employed by our subcontractors, we have 

arranged personal accident insurance up to a sum of IDR 75.0 million in the event of death or permanent 

disability and IDR 20.0 million in respect of medical expenses. For all our workers in Singapore, we maintain 

medical coverage which covers treatment of all such employees. 

The vessels we own are covered up to their respective hull cost values in respect of any loss or damage to 

their hull and machinery. We maintain protection and indemnity insurances over our vessels. Additionally we 

maintain individualised motor vehicle insurance on all our motor vehicles in Batam, Indonesia which includes 

comprehensive all risk insurance on each individual vehicle and is tailored specifically to each vehicle. 

Our Directors believe that we have adequate insurance coverage for the purpose of our business 

operations. However, we will continue to evaluate our existing insurance policies to determine whether the 

insurance policies and insurance coverage are adequate for our purposes. See “Risk Factors — Risks Relating 

to Our Business and Operations — We may not have adequate insurance to cover all risks we face, and we 

may suffer an uninsured loss”. 

We have not experienced any difficulties obtaining or renewing our insurance policies, or on realising 

claims under any of our insurance policies. We believe that this level of insurance cover is in line with 

standard market practice for the industry. 

Competition 

Our shipbuilding and ship repair and conversion businesses operate in a highly competitive industry. 

The primary bases for competition are the matching of the shipyard with its capacity and capabilities type 

of vessel, price, delivery schedule/availability and the type of equipment. 

Our immediate competitors in the Asia-Pacific region in respect of our shipbuilding business include 

Keppel Singmarine Pte. Ltd., Labroy Marine Pte Ltd, Pan-United Shipyard Pte Ltd, Jaya Holdings Limited 

and ASL Marine Holdings Limited. For ship repair, our competitors include ASL Marine Holdings Limited 

and Pan-United Shipyard Pte Ltd. 

As we start to concentrate more on building offshore vessels with higher specifications, we will have to 

compete against the established European shipyards such as Aker. Conversely, in respect of construction of the 

125

smaller vessels, we will face increasing competition from China-based shipyards and elsewhere. It is for this 

reason that we outsource these smaller vessels to third party shipyards. 

In respect of our ship chartering business, any offshore operator is our potential competitor. Although 

currently we operate mainly in the Middle East, we may deploy our vessels for chartering anywhere in the 

world. Our immediate competitors in the Asia-Pacific region in respect of our chartering business are Jaya 

Holdings Limited, CH Offshore Ltd., Swissco International Limited and Ezra Holdings Limited. 

Health, Safety and Environmental (“HSE”) 

We have a HSE management system, similar to those of major yards in Singapore, which has been in 

place since 2004. 

Our HSE manager is qualified and certified by Ministry of Manpower, Singapore and is the custodian of 

the Safety Management System Manual and procedures. In-house and external training programmes are 

conducted for safety orientation in respect of new employees. Courses are also given to existing employees for 

purposes of keeping their HSE knowledge up-to-date. 

Under Indonesian law, we have to conduct Environment Impact Analysis (EIA) for our shipyard operation 

and review for any major development that may arise. Periodic environment measurement and audit are 

conducted by an authorised third party and reports filed with the ministry concerned. 

126

Management Reporting Structure 

PROCUREMENT 

MANAGER 

Chia Chuan Hak 

GENERAL MANAGER 

UAE BRANCH 

Ang Kim Choon Eric 

DIRECTORS AND SENIOR MANAGEMENT 

FINANCIAL 

CONTROLLER 

Ooi Kok Chye 

CHIEF FINANCIAL 

OFFICER 

See Kian Heng 

BOARD OF DIRECTORS 

EXECUTIVE 

CHAIRMAN 

Yaw Chee Siew 

GROUP MANAGING 

DIRECTOR 

Lee Kok Wah 

CHIEF ACCOUNTING 

OFFICER 

Chong Sieh Jiuan 

MANAGER 

(SPECIAL PROJECTS) 

Roy Yap Meng Loong 

GROUP GENERAL 

MANAGER (OPERATION) 

Lum Kin Wah 

ASSISTANT GENERAL 

MANAGER (TECHNICAL) 

Boey Thim Ming 

TECHNICAL 

MANAGER (CHINA) 

Kan Kwok Yuen 


PT BATAMEC 

Chua Peng Chua 

SENIOR MANAGER 

(OPERATION) 

Yeo Teck Kiet 

MANAGING DIRECTOR 

OM OFFSHORE 

Ong Tian Khiam 


OM OFFSHORE 

Koh Keng Teck@Koh Gan Pin 

ASSISTANT GENERAL 

MANAGER (COMMERCIAL) 

Goh Chwee Bock 

Directors 

The Board of Directors is entrusted with the responsibility for our overall management. The names, ages, 

addresses and principal occupations of our Directors are set out below: 

Name Age Residential Address Principal Occupation 

Yaw Chee Siew. .................... 45 53Grange Road 

#14-04 Spring Grove 


Executive Chairman 

LeeKokWah...................... 61 22Ramsgate Road 


Group Managing Director 

William Edward Alastair Morrison ...... 51 59Binjai Park 


Non-executive Director 

Craig Foster Pickett ................. 61 7410 Shelborne Dr 

Granite Bay CA 

95746 USA 

Non-executive Director 

Reggie Thein ...................... 67 16ALady Hill Road 


Independent Director 

Ng Chee Keong .................... 59 22Jalan Labu Manis 


Independent Director 

Information on the area of responsibility and working experience of our Directors are set out below: 

Yaw Chee Siew joined us as Managing Director in 2001 and has been our Executive Chairman since 

2003. Mr. Yaw is responsible for our overall strategy and corporate governance. Prior to joining us, between 

1986 and 2006, Mr. Yaw founded and was the executive vice president of SunChase Holdings Inc. in Phoenix, 

Arizona, USA. He was jointly responsible with the president of the company for overseeing the operations of 

the SunChase Holdings organisation, beginning with the initial acquisition of strategic real estate investments 

and expanding to the planning and development of large master-planned community and township developments 

in California and Arizona. The company then managed and subsequently disposed of the land portfolio 

purchased from the US Government’s Resolution Trust Corporation comprising over 300 properties in 22 states. 

Between 1994 and 2002, Mr. Yaw was the chairman of Vigers Holdings Limited, a Hong Kong based firm of 

international property consultants. Mr. Yaw is also the founding chairman of Perdana Parkcity Sdn Bhd, a real 

127

estate company that is currently developing a 500-acre master planned community in Kuala Lumpur, where he 

is responsible for guiding and directing the project from the initial planning stages to the execution of many 

phases of the development. Mr. Yaw’s other business interests include portfolio investments under the Hong 

Kong based Yawson Investment Group Limited and SunChase International Holdings Limited. Mr. Yaw 

graduated from California State University, Sacramento in 1986 with Bachelor of Science in Real Estate, Land 

Use Affairs and Finance. 

Lee Kok Wah joined us in 2003 as an Executive Director and was promoted to become our Group 

Managing Director in 2004. He is primarily responsible for developing and implementing the strategic plan for 

the entire Group, as well as the day-to-day running of our Company. In the early 1970s, Mr. Lee was a 

corporate finance executive with Singapore International Merchant Bankers Ltd. where he specialised in 

dealing with major corporations and institutional clients on corporate loans, syndication, underwriting and ship 

financing. In 1974, he joined Neptune Orient Lines Limited. He was appointed as its owner representative in 

New York in 1979, where his duties included covering the containership services across the pacific to the east 

coast and mid-west areas of the US and Canada. In 1982, he was promoted to run Neptune Orient Lines’s 

Straits/Australia and Europe/South Asia liner services. In 1984, he joined Envi Holdings Pte. Ltd. as its 

general manager, which has subsidiaries operating in the shipping, hotels, trading and mining sectors. In 1988, 

he acquired Maystrong Management Services Pte. Ltd., a business consultancy firm where he obtained 

experience in business consulting. In July 2002, Mr. Lee was conferred the Long Service Award for 15 years 

of dedicated community service. Mr. Lee received his Bachelor of Social Sciences with Honours in Economics 

from the University of Singapore in 1969. 

Craig Foster Pickett joined us as a Non-executive and Non-independent Director with effect from 

3 September 2008. Mr. Pickett is a member of our Remuneration Committee and Nominating Committee. 

Mr. Pickett currently provides investment advisory services through Sunchase Investments LLC. Prior to 

joining us, Mr. Pickett was at Ernst and Young LLP as managing partner of the Sacramento, California, and 

Reno, Nevada offices. He joined Ernst and Young LLP in 1984 and was managing partner for over 21 years. 

As managing partner, he was responsible for all aspects of the practice which was particularly focused on 

publicly registered companies as well as those backed by venture capital or private equity and other fast 

growing enterprises. His experiences at Ernst and Young LLP covered most aspects of services relating to the 

securities of public companies including initial public offerings, secondary offerings, debt offerings, issues 

relating to reporting requirements and the registration of stock plans. Mr. Pickett graduated from the University 

of Utah in 1969 with a Bachelor of Science degree in Economics. He also obtained a Master of Business 

Administration from the University of California, Los Angeles, in 1970. In 1975, he qualified as a Certified 

Public Accountant with the Department of Consumer Affairs of the State of California. 

William Edward Alastair Morrison joined us as a Non-executive and Non-independent Director on 

14 April 2008 and is a member of the Audit Committee. Mr Morrison is currently the Co-Global Head and 

Managing Director at Standard Chartered Private Equity Limited which he joined in 2002. He has more than 

25 years of experience in the financial industry. Mr. Morrison started his career at 3i Group plc in London in 

1981 and worked in direct investment roles covering development capital and management buy-out deals, 

eventually leading one of 3i’s London investment teams. In 1997, he moved to Singapore as a director of 3i’s 

Asia Pacific operations. He was a Director of 3i plc from 1991 to 2000 and of 3i Asia Pacific Ltd from 2000 

to 2002. He graduated in Politics, Philosophy and Economics from Oriel College, Oxford University in 1979 

and obtained a Master of Philosophy in Management Studies from Oxford University in 1981. 

Reggie Thein joined us as our Independent Director with effect from 3 September 2008. He is the 

Chairman of the Audit Committee and member of the Remuneration Committee and Nominating Committee. 

He is also a director of United Overseas Bank Limited, a board member and chairman of the audit committees 

of several listed companies in Singapore, among them Haw Par Corporation Limited, GuocoLeisure Limited, 

MobileOne Ltd., Keppel Telecommunications & Transportation Ltd., MFS Technology Ltd., FJ Benjamin 

Holdings Ltd., Grand Banks Yachts Limited, and Guocoland Limited. Mr. Thein is a member of the Governing 

Council of the Singapore Institute of Directors, a fellow of the Institute of Chartered Accountants in England 

and Wales and member of the Institute of Certified Public Accountants of Singapore. He was previously a 

senior partner of PricewaterhouseCoopers, vice chairman of Coopers & Lybrand, and managing partner of its 

management consulting services firm. In 1999, he was awarded the Public Service Medal by the President of 

Singapore. 

Ng Chee Keong joined us as our Independent Director on 3 September 2008. He is the chairman of our 

Nominating Committee and Remuneration Committee and a member of our Audit Committee. Mr Ng is 

currently an independent director of Mermaid Maritime Public Company Limited, and a non-executive director 

128

and special advisor of PSA International Pte Ltd. Mr Ng joined PSA administrative service in 1971 and held 

various positions, including group president and chief executive officer of PSA International Pte Ltd and PSA 

Corporation Ltd. He retired from executive roles in PSA in January 2005. Mr Ng obtained a degree of 

Bachelor of Social Sciences with honors from the University of Singapore in 1971. Mr Ng was awarded the 

Public Administration Silver Medal in 1992 and the Public Administration Gold Medal in 1997 by the 

Singapore Government. 

Mr. Pickett is a Non-executive and Non-Independent Director of our Company, owing to his ongoing 

business relationship with our Executive Chairman, Mr. Yaw Chee Siew, Mr. Pickett does not provide us any 

professional services other than being a director of our Board. 

Mr. Morrison is a Non-executive and Non-Independent Director of our Company. He was appointed by 

our Company pursuant to Business Companion Investments’ obligation under the Exchangeable Loan 

Agreement. See “Substantial Shareholders and Vendors — Exchangeable Loan Agreement — Conversion of 

the Exchangeable Loan to Shares — Appointment of a Director by SCPEL on Our Board of Directors”. 

Save as disclosed herein, SCPEL does not have any relationship with our Company. Mr. Morrison does 

not provide us with any professional services other than serving as a Director of the Board. See “Interested 

Person Transactions and Conflicts of Interests — Potential Conflicts of Interest”. 

Executive Officers 

Our day-to-day operations are entrusted to our Executive Directors who are assisted by a management 

team of experienced key Executive Officers whose work we are dependent upon. The names, ages, addresses 

and principal occupations of our key Executive Officers are set out below in alphabetical order: 

Name Age Residential Address Principal Occupation 

Ang Kim Choon Eric .......... 56 AptBlk318Serangoon 

Avenue 2 #06-316 


Boey Thim Ming ............. 54 56TohTuckRoad #09-12 


Chia Chuan Hak .............. 49 2Jalan Tiga Ratus #01-04 

Tropicana Condominium 


Chong Sieh Jiuan ............. 36 AptBlk386Yishun Ring Road 

#05-1721 


Chua Peng Chua .............. 56 14Jalan Lempeng 

#14-02 Park West 


Goh Chwee Bock ............. 59 Blk1SinMingWalk#17-36 


Kan Kwok Yuen .............. 55 10E#05-19 Braddell Hill 


Koh Keng Teck @ Koh Gan Pin . . 60 15 Jalan Sappan 


LumKinWah ............... 52 50ATohTuckRoad #02-02 


Ong Tian Khiam. ............. 65 17Jalan Sappan 


Ooi Kok Chye ............... 42 45Hillview Avenue #02-06 


Roy Yap Meng Loong. ......... 32 Blk746Yishun Street 72 

#07-131 


See Kian Heng ............... 46 2CHong San Walk #11-01 


Yeo Teng Kiet ............... 52 AptBlk407#12-167 

Tampines Street 41 


129 

General Manager of Otto 

Marine Limited (UAE Branch) 

Assistant General Manager 

(Technical) 

Procurement Manager 

Chief Accounting Officer 

General Manager of 

PT Batamec 

Assistant General Manager 

(Commercial) 

Technical Manager (China) 

General Manager of OM 

Offshore 

Group General Manager 

(Operation) 

Managing Director of OM 

Offshore 

Financial Controller 

Manager (Special Projects) 

Chief Financial Officer 

Senior Manager (Operation)

Ang Kim Choon Eric joined us in 2006 as our General Manager heading our UAE operations. He is in 

charge of our branch located in the UAE where he oversees the business in the Persian Gulf Region. Mr. Ang 

has over 25 years of experience in operational sector and management affairs. In 1978, he was a production 

engineer at Alpha Industries Pte. Ltd. and later joined Pioneer Concrete Pte. Ltd. in 1979 as its plant manager 

to improve the efficiency and profitability of concrete plants. From 1980 to 1990, he assumed various 

managerial positions at Resources Development Corporation Ltd. In his capacity as the assistant general 

manager, he helped the company start the marine business, including tugs and barges operations in Singapore. 

Subsequently, he was promoted to the position of general manager to lead the general management team. 

From 1990 to 1991, Mr. Ang was an executive director with Poly Resources Pte. Ltd. During the period from 

1991 till 2006, Mr. Ang was designated by Eastern Industries Pte. Ltd. to assume a managerial role at a joint 

venture company between Eastern Industries Pte. Ltd. and its business partners. From 1991 to 2000, he was 

the general manager and subsequently became the director of Eastern Concrete Pte. Ltd. where he was 

responsible for overseeing the concrete batching plants and granite operations. Between 1994 and 2000, 

Mr. Ang was the general manager of National Cement Industry Pte. Ltd. where he led the technical 

modification and conversion of grains silos into cement terminals and cement supplies. From 2000 to 2006, 

Mr. Ang moved to Eastern Bricks Pte. Ltd. where he was appointed as the general manager and was later 

named as the director responsible for overseeing the management and operation in Indonesia. Mr. Ang 

graduated with a Bachelor in Engineering (Civil) degree from the University of Singapore in 1978 and 

received a Diploma in Business Administration from the University of Singapore in 1987. In 1992, he obtained 

his Master of Business Administration (General Business Administration) from Hull University in UK. Mr. Ang 

is a professional civil engineer certified by the Professional Engineers Board of Singapore. 

Boey Thim Ming joined us in 2007 as our Assistant General Manager (Technical) with PT Batamec. He is 

responsible for engineering, production and training at the shipyard. Mr. Boey has more than 20 years of 

experience in project and operation management, industrial engineering and educational lecturing. Between 

1972 and 1978, and again between 1981 and 1991, Mr. Boey worked for Keppel Shipyard Limited in various 

roles, such as an apprentice, ship repair manager, director of operations, marketing manager and senior ship 

repair manager. Between 1991 and 2002, Mr. Boey joined the Ngee Ann Polytechnic, School of Engineering 

as a lecturer and focused on lecturing in shipbuilding and offshore engineering. In 2002, Mr. Boey was 

seconded as a manager to Keppel Offshore & Marine Ltd. where he spent two years in the industrial 

engineering sector and assisted the company with its staff training. From 2004 to 2006, Mr. Boey was a course 

manager at the Ngee Ann Polytechnic, School of Engineering, where he was the head of the marine and 

offshore technology programme. Mr. Boey graduated with a degree of Bachelor of Science in Marine 

Engineering from the University of Newcastle upon Tyne in UK in 1981. He also obtained a Master of Science 

in Industrial and Systems Engineering from the National University of Singapore in 1996 and a Master of 

Science in Offshore Engineering from the University of Heriot Watt in Edinburgh in 1997. Mr. Boey is a 

Chartered Engineer registered with the Engineering Council in UK. In addition, Mr. Boey is a member of the 

Institute of Marine Engineering, Science & Technology, UK and member of the Society of Navel Architects 

and Marine Engineers of Singapore. 

Chia Chuan Hak joined us in 2005 as our Procurement Manager. He is responsible for overseeing the 

purchasing functions, including the purchase of shipbuilding equipment and materials from suppliers. He also 

manages our inventory in Batam, Indonesia. Mr. Chia began his career in 1980 with Selco Shipyard Pte. Ltd. 

as a buyer in the purchasing department. In 1985, he joined Pan-United Shipping Pte. Ltd. where he spent the 

next 20 years in various roles including the trading manager in charge of the trading of bulk commodities, the 

human resource manager and the senior manager. Mr. Chia attained the Singapore-Cambridge General 

Certificate of Education Ordinary Level Examination Pass in 1976. 

Chong Sieh Jiuan joined us in April 2008 as our Chief Accounting Officer. She is responsible for the 

financial and accounting functions of our Company. Ms Chong has more than 10 years of experience in 

accounting and financial management. Ms Chong worked for Deloitte & Touche between 1994 and 2003. 

There, she started out as an auditor with and was involved in auditing and projects relating to pre-acquisition 

due diligence and public offerings. She joined CC Yang & Co in 2005 as an associate director where she had 

a varied portfolio focusing on auditing, pre-acquisition due diligence work and other investigative work. She 

subsequently resigned from CC Yang & Co in early 2008. In 1994, Ms Chong was conferred a degree of 

Bachelor of Accountancy by Nanyang Technological University. She currently is a non-practising member of 

the Institute of Certified Public Accountants of Singapore. 

Chua Peng Chua joined us in 2007 as our General Manager. He is in charge of day-to-day business of PT 

Batamec. Mr. Chua has over 37 years of experience in the management line. Prior to joining us, from 1969 to 

1990, Mr. Chua was with Keppel Corporation Limited where he started his marine profession and advanced to 

130

attain the position of general manager. In 1990, Mr. Chua became the director of Mondo Beni (Singapore) Co. 

Pte. Ltd. and was responsible for the trading activities of the company. From 1992 to 2007, Mr. Chua was a 

director and general manager with Pan-United Marine Limited and was responsible for shipbuilding and ship 

repair. In 1989, Mr. Chua graduated with a Diploma in Management Studies from Singapore Institute of 

Management. Mr. Chua obtained the Shipbuilding Certificate and Welding Certificate from City & Guilds of 

London Institute respectively in 1970 and 1972. As the recipient of the Colombo Plan Scholarship awarded by 

the Public Service Commission of Singapore, he received training in Japan between 1978 and 1979. 

Goh Chwee Bock joined us in 2006 as our Assistant General Manager (Commercial) of PT Batamec and 

is responsible for the general management and business development of our shipyard. Mr. Goh has over 

40 years of experience in shipbuilding industry. Between 1967 and 1988, Mr. Goh worked for Keppel Shipyard 

Limited in various positions and advanced to become the general manager of Western Eagle Pte. Ltd., a 

subsidiary of Keppel Shipyard Limited, responsible for overseeing the general management. In 1988, he started 

his own engineering business with emphasis on float repair works. In 1996, he joined Labroy Marine Limited 

as the assistant general manager to lead their shipyard in Batam, Indonesia where he was in charge of ship 

repair works. Between 1997 and 2001, he worked for PT Pan-United Shipyard in Batam as the assistant 

general manager, where he was responsible for administration, engineering, repair and safety. Between 2001 

and 2006, Mr. Goh was the assistant general manager with PT Jaya Asiatic Shipyard in Batam and his role 

included administration, finance, purchase, maintenance, quality control and safety. Mr. Goh has completed 

two training courses provided by marine engine manufacturer Sulzer Ltd. in Switzerland and Wärtsilä 

Corporation in Finland. Mr. Goh attained the Singapore-Cambridge General Certificate of Education Ordinary 

Level Examination Pass in 1966. 

Kan Kwok Yuen joined us in 2005 as our Technical Manager. He is responsible for shipbuilding projects 

in China, inclusive of quality assessment and quality control. Prior to joining us, from 1994 to 2005 Mr. Kan 

was a manager with Pan-United Marine Limited, where his role covered quality assurance and environment, 

health and safety, production and the local industry upgrading programme. His expertise also extended to 

economic development board projects. In 1988, Mr. Kan graduated from the Hong Kong Polytechnic with a 

Certificate in Ships and Naval Architecture. In 2004, Mr. Kan gained the qualification of Internal Quality, 

Environment, Health and Safety Management System Auditor. In 2005, he qualified as Environment Management 

System Auditor by completing the Institute of Environmental Management and Assessment Approved 

Advanced Environment Management System Auditing Course for Quality Personnel, which was jointly 

provided by the Regional Institute of Environmental Technology, the Institute of Environmental Management 

and Assessment and Singapore Environment Council. 

Koh Keng Teck @ Koh Gan Pin joined us in 2007 as our General Manager for OM Offshore. Mr. Koh 

has more than 30 years of experience in project management for the construction of the engineering, 

procurement, construction and commissioning contracts for offshore drilling rigs. Mr. Koh was a gas plant 

supervisor with Public Utilities Board of Singapore between 1972 and 1973. In 1973, he joined Sembawang 

Shipyard Pte. Ltd. as a technical assistant in the area of construction of offshore projects. In 1974, Mr. Koh 

joined Far East Levingston Shipbuilding Limited (presently known as Keppel FELS Limited) where he was 

the project superintendent responsible for the construction of oil rigs. In 1980 he was promoted to senior 

project manager in charge of project management for delivering eight drilling rigs. Between 1992 and 1993, 

Mr. Koh was the general manager of Offshore Procurement Management Pte. Ltd. where he led the 

procurement management. In 1994, he rejoined Far East Levingston Shipbuilding Limited. His primary duties 

include supervising the turnkey floating production, storage and offloading projects. From 1996 till 2005, 

Mr. Koh was involved in his own real estate business. Before joining us, Mr. Koh was the senior project 

manager with PPL Shipyard Pte. Ltd. from 2006 to 2007. Mr. Koh graduated with a Technician Diploma in 

Mechanical Engineering in 1972 from the Singapore Polytechnic. He also received a Diploma in Industrial 

Management in 1980 from the Singapore Polytechnic. 

Lum Kin Wah joined us in 2003 as the Senior General Manager of PT Batamec. He was promoted to his 

present position of Group General Manager (Operation) in 2007 and is responsible for the general management 

of all shipyard activities including new construction projects and yard development. He is also supervising all 

of our shipbuilding activities in China. Mr. Lum has more than 35 years of experience in marine industry. 

From 1972 to 1988, Mr. Lum worked for Keppel Shipyard Limited in various roles, including apprentice, 

journey man, project engineer, ship repair manager and steel works section head. Between 1988 and 1990, he 

moved to Keppel Philippines Shipyard Inc. where he assumed managerial duties as yard manager, director and 

eventually vice president to oversee all operations of ship repair and new constructions. In 1990, he returned 

to Keppel Shipyard Limited as the steelworks manager to head all steelworks activities. Between 1991 and 

1997, he worked for Pan-United Shipyard Pte. Ltd. as the assistant general manager, where he managed all 

131

operational activities at the shipyard. From 1997 to 2000, Mr. Lum was the general manager and a director of 

PT Pan-United Shipyard in Indonesia and he was responsible for devising the company’s policy and 

operational procedures for the finance, commercial, production, safety and engineering departments in 

connection with shipyard development and maintenance. In 2000, he joined Nexus Engineering Pte. Ltd. as 

the managing director, which is a member of Labroy engineering group. In late 2001, Mr. Lum was the 

executive director of Marine CadCam Pte. Ltd., where he specialised in ship modelling services utilising the 

TRIBON software. Mr. Lum received a Technician Diploma in Mechanical Engineering from the Singapore 

Polytechnic in 1978 and a Bachelor of Science degree in Naval Architecture from the University of 

Strathclyde, Scotland, UK in 1981. He is a Chartered Engineer registered with the Engineering Council, UK, 

and a member of the Royal Institution of Naval Architecture. He is also a member of the Society of Naval 

Architects and Marine Engineers Singapore. 

Ong Tian Khiam joined us in 2007 as the Managing Director of OM Offshore which spearheads our 

offshore division and development projects. Mr. Ong has over 37 years of working experience in shipbuilding 

and rigbuilding industries. Mr. Ong was a graduate management trainee at Sembawang Shipyard Pte. Ltd. 

from 1969 to 1970. Between 1970 and 1978, he worked for Far East Levingston Shipbuilding Limited, where 

he filled various managerial roles, including in the areas of mechanical engineering and project management. 

Between 1978 and 1989, Mr. Ong worked for Promet Private Limited, first as a shipyard manager, and then 

was subsequently appointed as the director and then promoted to position of the managing director, where he 

was responsible for overseeing the management of an offshore drilling rig fabrication yard. In 1989, Mr. Ong 

joined Sembawang Maritime Limited as the deputy managing director. He was later appointed as the director 

of international marketing to head Sembawang group of companies’ regionalisation efforts. In 1994, he shifted 

to Sembawang Bethlehem Pte. Ltd. where he was the managing director in charge of the shipbuilding and 

rigbuilding business. From 1995 to 1997, Mr. Ong returned to Sembawang Shipyard Pte. Ltd. to assume the 

role of the managing director in charge of special projects and he was named in 1996 as the president director 

of PT Karimun Sembawang Shipyard. Prior to joining us, Mr. Ong was the managing director of PPL Shipyard 

Pte. Ltd. where he helped the company to further expand its oil rig related business. Mr. Ong graduated with a 

Bachelor of Engineering from the University of Singapore in 1969. Mr. Ong is also a registered member of the 

Singapore Professional Engineers Board and a member of the Institute of Engineers, Singapore. 

Ooi Kok Chye joined us in 2002 as our Financial Controller. He is responsible for financial management, 

banking and credit facilities, consultation on Indonesian tax matters, legal issues and financial forecast and 

review. Mr. Ooi has more than 10 years of experience in accounting, taxation and financial management. In 

1990, Mr. Ooi started out as an auditor with Chio Lim & Associates, where he was involved in statutory audit, 

receivership and consultancy. In 1991 he joined Singapore Shinei Sangyo Pte. Ltd. as a cost accountant, 

responsible for product costing, budgetary matters, stock and management reports. From 1992 to 1995, Mr. Ooi 

was an accountant at Neptune Orient Lines Limited and his areas of responsibility covered corporate finance, 

audit, treasury, tax and budgeting. Mr. Ooi was a senior accountant at Sembawang Shipyard Pte. Ltd. from 

1996 to 2001 and was primarily responsible for accounting, tax and audit matters. In November of 1989, he 

successfully completed the examination of the Chartered Institute of Management Accountants. Mr. Ooi 

received a Diploma in Commerce (Management Accounting) in 1990 from Tunku Abdul Rahman College in 

Malaysia. 

Roy Yap Meng Loong joined us in 2005 as our Manager (Special Projects) and is in charge of 

sophisticated ship-building projects. In 1999, he was the assistant project manager (engineering) with 

Sembawang Shipyard Pte. Ltd., overseeing engineering project management and procurement and he was 

subsequently promoted to a quality assurance and quality control manager position, where he was responsible 

for overseeing all quality assurance and quality control programmes. Between 2000 and 2004, Mr. Yap was 

the chairman for the Marine Group of the Local Industry Upgrading Programme with the Singapore Economic 

Development Board. In that capacity, he was responsible for overseeing the subcontractor upgrading and 

technology development programmes for the marine industry. In 2001 he was also appointed as a manager for 

Joint Shipyard Technologies Pte. Ltd. to oversee the funding management of the Agency for Science, 

Technology and Research for the technology development of seven major shipyards of Keppel Corporation 

Limited, Sembawang Corporation Limited and Singapore Technologies Engineering Ltd. In 1997, he graduated 

with a Diploma in merit in Shipbuilding and Offshore Engineering from the Ngee Ann Polytechnic and in the 

same year, he was awarded the Sembawang Shipyard Scholarship. In 1999, he obtained a Bachelor of 

Engineering (Hons) in Marine Technology from University of Newcastle upon Tyne. Mr. Yap is a member of 

Royal Institution of Naval Architects (RINA) and is qualified as an ISO 9000:2000 Series Lead Auditor. 

See Kian Heng joined us as our Chief Financial Officer in 2007. He is responsible for our financial 

control matters. Mr. See has comprehensive experience in general and financial management for public listed 

132

companies both in Singapore and overseas. In 1995, Mr. See joined Hong Leong group of companies as the 

group financial controller and was involved in finance, general and personnel administration. From 1998 to 

2000, Mr. See worked as the general manager of Falmac Limited, a listed company on SGX-ST, and later was 

promoted as their managing director to supervise finance, accounting, sales and operation activities. From 

2001 to 2002, Mr. See was the chief financial officer and chief operating officer of Ghim Li Holdings Pte. 

Ltd., which is related to GLG Corp Ltd., a company listed on the Australian Securities Exchange and his 

responsibilities there included finance, human resources, sale and marketing, business development and 

operation. In 2002, he joined Aussino International Corporation Pty Ltd., located in Perth, as their executive 

director and financial controller and was responsible for the finance, administration and personnel sectors in 

Australia. Between 2004 and 2006, Mr. See was the general manager in finance and administration at Quill 

Stationary Manufacturers Pty Ltd. where he headed the finance, administration, personnel and commercial 

sectors within the group. Mr. See graduated with a Bachelor of Business (Accounting) from Edith Cowan 

University in Australia in 1991. In 1992, he received his Master of Business Administration degree in Finance 

from Hull University in UK. He is a Certified Practising Accountant registered with the Australian Society of 

Certified Practising Accountants. In addition, he is also a member of the Marketing Institute of Singapore and 

a member of the Singapore Institute of Directors. 

Yeo Teng Kiet joined us in 2002 as our Senior Manager (Operation) of PT Batamec and is in charge of 

daily operational affairs at our shipyard. Mr. Yeo has more than 30 years of experience in the shipbuilding 

industry. In 1973, Mr. Yeo joined Sembawang Shipyard Pte. Ltd. where he received plenary training under an 

apprentice scheme and in 1977, upon completion of his trainee program, he became an engine fitter, later a 

trainee supervisor and subsequently he became a billing technician in 1979. Between 1983 and 1997, Mr. Yeo 

was a marine engineer with Neptune Ship Management Services Pte. Ltd., where he specialised in 

maintenance of shipboard machinery. From 1997 to 2002, Mr. Yeo rejoined Sembawang Shipyard Pte. Ltd. as 

the material, purchasing and logistic department manager at PT Karimun Sembawang Shipyard and took on 

the operational tasks at the shipyard. Mr. Yeo attained the Singapore-Cambridge General Certificate of 

Education Ordinary Level Examination Pass in 1972. 

There are no family relationships amongst any of our Directors, Executive Officers or Substantial 

Shareholders. 

Except for William Edward Alastair Morrison, who was appointed by our Company pursuant to Business 

Companion Investments’ obligation under the Exchangeable Loan Agreement, (see “Substantial Shareholders 

and Vendors — Exchangeable Loan Agreement — Conversion of the Exchangeable Loan to Shares — Appointment 

of a Director by SCPEL on Our Board of Directors”), none of our Directors or key Executive Officers 

have been appointed pursuant to any arrangement or understanding with a Substantial Shareholder, customer 

or supplier of ours, or other person. 

Service Agreements 

On 3 September 2008, our Company entered into Service Agreements with our Executive Directors, Yaw 

Chee Siew and Lee Kok Wah for an initial period of three years commencing with effect from the listing of 

our Company on the SGX-ST. Each Service Agreement may be terminated by either our Company or the 

relevant Executive Director by giving six months’ notice in writing. 

We may terminate their respective Service Agreements in the event any of the Executive Directors 

commit certain events of default described in their respective Service Agreements; including being convicted 

of felony, being dishonest, fraudulent with our Company and being guilty of any default, misconduct or wilful 

neglect in the discharge of his duties. 

Where the Director’s service is terminated by our Company for cause, or the Director resigns voluntarily 

other than for a good reason, or the Director dies during the term of his employment, the Director (or his 

estate, as the case may be) shall be entitled to receive his salary earned and accrued to the date of termination, 

plus any incentive bonus approved by the Board and earned but not paid for a completed fiscal year prior to 

termination. 

Where the Director’s service is terminated by our Company without cause or due to total disability of the 

Director, or if the Director resigns for a good reason, the Director shall be entitled: (i) to receive all payments 

due as his salary earned and accrued to the date of termination (ii) to receive any incentive bonus approved by 

the Board and earned but not paid for any completed fiscal year prior to termination (iii) to receive a pro rata 

portion of any incentive bonus for the fiscal year of termination (based on actual results for such fiscal year 

and the number of days in the fiscal year prior to termination), and (iv) to continue to participate in the our 

133

Company’s insurance scheme at our Company’s expense during the 6-month period following notice of 

termination, provided, that in the event the Director’s termination is due to a total disability, payment of all 

benefits and incentives under our Company’s policy to the Director shall be subject to reduction from time to 

time by the amount received from time to time by the Director under any disability insurance policy of our 

Company. 

The Service Agreements also contain non-competition, non-solicitation and confidentiality undertakings 

by each of the Executive Directors, which are effective throughout the term of their employment with our 

Company and for a period of 12 months after their employment with our Company ceases. Under the Service 

Agreements: (i) our Executive Chairman, Yaw Chee Siew will receive a monthly salary of S$40,000; and 

(ii) our Group Managing Director, Lee Kok Wah will receive a monthly salary of S$40,000. The monthly 

salaries mentioned herein exclude employers’ contributions to CPF. 

Our Company will reimburse our Executive Directors, certain expenses reasonably incurred by them in 

the performance of their duties, during the term of their Service Agreements such as transportation, 

communications and entertainment. The two Executive Director are each provided with a car. 

In respect of each financial year, none of our Executive Directors shall be eligible to receive a thirteenth 

month salary as a bonus. 

Profit Sharing Scheme 

As a performance incentive, we have a profit-sharing scheme pursuant to which certain of our Executive 

Directors, namely Yaw Chee Siew and Lee Kok Wah, are each entitled under their relevant Service 

Agreements and subject to the approval of our Remuneration Committee, to an incentive bonus, which is 

calculated based on the PBT (as defined below) as follows: 

Where the PBT does not exceed S$20.0 million ...................... Nil 

Where the PBT exceeds S$20.0 million but does not exceed 

S$30.0 million. ............................................ 0.50% of PBT 









Where the PBT exceeds S$80.0 million but is less than S$100.0 million .... 1.75% of PBT 

Where the PBT exceeds or is equivalent to S$100.0 million . ............ 2.00% of PBT 

For this purpose, “PBT” refers to our audited consolidated profit before tax excluding gains on 

exceptional items and extraordinary items. 

Save for the Service Agreements, the incentive bonuses that are provided for in the letters of employment 

with our Executive Officers and employees, there are no other bonus or profit sharing plans or any other 

profit-linked agreements or arrangements between our Company and any of our Executive Directors. 

Save as disclosed above, there are no existing or proposed service contracts entered into or to be entered 

into by our Company or any of our subsidiaries with any of our Executive Directors which provides for 

compensation in the form of stock options, or pension, retirement or other similar benefits, or other benefits, 

upon the termination of employment. 

Corporate Governance 

Our Directors recognise the importance of corporate governance and the high standards of accountability 

to our Shareholders and will follow closely the recommendations of the Code of Corporate Governance 2005 

issued in July 2005 (the “Code”). 

The Code recommends that the roles of executive chairman and chief executive officer be separated, to 

ensure an appropriate balance of power and increase accountability to shareholders. Keeping in line with this 

practice, Yaw Chee Siew is appointed as our Executive Chairman and Lee Kok Wah is appointed as our Group 

Managing Director. 

134

Our Board believes that Yaw Chee Siew should continue to lead us as executive chairman. Lee Kok Wah 

will manage our day-to-day operations and will be responsible for charting our strategic direction and growth. 

The Board has established three committees: (i) the Audit Committee; (ii) the Nominating Committee; 

and (iii) the Remuneration Committee. 

Audit Committee 

The Audit Committee comprises Reggie Thein, William Edward Alastair Morrison and Ng Chee Keong. 

The Chairman of the Audit Committee is Reggie Thein. The Audit Committee is required to meet periodically 

to perform the following functions: 

(i) assisting our Board in the discharge of its responsibilities on financial and accounting matters; 

(ii) reviewing the audit plans, scope of work and results of our audits compiled by our internal and 

external auditors; 

(iii) reviewing the co-operation given by our officers to the external auditors; 

(iv) nominating external auditors for re-appointment; 

(v) reviewing the integrity of any financial information presented to our Shareholders; 

(vi) reviewing interested person transactions, if any, and approving any repayments or prepayments, 

as the case may be, to Brizill International; 

(vii) reviewing potential conflicts of interest, if any; 

(viii) approving and reviewing all hedging policies and instruments to be implemented by us, if any; 

(ix) approving all investment instruments that are not principal protected; 

(x) reviewing and evaluating our administrative, operating and internal accounting controls and 

procedures; 

(xi) reviewing our risk management structure and any oversight of our risk management processes 

and activities to mitigate and manage risk at acceptable levels determined by our Board; and 

(xiii) reviewing the repayment of entrusted loans monthly to ensure that our financial performance 

and position are not compromised. 

Apart from the duties listed above, the Audit Committee is required to commission and review the 

findings of internal investigations into matters where there is any suspected fraud or irregularity, or failure of 

internal controls or infringement of any law, rule or regulation which has or is likely to have a material impact 

on our results of operations and/or financial position. Each member of the Audit Committee must abstain from 

voting on any resolution in respect of matters in which he is interested. 

Nominating Committee 

Our Nominating Committee comprises Ng Chee Keong, Reggie Thein and Craig Foster Pickett. The 

Chairman of the Nominating Committee is Ng Chee Keong. Our Nominating Committee is responsible for: 

(i) re-nomination of our Directors having regard to their contribution and performance, (ii) determining 

annually whether or not a Director is independent and (iii) deciding whether or not a Director is able to and 

has been adequately carrying out his duties as a director. 

The Nominating Committee decides how the Board’s performance is to be evaluated and proposes 

objective performance criteria, subject to the approval of the Board, which address how the Board has 

enhanced long-term Shareholders’ value. The Board has implemented a process to be carried out by the 

Nominating Committee for assessing the effectiveness of the Board as a whole and for assessing the 

contribution by each individual Director to the effectiveness of the Board. Each member of the Nominating 

Committee is required to abstain from voting on any resolutions and making any recommendations and/or 

participating in any deliberations of the Nominating Committee in respect of the assessment of his 

performance or re-nomination as director. 

Remuneration Committee 

Our Remuneration Committee comprises Ng Chee Keong, Reggie Thein and Craig Foster Pickett. The 

Chairman of the Remuneration Committee is Ng Chee Keong. Our Remuneration Committee is responsible 

135

for recommending to our Board a framework of remuneration for the Directors and key executives, and 

determining specific remuneration packages for each Director. The recommendations of our Remuneration 

Committee are submitted for endorsement by the entire Board. All aspects of remuneration, including but not 

limited to directors’ fees, salaries, allowances, bonuses, options and benefits in kind shall be covered by our 

Remuneration Committee. Each member of the Remuneration Committee is required to abstain from voting on 

any resolutions and making recommendations and/or participating in any deliberations of the Remuneration 

Committee in respect of his remuneration package. If a member of the Remuneration Committee has an 

interest in a matter being deliberated by the committee, he will abstain from participating in the review and 

approval process of our Remuneration Committee in relation to that matter. 

Compensation 

The compensation (which includes salaries, bonuses, benefits-in-kind, CPF contributions and Directors’ 

fees) paid or payable to our Directors and key Executive Officers for services rendered to us in all capacities 

for FY2006, FY2007 (being the last two most recent completed financial years) and the current financial year, 

in bands of S$250,000 per annum, was or is as follows: 

FY2006 FY2007 FY2008 

(Estimated) 

Directors 

Yaw Chee Siew ........................................ Band I Band I Band III 

LeeKokWah ......................................... Band II Band II Band III 

William Edward Alastair Morrison .......................... n/a n/a Band I 

Craig Foster Pickett ..................................... n/a n/a Band I 

Reggie Thein. ......................................... n/a n/a Band I 

Ng Chee Keong ........................................ n/a n/a Band I 

Executive Officers 

Ong Tan Khiam. ....................................... n/a Band I Band II 

LumKinWah......................................... Band II Band II Band II 

Chua Peng Chua ....................................... n/a Band I Band I 

KohKengTeck@KohGanPin ........................... n/a Band I Band I 

See Kian Heng ........................................ n/a Band I Band I 

Notes: 

(1) Band I means up to S$249,999 per annum, Band II means S$250,000 to S$499,999 per annum and Band III 

means S$500,000 to S$749,999 per annum. These bands do not include any compensation to be payable 

through the profit sharing scheme or the Share Award Scheme. 

(2) Craig Foster Pickett, William Edward Alastair Morrison, Reggie Thein, and Ng Chee Keong were only 

appointed as Directors in FY2008. 

(3) “n/a” means not applicable. 

We have not set aside or accrued any amounts for our Directors, Executive Officers and our employees to 

provide for pension, retirement or similar benefits (save for CPF contribution in Singapore). 

Board Practices 

At each AGM, one-third of the Directors for the time being (or, if their number is not a multiple of three, 

the number nearest to but not less than one-third) shall retire from office by rotation. A retiring Director shall 

be eligible for re-election. The Directors to retire in every year shall be those who have been longest in office 

since their last re-election or appointment. Except for our Group Managing Director, all Directors shall retire 

from office at least once every three years and shall be eligible for re-election. 

136

SHARE AWARD SCHEME 

On 2 September 2008, our Shareholders adopted an employee share award scheme known as the Otto 

Marine Share Award Scheme (the “Share Award Scheme”). 

In order for us to provide our Directors, executives and full-time employees (the “Participants”), a 

stronger and more lasting sense of identification with our Company, whereby the Participants are conferred 

rights by us to be issued or transferred Shares in our Company (“Award Shares”) or their cash equivalent or a 

combination of both (collectively, the “Award”), we have implemented this Share Award Scheme. 

The Share Award Scheme is a share incentive scheme and is an integral part of employee incentive 

compensation in our variable wage system. The Share Award Scheme is intended to motivate employees to 

achieve performance targets which will create and enhance economic value for our Shareholders. 

As at the Latest Practicable Date, no Awards have been granted under the Share Award Scheme. 

Objectives of the Share Award Scheme 

The objectives of the Share Award Scheme: 

(a) to motivate the Participants to optimise their performance standards, productivity and efficiency, 

to strive towards performance excellence and to maintain a high level of contribution to us by relating 

their total remuneration to our performance; 

(b) to make employee remuneration sufficiently competitive to attract potential employees with 

relevant skills and to recognise employee contributions; 

(c) to retain our key employees and Directors of us whose contributions are essential to our longterm 

growth and profitability; 

(d) to promote commitment, dedication and instill loyalty in our employees, thereby resulting in a 

stronger identification and long-term prosperity in our Company; and 

(e) to foster an ownership culture within our Group which aligns the interest of the Participants with 

the interest of the Shareholders. 

Summary of the Share Award Scheme 

Eligibility 

The following persons (provided that such persons are not undischarged bankrupts at the relevant time) 

shall be eligible to participate in the Share Award Scheme at the absolute discretion of a committee comprising 

of our Directors, duly authorised, appointed and nominated by the Board pursuant to administer the Share 

Award Scheme (the “Share Award Committee”): 

(a) Persons who have attained the age of 21 years on or before the relevant date of the Award; and 

(b) Directors, executives and full time employees. 

The following persons will not be eligible to participate in the Share Award Scheme: 

(a) Directors and employees who are Controlling Shareholders or Associates of a Controlling 

Shareholder (as defined in the rules of the Share Award Scheme) would not be eligible to participate in 

the Share Award Scheme; and 

(b) Lee Kok Wah, our present Group Managing Director. 

Except as provided above, there shall be no restriction on the eligibility of any Participant to participate 

in any other share option or share incentive schemes implemented by us. 

Subject to the Act and any requirement of the SGX-ST, the terms of eligibility for participation in the 

Share Award Scheme may be amended from time to time at the absolute discretion of the Share Award 

Committee. 

Award 

Awards represent the right of a Participant to receive fully paid Award Shares, their equivalent cash value 

or combinations thereof free of charge, upon the Participant achieving prescribed performance targets and 

upon expiry of the prescribed vesting periods. Performance targets set under the Share Award Scheme are 

137

intended to be based on medium-term corporate objectives covering market competitiveness, quality of returns, 

business growth and productivity growth. The performance targets are stretched targets aimed at sustaining 

long-term growth. Examples of performance targets to be set include targets based on criteria such as sales 

growth, and return on investment. 

The selection of a Participant and the number of Award Shares which are the subject of each Award to be 

granted to a Participant in accordance with the Share Award Scheme shall be determined at the absolute 

discretion of the Share Award Committee, which shall take into account criteria such as his rank, job 

performance and potential for future development, his contribution to our success and development and the 

extent of effort required to achieve the performance target within the performance period. 

Notwithstanding the above, the total number of Award Shares which are the subject of each Award to be 

granted to a Participant shall not exceed 25.0% of the total Award Shares in respect of which we may grant 

Awards. 

The Share Award Committee shall decide, in relation to each Award to be granted to a Participant: 

(a) the date on which the Award is to be vested; 

(b) the number of Award Shares which are the subject of the Award; 

(c) the prescribed performance targets; 

(d) the prescribed vesting periods; 

(e) the performance period during which the prescribed performance targets are to be satisfied; 

(f) the extent to which the Award Shares under that Award shall be released on the prescribed 

performance targets being satisfied (whether fully or partially) or exceeded, as the case may be, at the 

end of the prescribed performance period and upon the expiry of the prescribed vesting period; and 

(g) such other condition which the Share Award Committee may determine in relation to that 

Award. 

Awards may be granted at any time in the course of a financial year. An Award letter confirming the 

Award and specifying, inter alia, in relation to the Award, the prescribed performance target(s) and the 

performance period during which the prescribed performance target(s) are to be attained or fulfilled and the 

vesting period (the length of which will be determined on a case-by-case basis by the Share Award 

Committee), will be sent to each Participant as soon as reasonably practicable after the making of an Award. 

Special provisions for the vesting and lapsing of Awards apply in certain circumstances, including the 

following: 

(a) the termination of the employment of a Participant; 

(b) the ill health, injury, disability or death of a Participant; 

(c) the bankruptcy of a Participant; 

(d) the misconduct of a Participant; 

(e) the Participant, being a Non-executive Director, ceasing to be our Director for any reason 

whatsoever; and 

(f) a take-over, winding-up or reconstruction of our Company. 

The grant of an Award to a Participant shall be accepted by the Participant within 30 days from the date 

of grant. The Participant may accept or refuse the whole but not part of a grant of an Award. If the grant of an 

Award is not accepted by the Participant within 30 days from the day of the grant, the offer shall upon the 

expiry of the 30-day period automatically lapse and shall be null and void. 

Size and Duration of the Share Award Scheme 

The total number of Award Shares which may be issued pursuant to Awards granted under the Share 

Award Scheme shall not exceed 15.0% of the issued share capital of our Company on the day preceding the 

relevant date of the Award. The number of existing Shares which may be purchased from the market for 

delivery upon vesting of the Awards granted under the Share Award Scheme, will not be subject to any limit. 

Alternatively, we may make a release of Awards in cash instead of Award Shares and Participants entitled to 

138

such Awards will receive in lieu of Award Shares, the aggregate market value of such Award Shares. Such 

methods will not be subject to any limit as they do not involve the issue of any new Shares. 

The Share Award Scheme shall continue in force at the discretion of the Share Award Committee, subject 

to a maximum period of 10 years commencing on the date the Share Award Scheme is adopted by us in 

general meeting, provided always that the Share Award Scheme may continue beyond the above stipulated 

period with the approval of Shareholders by ordinary resolution in general meeting and of any relevant 

authorities which may then be required. 

Notwithstanding the expiry or termination of the Share Award Scheme, any Awards made to Participants 

prior to such expiry or termination will continue to remain valid. 

Operation of the Share Award Scheme 

The Share Award Scheme shall be administered by the Share Award Committee in its absolute discretion 

with such powers and duties as are conferred on it by the Board, provided that no member of the Share Award 

Committee shall participate in any deliberation or decision in respect of Awards granted or to be granted to 

him. 

Subject to prevailing legislation and SGX-ST guidelines, we will have the flexibility to deliver Award 

Shares to Participants upon vesting of their Awards by way of an issue of new Shares deemed to be fully paid 

upon their issuance and allotment and/or by way of the transfer of treasury shares (by way of purchase of 

existing Shares from the market for delivery to the Participants). The financial effects of the issue of new 

Shares and/or transfer of treasury shares to the Participants upon vesting of the Awards are set out somewhere 

else in this summary. 

In determining whether to issue new Shares or to purchase existing Shares and transfer them to 

Participants for purposes of satisfying Awards, we shall have the right to take into account factors such as (but 

not limited to) the number of Award Shares to be delivered, the prevailing market price of the Shares and our 

cost of either issuing new Shares, or purchasing existing Shares. 

New Shares allotted and issued and/or treasury shares transferred, upon the release of an Award shall: 

(a) be subject to all the provisions of the Memorandum and Articles of Association; and 

(b) rank for any dividend, right, allotment or other distribution on the date the Award Shares are 

vested in the Participant and (subject as aforesaid) will rank pari passu in all respects with the Shares 

then existing. 

We have the flexibility and if circumstances require, to approve the release of an Award, wholly or partly, 

in the form of cash upon the settlement of such Award rather than Award Shares. In determining whether to 

release an Award, wholly or partly, in the form of cash rather than Award Shares, we will take into account 

factors such as (but not limited to) our cost of releasing an Award, wholly or partly, in the form of cash rather 

than Award Shares. In considering the cost factor, we will take into account relevant factors such as taxation 

issues arising from the issue of new Shares and/or purchase of existing Shares and the payment of cash, the 

availability of cash for payment and the cost of funding the cash payment, if necessary. For example, we may 

determine that it is more tax efficient to release a particular Award in the form of cash so that such cash 

payment can be treated as a deductible expense for that financial year during which our Company is 

profitable. 

The Share Award Committee has the right to make reference to the audited results of our Company or 

our Group, as the case may be, to take into account such factors as the Share Award Committee may 

determine to be relevant, including changes in accounting methods, taxes and extraordinary events, and the 

right to amend the performance target(s) if the Share Award Committee decides that a changed performance 

target would be a fairer measure of performance. 

Adjustments and Alterations Under the Share Award Scheme 

Variation of Capital 

If a variation in our issued ordinary share capital (whether by way of a capitalisation of profits or reserves 

or rights issue, reduction, subdivision, consolidation or distribution) shall take place, then: 

(a) the number of Award Shares which are the subject of an Award to the extent not yet vested; 

and/or 

139

(b) the number of Award Shares over which future Awards may be granted under the Share Award 

Scheme, 

shall be adjusted in such manner as the Share Award Committee may determine to be appropriate. 

Unless the Share Award Committee considers an adjustment to be appropriate: 

(a) the issue of securities as consideration for an acquisition or a private placement of securities; 

(b) the increase in the number of issued Shares as a consequence of the exercise of options or other 

convertibles entitling holders of such options or convertibles to acquire Shares in our capital; 

(c) the cancellation of issued Shares purchased or acquired by us by way of a market purchase of 

such Shares undertaken by us on the SGX-ST during the period when a share purchase mandate granted 

by the Shareholders (including any renewal of such mandate) is in force; and 

(d) the increase in our issued share capital as a consequence of the delivery of Award Shares 

pursuant to the vesting of Awards from time to time by us or through any other share-based incentive 

schemes implemented by us, 

shall not normally be regarded as a circumstance requiring adjustment. 

Any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by the Auditors 

(acting only as experts and not arbitrators) to be in their opinion, fair and reasonable. 

Modifications to the Share Award Scheme 

Any or all the provisions of the Share Award Scheme may be modified and/or altered at any time and 

from time to time by resolution of the Share Award Committee, except that: 

(a) any modification or alteration which would be to the advantage of Participants under the Share 

Award Scheme shall be subject to the prior approval of the Shareholders in general meeting; and 

(b) no modification or alteration shall be made without due compliance with the Listing Manual and 

such other regulatory authorities as may be necessary. 

The Share Award Committee may at any time by resolution (and without other formality, save for the 

prior approval of the SGX-ST) amend or alter the rules or provisions of the Share Award Scheme in any way 

to the extent necessary to cause the Share Award Scheme to comply with any statutory provision or the 

provision or the regulations of any regulatory or other relevant authority or body (including the SGX-ST). 

Written notice of any modification or alteration made in accordance with this rule shall be given to all 

Participants. 

Rationale for Participation by Non-executive Directors (Including Independent Directors) in the Share 

Award Scheme 

Our Non-executive Directors come from diverse professions and working backgrounds. Although they are 

not involved in the day-to-day running of our operations, they are able to contribute their extensive experience, 

knowledge, expertise and business contacts to our benefit and assist in our business interests. They may also 

be able to provide us with strategic or significant alliances or opportunities. We therefore regard our Nonexecutive 

Directors as a resource pool from which we are able to tap business contacts, knowledge, expertise 

and experience. 

Our Non-executive Directors are presently also members of our Audit Committee, our Remuneration 

Committee and Nominating Committee. Each of these committees plays important roles in our corporate 

governance. 

Currently, our Non-executive Directors are remunerated only by way of Directors’ fees. Allowing the 

Non-executive Directors to participate in the Share Award Scheme provides us with a further avenue of 

acknowledging the services and contributions to us and to reward and give recognition to such services and 

contributions through a combination of fees and Awards. This flexibility is important since it may not always 

be possible to compensate Non-executive Directors fully or appropriately by increasing the Directors’ fees or 

by other forms of cash payment. Having a flexible remuneration system will enable us to continue to attract 

individuals of great ability and aptitude to serve as Non-executive Directors. In the long-run, this will help 

ensure the continuity of good corporate governance by us. 

140

However, as the Share Award Scheme is intended to cater primarily to our employees, our Directors 

anticipate that Awards to be granted to our Non-executive Directors pursuant to the Share Award Scheme 

would not comprise a significant portion of the Shares available under the Share Award Scheme. Further, in 

order to minimise any potential conflict of interests which may arise as a result of granting Awards to Nonexecutive 

Directors who are also members of our Audit Committee, Remuneration Committee or Nominating 

Committee, any grant of Awards to Non-executive Directors is anticipated to be minimal, with such grants 

being made as a token of our Company’s appreciation for their contributions to us and to help further align 

their interests with those of our Shareholders. Our Non-executive Directors would generally, continue to be 

remunerated for their services by way of Directors’ fees. 

Financial Effects to the Share Award Scheme 

Financial Reporting Standard 102 (“FRS 102”) relating to share-based payment was issued by the 

Singapore Council of Corporate Disclosure and Governance in July 2004 and takes effect for all listed 

companies for financial periods beginning on or after 1 January 2005. The Awards, if settled by way of issue 

of new Shares or the purchase of existing Shares, would be accounted for as equity-settled share-based 

transactions, as described in the following paragraphs. 

The fair value of employee services received in exchange for the grant of the Awards would be 

recognised as a charge to the profit and loss account over the period between the grant date and the vesting 

date of an Award. The total amount of the charge over the vesting period is determined by reference to the fair 

value of each Award granted at the grant date and where there are non-market conditions attached (see the 

following paragraph), the number of Award Shares vested at the vesting date, with a corresponding credit to 

reserve account. Before the end of the vesting period, at each accounting year end, the estimate of the number 

of Awards that are expected to vest by the vesting date is subject to revision, and the impact of the revised 

estimate will be recognised in the income statement with a corresponding adjustment to the reserve account. 

After the vesting date, no adjustment to the charge to the income statement will be made. This accounting 

treatment has been referred to as the “modified grant date method” because the number of Award Shares 

included in the determination of the expense relating to employee services is adjusted to reflect the actual 

number of Award Shares that eventually vest but no adjustment is made to changes in the fair value of the 

Award Shares since the grant date. 

The amount charged to the profit and loss account would be the same whether we settle the Awards by 

issuing new Shares, or transferring treasury shares. The amount of the charge to the profit and loss account 

also depends on whether or not the performance target attached to an Award is a “market condition”, that is, a 

condition which is related to the market price of the Shares. If the performance target is a market condition, 

the probability of the performance target being met is taken into account in estimating the fair value of the 

Award Shares granted at the grant date and no adjustments to amounts charged to the profit and loss account 

is made if the market condition is not met. On the other hand, if the performance target is not a market 

condition, the probability of the target being met is not taken into account in estimating the fair value of the 

Award Shares granted at the grant date. Instead, it is subsequently considered at each accounting date in 

assessing whether the Awards would vest. Thus, where the vesting conditions do not include a market 

condition, there would be no charge to the profit and loss account if the Awards do not ultimately vest. 

In the event that the Participants receive cash, we shall measure the fair value of the liability at the grant 

date. Until the liability is settled, we shall re-measure the fair value of the liability at each accounting date and 

at the date of settlement, with changes in the fair value recognised in the income statement. 

Share Capital 

The Share Award Scheme will result in an increase in our issued share capital when new Shares are 

issued to Participants pursuant to the grant of the Awards. This will in turn depend on, inter alia, the number 

of new Shares comprised in the Awards to be issued. 

There will not be an effect on the share capital if existing Shares are purchased from the market on behalf 

of Participants upon the vesting of Awards. 

If instead of issuing new Shares to Participants, treasury shares are transferred to the Participants or our 

Company, the Share Award Scheme would have no impact on our total number of issued Shares. 

141

Net Tangible Assets (“NTA”) 

As described in the paragraph below, the Share Award Scheme will result in a charge to our profit and 

loss account equal to the fair value at each grant date and will have no impact to the consolidated NTA of our 

Company if new Shares are issued under the Share Award Scheme. However, if instead of issuing new Shares 

to Participants, existing Shares are purchased for delivery to Participants, the NTA would be impacted by the 

cost of the Shares purchased or the cash payment, respectively. 

Costs to Our Company 

Awards granted under the Share Award Scheme have a financial effect on us and are recognised as an 

expense to our Company. The expense will be based on the fair value of the Awards at each grant date and 

recognised at each reporting date. The requirement to recognise an expense in respect of Awards granted to 

employees is set out in FRS 102 and should be applied by listed companies. 

Pursuant to the circular on “Use of Treasury Shares to Fulfil Obligations under an Employee Equity- 

Based Remuneration Scheme” published by the Inland Revenue Authority of Singapore on 30 June 2006, 

where we decide to release Award Shares under an Award by way of a delivery of existing Shares at the end 

of the prescribed performance period and upon the expiry of the prescribed vesting period, we will be 

accorded a tax deduction, as an actual outlay is incurred by us in purchasing or acquiring our own Shares for 

this purpose. 

Disclaimer 

Notwithstanding any provisions herein contained, the Board, the Share Award Committee and we shall 

not under any circumstances be held liable for any costs, losses, expenses and damages whatsoever and 

howsoever arising in any event, including but not limited to the delay in issuing the new Shares or applying 

for or procuring the listing of the new Shares to be issued pursuant to the vesting of Awards granted under our 

Share Award Scheme on the SGX-ST. 

142

SUBSTANTIAL SHAREHOLDERS AND VENDORS 

Shareholders 

Our Directors, Substantial Shareholders and Cornerstone Investors and their respective shareholdings 

immediately before and after the Offering are set out below: 

Before the Offering Immediately after the Offering 

Direct Interest Deemed Interest Direct Interest Deemed Interest 

No. of 

Shares % 

No. of 

Shares % 

No. of 

Shares % 

No. of 

Shares % 

’000 ’000 ’000 ’000 

Directors 

Yaw Chee Siew (1) 

..................... — — 877,500 90.00% — — 858,000 72.65% 

LeeKokWah........................ 97,500 10.00% — — 87,750 7.43% — — 

William Edward Alastair Morrison .......... — — — — — — — — 

Craig Foster Pickett .................... — — — — — — — — 

Reggie Thein ........................ — — — — — — — — 

Ng Chee Keong . . . .................... — — — — — — — — 

Substantial Shareholders 

CEO Technology Asia (2) ................. 48,750 5.00% — — 29,250 2.48% — — 

Business Companion Investments (3) .......... 828,750 85.00% — — 828,750 70.17% — — 

Public 

Standard Chartered Private Equity Limited (5) .... 

Cornerstone Investors 

— — 

(5) (5) 

— — 

Bangkok Bank (4) ...................... — — — — 39,215 3.32% — — 

Standard Chartered Private Equity Limited (4) .... — — — — 58,000 4.91% — — 

Maju Holdings (4) ...................... 

Others 

— — — — 49,019 4.15% — — 

Others (6) (including Reserved Shares (7) ) ....... — — — — 89,061 7.54% — — 

Total .............................. 975,000 100.00% — — 1,181,045 100.00% — — 

(5) (5) 

Notes: 

(1) Yaw Chee Siew is deemed to be interested in all the Shares held by CEO Technology Asia and Business 

Companion Investments under Section 4 of the SFA. 

(2) CEO Technology Asia is an investment holding company incorporated in BVI on 28 October 2005 and 

Yaw Chee Siew is its sole shareholder. 

(3) Business Companion Investments is an investment holding company incorporated in BVI on 12 November 

2007 and Yaw Chee Siew is its sole shareholder. 

(4) Each of Bangkok Bank, Maju Holdings and SCPEL has entered into a Cornerstone Share Subscription 

Agreement with our Company to purchase Shares for an amount of S$20,000,000, S$25,000,000 and 

S$29,580,000 (subject to rounding down to the nearest thousand Shares) respectively. Save as disclosed in 

“Directors and Senior Management”, there is no relationship between the Cornerstone Investors and the 

Directors, Substantial Shareholders of our Company and their Associates. 

(5) These do not include Shares subscribed under Cornerstone Share Subscription Agreement between SCPEL 

and us. SCPEL has certain options over these Shares under the Exchangeable Loan Agreement. The 

Exchangeable Loan was drawn down on 14 April 2008, by Business Companion Investments. Pursuant to 

the terms of the Exchangeable Loan Agreement, SCPEL may acquire Shares owned by Business Companion 

Investments by electing to be transferred Shares owned by Business Companion Investments in 

exchange for the Exchangeable Loan in two tranches of S$35.0 million each, along with the applicable 

accrued interest on each tranche owing to SCPEL (“Applicable Interest”), at certain pre-determined periods 

of time and at exchange prices based on certain pre-determined exchange formulas. See “— Exchangeable 

Loan Agreement”. 

By virtue of Section 4 of the SFA, SCPEL is deemed to be interested in the Shares as a result of the rights 

of exchange granted by Business Companion Investments over Shares owned by it to SCPEL as follows: 

(a) In relation to the first tranche of S$35.0 million, SCPEL can elect to convert it, together with the 

Applicable Interest as at the point of the first exchange, at an exchange price per Share of S$0.4743, 

which is 93.0% of the Offering Price, in accordance with the terms of the Exchangeable Loan 

143

Agreement. As the Applicable Interest for this tranche (which value depends on the date SCPEL 

chooses to exchange) is currently unascertainable, we are therefore unable to ascertain the full extent 

of SCPEL’s deemed interests in the Shares for this tranche. Purely for illustrative purposes only, on the 

basis that SCPEL only elects to exchange this first tranche of S$35.0 million into Shares (without taking 

into account the Applicable Interest in relation to this tranche), SCPEL is deemed to be interested 

in 73,792,958 Shares which represent (i) 7.6% of our issued share capital before the Offering and 

(ii) 6.2% of our issued share capital immediately after the Offering. Such figures are subject to change 

to the extent that the Applicable Interest accrued in relation to this tranche pursuant to the terms and 

conditions of the Exchangeable Loan Agreement is converted into Shares as well. 

(b) In relation to the second tranche of S$35.0 million, SCPEL can elect to convert it, together with the 

Applicable Interest as at the point of the second exchange at an exchange price per Share which will 

be an amount equivalent to 10 times the fully diluted earnings per Share, based on our audited consolidated 

accounts for FY2008. See “— Exchangeable Loan Agreement — Conversion of the Exchangeable 

Loan to Shares”. As the FY2008 fully diluted earnings per Share and the Applicable Interest for 

this second tranche (which value depends on the date SCPEL chooses to exchange) are currently 

unascertainable, this would mean that the number of Shares that SCPEL could exchange into is also 

presently unascertainable. Accordingly, we are unable to calculate the extent of SCPEL’s deemed interests 

in the Shares for the second tranche of S$35.0 million and its Applicable Interest. 

(6) WAP Asia Investment and Phillip Group have both indicated an interest to subscribe and or purchase 

Shares pursuant to the Offering. Phillip Group consists of Phillip Capital Management and Phillip Securities 

Pte. Ltd. and are beneficially owned by the same shareholders. Phillip Capital Management is engaged 

in the business of fund management. WAP Asia Investments is a company incorporated in the Cayman 

Islands and Mr William A. Pope is the ultimate beneficial owner. Mr William A. Pope is an American citizen 

and resides in the United States of America. Mr William A. Pope is the owner of Sunchase Investment 

LLC, one of the companies that Mr Craig Pickett (a non-executive Director of the Company) provides 

investment advisory services through (one of his clients being Mr Yaw Chee Siew). Also, Mr William A. 

Pope and Mr Yaw Chee Siew are business partners by virtue of being shareholders with equal shareholdings 

in a Luxemburg company which owns a French real estate company. Save as disclosed, there is no 

other relationship between WAP Asia Investments and the Directors, Substantial Shareholders of our Company 

and their Associates. 

(7) We intend to offer 8,915,000 Reserved Shares to certain of our employees who have contributed to our 

success and development. Should they accept the Reserved Shares, they may hold, dispose of or transfer 

all or part of their respective shareholdings in our Company after the Shares are listed on the SGX-ST. 

Any discrepancies between the listed amounts and the total thereof are due to rounding. Accordingly, the 

total figure shown may not be an arithmetic aggregation of the figures which precede them. 

Apart from Yaw Chee Siew, none of our other Shareholders have any deemed interest in the Shares. 

Each of the Shareholders has confirmed that it/he does not hold any Shares on trust for any person as at 

the date of this document. 

Save as disclosed in this document, there is no relationship between our Directors, key Executive Officers 

and Substantial Shareholders. Save as disclosed above, none of our Directors, our Executive Officers and 

employees has 5.0% or more in the issued and paid up share capital of our Company after the Offering. Save 

as disclosed above, to the best of the knowledge of our Directors, our Company is not directly or indirectly 

owned or controlled, whether severally or jointly, by any other corporation, any government or other natural or 

legal person. 

There has not been any public take-over offer by a third party in respect of our Shares or by us in respect 

of the shares of another corporation or the units of a business trust, which has occurred between the beginning 

of the most recent completed financial year and the Latest Practicable Date. 

The Shares held by our Directors and Substantial Shareholders do not carry different voting rights from 

the New Shares which are the subject of the Offering. 

144

Information on Cornerstone Investors 

Bangkok Bank 

Bangkok Bank Public Company Limited is a public limited company registered in the Kingdom of 

Thailand. Its main business is commercial banking which is conducted through a network of branches in 

Thailand and certain other countries in Asia and a branch each in the United Kingdom and United States of 

America. 

SCPEL 

SCPEL, which is incorporated in Hong Kong, is a subsidiary of Standard Chartered Bank and its principal 

business is to undertake private equity investments. SCPEL makes investments in mid to late stage companies 

in need of expansion capital or acquisition finance, and in management buy-outs. SCPEL has offices in 

Singapore, Hong Kong and India and invests in companies located in the People’s Republic of China, Korea, 

South East Asia and India. 

Maju Holdings 

Maju Holdings is a private limited company incorporated in Malaysia and has been in business since 

1978. Its principal areas of business are engineering, construction, steel manufacturing, fabrication and 

erection, property development and trading. Maju Holdings is a major shareholder of Perwaja Holdings Bhd, a 

company listed on the Bursa Malaysia Securities Berhad. Perwaja Steel Sdn Bhd is a wholly owned subsidiary 

of Perwaja Holdings Bhd. 

Exchangeable Loan Agreement 

Pursuant to the Exchangeable Loan Agreement, SCPEL has provided an exchangeable loan in an amount 

of S$70.0 million (the “Exchangeable Loan”) to Business Companion Investments, a company wholly-owned 

by Yaw Chee Siew, with a term of three years from 8 April 2008, and an interest rate of 5.0% per annum. The 

Exchangeable Loan may be exchanged into Shares by SCPEL in accordance with the terms described below 

or repaid in its entirety in one instalment on its maturity date, which is the day ending three years from 8 April 

2008. 

Under the Exchangeable Loan Agreement, Business Companion Investments has granted to SCPEL the 

right to exchange into Shares owned by Business Companion Investments exerciseable within certain predetermined 

periods of time and at exchange prices based on certain exchange formulas. 

Conversion of the Exchangeable Loan to Shares 

Subject to adjustment provisions contained in the Exchangeable Loan Agreement, SCPEL has the right to 

exchange all or part of the Exchangeable Loan along with the accrued interests into Shares owned by Business 

Companion Investments in the following manner: 

1. the first tranche of S$35.0 million together with Applicable Interest may be exchanged within one 

month commencing from the date of expiry of the Moratorium Period, at an exchange price per Share of 

93.0% of the Offering Price; 

2. the second tranche of S$35.0 million together with Applicable Interest may be exchanged within 

(a) three months after the date of release by us of our audited consolidated accounts on SGXNET for 

FY2008 or (b) one month commencing from the date of expiry of the Moratorium Period, whichever is 

later, at an exchange price per Share equivalent to an amount 10 times the fully diluted earnings per 

Share based on our audited consolidated accounts for FY2008. For this purpose, earnings per Share will 

be calculated by dividing the total of: 

(i) the audited consolidated profits of our Company after tax and minority interests for FY2008 

but excluding any gains from sale of assets other than in the ordinary course of business, less 

(ii) foreign exchange gains in excess of 10% of the profits calculated in accordance with the 

paragraph (i) above, by the number of issued Shares including Shares awarded under the Share 

Award Scheme and Shares outstanding under any option granted, as at the date of the exchange. 

145

In the context of the Offering, the other salient terms of the Exchangeable Loan Agreement are as 

follows: 

Undertakings by Each of Yaw Chee Siew and Business Companion Investments 

Each of Business Companion Investments and Yaw Chee Siew, has warranted and undertaken to SCPEL 

that until the date all amounts outstanding under the Exchangeable Loan Agreement have been fully repaid to 

SCPEL, among others: 

(a) save in connection with the Offering, in the event that our Company undertakes any corporate 

action which dilutes the interest of SCPEL in our Company or varies the rights attaching to any of the 

Shares owned by Business Companion Investments which may be transferred to SCPEL upon conversion 

of the Exchangeable Loan without the prior written consent of SCPEL (such consent not to be 

unreasonably withheld), including but not limited to, a capital reduction exercise, a bonus issue, a capital 

distribution, then SCPEL shall be entitled at its sole discretion to elect to: 

(i) to the extent that SCPEL has not exercised its conversion rights under the Exchangeable 

Loan Agreement, receive the rights or entitlements from Business Companion Investments pursuant 

to the aforesaid corporate actions that a Shareholder receives or is entitled to exercise as if SCPEL 

were a Shareholder, on the same terms and conditions as the Shareholders who are entitled to receive 

or exercise such rights as aforesaid, subject to SCPEL making payment to Business Companion 

Investments of the necessary consideration that the Shareholders exercising or receiving such rights 

as aforesaid are required to pay to our Company. The amount of such rights and entitlements that 

SCPEL is entitled to receive under the aforesaid corporate actions shall be in the proportion to which 

SCPEL’s shareholding in our Company (which shall be of an amount equivalent to the Exchangeable 

Loan and the Applicable Interest) bears to the total number of Shares (including, if applicable, 

Shares which have not fully vested) adopted for the calculation of the rights or entitlements due to 

Shareholders as at our Company’s books closure date in relation to the aforesaid corporate actions if 

the Exchangeable Loan and the Applicable Interest had been capitalised; or 

(ii) adjust the exchange price payable for the conversion of the Exchangeable Loan into Shares 

in accordance with certain adjustment mechanism specified in the Exchangeable Loan Agreement, 

(b) it/he shall not, without the prior written consent of SCPEL or the Director appointed by SCPEL: 

(i) create or have outstanding any encumbrance (save for the Moratorium Undertakings) in 

respect of (A) 60.0% or more of the Shares owned by Business Companion Investments; and (B) any 

of Yaw Chee Siew’s shares in Business Companion Investments; 

(ii) acquire or dispose of, or agree to acquire or dispose of, any asset, business or undertaking 

of Business Companion Investments; 

(iii) in relation to Yaw Chee Siew, dispose of, or agree to dispose of any shares of Business 

Companion Investments held by Yaw Chee Siew; and 

(iv) cause Business Companion Investments to dispose of or agree to dispose of any Shares 

held by Business Companion Investments; 

(c) it/he shall supply to SCPEL, as soon as the same become available but in any event, (i) within 

90 days after the end of each of our financial years, the audited consolidated financial statements of our 

Company for that financial year or 30 days after the release of our Company’s audited statements via 

SGXNET, whichever is the later; (ii) within 45 days after the end of each financial quarter, the unaudited 

consolidated management accounts of our Company, provided always that such audited consolidated 

financial statements and unaudited consolidated management accounts will only be provided to SCPEL 

once the same have been released by our Company via SGXNET; 

(d) it/he shall procure that the annual budget of our Company shall be submitted to our Board for 

approval not less than 30 days after its finalisation; 

(e) it/he shall not either solely or jointly with or on behalf of any person, directly or indirectly, 

compete with any business carried on by us or otherwise be interested, directly or indirectly, in any 

business competing directly with the business carried on by us; 

(f) save for any amendment to comply with the rules, regulations or requirements of the SGX-ST, it/ 

he shall not, and shall ensure that our Company does not and shall not undertake any amendment of our 

146

Memorandum and Articles of Association or other constitutive documents except with the prior written 

consent of SCPEL (such consent not to be unreasonably withheld or delayed). 

Appointment of a Director by SCPEL on Our Board of Directors 

(a) At the request of SCPEL, each of Business Companion Investments and Yaw Chee Siew shall take all 

necessary actions to procure the appointment of one nominee of SCPEL to be a Director on our Board. 

(b) Notwithstanding any provision construed in the Exchangeable Loan Agreement, SCPEL shall, subject 

to our Memorandum and Articles of Association, any applicable laws and the rules and regulations of SGX- 

ST, be entitled to nominate a Director to our Board for so long as: 

(i) Yaw Chee Siew and/or Business Companion Investments holds the power or authority, whether 

exercised or not, to direct the business, management and policies of our Company; 

(ii) Yaw Chee Siew is a Director; and 

(iii) SCPEL holds at least eight per cent. (8%) of the issued share capital of our Company (whether 

pursuant to subscription of the Shares and/or by exercise of its conversion rights under the Exchangeable 

Loan Agreement), 

and at the request of SCPEL, each of Business Companion and Yaw Chee Siew shall use their best 

endeavours to take all necessary actions to nominate and appoint the SCPEL nominee to be a Director on 

our Board, including Yaw Chee Siew voting as a member of our Board, and both Business Companion 

Investments and Yaw Chee Siew voting in respect of any Shares that they hold, in favour of the 

appointment of the nominee of SCPEL as a Director of our Board. 

(c) On 14 April 2008, our Non-executive Director William Edward Alastair Morrison was appointed as 

one of our Directors pursuant to Business Companion Investments and Yaw Chee Siew’s obligation under the 

Exchangeable Loan Agreement. As one of our Directors, William Edward Alastair Morrison shall be entitled 

to receive reasonable directors’ fees, remuneration and other entitlements, which shall in any event be the 

same as the directors’ fees, remuneration and other entitlements that our other Directors, acting in the same 

capacity are entitled to receive. 

Undertakings by SCPEL 

Separately, SCPEL has undertaken to each of Business Companion Investments and Yaw Chee Siew that 

it will not sell any Shares or undertake any enforcement action pursuant to an event of default on the part of 

Business Companion Investments under the Exchangeable Loan Agreement or enforce any rights under it, 

which may result in either of Business Companion Investments or Yaw Chee Siew being directly or indirectly 

in contravention of the Moratorium Undertakings. 

Personal Guarantee of Yaw Chee Siew 

Mr. Yaw has given a personal guarantee to SCPEL as security for the Exchangeable Loan pursuant to the 

terms of the Exchangeable Loan Agreement. 

Significant Changes in Percentage of Ownership 

The changes in the percentage of ownership of our Shares in the three years prior to the Latest Practicable 

Date are as follows (Share numbers presented in this section are presented without adjusting for the Share 

Split): 

Name of Shareholder 

As at 

26 July 

2006 (1) 

Number of 

Shares % 

As at 

30 December 

2006 (2) 

Number of 

Shares % 

As at 

11 January 

2008 (3) 

Number of 

Shares % 

As at the Latest 


Number of 

Shares % 

(4) 

Yaw Teck Seng ............ 250,000 10.0 250,000 0.8 — — — — 

Yaw Chee Ming ............ 150,000 6.0 150,000 0.4 — — — — 

Yaw Chee Siew ............ 2,100,000 84.0 27,225,000 83.8 27,625,000 85.0 — — 

LeeKokWah ............. — — 3,250,000 10.0 3,250,000 10.0 3,250,000 10.0 

CEO Technology Asia (5) 

..... — — 1,625,000 5.0 1,625,000 5.0 1,625,000 5.0 

Business Companion 

Investments (5) ............ — — — — — — 27,625,000 85.0 

147

Notes: 

(1) On 26 July 2006, Yaw Chee Siew was allotted and issued 2,000,000 new Shares for a consideration of 

S$2,000,000. 

(2) On 30 December 2006, Yaw Chee Siew, Lee Kok Wah and CEO Technology Asia were allotted and issued 

new Shares respectively on the following basis: 

Name 

Number of 

New Shares 

Total 

Consideration 

S$ 

Yaw Chee Siew .............................................. 25,125,000 25,125,000 

LeeKokWah................................................ 3,250,000 3,250,000 

CEO Technology Asia ......................................... 1,625,000 1,625,000 

CEO Technology Asia is an investment holding company incorporated in BVI on 28 October 2005. Its sole 

shareholder is Yaw Chee Siew. 

(3) On 11 January 2008, Yaw Teck Seng and Yaw Chee Ming transferred all the Shares held by them to Yaw 

Chee Siew for a nominal consideration of S$1.00 to each of them. 

(4) Business Companion Investments is an investment holding company incorporated in BVI on 12 November 

2007. Its sole shareholder is Yaw Chee Siew. On 28 February 2008, Yaw Chee Siew transferred the entire 

27,625,000 Shares held by him to Business Companion Investments for a nominal consideration of 

S$1.00. 

(5) CEO Technology Asia and Business Companion Investments are wholly owned by Yaw Chee Siew. Yaw 

Chee Siew is therefore deemed to be interested in the Shares held by CEO Technology Asia and Business 

Companion Investments by virtue of Section 4 of SFA. 

Vendors 

Details of the following existing Shareholders who will be selling their Shares in the Offering are set out 

below: 

Name/Address/Position 

Relationship with Us 

Name 

Shares Held Immediately 

Before the Offering 

Vendor Shares Offered 

Pursuant to the Offering 

Shares Held After 

the Offering 

Number of 

Shares 

%of 

Pre-Offering 

Share Capital 

Number of 

Shares 

%of 

Pre-Offering 

Share Capital 

Number of 

Shares 

%of 

Post-Offering 

Share Capital 

’000 ’000 ’000 

CEO Technology Asia/ 

OMC Chambers, 

P.O. Box 3152, 

Road Town, Tortola, 

British Virgin Islands/ 

Shareholder .......... 

Lee Kok Wah/ 

22 Ramsgate Road, 

Singapore 437468/ 

Director and 

48,750 5.0 19,500 2.0 29,250 2.5 

Shareholder .......... 97,500 10.0 9,750 1.0 87,750 7.4 

Saved as disclosed herein, none of our Directors or Substantial Shareholders or their Associates is 

interested in the Vendor Shares. 

148

Change of Control of Our Company 

To our knowledge, our Company will not be owned or controlled by any corporation (other than as 

described in “— Shareholders”) immediately after the completion of the Offering. Other than as described in 

“— Shareholders”, our Company is not owned or controlled by any government or other natural or legal 

person. 

We are not currently aware of any arrangements, the operation of which may at a subsequent date result 

in a change of control of our Company, except for the Exchangeable Loan Agreement entered into on 8 April 

2008, between and among Business Companion Investments, Yaw Chee Siew and SCPEL. See “Substantial 

Shareholders and Vendors — Exchangeable Loan Agreement” and “Risk Factors — Risks Relating to Our 

Business and Operations — There could be a change in control of our Company if the lender under the 

Exchangeable Loan Agreement exercises its exchange rights”. 

149

INTERESTED PERSON TRANSACTIONS AND CONFLICTS OF INTERESTS 

Pursuant to the Fourth Schedule of the Securities and Futures (Offers of Investments) (Shares and 

Debentures) Regulations 2005, the term “Interested Person”, in relation to any entity, includes: (a) a director 

or an equivalent person of the entity; (b) the chief executive officer or equivalent person of the entity; (c) where 

the entity is a corporation, a controlling shareholder of the entity; and (d) an Associate of any of the persons 

described in (a), (b) or (c). 

Save as disclosed below and in the section “Our Restructuring and Corporate Structure” of this document, 

no Director, Controlling Shareholder or their respective associates was or is interested in any transaction 

entered into by us which is material in the context of the Offering for the last three financial years ended 

31 December 2007 and for the period from 1 January 2008 to the Latest Practicable Date (the “Period under 

Review”). 

The following persons are Interested Persons with whom we have entered into past or ongoing 

transactions or expect to enter into future transactions. References to percentage of ownership in the table 

below are as of the Latest Practicable Date, unless otherwise noted. 

Interested Person Relationship With Us 

Brizill International. ........... Brizill International Limited, an investment holding company, wholly 

owned by Yaw Chee Siew. 

Eurebon .................... Eurebon Shipping Pte. Ltd., a company which has been dormant since 

December 2005, previously in the principal business of freight 

forwarding, is 40.0% owned by Yaw Chee Siew. The directors of 

Eurebon are Yaw Chee Siew and Lee Kok Wah, both of whom are also 

Directors of our Company. 

Pantai Bayu ................. Pantai Bayu Indah Sdn Bhd, a 51.0% subsidiary of Samling Strategic (as 

defined below), which is in the principal business of construction. 

PT Batamec ................. PTBatamec, an Indonesian company which is a 95.2% subsidiary of our 

Company. Prior to completion of the Second Batamec Restructuring, PT 

Batamec was 44.2% owned by Brizill International and hence was 

deemed to be an Associate of Yaw Chee Siew by virtue of the fact that 

Brizill International is wholly-owned by him, notwithstanding the fact 

that it was also a subsidiary of our Company as our Company exercised 

control over it. 

Pursuant to the Second Batamec Restructuring and Third Batamec 

Restructuring, Brizill International sold all of its shares in PT Batamec to 

our Company, and accordingly, PT Batamec ceased to be an Associate of 

Yaw Chee Siew and an Interested Person vis-à-vis us on 26 March 2008. 

See “Our Restructuring and Corporate Structure — Increase in 

Shareholding and Transfer of Shares in PT Batamec (the “Batamec 

Restructuring”)”. 

Richman Singapore. ........... Richman Investment Pte. Ltd., an investment holding company, wholly 

owned by Yaw Chee Siew. 

Rimalco .................... Rimalco Sdn. Bhd., an indirect 40.0% owned associated company of 

Samling Global, is in the principal business of manufacture and sale of 

sawn timber. Samling Global is listed on the Hong Kong Stock Exchange 

and which is majority-owned by the Yaw Family. 

Samling International .......... Samling International Limited, an investment holding company, wholly 

owned by Yaw Teck Seng and Yaw Chee Ming, the father and brother 

respectively of Yaw Chee Siew. 

Samling Singapore ............ Samling Singapore Private Limited, a wholly owned subsidiary of 

Samling International, is in the principal business of trading spare parts 

and components. 

Samling Strategic ............. Samling Strategic Corporation Sdn. Bhd., an investment holding 

company, wholly owned by Yaw Holding Sdn. Bhd., which is wholly 

owned by the Yaw Family. 

150

Interested Person Relationship With Us 

Sanwa ..................... Sanwa Singapore Agencies (Pte) Ltd, a company which has been 

dormant since 2001 and was previously in the principal business of 

providing management and consultancy services. It is 50.0% owned by 

Yaw Chee Siew. 

Tinjar Transport .............. Tinjar Transport Sdn Bhd, a subsidiary of Samling Global, is in the 

principal business of providing riverine transportation services. Samling 

Global is listed on the Hong Kong Stock Exchange and is majorityowned 

by the Yaw Family. 

Tourquoise .................. Tourquoise Limited, a company wholly-owned by Yaw Chee Siew, 

incorporated in the Federal Territory of Labuan, Malaysia. 

Victon ..................... Victon Investment Limited, an investment holding company, in which 

Yaw Teck Seng, the father of Yaw Chee Siew, has an indirect and 

beneficial interest of 99.9%. 

Yaw Chee Chik .............. YawChee Chik is the brother of Yaw Chee Siew. 

Yaw Chee Ming .............. YawChee Ming is the brother of Yaw Chee Siew. 

Yaw Chee Siew .............. YawChee Siew is our Executive Chairman and a Controlling 

Shareholder. 

Yaw Teck Seng. .............. YawTeckSeng is the father of Yaw Chee Siew. 

Yawson .................... Yawson Engineering Works Pte. Ltd., a company which has been 

dormant since December 2007 and was previously in the principal 

business of freight forwarding and chartering. It is 94.55% owned by 

Yaw Chee Siew. 

The directors of Yawson include Yaw Chee Siew and Lee Kok Wah, both 

of whom are also Directors of our Company. 

Past Interested Person Transactions 

As part of the Restructuring Exercise, our Company acquired all of Yaw Chee Siew’s indirect interests in 

PT Batamec held through Brizill International in order to consolidate our shareholding in PT Batamec and to 

avoid any potential conflict of interests. The Company entered into three separate share sale and purchase 

agreements with PT Batamec, which together with details of this restructuring are described in the section 

“Our Restructuring And Corporate Structure — The Batamec Restructuring”. 

The details of our past interested person transactions for the Period Under Review are set out below: 

Transactions with Brizill International 

Brizill International is an investment holding company wholly owned by Yaw Chee Siew. Although 

Brizill International’s principal activity is that of investment holding, it has also been engaged in the past from 

time to time in the non-principal activity of acting as an intermediary between us and certain entities 

controlled by the Yaw Family and of providing financial and non-financial support to our Company. 

The transactions in which Brizill International has been involved with our Group for the Period under 

Review are as follows: 

Past transactions: 

(a) hiring of staff by Brizill International for the purposes of secondment to our Group and 

payment by us to such staff; 

(b) acting as an intermediary for entities controlled by the Yaw Family in relation to shipbuilding 

and maintenance services provided by us to such entities; and 

(c) acting as an intermediary for entities controlled by the Yaw Family in relation to the supply 

and fabrication of steel plates by us for such entities. 

Present and ongoing transactions (see “— Present and Ongoing Interested Person Transactions”): 

(a) payment on our behalf for certain purchases of raw materials for our shipbuilding activities 

and advances to our Company, collections on our behalf for sale of certain goods and services, our 

151

payment on behalf of Brizill International for certain expenses and extension of the Brizill Term 

Loan to our Company; and 

(b) pledge of certain listed shares as security for certain of our banking facilities. 

Other than the repayment of the Brizill Term Loan and the pledge of certain listed shares by Brizill 

International as security for certain of our banking facilities, we do not intend to enter into any other 

transaction with Brizill International after the Offering. 

(a) Secondment of staff from Brizill International to our Group and payment by us to such staff on behalf 

of Brizill International 

In 2005 and 2006, Brizill International acted as an intermediary for our Group by hiring several 

employees on our behalf and seconding them to our subsidiary PT Batamec. Brizill International charged us a 

management fee for these secondments which we paid by way of making salary payments to these employees 

on behalf of Brizill International. The following table shows the management fees charged by Brizill 

International. 

Period from 


FY2005 FY2006 FY2007 


31 May 2008 

Up to the Latest 


(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Management fee charged by 

Brizill International ........ 582 905 — — — 

All amounts charged by Brizill International as the management fee have been settled. 

Our Directors believe that the above transactions were not carried out on an arm’s length basis as Brizill 

International did not derive any commercial benefit from these transactions. 

We do not intend to enter into any future transactions of this nature with Brizill International. 

(b) Shipbuilding and maintenance contracts between Brizill International and PT Batamec 

In 2006, Brizill International, on behalf of Yawson, entered into contracts with PT Batamec for the 

purpose of engaging PT Batamec to carry out shipbuilding, repairs and maintenance services for Yawson. See 

“— Transactions with Yawson”. The revenues recognised from the transactions in respect of the Period under 

Review are as follows: 

Period from 


FY2005 FY2006 FY2007 


31 May 2008 



(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Revenues recognised from 

transactions for shipbuilding, 

repair and maintenance 

services ................. — 3,518 — — — 

As of the Latest Practicable Date, all payments for these transactions have been settled. 

Our Directors believe that these transactions were carried out on an arm’s length basis and based on 

normal commercial terms and market prices. We do not intend to enter into any future transactions of this 

nature with Brizill International. 

(c) Supply and fabrication of steel plates 

In 2006 and 2007, Brizill International engaged us to supply and fabricate steel plates which were used in 

the assembly of barges by entities controlled by the Yaw Family. The revenue we derived from the supply and 

fabrication of these steel plates for the Period under Review is as follows: 

Period from 


FY2005 FY2006 FY2007 


31 May 2008 



(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Supply and fabrication of steel 

plates .................. — 2,988 250 — — 

152

As of the Latest Practicable Date the above amounts have been settled. Our Directors believe that these 

transactions were carried out on an arm’s length basis. We do not intend to enter into any future transactions 

of this nature with Brizill International. 

Transactions with PT Batamec 

Until 26 March 2008, before completion of the Second Batamec Restructuring and the Third Batamec 

Restructuring, PT Batamec was both a subsidiary of our Company (and therefore an entity at risk) and an 

Associate of Yaw Chee Siew by virtue of the fact that Brizill International (which owned 44.2% of the shares 

of PT Batamec) is wholly-owned by him and therefore was an Interested Person. See “Our Restructuring and 

Corporate Structure — Increase in Shareholding and Transfer of Shares in PT Batamec (the “Batamec 

Restructuring”)”. 

On 26 March 2008, PT Batamec ceased to be an Interested Person, as Brizill International ceased to hold 

any shares in PT Batamec, and, hence, ceased to be an Associate of Yaw Chee Siew. As a result, transactions 

with PT Batamec are no longer considered interested person transactions. 

(a) Shipbuilding agreements between us and PT Batamec 

We make all of our arrangements for the construction of newbuildings, except certain barges, through our 

wholly owned subsidiary Otto Offshore (and until March 2006, through our wholly owned subsidiary Sea 

Dolphin Finance, which is currently dormant). When we receive an order for a newbuilding from a customer 

(including from our Company, for vessels that we intend to keep for our chartering fleet), we enter into a 

vessel purchase agreement with the customer through Otto Offshore (or, historically, Sea Dolphin Finance). 

Otto Offshore (or, historically, Sea Dolphin Finance) then places a vessel construction order with PT Batamec, 

and when the vessel is completed, PT Batamec sells the vessel to Otto Offshore (or, historically, Sea Dolphin 

Finance) for further on-sale to the end customer (which could include our Company). 

Each such transaction up to 26 March 2008 between PT Batamec and either Sea Dolphin Finance or Otto 

Offshore was considered an interested person transaction. 

The revenues recognised by PT Batamec under transactions with Sea Dolphin Finance for the Period 

under Review are as follows: 

FY2005 FY2006 FY2007 


31 May 2008 

Period from 




(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Sea Dolphin Finance ......... 25,047 — — — — 

The amount invoiced to Otto Offshore by PT Batamec for the Period under Review are as follows: 

FY2005 FY2006 FY2007 


31 May 2008 

Period from 




(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Otto Offshore .............. 2,501 58,494 40,836 20,282 (1) 

20,282 (1) 

Note: 

(1) This figure reflects the aggregate amount invoiced to Otto Offshore by PT Batamec for the period from 

1 January 2008 up to 26 March 2008 only, when PT Batamec ceased to be an Interested Person. 

Our Directors believe that the above transactions were carried out on an arm’s length basis based on 

market prices and on normal commercial terms. 

153

(b) Sale of materials and other supplies to PT Batamec 

Our Company procures certain materials and other supplies and sells them to PT Batamec to be either 

used in the shipyard or installed into the vessels being constructed. The aggregate sums billed to PT Batamec 

under this arrangement for the Period Under Review are as follows: 

FY2005 FY2006 FY2007 

Five Months 

Ended 

31 May 2008 

Period from 

1 January 

2008 Up to 

the Latest 

Practicable 

Date 

(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Aggregate sums billed to PT Batamec . . . 49,168 81,663 95,913 11,796 (1) 

11,796 (1) 

Note: 

(1) This figure reflects the aggregate amount billed by our Company to PT Batamec for the period from 1 January 

2008 up to 26 March 2008 only, when PT Batamec ceased to be an Interested Person. 

Our Directors believe that the above transactions were carried out on an arm’s length basis. We intend to 

continue to enter into such transactions in the future. 

(c) Corporate guarantees given by our Company for the benefit of PT Batamec 

Our Company provided corporate guarantees as security for various facilities provided to PT Batamec by 

Bank Niaga for its working capital purposes. 

The details of the corporate guarantees are shown in the following table. The guarantees given in 2006 

have all been discharged. 

Date of 

Guarantee 

Amounts of the 

Facilities 

Guaranteed 

Interest Rate 

(per Annum) 

Largest 

Amount 

Outstanding 

During the 

Period Under 

Review 

Amount 

Outstanding 

as at 

31 May 2008 

Amount 

Outstanding 

as at the 

Latest 

Practicable 

Date 

(US$’000) (US$’000) (US$’000) (US$’000) 

May 2006 ....... Upto13,700 8.0% for the revolving 13,700 — — 

facility of 

US$3.7 million and 

7.85% for the 

US$10.0 million loan 

June 2006 ....... Upto13,700 8.0% 13,700 — — 

July 2006 ........ Upto23,700 8.0% 13,700 — — 

June 2007 ....... Upto30,000 8.0% 30,000 30,000 30,000 

December 2007 . . . Up to 23,000 8.0% 23,000 23,000 23,000 

Our Directors believe that the above guarantees were not given on an arm’s length basis as our Company 

received no direct benefit. We do not intend to discharge the guarantees given in 2007, as the facilities against 

which the corporate guarantees were provided are still outstanding. 

(d) Leasing of shipyard facilities 

PT Lestari acquired certain machinery, equipment, land and buildings (the “Shipyard Assets”) in 

November 2006 and December 2006 through the public auction of the assets of PT Batamas in Indonesia 

arising out of PT Batamas’ liquidation. See “Our Business — Properties — Leases”. 

With effect from January 2007, PT Lestari granted two leases to PT Batamec, one for the lease of 

machinery and equipment (“Lease of Machinery and Equipment”) and the other for the lease of land and 

buildings (“Lease for Land and Buildings”) for a term of ten years commencing on 1 January 2007. 

Between the completion of the Lestari Restructuring, when PT Lestari became our subsidiary, and 

26 March 2008 during which time PT Batamec was both our subsidiary (and therefore an entity at risk) and 

an Associate of Yaw Chee Siew by virtue of the fact that Brizill International (which owned 44.2% of the 

shares of PT Batamec) is wholly-owned by him and therefore was an interested person, these leases were 

interested person transactions. 

The monthly rentals payable to PT Lestari under the Lease of Machinery and Equipment are US$24,000 

for FY2007; US$35,000 for FY2008; US$45,000 for FY2009 and US$45,000 (adjusted for prevailing annual 

154

inflation rate) for the remaining term of the lease, while that for the Lease for Land and Buildings is 

US$16,000 for FY2007; US$20,000 for FY2008; US$25,000 for FY2009 and US$25,000 (adjusted for 

prevailing annual inflation rate) for the remaining term of the lease. These rents are based on the independent 

valuation report issued in July 2007 by the Superintending Company of Indonesia (Persero). 

The rents under the above leases for the Period Under Review are set out below. 

Period from 

1 January 

2008 Up to 

FY2005 FY2006 FY2007 

Five Months 

Ended 

31 May 2008 

the Latest 

Practicable 

Date 

(US$’000) (US$’000) (US$’000) (US$’000) (US$’000) 

Rent under the Lease of Machinery 

and Equipment ............... — — 288 105 (1) 

Rent under the Lease for Land and 

Buildings. ................... — — 192 60 (2) 

105 (1) 

Notes: 

(1) This figure reflects the rent for the period from 1 January 2008 up to 26 March 2008 only, when PT Batamec 

ceased to be an Interested Person. 

(2) This figure reflects the rent for the period from 1 January 2008 up to 26 March 2008 only, when PT Batamec 

ceased to be an Interested Person. 

Our Directors believe that the above leases were entered into on an arm’s length basis as the rental 

payable is in line with market rates as based on the independent valuation report. We intend to continue with 

these lease arrangements in the future. 

Transactions with Yawson 

Sale of Nine Vessels — Purchase of 10 Vessels — Corporate Guarantee in Favour of Yawson — Lease of 

Vessels 

Yawson, a dormant company which was previously in the principal business of freight forwarding and 

chartering, is 94.55% owned by Yaw Chee Siew. 

In order to avoid a potential conflict of interest with our operations and in view of the Offering, Yawson 

ceased its operations in December 2007 and has since been dormant. 

From September 2006 to July 2007, our Company contracted with third parties to purchase four barges 

and five tugs from them for a total consideration of S$30.4 million. Our Company had a back-to-back 

arrangement with Yawson to sell these vessels to Yawson at the same consideration as Yawson had the 

financial resources to secure the bank facilities to finance our original purchase of these vessels. Yawson 

financed the purchase of these vessels with cash and a loan from Bangkok Bank. As discussed below, our 

Company provided a corporate guarantee for the loan and these vessels were leased back to us for our 

chartering business, which commenced in April 2007. 

Separately, in 2006, Brizill International contracted to purchase from PT Batamec a barge for S$3.3 million 

(see “— Transactions with Brizill International”) and had a back-to-back arrangement with Yawson to sell 

this barge to Yawson at the same consideration. Yawson financed the purchase of the barge with cash and a 

loan from Hong Leong Finance. As discussed below, our Company provided a corporate guarantee for the loan 

and the barge was leased back to us. 

With the improvement of our financial condition, we repurchased these ten vessels from Yawson between 

October and December 2007 for our chartering fleet. 

The total amounts under these sales and purchases for the Period under Review are as follows: 

FY2005 FY2006 FY2007 


31 May 2008 

60 (2) 

Period from 




(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Sale of nine vessels to Yawson. . — 6,430 23,938 — — 

Purchase of 10 vessels from 

Yawson ................. — — 33,618 — — 

155

As at the Latest Practicable Date, all payments for the above sales and purchases of vessels have been 

fully settled. 

We do not intend to sell vessels to or purchase vessels from Yawson or Brizill International in the future. 

Our Directors believe that the sales and purchases of these vessels to and from Yawson and Brizill 

International were not on an arm’s length basis as they were entered into at cost. 

Our Company provided certain corporate guarantees to Bangkok Bank and Hong Leong Finance in July 

2006 and August 2006, respectively, in respect of the loan facilities extended to Yawson for the purchase of 

the above vessels, including all interests and costs. The details of these guarantees are as follows: 

Financial 

Institution 

Amount of 

Facilities 

Guaranteed 

Bangkok Bank . . . 

Hong Leong 

US$16,000 0.5% 

below the 

bank’s 

prime 

lending 

rate 

Finance. ...... S$2,600 2.4% 

above 

swap rate 

Largest Amount 

Outstanding 

During the 

Period Under 

Review 

Interest 

Rate Per 

Annum 

Amount Outstanding 

as at 31 May 2008 


as at the Latest 


(’000) (’000) (’000) (’000) 

US$14,400 — — 

S$2,600 — — 

Our Directors believe that our guarantees to Bangkok Bank and Hong Leong Finance were not on an 

arm’s length basis as we did not receive a direct benefit from providing the guarantees. 

With the improvement of our financial condition, we secured bank financing from Bangkok Bank to 

partially finance our re-purchase of these vessels from Yawson at cost for a total consideration of S$33.6 million. 

Based on the independent valuation reports related to these vessels, issued between 2006 and 2007, and 

commissioned by Bangkok Bank, the aggregate market value of these vessels was S$40.9 million, which is 

21.7% higher than the purchase consideration. 

The initial guarantee granted in favour of Bangkok Bank was fully discharged in October 2007, when we 

entered into new facility agreements with Bangkok Bank. The guarantee granted in favour of Hong Leong 

Finance was fully discharged in December 2007. 

Beginning March 2007 to the date we purchased these vessels from Yawson, Yawson leased these vessels 

to us under time-charter contracts for a consideration of US$2,000 (for each tug) per day and US$1,800 (for 

each barge) per day, to enable us to commence our chartering business in April 2007. 

Our Directors believe that the charter agreements entered into with Yawson were on an arm’s length basis 

and in accordance with normal commercial terms. 

We do not intend to enter into any future transactions of the above nature with Yawson. 

Novation by Richman BVI to Richman Singapore of US$7.5 Million Loan Granted by Richman BVI to 

PT Lestari 

In September 2006, Richman BVI, an unrelated third party, provided a loan of US$7.5 million to 

PT Lestari, which was an independent third party at that time, for the purpose of acquiring all of the assets of 

PT Batamas, including the Shipyard Assets (see “Our Restructuring and Corporate Structure — Subscription 

for 95.0% of the Issued Shares in PT Lestari (the “Lestari Restructuring”)”). The loan had a fixed interest rate 

of 6.0% per annum, repayable at any time upon 14 days’ written notice. 

In January 2007, the loan was novated in favour of Richman Singapore, on the same terms as described 

above. In April 2007, Yaw Chee Siew acquired the entire share capital of Richman Singapore from its 

shareholders. 

156

PT Lestari became our subsidiary in December 2007 and this loan became an interested person 

transaction. The aggregate amounts due from PT Lestari to Richman Singapore under this loan as at the end 

of each of the last three financial years ended 31 December 2007 and as at the Latest Practicable Date are as 

follows: 

As at 

31 December 

2005 

As at 

31 December 

2006 

As at 

31 December 

2007 

As at 

31 May 

2008 

As at 

the Latest 


(US$’000) (US$’000) (US$’000) (US$’000) (US$’000) 

Amount outstanding ...... — — 509 — — 

The largest aggregate outstanding amount, including interest, due from PT Lestari under the loan during 

the Period Under Review was US$8.0 million. 

The loan was repaid in full by PT Lestari to Richman Singapore on 28 May 2008. 

Our Directors believe that the loan was entered into on an arm’s length basis. 

We do not intend to enter into any future transactions of the above nature with Richman Singapore. 

Corporate Guarantee Given by Our Company for the Benefit of Yaw Chee Chik and His Wife 

In August 2006, our Company provided a corporate guarantee as security for a loan granted to Yaw Chee 

Chik and his wife, Adeline Margaret Liew Siew Choo, by Hong Leong Finance for the purchase of a house. 

The amount of the facilities guaranteed by our Company, the interest rate, the largest amount outstanding 

during the Period Under Review and the amount outstanding as at the Latest Practicable Date are as follows: 


Outstanding 

Amount of 

Facilities 

Guaranteed 

Interest Rate Per 

Annum 

During the 

Period Under 

Review 

Amount 

Outstanding as at 

the 31 May 2008 


as at the Latest 


(S$’000) (S$’000) (S$’000) (S$’000) 

2,097 . . . 4.25% and 3.75% below Hong 

Leong Finance’s variable home 

rate for the first and second 

years and 3.25% below the 

said variable home rate after 

second year 

2,097 2,097 — 

Our Directors believe that the above guarantee was not given on an arm’s length basis as our Company 

received no benefit from the transaction. The above guarantee was fully discharged on 30 June 2008 and we 

do not expect to enter into any future transactions of the above nature in connection with Yaw Chee Chik’s 

obligations or otherwise. 

157

Personal Guarantees and Other Undertakings Provided by Associates of Yaw Chee Siew in Our Favour 

Associates of Yaw Chee Siew have provided personal guarantees as security for loans and other credit 

facilities granted to us by banks and financial institutions. Details of these personal guarantees are as follows: 

Financial 

Institution Guarantor 

HSBC Bank . . . . Yaw Chee Ming and 

Yaw Teck Seng (1) 

HSBC Bank . . . . Yaw Chee Ming and 

Yaw Teck Seng (1) 

Sumikin Bussan. . Yaw Teck Seng (2) 

Amount of 

Facilities 

Guaranteed 

Interest Rate 

Per Annum 

S$4,821,605 1.0% above 

Singapore 

Dollar 

prime 

lending rate 

S$766,042 Singapore 

Dollar 

prime 

lending rate 

Yen 950 

million 

Largest 

Amount 

Outstanding 

During 

Period 

Under 

Review 

4.5% Yen 950 

million 

Amount 

Outstanding 

as at 

31 May 2008 

Amount 

Outstanding 

as at the 

Latest 

Practicable 

Date 

(S$’000) (S$’000) 

S$4,821,605 — — 

S$766,042 — — 

— — 

Notes: 

(1) Yaw Teck Seng, Taikichi Ito and Yaw Chee Ming, all former Directors of our Company, were jointly and 

severally liable under this guarantee. 

(2) Yaw Teck Seng and Taikichi Ito, our former Directors, were jointly and severally liable under this 

agreement. 

As at the Latest Practicable Date, the above facilities and the above guarantees have been fully 

discharged. 

Our Directors believe that the above guarantees were not given on an arm’s length basis as the guarantors 

received no benefit from the transactions. We do not intend to rely on guarantees of this nature from the 

Associates of Yaw Chee Siew in the future. 

Transaction with Pantai Bayu 

In June 2004, our Company entered into an agreement with Pantai Bayu to act on Pantai Bayu’s behalf as 

a main contractor to perform certain dredging and reclamation work in Malaysia. We subsequently entered 

into a separate sub-contracting agreement at a contract price of RM31.5 million with a sub-contractor to 

complete the work. The work was completed in June 2005, and payment was made directly by Pantai Bayu to 

the sub-contractor. 

Yaw Chee Siew provided us with an indemnity against all liabilities and claims that may arise from or in 

connection with the agreement with the sub-contractor. We did not receive any benefit from Pantai Bayu and 

acted as an intermediary to this arrangement. 

Our Directors believe that the above transaction was not carried out on an arm’s length basis as our 

Company did not receive any benefit from this transaction. We do not intend to enter into any future 

transactions of this nature with Pantai Bayu. 

On 20 November 2007, our Company received a notice of arbitration from the sub-contractor alleging 

that there was a separate express or collateral agreement to pay them an additional RM4.4 million in relation 

to the work done by it. On 10 September 2008, we entered into a settlement agreement with the sub-contractor 

for full and final settlement of all claims made by them against us in the arbitration proceedings. See “Our 

Business — Litigation and Arbitration Proceedings” for more information on the claim. Accordingly, Yaw Chee 

Siew has, in connection with the indemnity provided by him, reimbursed us for all costs and expenses we 

incurred pursuant to the settlement agreement and all legal expenses arising out of the arbitration proceedings. 

Sale of Vessels to Tinjar Transport 

During the Period under Review, our subsidiary PT Batamec was awarded two contracts by Tinjar 

Transport to build seven vessels in total with an aggregate contract value of S$7.2 million. Six vessels were 

158

delivered in 2005 and one vessel was delivered in 2006. These vessels were to be used by Tinjar Transport in 

the ordinary course of business. 

The total revenues recognised under these two contracts for the Period under Review are as follows: 

FY2005 FY2006 FY2007 

Five Months 

Ended 

31 May 2008 

Period from 




(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Sales of vessels to Tinjar Transport ...... 6,116 1,034 — — — 

As of the Latest Practicable Date, all payments under these two contracts have been fully settled. 

Our Directors believe that the above transactions were carried out on an arm’s length basis and based on 

normal commercial terms and market prices. We do not intend to enter into any future transactions of the 

above nature with Tinjar Transport. 

Inter-company Balances Between Us and Certain Interested Persons 

During the Period under Review, certain Interested Persons, namely Sanwa, Yawson, Eurebon, Samling 

Singapore and Samling International, paid for certain purchases of raw materials for our shipbuilding activities 

on our behalf and made advances to our Company to fund our working capital requirements. These payments 

and advances resulted in amounts due from us to these Interested Persons. On occasion we paid certain 

expenses on behalf of these Interested Persons, and these payments partially offset the amounts due from us to 

these Interested Persons. In addition, Yawson and Eurebon were engaged in owning and chartering of vessels 

to third parties. As Sanwa, Yawson, Eurebon, Samling Singapore, Samling International and we were all 

controlled by the Yaw Family during this time, we regularly received funding from or extended funding to 

these entities. 

These amounts due from us to these entities and payments made by us on behalf of these entities, resulted 

in net inter-company balances due from us to these entities. On 31 December 2006, these amounts due from 

us to these Interested Persons were consolidated under Brizill International. See “— Present and Ongoing 

Interested Person Transactions — Inter-company Balances Between Us and Brizill International, Advances to 

Us from Brizill International and the Brizill Term Loan”. In view of the proposed listing of our Company, 

these entities have ceased to engage in activities similar to those of our Group in order to avoid any potential 

conflict of interests. 

These advances and inter-company balances were unsecured and non-interest-bearing and had no fixed 

term of repayment. 

The details of the net inter-company balances with each of these Interested Persons during the Period 

under Review are as follows (see also “— Present and Ongoing Interested Person Transactions — Intercompany 

Balances Between Us and Brizill International, Advances to Us from Brizill International and the 

Brizill Term Loan”): 

As at 

31 December 

2005 

As at 

31 December 

2006 

As at 

31 December 

2007 

As at 

31 May 

2008 

As at 

the Latest 


Largest Net 

Outstanding 

Amount Due 

from Us 

for the Period 

Under Review 

(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Net outstanding amounts 

due from us to 

Sanwa .................. 171 — — — — 171 

Yawson ................. 3,717 — — — — 17,408 

Eurebon. ................ 145 — — — — 184 

Samling Singapore ......... 2,264 — 200 470 550 2,264 

Samling International ....... 4,825 — — — — 4,825 

Our Directors believe that these payments and advances were not made on an arm’s length basis, as 

neither the Interested Persons mentioned above nor our Group (as the case may be) received any benefit under 

such arrangements. 

In view of the proposed listing of our Company on the SGX-ST, and by 1 January 2007, we had ceased 

the above practices in relation to these Interested Persons, save as disclosed in the section “— Present and 

159

Ongoing Interested Person Transactions”. We do not intend to receive or make any further payments, advances 

or funding arrangements from, to or with any of these Interested Persons in the future. 

Option Granted by Yaw Chee Siew 

On 22 December 2007, Tourquoise Limited, a company incorporated in Labuan, Malaysia, and wholly 

owned by Yaw Chee Siew, entered into an agreement with three other parties unrelated to Yaw Chee Siew 

pursuant to which Tourquoise has invested US$25.0 million to acquire an interest in a joint venture company. 

Tourquoise is expected to have a 29.4% shareholding in the joint venture company. The parties will enter into 

a shareholder’s agreement to operate the joint venture company. The joint venture company will purchase up 

to two semi-submersible rigs and convert them into accommodation rigs and will operate them as floating 

hotels. 

On 30 May 2008, Yaw Chee Siew granted us an option to purchase all of the issued shares of Tourquoise 

(“Tourquoise Option”) at a purchase price equal to the fair market value of the entire issued share capital of 

Tourquoise, based on an independent valuation, determined by a qualified independent valuer jointly appointed 

by Yaw Chee Siew and us. 

The Tourquoise Option must be exercised within six months from the date of the listing of our Shares on 

the SGX-ST. 

Our Directors believe that the grant of Tourquoise Option by Yaw Chee Siew to us was not entered into 

on an arm’s length basis as the consideration we paid for the grant of the Tourquoise Option was only S$1.00. 

In considering the exercise of the Tourquoise Option, we will seek approval from our Audit Committee, 

comprising independent and non-executive Directors who do not have a material interest in the matter. The 

Audit Committee, in assessing whether the purchase price for all of the issued shares of Tourquoise is fair and 

reasonable, will take into account the independent valuation report prepared by the qualified independent 

valuer and will further appoint an independent financial adviser if it deems it necessary. In addition, we will 

comply with the applicable rules of the Listing Manual if we do proceed to exercise the Tourquoise Option. 

Present and Ongoing Interested Person Transactions 

We intend to continue with the transactions described below following the Offering. Pursuant to 

Rule 920(2) of the Listing Manual, such transactions with each of the Interested Persons below (which may in 

aggregate amount to 5.0% or more of the latest audited NTA of our Group during the financial year) are 

treated as having been approved by our Shareholders under the Shareholders’ Mandate. Our future transactions 

with any Interested Person will be subject to the review procedures under the Shareholders’ Mandate and will 

also be reviewed by our Audit Committee to ensure that they are carried out on an arm’s length basis and on 

normal commercial terms, as described in further detail in “— Shareholders’ Mandate — Guidelines and 

Review Procedures for Mandated Interested Person Transactions”. 

The details of our present and ongoing interested person transactions are set out below. 

Inter-company Balances Between Us and Brizill International, Advances to Us from Brizill International 

and the Brizill Term Loan 

During the Period under Review, Brizill International paid for certain purchases of raw materials for our 

shipbuilding activities on our behalf and made advances to our Company to fund our working capital 

requirements (including repayments for a bank loan granted to our Company for the expansion of our shipyard 

facilities in Indonesia, which has since been fully repaid, and advances to partially finance the purchase of 

vessels for our ship chartering business). In addition, during the Period under Review, Brizill International 

charged a management fee for the secondment of staff from Brizill International to our Group. See “— Past 

Interested Person Transactions — Transactions with Brizill International). These payments and advances 

resulted in inter-company balances due from us to Brizill International. During the Period under Review, 

Brizill International also collected sales proceeds on behalf of our subsidiary PT Batamec. In addition, on 

occasion we paid certain expenses on behalf of Brizill International. These collections of sales proceeds and 

payments for expenses partially offset the inter-company balances due from us to Brizill International. In 

addition, the amount owing to Brizill International as at the Latest Practicable Date includes the consideration 

for the Batamec Restructuring. See “Our Restructuring and Corporate Structure — Increase in Shareholding 

and Transfer of Shares in PT Batamec (the “Batamec Restructuring”)”. All of these amounts are classified as 

“non-trade”. 

160

These inter-company payments and advances resulted in net inter-company balances due from us to 

Brizill International. In addition, on 31 December 2006, all net inter-company balances due from us to Sanwa, 

Yawson, Eurebon, Samling Singapore and Samling International were consolidated under Brizill International. 

See “— Past Interested Person Transactions — Inter-company Balances Between Us and Certain Interested 

Persons”. 

As the payments and advances made by Brizill International on our behalf were generally more than the 

collection of sales proceeds and payments for expenses during the Period under Review, these arrangements 

resulted in an overall net inter-company balance due from us to Brizill International as at the end of each year 

during the Period under Review. 

These advances and amounts due from us were unsecured, non-interest bearing and had no fixed term of 

repayment. 

The details of the amounts due from us to Brizill International during the Period under Review are as 

follows: 

As at 

31 December 

2005 

As at 

31 December 

2006 

As at 

31 December 

2007 

As at 

31 May 

2008 

As at the 

Latest 

Practicable 

Date 

Largest Net 

Outstanding 

Amount 

During the 

Period 

Under 

Review 

(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Net outstanding 

amounts due 

from us to 

Brizill 

International 

Non-current ...... 43,976 (1) 

27,872 51,381 102,828 (2) 

93,580 (2) 

105,828 (2) 

Current ......... 583 1,416 1,457 — — 1,457 

Notes: 

(1) This figure includes the inter-company balances due from us to Sanwa, Yawson, Eurebon, Samling Singapore, 

and Samling International. 

(2) This figure includes the outstanding amount under the Brizill Term Loan (see below). 

Our Directors believe that these transactions were not entered into on an arm’s length basis, as neither 

Brizill International nor our Group, as the case may be, received any benefit from these transactions. 

In view of the proposed listing of our Company on the SGX-ST, from 1 January 2008, we have stopped 

making payments for expenses incurred by Brizill International and all invoices issued after 30 September 

2007 are being collected directly by us. 

In June 2008, we converted S$52.0 million of the amounts due from us to Brizill International into the 

Brizill Term Loan. The loan is a five-year term loan which is unsecured. See “Management’s Discussion and 

Analysis of Financial Condition and Results of Operations — Borrowings”. The following table shows the 

principal terms of the Brizill Term Loan: 

Lender 

Amount 

Term Loan Interest Rate 


Outstanding 

During the 

Period Under 

Amount 

Outstanding 

as at 

Outstanding 

as at the 

Latest 

Practicable 

Amount Per Annum Review 31 May 2008 Date 

(S$’000) (S$’000) (S$’000) (S$’000) 

Brizill International . . . 52,000 2.0% above the 

prime lending 

rate of HSBC 

Bank or 7.0%, 

whichever is 

higher 

52,000 52,000 52,000 

Our Directors believe that the Brizill Term Loan was not entered into on an arm’s length basis, as the 

terms of the loan are favourable to us. 

161

We do not intend to receive any further payments or obtain any further advances or loans from Brizill 

International after the Offering. In addition, we intend to fully repay the outstanding amounts due to Brizill 

International, other than the Brizill Term Loan, as soon as practicable, using internally generated funds and/or 

bank borrowings. Any prepayment of the Brizill Term Loan and any repayments of any outstanding amounts 

due to Brizill International will have to be approved by the Audit Committee, after taking into account our 

cash flow position, working capital requirements and upon due consideration of the financial covenants 

imposed by banks and financial institutions relating to the repayment of shareholder loans at that particular 

point of time. As and when any repayment is made upon approval of our Audit Committee, we will make an 

appropriate announcement via the SGXNET. 

We will cease all transactions with Brizill International upon completion of the Offering, except for the 

following: 

(a) principal repayment and interest payment of the Brizill Term Loan, in accordance with its terms; 

(b) repayment of the balances outstanding due to Brizill International, other than the Brizill Term 

Loan; and 

(c) pledge of certain listed shares to Bangkok Bank by Brizill International. 

Pledge of Certain Listed Shares to Bangkok Bank by Brizill International 

In October 2006, Brizill International pledged certain listed shares it holds in favour of Bangkok Bank as 

security for banking facilities granted to our Company. These banking facilities include: (i) a refund guarantee 

facility of up to US$110.0 million; (ii) a revolving short-term loan of US$2.5 million; (iii) trade finance 

facilities of up to US$60.0 million; and (iv) a term loan of US$14.4 million. See “Management’s Discussion 

and Analysis of Financial Condition and Results of Operations — Borrowings”. 

Our Directors believe that the pledge of listed shares by Brizill International to assist us to secure the 

banking facilities from Bangkok Bank was not carried out on an arm’s length basis as Brizill International 

received no benefit from the transaction. 

Subsequent to completion of the Offering, we intend to negotiate for the discharge of the pledge. In the 

event that Bangkok Bank does not release the pledge, Brizill International will continue to pledge the said 

shares to secure the relevant facilities. 

Personal Guarantee and Other Undertaking Provided by Yaw Chee Siew 

In August 2006, Yaw Chee Siew provided a personal guarantee as security for banking facilities provided 

to us by Bangkok Bank. These facilities include: (i) a refund guarantee facility of up to US$110.0 million; 

(ii) a revolving short-term loan of US$2.5 million; (iii) trade finance facilities of up to US$60.0 million; and 

(iv) a term loan of US$14.4 million. See “Management’s Discussion and Analysis of Financial Condition and 

Results of Operations — Borrowings”. Yaw Chee Siew also gave a subordination undertaking to Bangkok 

Bank not to demand or accept payment of any monies or liabilities or advances owing to him or Brizill 

International by our Company while any facilities granted by Bangkok Bank to our Company or our subsidiary 

Otto Offshore remain outstanding. 

This guarantee is still in force under the revised facilities granted to us by Bangkok Bank in July 2007. 

The subordination undertaking was amended to include monies owed by our subsidiary Otto Offshore to Yaw 

Chee Siew. It was further amended to specify that Yaw Chee Siew may demand or accept payment of any 

monies or liabilities or advances owing to him by our Company and Otto Offshore as long as the outstanding 

amount of such monies or liabilities or advances owing to him by our Company and Otto Offshore is not less 

than S$25.0 million. 

The largest amount drawn down on the Bangkok Bank facilities during the Period under Review was 

US$74.4 million. As at 31 May 2008, the amount outstanding under the facilities was US$59.5 million and as 

at the Latest Practicable Date, the amount outstanding under the facilities was US$45.1 million. 

In January 2008, Hong Leong Finance granted us a shipping loan facility of S$3.0 million, for which, 

Yaw Chee Siew provided a personal guarantee as security. The largest amount drawn down on the Hong 

Leong Finance facility as at the Latest Practicable Date was S$3.0 million. 

In February 2008, Caterpillar Financial granted us a vessel construction loan facility of US$40.4 million, 

for which, Yaw Chee Siew provided a personal guarantee as security. The largest amount drawn down on the 

Caterpillar Financial facility as at the Latest Practicable Date was US$25.7 million. The facility includes a 

162

provision subordinating our indebtedness to Shareholders and our affiliates to the amounts owing under the 

facilities granted by Caterpillar Financial. 

In June 2008, Yaw Chee Siew provided a personal guarantee as security for banking facilities provided to 

us by RHB Bank Berhad. These facilities include: (i) a vessel construction facility of US$14.0 million; (ii) a 

vessel construction facility of US$15.0 million; and (iii) a revolving credit facility of S$20.0 million. The 

largest amount drawn down on each of these facilities as at the Latest Practicable Date was US$8.4 million, 

US$7.4 million and S$20.0 million, respectively. 

Subsequent to completion of the Offering, we intend to negotiate for the discharge of these personal 

guarantees and undertakings. In the event that Bangkok Bank, Hong Leong Finance, Caterpillar Financial and 

RHB Bank Berhad do not release Yaw Chee Siew from his obligations under these guarantees or this 

undertaking, Yaw Chee Siew will continue to provide the personal guarantees and undertaking for the relevant 

facilities. 

In March 2008, Yaw Chee Siew provided a personal guarantee as security for banking facilities provided 

to us by Standard Chartered Bank. These facilities include: (i) a refund guarantee facility of up to 

US$59.9 million; (ii) a refund guarantee facility of up to Eur 10.9 million; and (iii) treasury facilities. Yaw 

Chee Siew also provided a subordination undertaking not to demand or accept payment of monies or liabilities 

or advances owing to him or Brizill International by our Company, as long as the outstanding amount of such 

monies or liabilities or advances owing to him or Brizill International, by our Company is not less than 

S$51.4 million, while any facilities granted by Standard Chartered Bank to our Company remain outstanding. 

Subsequent to completion of the Offering, the personal guarantee given by Yaw Chee Siew will be 

discharged and we intend to negotiate for the discharge of the subordination undertaking. In the event that 

Standard Chartered Bank does not release Yaw Chee Siew from his obligations under this undertaking, Yaw 

Chee Siew will continue to provide the undertaking for the relevant facilities. 

Our Directors believe that the above guarantees and undertaking were not given on an arm’s length basis 

as Yaw Chee Siew did not receive any benefit from the transaction. 

Purchase of Sawn Timber by Us from Rimalco 

During the Period under Review, we purchased sawn timber from Rimalco to construct the decks of the 

vessel that we build. The aggregate amount of purchases from Rimalco are set out below: 

FY2005 FY2006 FY2007 

Five Months 

Ended 

31 May 2008 

Period from 

1 January 

2008 to the 

Latest 

Practicable 

Date 

(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Purchases from Rimalco ............. — — 220 — — 

The payment for this purchase has been fully settled. Our Directors believe that the above transaction was 

carried out on an arm’s length basis. 

We anticipate that, with the expansion of our shipbuilding activities, we may increase our purchases of 

sawn timber from Rimalco. Having taken into consideration pertinent factors including, but not limited to the 

quality and reliability of product, pricing terms, delivery time and the track record of Rimalco, our Directors 

believe that purchases of sawn timber from Rimalco will be beneficial to us so long as the transactions are 

entered into on an arm’s length basis and based on normal commercial terms. 

When entering into such future transactions with Rimalco, we will follow the review procedures described 

in “— Shareholders’ Mandate — Guidelines and Review Procedures for Mandated Interested Person 

Transactions”. 

Lease Agreement Between Our Company and Samling Singapore 

In June 2004, our Company leased its office premises at 9 Temasek Boulevard #33-01, Suntec Tower 

Two, Singapore 038989 from Samling Singapore for a period of three years. This office unit is owned by 

Samling Strategic, who leased the office unit to Samling Singapore, who in turn, subleased it to our Company. 

In June 2007, the sublease was extended for a further term of three years. The monthly rental payable to 

Samling Singapore was increased from S$4.00 per square foot per month to S$8.00 per square foot per month, 

and the lettable floor area of the unit was increased from 2,500 square feet to 4,550 square feet. 

163

The amounts recognised as rental expenses due to Samling Singapore in relation to the office unit during 

the Period under Review are set out below: 

FY2005 FY2006 FY2007 

Five Months 

Ended 

31 May 2008 

Period from 

1 January 

2008 Up to 

the Latest 

Practicable 

Date 

(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Rent expenses for the office unit ....... 120 120 305 182 255 

An independent valuation report issued by DTZ Debenham Tie Leung (SEA) Pte. Ltd. on 27 March 2007 

accorded a valuation of S$9.50 per square foot for the open market rental value of the office unit. Accordingly, 

the monthly rental of S$8.00 per square foot paid by us for the office unit is below the market valuation and, 

hence, this transaction is not on an arm’s length basis. 

We are currently in negotiation with Samling Singapore Private Limited for lease of additional floor 

space. 

Our Audit Committee will also review the terms of any subsequent renewals of the lease in accordance 

with the requirements of Chapter 9 of the Listing Manual, to ensure that they are transacted on normal 

commercial terms and are not prejudicial to our interests or those of our minority Shareholders. 

Pledge of Certain Shares by Victon to Bangkok Bank 

In October 2006, Victon pledged certain shares it holds in favour of Bangkok Bank as security for 

banking facilities granted by Bangkok Bank to our Company. These facilities included: (i) a refund guarantee 

facility of up to US$110.0 million; (ii) a revolving short-term loan of US$2.5 million; (iii) trade finance 

facilities of up to US$60.0 million; and (iv) a term loan of US$14.4 million. 

Our Directors believe that the pledge of shares by Victon to secure the banking facilities from Bangkok 

Bank was not carried out on an arm’s length basis as Victon received no benefit from this transaction. 

Subsequent to completion of the Offering, we intend to negotiate for the discharge of the Victon pledge. 

In the event that Bangkok Bank does not release the Victon pledge, Victon will continue to pledge the 

referenced shares to secure the relevant facilities. 

Other Transactions 

Present and Ongoing Other Transactions 

(a) Purchases by our Company from LSH Group 

As at the Latest Practicable Date, our former Director Yaw Teck Seng has an indirect minority interest of 

23.1% in the issued share capital of LSH, which is principally engaged in the trading of motor vehicles, heavy 

equipment and spare parts, the provision of after-sales and product support services, property development and 

investment, general trading and financial services. 

Yaw Teck Seng is not a director of LSH or LSH Group and is not involved in the management or day-today 

operations of LSH or the LSH Group. 

According to the Composite Document, our former Director Taikichi Ito has an interest of approximately 

0.8% in the issued share capital of LSH. 

On 17 March 2008, LSH was withdrawn from listing on the Hong Kong Stock Exchange pursuant to a 

scheme of arrangement sanctioned by the High Court of Hong Kong. On 23 May 2008, it was converted into a 

private company. The reasons offered for its privatisation as stated in the Composite Document were: 

(i) low liquidity of the shares of LSH traded on the Hong Kong Stock Exchange; 

(ii) insufficient public float on the Hong Kong Stock Exchange; and 

(iii) a high concentration of shareholding in LSH. 

Yaw Teck Seng’s interest in LSH is held through (a) Victon and Starways Nominees Inc., which are 

entities that are beneficially owned and controlled by him, and (b) Yetime Nominees Limited, which holds 

shares on his behalf. 

164

In October 2006, we started engaging LSH Group to assist us with the procurement for a number of our 

purchases. 

LSH Group is not an “Interested Person” within Chapter 9 of the Listing Manual since none of our 

Directors or Controlling Shareholder or any of their Associates have an interest of 30% or more in or 

management control over LSH or LSH Group. We are including a description of our transactions with LSH 

Group because Yaw Teck Seng is our former Director and is the father and therefore an Associate of Yaw 

Chee Siew, and because our former Director Taikichi Ito also holds an interest in LSH. 

The decision-making process in relation to our future transactions with LSH Group will be subject to the 

following process upon completion of the Offering: 

we intend to enter into a procurement service agreement with LSH Singapore to formalise our working 

arrangement. The agreement will be subject to a review by and approval of our Audit Committee to 

ensure that the terms of the agreement are on an arm’s length basis and based on normal commercial 

considerations; 

our Audit Committee will, as soon as practicable, set out the procedures for the procurement of goods 

and services; and 

all procurement transactions will be subject to a review by our internal auditors. Our internal auditors 

will report their findings to our Audit Committee on a quarterly basis. 

Our total purchases through LSH Group for the Period under Review are as follows: 

FY2005 FY2006 FY2007 

Five Months 

Ended 

31 May 2008 

Period From 




(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Total purchases through LSH Group ..... — 19,232 155,528 66,394 87,273 

The amounts due from us to LSH Group as at the end of each of the last three years ended 31 December 

2007, as at 31 May 2008 and as at the Latest Practicable Date are as follows: 

As at 

31 December 

2005 

As at 

31 December 

2006 

As at 

31 December 

2007 

As at 

31 May 

2008 

As at the Latest 


(S$’000) (S$’000) (S$’000) (S$’000) (S$’000) 

Outstanding amounts .......... — 19,873 97,757 124,278 70,643 

Our Directors believe that the transactions entered into by our Company with LSH Group were carried 

out on an arm’s length basis and based on normal commercial terms and on market prices. 

Save as disclosed above, our Directors, Controlling Shareholders and their Associates do not have any 

relationship with LSH or LSH Group. 

(b) Pledge of certain public listed shares by Taikichi Ito and companies controlled by Taikichi Ito 

Our former Director Taikichi Ito was appointed as an executive Director of our Company in 1980. In 

2001, he became a non-executive Director and remained on our board in a non-executive role until he retired 

in November 2007. As such, he and the companies controlled by him are not interested persons of our Group 

within the definition contained in Chapter 9 of the Listing Manual. However, as Taikichi Ito is a former 

Director, we set out the details of the transactions between Taikichi Ito and our Company below. 

In October 2006, Taikichi Ito and companies owned and controlled by him, namely Cairney International 

Limited, Sindix Corporation and Vendalon Investment Ltd., each incorporated in the BVI, and Fentil 

Navigation Corp, a company incorporated in Panama, pledged certain shares to Bangkok Bank as security for 

banking facilities granted to our Company. See “Management’s Discussion and Analysis of Financial 

Condition and Results of Operations — Borrowings”. 

Our Directors believe that the pledge of shares by Taikichi Ito and these companies to secure the banking 

facilities from Bangkok Bank was not carried out on an arm’s length basis as Taikichi Ito and these companies 

received no benefit from this transaction. 

Subsequent to completion of the Offering, we intend to negotiate for the discharge of the pledge by 

Taikichi Ito and these companies. In the event that Bangkok Bank does not release the pledge, Taikichi Ito and 

these companies will continue to pledge the referenced shares to secure the relevant facilities. 

165

Approval of Ongoing Transactions with Interested Persons 

Our ongoing transactions with Interested Persons, as described in “— Present and Ongoing Interested 

Person Transactions” and “— Other Transactions” will be deemed to have been specifically approved by 

Shareholders of our Company upon subscription and/or purchase of our Shares in the Offering and are 

therefore not subject to Rules 905 and 906 of the Listing Manual. 

Shareholders’ Mandate 

We expect that we will, in the ordinary course of business, continue to enter into transactions with 

Rimalco for the purchase of sawn timber. It is likely that such transactions will occur with some degree of 

frequency and could arise at any time and from time to time. In view of the time-sensitive nature of 

commercial transactions, it would be advantageous to us to obtain a Shareholders’ mandate to enter into these 

interested person transactions in our normal course of business, provided that all such transactions are carried 

out on normal commercial terms and are not prejudicial to our Company or the minority Shareholders of our 

Company. 

In accordance with Rule 906 of the Listing Manual, our Company is required to obtain Shareholders’ 

approval for any interested person transactions (or series of interested person transactions with the same 

interested person during the same financial year) of a value equal to or more than 5.0% of our latest audited 

NTA. Based on our audited NTA of approximately S$52.7 million as at 31 December 2007, the relevant 5.0% 

threshold would be approximately S$2.6 million. 

Pursuant to Rule 920(2) of the Listing Manual, we may treat a general mandate as having been obtained 

from our Shareholders (the “Shareholders’ Mandate”) for us to enter into certain categories of interested 

person transactions with the classes of interested persons set out below (the “Mandated Transactions”), if the 

information required by Rule 920(1)(b) is included in this document. The information required by 

Rule 920(1)(b) is as follows: 

(i) the class of interested persons with which the entity at risk will be transacting; 

(ii) the nature of the transactions contemplated under the mandate; 

(iii) the rationale for, and benefit to, the entity at risk; 

(iv) the methods or procedures for determining transaction prices; 

(v) the independent financial adviser’s opinion on whether the methods or procedures in (iv) are 

sufficient to ensure that the transactions will be carried out on normal commercial terms and will not be 

prejudicial to the interests of the issuer or its minority shareholders; 

(vi) an opinion from the audit committee, if it takes a different view to the independent financial 

adviser; 

(vii) a statement from the issuer that it will obtain a fresh mandate from shareholders if the methods 

or procedures in (iv) become inappropriate; and 

(viii) a statement that the interested person will abstain and has undertaken to ensure that its 

Associates will abstain from voting on the resolution approving the transaction. 

The Shareholders’ Mandate will be effective until the earlier of the following: (i) our first annual general 

meeting following our admission to the Official List of the SGX-ST; or (ii) the first anniversary of the date of 

our admission to the Official List of the SGX-ST. Thereafter, we will seek the approval of our Shareholders 

for a renewal of the Shareholders’ Mandate at each subsequent annual general meeting. 

In accordance with Rule 920(1)(b)(viii) of the Listing Manual, Interested Persons shall abstain and 

undertake that their Associates shall abstain from voting on resolutions approving interested person transactions 

involving themselves and us. Furthermore, such Interested Persons shall not act as proxies in relation to 

such resolutions unless voting instructions have been given by the Shareholder. 

Pursuant to Chapter 9 of the Listing Manual, transactions entered into by us with an interested person 

that are below S$100,000 in value are not subject to the requirements of Chapter 9. Therefore, the 

Shareholders’ Mandate does not relate to any such interested person transactions. In addition, the Shareholders’ 

Mandate will cover only recurrent transactions of a revenue or trading nature or those necessary for our 

day-to-day operations (such as the purchase and sale of supplies and materials) and will not cover transactions 

relating to the purchase or sale of assets, undertakings or businesses. 

166

Transactions with interested persons that do not fall within the ambit of the Shareholders’ Mandate shall 

be subject to the relevant provision of Chapter 9 and/or any other applicable provisions of the Listing Manual. 

Entities at Risk 

For the purpose of the Shareholders’ Mandate, an “Entity at Risk” means, as defined in the Listing 

Manual: 

(a) our Company; 

(b) a subsidiary of our Company that is not listed on the SGX-ST or an approved exchange; or 

(c) an associated company of our Company that is not listed on the SGX-ST or an approved 

exchange, provided that our Group or our Group and Interested Persons have control over the associated 

company. 

Classes of Interested Persons 

The Shareholders’ Mandate will apply to transactions with Rimalco and its subsidiaries and associated 

companies. 

Categories of Interested Person Transactions 

Interested Person Transactions of a Recurring Nature 

The interested person transactions that will be covered by the Shareholders’ Mandate relate to the 

purchases of sawn timber from Rimalco as such purchases may occur in the ordinary course of our business or 

as they are necessary for our day-to-day operations (but not in respect of purchases or sales of assets, 

undertakings or businesses which are not part of our day-to-day operations). 

The details of these Mandated Transactions with Rimalco are set out in “— Present and Ongoing 

Interested Person Transactions — Purchase of sawn timber by us from Rimalco”. 

Rationale for and Benefits of the Shareholders’ Mandate 

The transactions with Rimalco entered into or to be entered into by us occur or may occur in the ordinary 

course of business. We purchase sawn timber from Rimalco to construct the decks of the vessels that we build. 

As we expand our shipbuilding activities, we anticipate that we will be increasing our purchases of sawn 

timber from Rimalco. These transactions are generally recurring transactions that are likely to occur with some 

degree of frequency and arise at any time and from time to time. We have an ongoing relationship with 

Rimalco and have been satisfied with the standard and quality of their timber. Our Directors are of the view 

that it may be beneficial to us to transact or continue to transact with Rimalco. 

The Shareholders’ Mandate and the renewal of the Shareholders’ Mandate on an annual basis will 

eliminate, among other things, the need for us to convene separate general meetings on each occasion to seek 

our Shareholders’ approval as and when potential transactions with Rimalco arise. This will reduce 

substantially the administrative time, inconvenience and expenses associated with the convening of such 

meetings, without compromising our corporate objectives and adversely affecting our business opportunities. 

The Shareholders’ Mandate is intended to facilitate transactions in the ordinary course of our business 

which are transacted from time to time with Rimalco, provided that they are carried out on normal commercial 

terms and are not prejudicial to the interests of our Company or our minority Shareholders. 

Disclosure will be made in the format required by the Listing Manual, and to the extent required by the 

SGX-ST, of the aggregate value of interested person transactions conducted pursuant to the Shareholders’ 

Mandate during the current financial year and in the annual reports for subsequent financial years during 

which a Shareholders’ Mandate is in force. 

Guidelines and Review Procedures for Mandated Interested Person Transactions 

We have established procedures to ensure that the Mandated Transactions with Rimalco are undertaken 

on an arm’s length basis and on normal commercial terms consistent with our usual business practices and 

policies and on terms which are generally no more favourable to Rimalco than those extended to unrelated 

third parties. 

167

In particular, the following review procedures have been implemented: 

When purchasing sawn timber from Rimalco, we will obtain at least two other quotations from unrelated 

third-party suppliers for comparison to ensure that Rimalco’s quotations are fair and reasonable so as not to 

compromise the interests of minority Shareholders. The purchase price shall not be higher than the most 

competitive price of the two other quotations from unrelated third-party suppliers. In determining the most 

competitive purchase price, all pertinent factors, including but not limited to quality, reliability, delivery time, 

credit and payment terms and track record will be taken into consideration. 

Each of the transactions with Rimalco in relation to the purchase of sawn timber will be monitored as an 

individual transaction and, based on the value of the transaction, will require the prior approval of the 

corresponding approving authority, who shall be a Director or management employee of the Group (but not an 

interested person or his Associate) and who does not have any interests, whether direct or indirect, in relation 

to the transaction (the “Relevant Approving Authority”). Guidelines for the Relevant Approving Authority 

are as follows: 

Approval Limits Relevant Approving Authority 

Transactions not exceeding S$250,000 ................ AnytwoDirectors and the CFO 

Transactions above S$250,000 ...................... AnytwoAudit Committee members, 

one of whom must be the Chairman of 

the Audit Committee 

As at the Latest Practicable Date, our Group Managing Director Lee Kok Wah, our Non-executive 

Director Craig Foster Pickett and the Audit Committee members Reggie Thein, William Edward Alastair 

Morrison and Ng Chee Keong, are not related to Rimalco. Reggie Thein is the Chairman of the Audit 

Committee. 

Other Review Procedures 

We have also implemented the following procedures for the identification of Interested Persons and the 

recording of all interested person transactions: 

(a) our CFO will maintain a register of all transactions carried out with Interested Persons (and the 

basis, including the quotations obtained to support such basis, on which these transactions are entered 

into), whether mandated or non-mandated; 

(b) on a quarterly basis, our CFO will submit a report to our Audit Committee of all recorded 

interested person transactions, and the basis of such transactions, entered into by us; 

(c) our Company’s internal auditor shall review, on a quarterly basis, all Mandated Transactions 

entered into pursuant to the Shareholders’ Mandate to ensure that the relevant approvals have been 

obtained and the review procedures in respect of such transactions had been adhered to. The internal 

auditor shall report directly to the Audit Committee; and 

(d) the Audit Committee shall review from time to time such internal controls and review procedures 

for interested person transactions to determine if they are adequate and/or commercially practicable to 

ensure that the transactions between us and the Interested Persons are conducted on normal commercial 

terms and not prejudicial to the interests of our Company or minority Shareholders. In conjunction with 

such review, the Audit Committee will also ascertain whether the established review procedures have 

been complied with. Further, if during these periodic reviews, the Audit Committee is of the view that the 

internal controls and review procedures for interested person transactions are inappropriate or not 

sufficient to ensure that the interested person transactions will be on normal commercial terms and not 

prejudicial to the interests of our Company or minority Shareholders, the Audit Committee will (pursuant 

to Rule 920(1)(b)(iv) and (vii) of the Listing Manual) revert to Shareholders for a fresh Shareholders’ 

Mandate based on new internal controls and review procedures for transactions with Interested Persons. 

All Mandated Transactions shall be reviewed and approved by the Audit Committee prior to entry while a 

fresh mandate is being sought from Shareholders. 

For the purposes of the above review of the internal controls and review procedures, any of the Directors 

or members of the Audit Committee who are not considered independent, will abstain from participating in 

the Audit Committee’s review of the internal controls and review procedures. 

The Board and the Audit Committee will have overall responsibility for determining the review 

procedures, with the authority to delegate this responsibility to individuals or committees within our Group as 

they deem appropriate. 

168

Opinion of the Independent Financial Adviser 

Provenance Capital Pte. Ltd. was appointed as our independent financial adviser pursuant to 

Rule 920(1)(b)(v) of the Listing Manual to provide an opinion on whether the review procedures set out above 

for determining the transaction prices and terms of the Mandated Transactions are sufficient to ensure that the 

transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of our 

Company or minority Shareholders. 

Based on the review procedures for the Mandated Transactions, Provenance Capital Pte. Ltd. is of the 

opinion that the current guidelines and review procedures for determining the transaction prices of the 

Mandated Transactions if adhered to, are sufficient to ensure that the Mandated Transactions will be carried 

out on normal commercial terms and will not be prejudicial to the interests of our Company or minority 

Shareholders. 

Potential Conflicts of Interest 

Exchangeable Loan Agreement with SCPEL 


Agreement, under which SCPEL has acquired certain indirect interests in our Shares. See “Substantial 

Shareholders and Vendors — Exchangeable Loan Agreement”. Our Non-executive Director William Edward 

Alastair Morrison was appointed as a Director of our Company pursuant to the obligations of Business 

Companion Investments and Yaw Chee Siew under the Exchangeable Loan Agreement. He is also the 

Managing Director of SCPEL. 

SCPEL, which is incorporated in Hong Kong, is a subsidiary of Standard Chartered Bank, and its 

principal business is to undertake private equity investments. Due to the nature of its business, it may from 

time to time invest in ventures that carry on similar businesses or deal in similar products as our Group, or 

which compete with the businesses of our Group. 

In the event of any possible conflict of interest between our Group and any company in which SCPEL 

has an investment, Mr. Morrison will (to the extent that he is aware of such conflict and is not able to act in 

the best interests of our Company as a result of such conflict) disclose the conflict to our Board and abstain 

from voting or participating in the decision-making process in relation to those matters. 

Confirmation from Yaw Chee Siew 

Yaw Chee Siew has provided a confirmation to us that as of the Latest Practicable Date, he and entities 

of which he is a controlling shareholder: 

(a) are not carrying on businesses similar to those carried out by our Group or which compete 

directly or indirectly with the businesses carried out by our Group as at the date of the listing of our 

Company on the SGX-ST (“Competing Businesses”); 

(b) do not have any interest in any company as a controlling shareholder, that carries on Competing 

Businesses; and 

(c) do not carry on any business activities which conflict with the interests of our Group in any way. 

Yaw Chee Siew has further undertaken that he will not and will use his best endeavours to procure that 

his spouse, children and the entities of which he is a controlling shareholder will not carry on, participate or 

be engaged in any Competing Businesses in the future so long as our Company remains listed on the SGX-ST 

and he: 

(a) in fact exercises control over our Company; 

(b) holds directly or indirectly 15% or more of the nominal amount of all Shares; or 

(c) serves as a Director. 

Save as disclosed in this section, none of our Directors, Controlling Shareholders or their Associates have 

any interest, direct or indirect, in: 

(a) any company carrying on the same business or dealing in similar products as we; 

(b) any company that is our customer, supplier or sub-contractor; and 

(c) any material transactions to which we were or are a party. 

169

DESCRIPTION OF SHARE CAPITAL 

Share Capital 

Our Company 

We (Company Registration No. 197902647M) were incorporated in Singapore on 5 September 1979 

under the Act as a private limited company under the name “Otto Industrial Co (Pte) Ltd”. With effect from 

5 October 2006, we changed our name to “Otto Marine Pte. Ltd.”. On 17 March 2008, our name was changed 

to “Otto Marine Limited” in connection with our conversion to a public limited company. 

Our Memorandum of Association states, inter alia, that the liability of our members is limited to the 

amount, if any, for the time being unpaid on the Shares respectively held by them. As at the date of 

incorporation, our authorised share capital was S$500,000 divided into 500,000 ordinary shares of S$1.00 each 

and the issued and paid-up capital of our Company was S$3.00 comprising three ordinary shares of S$1.00 

each. 

Pursuant to resolutions passed on 14 July 1980 and 2 August 1980, our Shareholders approved the issue 

and allotment of additional 99,997 shares and 400,000 shares, respectively, each of S$1.00. At an EGM held 

on 25 July 2006, our Shareholders approved the issue of an additional 2,000,000 shares, each of S$1.00. On 

30 December 2006, 25,125,000 shares were issued to Yaw Chee Siew, each of S$1.00, to capitalise certain 

shareholder loans. We issued a further 4,875,000 shares of S$1.00 each to our Group Managing Director, Lee 

Kok Wah and CEO Technology Asia. 

At an EGM held on 29 February 2008, our Shareholders approved, inter alia, the following: 

(a) the conversion of our Company into a public limited company; 

(b) the change of our Company’s name from “Otto Marine Pte. Ltd.” to “Otto Marine Limited”; and 

(c) the adoption of a new set of Memorandum and Articles of Association; 

Our issued share capital immediately prior to listing was S$32.5 million. At an EGM held on 2 September 

2008, our Shareholders approved, inter alia, the following: 

(a) the Shareholders’ mandate described in further detail in “Interested Person Transactions and 

Conflicts of Interest — Shareholder’s Mandate”; 

(b) the sub-division of every one ordinary share in our Company’s share capital into 30 Shares; 

(c) the adoption of the Otto Marine Share Award Scheme; and 

(d) that our Directors be authorised, pursuant to Section 161 of the Act, to: (i) allot and issue shares 

in our Company; and (ii) issue convertible securities and any shares in our Company pursuant to the 

conversion of such convertible securities (whether by way of rights, bonus or otherwise) at any time and 

from time to time thereafter upon such terms and conditions and for such purposes and to such persons as 

our Directors shall in their absolute discretion deem fit, provided that the aggregate number of shares to 

be issued pursuant to such authority shall not exceed 50.0% of our post-Offering issued share capital and 

that the aggregate number of shares to be issued other than on a pro-rata basis to the then existing 

Shareholders of ours shall not exceed 20.0% of our post-Offering issued share capital, and, unless revoked 

or varied by us in general meeting, such authority shall take effect from the date of listing of our Shares 

on the SGX-ST and shall continue to be in force until our next AGM or the date by which our next AGM 

is required by law or by our Articles of Association to be held, whichever is earlier. For this purpose, the 

percentage of the issued share capital is based on our Company’s post-Offering issued share capital, after 

adjusting for new shares arising from the conversion or exercise of any outstanding or subsisting options 

at the time of the passing of the resolution approving the mandate, provided the issue of shares or such 

convertible securities are made in compliance with the Listing Manual and subsequent consolidation or 

subdivision of shares. 

For the purposes of this resolution, and pursuant to Rules 806(3) and 806(4) of the Listing Manual, “post- 

Offering issued share capital” shall mean our enlarged issued and paid-up share capital after the Offering, after 

adjusting for: (i) new shares arising from the conversion or exercise of any convertible securities; (ii) new 

shares arising from the exercise of share options or the vesting of share awards outstanding or subsisting at the 

time such authority is given, provided the options or awards were granted in compliance with the Listing 

Manual; and (iii) any subsequent consolidation or subdivision of shares. 

170

At an EGM held on 19 November 2008, our Shareholders approved, inter alia, the allotment and issue of 

the New Shares which are the object of the Offering. 

As at the Latest Practicable Date, our issued share capital was S$32.5 million comprising of 32,500,000 

issued and fully-paid Shares. Upon the allotment and issue of the New Shares pursuant to the Offering, the 

resultant issued share capital of our Company will be increased to S$137,582,950 comprising 

1,181,045,000 Shares before deduction of the estimated expenses payable by the company in connection with 

the Offering. As at the date of this document, we have only one class of Shares, being ordinary shares. There 

are no founder, management, deferred or unissued shares reserved for any purpose. The rights and privileges 

relating to our Shares are stated in our Articles of Association. 

Our Subsidiaries and Associated Companies 

Details of the changes in the issued and paid-up share capital of our subsidiaries and associated 

companies in the three years prior to the Latest Practicable Date are as follows: 

Company Name Date Purpose 

Blue Fin I .......31January 2007 

19 October 2007 

Blue Fin II .......31January 2007 


Blue Fin III ......8February 2007 


Blue Fin IV ......8February 2007 


Blue Fin V .......8February 2007 


Otto Investment ....28May2007 

13 June 2007 

Establishment of Blue Fin I 

First capital increase of Blue Fin I 

Establishment of Blue Fin II 

First capital increase of Blue Fin II 

Establishment of Blue Fin III 

First capital increase of Blue Fin III 

Establishment of Blue Fin IV 

First capital increase of Blue Fin IV 

Establishment of Blue Fin V 

First capital increase of Blue Fin V 

Establishment of Otto Investment 

First capital increase of Otto 

Investment 

Number of 

Shares 

Issued 

2 

49,998 

2 

49,998 

2 

49,998 

2 

49,998 

2 

49,998 

1 

Issue Price 

per Share 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

US$1.00 

Total Number 

of Issued 

Shares 

2 

50,000 

2 

50,000 

2 

50,000 

2 

50,000 

2 

50,000 

1 

Total Issued and 

Paid-up Share 

Capital 

S$2.00 

S$50,000.00 

S$2.00 

S$50,000.00 

S$2.00 

S$50,000.00 

S$2.00 

S$50,000.00 

S$2.00 

S$50,000.00 

US$1.00 

1 US$1.00 

2 

US$2.00 

OM Offshore .....6August 2007 Establishment of OM Offshore 3 S$1.00 3 S$3.00 

Otto Offshore .....15December 2005 Establishment of Otto Offshore 2 US$1.00 2 US$2.00 

PT Batamec ......4October 2006 Capital increase of PT Batamec 150,000 IDR 840,800 293,000 

shares 

comprising 

a) 143,000 

Class A 

Shares 

b) 150,000 

Class B 

Shares 

IDR 156.2 billion 

PT Lestari .......3August 2006 

5 December 2007 

Establishment of PT Lestari 

First capital increase of PT Lestari 

700 

13,300 

IDR 1.0 million 

IDR 1.0 Million 

700 

14,000 

IDR 700.0 million 


Otto Ventures .....28November 2006 Establishment of Otto Ventures 

Sea Dolphin 

2 S$1.00 2 S$2.00 

Finance .......18January 2005 Establishment of Sea Dolphin 

Finance 1 US$1.00 1 US$1.00 

Tetra I ..........31January 2007 


Tetra II .........31January 2007 


Tetra III .........8February 2007 


Tetra IV .........8February 2007 


Tetra V .........8February 2007 


Establishment of Tetra I 

First capital increase of Tetra I 

Establishment of Tetra II 

First capital increase of Tetra II 

Establishment of Tetra III 

First capital increase of Tetra III 

Establishment of Tetra IV 

First capital increase of Tetra IV 

Establishment of Tetra V 

First capital increase of Tetra V 

2 

49,998 

2 

49,998 

2 

49,998 

2 

49,998 

2 

49,998 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

2 

50,000 

2 

50,000 

2 

50,000 

2 

50,000 

2 

50,000 

S$2.00 

S$50,000.00 

S$2.00 

S$50,000.00 

S$2.00 

S$50,000.00 

S$2.00 

S$50,000.00 

S$2.00 

S$50,000.00 

Otto Strategic .....13February 2008 Establishment of Otto Strategic 2 S$1.00 2 S$2.00 

Otto Fleet. .......1February 2008 Establishment of Otto Fleet 2 S$1.00 2 S$2.00 

Tarpon 1 ........6February 2008 Establishment of Tarpon 1 2 S$1.00 2 S$2.00 





WAIL..........26June 2007 Establishment of WAIL 100 US$1.00 100 US$100.00 

171

Company Name Date Purpose 

Aries Offshore 

Singapore ......31December 2007 


Polar Marine I .....4February 2008 

18 June 2008 

Polar Marine II ....4February 2008 

18 June 2008 

Establishment of Aries Offshore 

Singapore 

First capital increase of Aries 

Offshore Singapore 

Establishment of Polar Marine I 

First capital increase of Polar 

Marine I 

Establishment of Polar Marine II 

First capital increase of Polar 

Marine II 

Number of 

Shares 

Issued 

2 

98 

2 

98 

2 

98 

Issue Price 

per Share 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

S$1.00 

Total Number 

of Issued 

Shares 

2 

100 

2 

100 

2 

100 

Total Issued and 

Paid-up Share 

Capital 

S$2.00 

S$100.00 

S$2.00 

S$100.00 

S$2.00 

S$100.00 

Changes in Share Capital of Our Company 

Save as disclosed below and in “Substantial Shareholders and Vendors — Significant Changes in 

Percentage of Ownership” of this document, there were no changes in our issued and paid-up capital and our 

subsidiaries and associated companies during the three years preceding the Latest Practicable Date. 

There have not been any situations where more than 10.0% of our share capital has been paid for with 

assets other than in cash within the period of three years preceding the date of lodgement of this document. 

Prior to 26 July 2006, the total issued and paid up share capital of our Company was S$0.5 million, 

consisting of 500,000 Shares. The details of the changes in our issued and paid-up capital in the three years 

prior to the Latest Practicable Date and up to the date of this document and the resultant issued and paid-up 

share capital immediately after the Offering are as follows: 

Resultant 

Number of 

Resultant 

Number of 

Issued 

and Paid-up 

Date Purpose of Issue Consideration Shares Issued Issued Shares Share Capital 

(S$’000) (S$’000) 

26 July 2006 Subscription of new Shares by 

Yaw Chee Siew 

2,000 2,000,000 2,500,000 2,500 

30 December 2006 Subscription of new Shares by 

Yaw Chee Siew 

25,125 25,125,000 27,625,000 27,625.5 


Lee Kok Wah, 

our Group Managing Director 

3,250 3,250,000 30,875,000 30,875 


CEO Technology Asia 

1,625 1,625,000 32,500,000 32,500 

2 September 2008 Sub-division — — 975,000,000 32,500 

28 November 2008 Shares to be issued pursuant to 

the Offering 

105,083 (1) 

206,045,000 1,181,045,000 137,583 (1) 

Note: 

(1) Before deduction of the estimated expenses payable by our Company in connection with the Offering. 

There have not been any situations where more than 10.0% of our capital has been paid for with assets 

other than in cash within the period of three years preceding the date of lodgement of this document. 

172

DESCRIPTION OF OUR SHARES 

The following statements are brief summaries of the more important rights and privileges of the 

Shareholders as conferred by the laws of Singapore and the Articles. These statements summarise the material 

provisions of the Articles but are qualified in entirety by reference to the Articles, a copy of which will be 

available for inspection at our Company during normal business hours for a period of six months from the 

date of this document. 

Ordinary Shares 

Our issued and paid-up share capital as at the Latest Practicable Date comprise only one class of shares, 

namely, the ordinary shares. The Articles provide that we may issue shares of a different class with such 

preferred, deferred or other special rights, privileges or conditions as our Board of Directors may think fit and 

may issue preference shares which are, or at our option are, redeemable, subject to certain limitations. 

Fully paid ordinary shares are not subject to any further capital calls by us. All the ordinary shares are in 

registered form. We may, subject to the provisions of the Act and the rules of the SGX-ST, purchase our own 

ordinary shares. However, we may not, except in circumstances permitted by the Act, grant any financial 

assistance for the acquisition or proposed acquisition of our own ordinary shares. 

New Shares 

We may only issue new shares with the prior approval of our Shareholders in a general meeting. Our 

Shareholders have given us general authority to allot and issue shares and/or convertible securities (where the 

maximum number of shares to be issued upon conversion is determinable at the time of the issue of such 

securities) in our Company (whether by way of rights, bonus, or otherwise) at any time and from time to time 

thereafter to such persons and on such terms and conditions and for such purposes as our Directors may in 

their absolute discretion deem fit. 

The aggregate number of shares and/or convertible securities to be issued pursuant to such general 

authority shall not exceed 50.0% of our issued share capital, of which the aggregate number of shares and/or 

convertible securities to be issued other than on a pro-rata basis to existing Shareholders shall not exceed 

20.0% of our issued share capital, and unless earlier revoked or varied by ordinary resolution of our 

Shareholders in general meeting, such authority shall continue to be in force only until our next AGM or the 

date by which our next AGM is required by law to be held, whichever is earlier. For this purpose, the 

percentage of issued share capital is based on our issued share capital at the time such authority is given after 

adjusting for new shares arising from the conversion of convertible securities or employee share options on 

issue at the time when such authority is given and any subsequent consolidation or subdivision of shares. 

Subject to the foregoing, the provisions of the Act and any special rights attached to any class of shares 

currently issued, all new ordinary shares are under the control of our Board of Directors who may allot and 

issue the same with such rights and restrictions as it may think fit. 

Under our Articles, subject to any direction to the contrary that may be given by us in general meeting or 

except as permitted under the listing rules of the SGX-ST, all new shares shall, before issue, be offered to our 

Shareholders in proportion, as nearly as circumstances admit, to the amount of the existing shares to which 

they are entitled. 

Shareholders 

Only persons who are registered on the register of members of our Company and, in cases in which the 

person so registered is CDP, the persons named as the Depositors in the Depository Register maintained by 

CDP for the ordinary shares, are recognised as the Shareholders. We will not, except as required by law, 

recognise any equitable, contingent, future or partial interest in any ordinary share or other rights for any 

ordinary share other than the absolute right thereto of the registered holder of that ordinary share or of the 

person whose name is entered in the Depository Register for that ordinary share. 

We may close our register of members for any time or times so long as we provide the Registry of 

Companies and Businesses of Singapore with at least 14 days’ notice and the SGX-ST at least 10 clear market 

days’ notice. However, the register may not be closed for more than 30 days in aggregate in any calendar year. 

We typically close the register to determine our Shareholders’ entitlement to receive dividends and other 

distributions. 

173

Transfer of Shares 

There is no restriction on the transfer of fully paid shares except where required by law or the listing 

rules or the rules or by-laws of any stock exchange on which we are listed. Our Board of Directors may 

decline to register any transfer of shares which are not fully paid or on which we have a lien. Our shares may 

be transferred by a duly signed instrument of transfer in a form approved by any stock exchange on which we 

are listed. Our Board of Directors may also exercise their discretion to decline to register any instrument of 

transfer unless, among other things, it has been duly stamped and is presented for registration together with 

the share certificate and such other evidence of title as it may require. Replacement for lost or destroyed share 

certificates will be made by us if we are properly notified and the applicant pays a fee, which will not exceed 

S$2.00, and furnishes any evidence and indemnity that our Board of Directors may require. 

General Meetings of Shareholders 

An AGM is to be held by us every financial year. Our Board of Directors may convene an EGM 

whenever it thinks fit and must do so if Shareholders representing not less than 10.0% of the total voting 

rights of all the Shareholders request in writing that such a meeting be held. In addition, two or more of the 

Shareholders holding not less than 10.0% of our issued share capital may call for an EGM. 

Unless otherwise required by law or by the Articles, voting at general meetings is by ordinary resolution, 

requiring an affirmative vote of a simple majority of 50.0% of the votes cast at that meeting. An ordinary 

resolution suffices, for example, for the appointment of Directors. A special resolution, requiring the 

affirmative vote of at least 75.0% of the vote cast at the meeting, is necessary for certain matters under 

Singapore law, including voluntary winding up, amendments of the Memorandum and the Articles of 

Association, a change of the corporate name and a reduction in our share capital or capital redemption reserve 

fund. 

We must give at least 21 days’ notice in writing for every general meeting convened for the purpose of 

passing a special resolution. Ordinary resolutions generally require at least 14 days’ notice in writing. The 

notice must be given to each of the Shareholders who have supplied us with an address in Singapore for the 

giving of notices and must set forth the place, the day and the hour of the meeting and, in the case of special 

business, the general nature of that business. 

Voting Rights 

A Shareholder is entitled to attend, speak and vote at any general meeting, in person or by proxy. A 

proxy need not be a Shareholder. A person who holds shares through the SGX-ST book-entry settlement 

system will only be entitled to vote at a general meeting as a shareholder if his or her name appears on the 

Depository Register maintained by CDP 48 hours before the general meeting. 

Except as otherwise provided in the Articles, two or more Shareholders must be present in person or by 

proxy to constitute a quorum at any general meeting. Under the Articles, on a show of hands, every 

Shareholder present in person or by proxy shall have one vote (provided that in the case of a Shareholder who 

is represented by two proxies, only one of the two proxies as determined by that Shareholder or, failing such 

determination, by the chairman of the meeting in his or her sole discretion, shall be entitled-to vote on a show 

of hands), and on a poll, every Shareholder present in person or by proxy shall have one vote for each 

ordinary share which he or she holds or represents. 

A poll may be demanded in certain circumstances, including by the chairman of the meeting or by any 

Shareholder present in person or by proxy and representing not less than 10.0% of the total voting rights of all 

Shareholders having the rights to attend and vote at the meeting or by any two Shareholders present in person 

or by proxy and entitled to vote. In the case of a tie vote, whether on a show of hands or a poll, the chairman 

of the meeting shall be entitled to a casting vote. 

Dividends 

We may, by ordinary resolution of the Shareholders, declare dividends at a general meeting, but it may 

not pay dividends in excess of the amount recommended by our Board of Directors. Our Directors may also 

declare an interim dividend without the approval of our Shareholders. 

We must pay all dividends out of our profits. All dividends are paid pro rata amongst the Shareholders in 

proportion to the amount paid up on each Shareholder’s shares, unless the rights attaching to an issue of any 

share provide otherwise. 

174

Unless otherwise directed, dividends are paid by cheque or warrant sent through the post to each 

Shareholder at his registered address. Notwithstanding the foregoing, the payment by us to CDP of any 

dividend payable to a Shareholder whose name is entered in the Depository Register shall, to the extent of the 

payment made to CDP, discharge us from any liability to that Shareholder in respect of that payment. 

Bonus and Rights Issue 

Our Board of Directors may, with the approval of the Shareholders at a general meeting, capitalise any 

reserves or profits (including profits or monies carried and standing to any reserve) and distribute the same as 

bonus shares credited as paid-up to the Shareholders in proportion to their shareholdings. Our Board of 

Directors may also issue rights to take up additional ordinary shares to Shareholders in proportion to their 

shareholdings. Such rights are subject to any conditions attached to such issue and the regulations of any stock 

exchange on which we are listed. 

Takeovers 

The Securities and Futures Act (Chapter 289) of Singapore and the Singapore Code on Takeovers and 

Mergers regulate the acquisition of ordinary shares of public companies and contain certain provisions that 

may delay, deter or prevent a future takeover or change in control of us. Any person acquiring an interest, 

either on his own or together with parties acting in concert with him, in 30.0% or more of the voting shares in 

our Company must extend a takeover offer for the remaining voting shares in accordance with the provisions 

of the Singapore Code on Takeovers and Mergers. “Parties acting in concert” include a company and its 

related and associated companies, a company and its directors (including their relatives), a company and its 

pension funds, a person and any investment company, unit trust or other fund whose investment such person 

manages on a discretionary basis, and a financial adviser and its client in respect of shares held by the 

financial adviser and shares in the client held by funds managed by the financial adviser on a discretionary 

basis. An offer for consideration other than cash must be accompanied by a cash alternative at not less than 

the highest price paid by the offeror or parties acting in concert with the offeror within the preceding six 

months. A mandatory takeover offer is also required to be made if a person holding, either on his own or 

together with parties acting in concert with him, between 30.0% and 50.0% of the voting rights acquires 

additional voting shares representing more than 1.0% of the voting shares in any six month period. 

Limitations on Rights to Hold or Vote on Shares 

Except as described in “Voting Rights” and “Takeovers” above, there are no limitations imposed by 

Singapore law or by the Articles on the rights of non-resident Shareholders to hold or vote on shares. 

Liquidation or Other Return of Capital 

If we liquidate, or in the event of any other return of capital, holders of the ordinary shares will be 

entitled to participate in any surplus assets in proportion to their shareholdings, subject to any special rights 

attaching to any other class of shares. 

Indemnity 

As permitted by Singapore law, the Articles provide that every director, managing director, agents, 

auditors, secretary and other officers shall be indemnified out of the assets of our Company against any 

liability incurred in defending any proceedings, whether civil or criminal, which relate to anything done or 

omitted to have been done by them and in which judgement is given in their favour or in which they are 

acquitted or in connection with any application under Section 391 of the Act for relief from liability in respect 

thereof in which relief is granted by the court. 

We may not indemnify our Directors and officers against any liability which by law would otherwise 

attach to them in respect of any negligence, default, breach of duty or breach of trust of which they may be 

guilty in relation to our Company. 

Substantial Shareholdings 

Under the Act, a person has a substantial shareholding in a company if he has an interest (or interests) in 

one or more voting shares in such company and the total votes attached to that share (or shares) is not less 

than 5.0% of the total votes attached to all voting shares in the company. 

175

The Act and the Securities and Futures Act require our Substantial Shareholders to give notice to us and 

the SGX-ST, including particulars of their interest and the circumstances by which they have such interest, 

within two business days of their becoming our Substantial Shareholders and of any change in the percentage 

level of their interest. 

Minority Rights 

The rights of minority shareholders of Singapore-incorporated companies are protected under Section 216 

of the Act, which gives the Singapore courts a general power to make any order, upon application by any 

Shareholder of ours, as they think fit to remedy any of the following situations: 

our affairs are being conducted or the powers of our Board of Directors are being exercised in a manner 

oppressive to, or in disregard of the interests of, one or more of our Shareholders; or 

we take an action, or threaten to take an action, or the Shareholders pass a resolution, or propose to 

pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more of 

our Shareholders, including the applicant. 

Singapore courts have a wide discretion as to the relief they may grant and that relief is in no way limited 

to the relief listed in the Act itself. Without prejudice to the foregoing, Singapore courts may amongst other 

things: 

direct or prohibit any act or cancel or vary any transaction or resolution; 

regulate the conduct of our affairs in the future; 

authorise civil proceedings to be brought in the name, or on behalf of, us by a person or persons and on 

such terms as the court may direct; 

provide for the purchase of a minority Shareholder’s shares by the other Shareholders or by us and, in 

the case of a purchase of shares by us, a corresponding reduction of our share capital; or 

provide that we be wound up. 

176

TAXATION 

The following is a discussion of certain tax matters arising under the current tax laws and announced 

2008 Singapore Budget changes in Singapore and the United States and is not intended to be and does not 

constitute legal or tax advice. The following summary is subject to changes in Singapore law, including 

changes that could have retroactive effects. No assurance can be given that courts or fiscal authorities 

responsible for the administration of such laws will agree with this interpretation or that changes in such laws 

will not occur. 

The discussion is limited to a general description of certain tax consequences in Singapore with respect 

to the holding or disposal of the Shares by Singapore investors, and does not purport to be a comprehensive 

nor exhaustive description of all of the tax considerations that may be relevant to a decision to subscribe for 

the Shares. Prospective investors in all jurisdictions are urged to consult their own tax advisers about the tax 

consequences of an investment in the Shares under the laws of Singapore and their constituent jurisdictions, 

and any other jurisdictions where the investors of the Shares may be subject to taxation. 

It is emphasised that neither we, our Directors, the Vendors, the Issue Managers, the Underwriter, nor 

any other persons involved in the Offering accepts responsibility for any tax effects or liabilities resulting from 

the subscription for, purchase, holding or disposal of our Shares. 

Singapore Taxation 

Income Tax 

Singapore income tax is imposed, subject to specific exemptions, on income accruing in or derived from 

Singapore, and subject to certain exceptions, on foreign income received or deemed to be received in 

Singapore. 

Generally, foreign income remitted or deemed remitted into Singapore, by corporate taxpayers, are, 

subject to certain exceptions, subject to Singapore income tax. Foreign-sourced income in the form of 

dividends, branch profits and service income received or deemed received in Singapore by tax resident 

corporate taxpayers will be exempt from tax if certain prescribed conditions are met. 

A company will be regarded as being resident in Singapore if the control and management of its business 

is exercised in Singapore. An individual will be regarded as being resident in Singapore in a year of 

assessment if, in the preceding year, he was physically present in Singapore or exercised employment in 

Singapore (other than as a director of a company) for 183 days or more, or if he resides in Singapore. 

The corporate tax rate in Singapore is currently 18.0%, with effect from the year of assessment 2008, 

with certain exemptions for the first S$300,000 of chargeable income. The above tax exemption does not apply 

to Singapore franked dividends received by companies. 

For a Singapore tax resident individual, income tax will be imposed based on progressive rates which will 

vary according to the individual’s income bands, and the current top rate for a residential individual is 20.0%. 

Dividend Distributions 

Singapore currently operates a one-tier corporate tax system on 1 January 2003. Under the one-tier 

corporate tax system, the tax payable on normal chargeable income by resident and non-resident companies 

would constitute a final tax. 

Dividends payable by companies under the one-tier corporate tax system would be tax exempt in the 

hands of its shareholders. Such dividends are referred to as tax exempt (one-tier) dividends. 

There is no withholding tax on dividends paid to non-Singapore tax resident shareholders. Foreign 

shareholders are advised to consult their own tax advisers in respect of the tax laws of their respective 

countries of residence and the applicability of any double taxation agreement that their country of residence 

may have with Singapore. 

Gains on Disposal of Ordinary Shares 

Singapore does not impose tax on capital gains. However, there are no specific laws or regulations which 

deal with the characterisation of capital gains. Hence, gains arising from the disposal of ordinary shares are 

not taxable in Singapore unless the seller is regarded as having derived gains of an income nature in 

Singapore, in which case, the disposal profits would be taxable as trading income. 

177

Stamp Duty 

No stamp duty is payable on the allotment or holding of our Shares. Stamp duty is payable on the 

instrument of transfer of our Shares at the rate of S$0.20 for every S$100 or any part thereof, computed on the 

consideration of the transfer, or market value, of our Shares, whichever is higher. 

The stamp duty is borne by the purchaser, unless otherwise agreed. No stamp duty is payable if no 

instrument of transfer is executed or the instrument of transfer is executed outside Singapore. However, stamp 

duty may be payable if the instrument of transfer which is executed outside Singapore is received in 

Singapore. 

The above stamp duty is not applicable to electronic transfers of the ordinary shares through the CDP 

system. 

Goods and Services Tax (“GST”) 

The sale of the Shares by a GST-registered investor belonging in Singapore through an SGX-ST member 

or to another person belonging in Singapore is an exempt sale not subject to GST. Generally, any GST directly 

or indirectly incurred by the GST-registered investor in respect of this exempt sale will become an additional 

cost to the investor. 

Where the Shares are sold by a GST-registered investor to a person belonging outside Singapore, the sale 

is generally a taxable sale subject to GST at zero-rate. Any GST incurred by a GST-registered investor in the 

making of this taxable supply in the course or furtherance of a business may be recoverable from the 

Comptroller of GST. 

Services such as brokerage, handling and clearing services rendered by a GST-registered person to an 

investor belonging in Singapore in connection with the investor’s purchase, sale or holding of the Shares will 

be subject to GST at the current rate of 7.0%. Similar services rendered to an investor belonging outside 

Singapore would generally be subject to GST at zero-rate. 

Estate Duty 

In the 2008 Budget Statement announced on 15 February, 2008, the Minister for Finance of Singapore, 

proposed that estate duty be abolished for deaths occurring on and after 15 February, 2008. This proposal has 

yet to be promulgated as law. 

178

PLAN OF DISTRIBUTION 

The Offering 

UOB is acting as the Global Coordinator, Underwriter and Bookrunner in connection with the Offering. 

The Offering consists of (i) the Placement of 234,295,000 Placement Shares to investors, including the 

Cornerstone Investors, institutional and other investors in Singapore including 8,915,000 Reserved Shares and 

(ii) the Public Offer in Singapore of 1,000,000 Offer Shares. Offering Shares may be re-allocated between the 

Placement and the Public Offer at the sole discretion of the Underwriter. 

The Placement is being conducted pursuant to a placement agreement dated 21 November 2008 (the 

“Placement Agreement”) among, UOB, the Vendors and ourselves. Subject to the terms and conditions of the 

Placement Agreement, UOB has agreed to subscribe and/or purchase, and/or procure the subscription and/or 

purchase of, the Placement Shares at the Offering Price. 

The Public Offer is being conducted pursuant to an offer agreement dated 21 November 2008 (the “Offer 

Agreement”) among UOB, Credit Suisse, the Vendors and ourselves. Subject to the terms and conditions of 

the Offer Agreement, and concurrently with the 234,295,000 Placement Shares pursuant to the Placement 

Agreement, we and the Vendors have agreed to appoint the Underwriter to procure subscribers and purchasers, 

and the Underwriter has agreed to procure subscribers and purchasers, or failing which, to subscribe for and 

purchase 235,295,000 Offering Shares at the Offering Price. The completion of the Public Offer is conditional 

upon the completion of the Placement. 

The Offering Shares are being offered and sold outside the United States to non-US persons (including 

the Cornerstone Investors, institutional and other investors in Singapore) in reliance on Regulation S under the 

Securities Act. The Offering Shares have not been and will not be registered under the Securities Act and, 

subject to certain exceptions, may not be offered or sold within the United States or to, or for the account or 

benefit of, US persons (as defined in Regulation S). 

Prior to the Offering, there has been no public market for the Offering Shares. The Offering Price was 

determined by agreement among us, the Vendors and the Underwriter. Among the factors which were taken 

into account in determining the Offering Price are the estimated demand for the Offering Shares and the 

prevailing conditions in the securities markets. 

Neither we, the Vendors, the Issue Managers nor the Underwriter can provide you with any assurance that 

an active trading market will develop for the Offering Shares or that the Offering Shares will trade in the 

public market after the Offering at or above the Offering Price. 

We and each of the Vendors will pay the Underwriter as compensation for their services in connection 

with the offer and sale of the Offering Shares in the Offering, a combined underwriting and selling 

commission of 2.75% of an amount equal to the total number of Offering Shares under the Offering multiplied 

by the Offering Price. We and each of the Vendors have also agreed to reimburse the Underwriter and the 

Issue Managers for certain expenses incurred in connection with the Offering. See “Use of Proceeds” for 

details on such expenses. Brokerage will be paid by us out of the underwriting and selling commission of 

2.75% payable to the Underwriter at the rate of 0.25% (UOB and OCBC) and 0.50% (DBS) of the Offering 

Price for each Offer Share as Participating Banks in Singapore in respect of successful applications made 

through Electronic Applications at their respective ATMs and IB websites, if applicable (subject to a minimum 

brokerage fee of S$5,000 by DBS). 

Subscribers and purchasers of our Offering Shares may be required to pay a brokerage fee (and if so 

required, such brokerage will be up to 1.0% of the Offering Price), stamp taxes and other similar charges in 

accordance with the laws and practices of the country of purchase, in addition to the Offering Price, as 

applicable. 

As trades in the secondary market generally are required to settle in three business days, purchasers who 

wish to trade our Shares on the date of pricing or the next two succeeding business days will be required, by 

virtue of the fact that the Shares initially will settle in T+3, to specify an alternate settlement cycle at the time 

of any such trade to prevent a failed settlement. Purchasers of our Shares who wish to trade Shares on the date 

of pricing or the next two succeeding business days should consult their own adviser. 

The Placement 

In the Placement Agreement, UOB has agreed, subject to the terms and conditions set forth in that 

agreement, to subscribe and/or purchase, and/or procure the subscription and/or purchase of, the Placement 

179

Shares (including the Reserved Shares). The Placement Agreement may be terminated at any time prior to the 

issue and transfer (as applicable) of the Placement Shares pursuant to the terms of the Placement Agreement 

upon the occurrence of certain events, including, among other things, certain force majeure events and the 

discharge or release of the obligations of the Issue Managers and/or Underwriter under or pursuant to the Offer 

Agreement and/or the termination of the Offer Agreement. The closing of the Offering is conditional upon 

certain events including the fulfillment, or waiver by the SGX-ST, of all conditions contained in the letter of 

eligibility from the SGX-ST for the listing and quotation of our issued Shares (including the Offering Shares) 

on the Main Board of the SGX-ST and the closing of the transactions contemplated by the Placement 

Agreement. 

Subject to certain conditions, we and each of the Vendors have agreed to indemnify UOB against certain 

liabilities incurred in connection with the Placement. 

Reserved Shares 

Out of the 234,295,000 Placement Shares, 8,915,000 Reserved Shares at the Offering Price will be 

reserved for our employees who have contributed to our success and development (to be determined by us at 

our sole discretion). The Reserved Shares will be offered on the same terms as the other Offering Shares. If 

any of the Reserved Shares are not taken up, they will be available to satisfy over-subscription (if any) for the 

Placement Shares (other than the Reserved Shares) and/or the Offer Shares. Reserved Shares subscribed for 

and/or purchased will, except as restricted by applicable securities laws, be available for resale following the 

Offering. 

The Public Offer 

In the Offer Agreement, the Underwriter has agreed, subject to the terms and conditions set forth in that 

agreement, to subscribe and/or purchase and/or procure the subscription and/or purchase of Offer Shares. The 

Offer Agreement will be terminated upon termination of the Placement Agreement. The Public Offer is 

conditional upon the conditions to the Placement set out in the Placement Agreement being satisfied. The 

closing of the Offering is conditional upon, among other things, the closing of the transactions contemplated 

by the Offer Agreement. 

Subject to certain conditions, we and each of the Vendors have agreed to indemnify each of the Issue 

Managers and Underwriter against certain liabilities incurred in connection with the Public Offer. 

Restrictions on Disposals and Issue of Shares 

We have agreed that we will not, subject to certain exceptions, issue, offer, sell, contract to sell, pledge or 

otherwise dispose of, directly or indirectly, or file with the United States Securities and Exchange Commission 

a registration statement under the Securities Act relating to, any Shares or securities convertible into or 

exchangeable or exercisable for any Shares or warrants or other rights to purchase or subscribe for Shares, or 

enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement 

that transfers, in whole or in part, any of the economic consequences of ownership of our Shares, whether any 

of these transactions are to be settled by delivery of our Shares or such other securities, in cash or otherwise, 

or publicly disclose our intention to make any offer, sale, pledge, disposition or filing, without, in each case, 

the prior written consent of the Underwriter until six months after the Listing Date. We have also agreed that 

we will not at any time offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any 

securities under circumstances where such offer, sale, pledge, contract or disposition would cause the 

exemption afforded by Section 4(2) of the Securities Act or the safe harbour of Regulation S to cease to be 

applicable to the offer and sale of the Offering Shares. 


Agreement on 8 April 2008. Pursuant to the Exchangeable Loan Agreement, SCPEL has undertaken that, 

notwithstanding any event of default under the Exchangeable Loan Agreement on the part of Business 

Companion Investments or Yaw Chee Siew, it will not pursue any enforcement action which would result in 

Business Companion Investments or Yaw Chee Siew directly or indirectly contravening the moratorium 

undertakings given by each of Business Companion Investments and Yaw Chee Siew, as stated below. 

To demonstrate their commitment to us, our current Shareholders Business Companion Investments, CEO 

Technology Asia and Lee Kok Wah who will in aggregate hold 945,750,000 Shares, representing approximately 

80.1% of our enlarged issued share capital immediately after the Offering, have each undertaken not 

to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any Shares or securities 

180

convertible into or exchangeable or exercisable for any Shares or warrants or other rights to purchase or 

subscribe for Shares, or enter into a transaction which would have the same effect, or enter into any swap, 

hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership 

of the Shares, whether any of these transactions are to be settled by delivery of the Shares or such other 

securities, in cash or otherwise, or publicly disclose its or his intention to make any offer, sale, pledge, 

disposition or filing, without, in each case, the prior written consent of the Issue Managers until six months 

after the Listing Date. Business Companion Investments, CEO Technology Asia and Lee Kok Wah have also 

each agreed that it/he will not at any time offer, sell, contract to sell, pledge or otherwise dispose of, directly 

or indirectly, any securities under circumstances where such offer, sale, pledge, contract or disposition would 

cause the exemption afforded by Section 4(2) of the Securities Act or the safe harbour of Regulation S to 

cease to be applicable to the offer and sale of the Offering Shares. 

In addition, Yaw Chee Siew, who is the ultimate shareholder of Business Companion Investments and 

CEO Technology Asia, has agreed that he will not offer, sell, contract to sell, pledge or otherwise dispose of, 

directly or indirectly, any of his shares in Business Companion Investments and CEO Technology Asia (the 

“BCI Shares” and “CEO Shares”, respectively) or securities convertible into or exchangeable or exercisable for 

any BCI Shares or CEO Shares or warrants or other rights to purchase or subscribe for BCI Shares or CEO 

Shares, or enter into a transaction which would have the same effect, or enter into any swap, hedge or other 

arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the BCI 

Shares or CEO Shares, whether any of these transactions are to be settled by delivery of the BCI Shares or 

CEO Shares or such other securities, in cash or otherwise, or publicly disclose his intention to make any offer, 

sale, pledge, disposition or filing, without, in each case, the prior written consent of the Issue Managers until 

six months after the Listing Date. He has also agreed that he will not at any time offer, sell, contract to sell, 

pledge or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, 

sale, pledge, contract or disposition would cause the exemption afforded by Section 4(2) of the Securities Act 

or the safe harbour of Regulation S to cease to be applicable to the offer and sale of the Offering Shares. 

Other Relationships 

UOB is one of our principal bankers and has granted us project finance facilities and various refund 

guarantees. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — 

Borrowings”. 

The Issue Managers and their affiliates engage in transactions with, and perform services for, the Vendors 

and/or us in the ordinary course of business and have engaged, and may in the future engage, in commercial 

banking and investment banking transactions with the Vendors and/or us, for which they have received, and 

may in the future receive, customary compensation. 

Persons Intending to Subscribe for and/or Purchase in the Offering 

The Cornerstone Investors, WAP Asia Investments and Phillip Group each intends to subscribe for and/or 

purchase 5.0% or more of the Offering Shares. Save as disclosed, we are not aware of any person who intends 

to subscribe for or purchase 5.0% or more of the Offering Shares. 

No action has been or will be taken in any jurisdiction that would permit a public offering of the Offering 

Shares being offered outside Singapore, or the possession, circulation or distribution of this document or any 

other material relating to us or the Offering Shares in any jurisdiction where action for the purpose is required. 

Accordingly, the Offering Shares may not be offered or sold, directly or indirectly, and neither this 

document nor any other offering material or advertisement in connection with the Offering Shares may be 

distributed or published, in or from any country or jurisdiction except under circumstances that will result in 

compliance with any applicable rules and regulations of any such country or jurisdiction. 

Distribution and Selling Restrictions 

The distribution of this document or any offering material and the offering, sale or delivery of our Shares 

is restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this document 

or any offering material are advised to consult with their own legal advisers as to what restrictions may be 

applicable to them and to observe such restrictions. This document may not be used for the purpose of an 

offer or invitation in any circumstances in which such offer or invitation is not authorised. 

181

General 

No action has been taken or will be taken by us, the Vendors and the Underwriter in any jurisdiction that 

would permit a public offering of Shares outside Singapore or possession or distribution of any offering 

documents or any amendment or supplement thereto or any other offering or publicity material relating to the 

Shares in any country or jurisdiction where action for that purpose is required. 

Australia 

No prospectus, disclosure document, offering material or advertisement in relation to the Offering Shares 

has been lodged with the Australian Securities and Investments Commission (“ASIC”) or the Australian Stock 

Exchange Limited. Accordingly, a person may not (a) make, offer or invite applications for the issue, sale or 

purchase of the Offering Shares within, to or from Australia (including an offer or invitation which is received 

by a person in Australia) or (b) distribute or publish this document or any other prospectus, disclosure 

document, offering material or advertisement relating to the Offering Shares in Australia, unless (i) the 

minimum aggregate consideration payable by each offeree is at least A$0.5 million (or its equivalent in an 

alternative currency) (disregarding moneys lent by the offeror or its Associates) or the offer otherwise does not 

require disclosure to investors in accordance with Part 6D.2 of the Corporations Act 2001 (Cth) of Australia 

(“Corporations Act”); and (ii) such action complies with all applicable laws and regulations. 

An offer does not require disclosure to investors under Part 6D.2 of the Corporations Act if it is to 

persons who are able to demonstrate that are a “professional investor”, a “sophisticated investor”, or an 

“experienced investor” as contemplated in sections 708(8), 708(10), or 708(11) of the Corporations Act. 

As any offer for the issue of Offering Shares under this document will be made without disclosure in 

Australia under Part 6D.2 of the Corporations Act, the offer of the Offering Shares for resale in Australia 

within 12 months of their issue may, under Section 707(3) of the Corporations Act, require disclosure to 

investors under Part 6D.2 if none of the exemptions in Section 708 of the Corporations Act apply to that 

resale. 

Accordingly, any person to whom Offering Shares are issued pursuant to this document should not, within 

12 months after the issue, offer those Offering Shares for sale to investors in Australia except in circumstances 

where disclosure to investors is not required under Part 6D.2 or unless a compliant disclosure document is 

prepared and lodged with ASIC. 

Chapter 6D of the Corporations Act 2001 (Cth) is complex, and if in any doubt as to the application or 

effect of this legislation, you should confer with your professional advisers. 

Belgium 

This document has not been submitted for approval to the Belgian Banking, Finance and Insurance 

Commission or any other competent authority in the European Economic Area and, accordingly, the Offering 

Shares may not be distributed in Belgium by way of an offer of securities to the public, as defined in 

Article 2.1(d) of the Prospectus Directive and Article 3 & 1 of the law of 16 June 2006 on public offerings of 

investment instruments and the admission of investment instruments to trading on regulated markets, save in 

those circumstances commonly called “private placement” set out in Article 3.2 of the Prospectus Directive 

and Article 3 & 2 of the law of 16 June 2006. 

European Economic Area 

The distribution of this document and the offering of the Shares in certain jurisdictions may be restricted 

by law. Neither we nor the Underwriter represent that this document may be lawfully distributed, or that the 

Shares may be lawfully offered, in compliance with any applicable registration or other requirements in any 

jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any 

distribution or offering. 

Unless expressly specified otherwise below, neither we nor the Underwriter has taken action, nor will any 

of us take action to render the public offer of the Shares or their possession, or the distribution of offer 

documents relating to the Shares, admissible in any jurisdiction requiring special measures to be taken for this 

purpose. Accordingly, the Shares may not be offered or sold, directly or indirectly, and none of this document, 

any advertisement relating to the Shares or any other offering material may be distributed or published in any 

jurisdiction, except under circumstances that will result in compliance with any applicable laws and 

182

egulations. Persons into whose possession this document comes must inform themselves about, and observe 

any such restrictions. 

Public Offer of the Shares within the European Economic Area 

Anyone who purchases the Shares is obliged and agrees never to publicly offer the Shares to persons in 

one of the member states of the European Economic Area that has implemented EU Directive 2003/71/EC 

(the “Prospectus Directive”; the term also covers all implementation measures by member states of the 

European Economic Area), except in circumstances that comply with one of the following offerings of the 

respective Shares: 

(a) within the period which begins on publication of a base prospectus which was approved in 

accordance with the Prospectus Directive, and, if necessary, for which cross-border validity pursuant to 

Sections 17 and 18 of the Prospectus Directive has been granted, and which ends twelve months after 

publication of the base prospectus; 

(b) to legal entities which are authorised or regulated to operate in the financial markets, including: 

to credit institutions, investment firms, other authorised or regulated financial institutions, insurance 

companies, collective investment schemes and their management companies, pension funds and their 

management companies, commodity dealers, as well as entities that are not authorised or regulated whose 

corporate purpose is solely to invest in Shares; 

(c) to other legal entities which meet two of the following three criteria: an average number of 

employees during the most recent financial year of more than 250, total assets exceeding A43.0 million 

and an annual net revenue of over A50.0 million; all as stated in the most recent annual financial 

statements or consolidated accounts, or 

(d) other circumstances prevail whereby the publication of a prospectus is not required pursuant to 

Article 3 of the Prospectus Directive. 

The term “public offer of Shares” in this context means any kind or means of communication to the 

public containing sufficient information relating to the offering conditions and the Shares offered to put an 

investor in a position to decide whether to buy or subscribe to these Shares. Anyone buying the Shares should 

note that the term “public offer of Shares” may vary, depending on the implementation measures in the various 

member states of the European Economic Area. 

In any member states of the European Economic Area which have not yet implemented the Prospectus 

Directive in national law, the Shares may only be offered or sold directly or indirectly, in accordance with 

prevailing legislation, to which the dissemination and publication of the prospectus, any advertising or other 

sales documents, is also subject. 

Germany 

The Shares have not been notified to, registered with or approved by the German Federal Financial 

Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht — BaFin) for public offer or public 

distribution under German law. 

Accordingly, the Shares may not be distributed/offered to or within Germany by way of a public 

distribution/offer within the meaning of applicable German laws, public advertisement or in any similar 

manner. This document and any other document relating to the offer of the Shares, as well as any information 

contained therein, may not be supplied to the public in Germany or used in connection with any offer for 

subscription of the Shares to the public in Germany or any other means of public marketing. 

This document and any other document relating to the offer of the Shares are strictly confidential and 

may not be distributed to any person or entity other than the recipient hereof to whom this document is 

personally addressed. 

The receipt of this document by any person, as well as information contained therein or supplied herewith 

or subsequently communicated to any person in connection with any offer for subscription is not to be taken 

as constituting the giving of investment advice to such person; each such person should make its own 

independent assessment of the merits or otherwise of acquiring the Shares and should take its own professional 

advice. 

183

Hong Kong 

The Underwriter has represented, warranted and agreed, that: (i) they have not offered or sold and will 

not offer or sell in Hong Kong, by means of any document, any Offering Shares other than (a) to “professional 

investors” as defined in the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong (the 

“SFO”) and any rules made thereunder or (b) to persons whose ordinary business is to buy or sell shares or 

debentures, whether as principal or agent, or (c) in circumstances which do not result in the document being a 

“prospectus” as defined in the Companies Ordinance, Chapter 32 of the Laws of Hong Kong and; (ii) it has 

not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the 

purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to 

the Offering Shares, which is directed at, or the contents of which are likely to be accessed or read by the 

public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with 

respect to the Offering Shares which are or are intended to be disposed of only to persons outside Hong Kong 

or only to “professional investors” as defined in the SFO and any rules made thereunder. 

Indonesia 

This document may not be distributed or passed on within Indonesia or to persons who are citizens of 

Indonesia (wherever they are domiciled or located) or entities in or residents of Indonesia. The Offering Shares 

may not be offered or sold, directly or indirectly, within Indonesia or to Indonesian citizens (wherever they are 

domiciled or located), entities or residents in a manner that constitutes a public offering of the Offering Shares 

under the laws and regulations of Indonesia. 

Italy 

The offering of the Offering Shares in Italy has not been registered with the Commissione Nazionale per 

le Società e la Borsa (“CONSOB”) pursuant to Italian securities legislation and, accordingly, the Underwriter 

has represented and agreed that they have not offered or sold, and will not offer or sell, any Offering Shares in 

the Republic of Italy in a solicitation to the public, and that sales of the Offering Shares in the Republic of 

Italy shall be effected in accordance with all Italian securities, tax and exchange control and other applicable 

laws and regulations. 

The Underwriter has represented and agreed that it will not offer, sell or deliver any Offering Shares or 

distribute copies of this document or any other document relating to the Offering Shares in the Republic of 

Italy except: 

(a) to “Professional Investors”, as defined in Article 31.2 of CONSOB Regulation No. 11522 of 

1 July 1998, as amended (“Regulation No. 11522”), pursuant to Article 30.2 and 100 of Legislative 

Decree No. 58 of 24 February 1998, as amended (“Decree No. 58”) and/or to “Qualified Investors” 

pursuant to Article 100 of Decree No. 58 and to Article 2(e) of Directive 2003/71/EC of the European 

Parliament and of the Council of 4 November 2003; or 

(b) in any other circumstances where an express exemption from compliance with the solicitation 

restrictions applies, as provided under Decree No. 58 or CONSOB Regulation No. 11971 of 14 May 

1999, as amended. 

Any such offer, sale or delivery of the Offering Shares or distribution of copies of this document or any 

other document relating to the Offering Shares in the Republic of Italy must be: 

(a) made by investment firms, banks or financial intermediaries permitted to conduct such activities 

in the Republic of Italy in accordance with Legislative Decree No. 385 of 1 September 1993 as amended, 

Decree No. 58, Regulation No. 11522 and any other applicable laws and regulations; and 

(b) made in compliance with any other applicable notification requirement or limitation which may 

be imposed by CONSOB, the Italian securities and exchange commission, or the Bank of Italy. 

Japan 

The Offering Shares have not been and will not be registered under the Securities and Exchange Law of 

Japan (the “Securities Exchange Law”) Article 4, Paragraph 1 because the requirements under Article 2, 

Paragraph 3, Item 2-i (QII) of the Securities and Exchange Law are satisfied. The Offering Shares which the 

Underwriter subscribe and/or purchase will be subscribed and/or purchased by it as principal and, in 

connection with the Offering, it will not, directly or indirectly, offer or sell any Offering Shares in Japan or to, 

or for the benefit of, any resident of Japan (which terms as used herein means any person resident in Japan, 

184

including any corporation or other entity organised under the laws of Japan), except pursuant to an exemption 

from the registration requirements of, and otherwise in compliance with, the Securities Exchange Law and 

other relevant laws and regulations of Japan. Resale of the Offering Shares purchased by offeree is permitted 

only where that transferee is QII. 

Thailand 

The Underwriter has represented and agreed that they have not offered or sold, and will not offer or sell, 

Offering Shares to persons in Thailand other than under circumstances which do not constitute an offer for 

sale of Shares to the public for the purposes of the Securities and Exchange Act of 1992 of Thailand or 

require approval from or filing registration statement and draft prospectus with the office of the Securities and 

Exchange Commission of Thailand. 

United Arab Emirates 

This document is not intended to constitute an offer, sale or delivery of shares or other securities under 

the laws of the United Arab Emirates (“UAE”). The Offering Shares have not been and will not be registered 

under Federal Law No. 4 of 2000 Concerning the Emirates Securities and Commodities Authority and the 

Emirates Security and Commodity Exchange, or with the UAE Central Bank, the Dubai Financial Market, the 

Abu Dhabi Securities market or with any other UAE exchange. 

The Offering, the Offering Shares and interests therein have not been approved or licensed by the UAE 

Central Bank or any other relevant licensing authorities in the UAE, and do not constitute a public offer of 

securities in the UAE in accordance with the Commercial Companies Law, Federal Law No. 8 of 1984 (as 

amended) or otherwise. 

This document is strictly private and confidential and is being distributed to a limited number of investors 

and must not be provided to any person other than the original recipient, and may not be reproduced or used 

for any other purpose. The interests in the Offering Shares may not be offered or sold directly or indirectly to 

the public in the UAE. 

This advice is limited to the UAE outside the Dubai International Financial Centre. 

United Kingdom 

The Underwriter has represented, warranted and agreed that: 

(a) it has only communicated or caused to be communicated and will only communicate or cause to 

be communicated any invitation or inducement to engage in investment activity (within the meaning of 

Section 21 of the Financial Services and Markets Act 2000, as amended (the “FSMA”)) received by it in 

connection with the issue or sale of any Offering Shares in circumstances in which section 21(1) of the 

FSMA does not apply to us; and 

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to 

anything done by it in relation to the Offering Shares in, from or otherwise involving the United 

Kingdom. 

United States of America 

The Offering Shares have not been and will not be registered under the Securities Act and may not be 

offered or sold within the United States or to, or for the account or benefit of, US persons except in 

accordance with Regulation S or pursuant to an exemption from the registration requirements under the 

Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the 

Securities Act. 

The Underwriter has agreed that, except as permitted by the Placement Agreement and the Offer 

Agreement, it will not offer or sell the Offering Shares (i) as part of their distribution at any time or 

(ii) otherwise until 40 days after the later of the commencement of the Offering and the closing date thereof 

(the “Distribution Compliance Period”), within the United States or to, or for the account or benefit of, US 

persons and that it will have sent to each dealer to which it sells, during the Distribution Compliance Period a 

confirmation or other notice setting forth the restriction on offers and sales of the Shares within the United 

States or to, or for the account or benefit of US persons. Terms used in this paragraph have the meaning given 

to them by Regulation S. Resales of the Shares are restricted as described under “Transfer Restrictions”. 

185

In addition, until 40 days after the later of the commencement of the Offering and the completion of the 

distribution of the Offering Shares, an offer or sale of Offering Shares within the United States by any dealer 

(whether or not participating in the Offering) may violate the registration requirements of the Securities Act if 

such offer or sale is made otherwise than in accordance with an exemption from registration under the 

Securities Act. It is not anticipated that Rule 144A will be available to dealers or any other persons as such an 

exemption. See the section entitled “Transfer Restrictions”. 

186

TRANSFER RESTRICTIONS 

Because the following restrictions will apply to the Placement, purchasers are advised to consult their 

own legal counsel prior to making any offer, resale, pledge or transfer of our Shares. 

The Shares have not been and will not be registered under the Securities Act and may not be offered and 

held within the United States or to, or for the account or benefit of, US persons (as defined in the 

Regulation S) except pursuant to an exemption from, or in a transaction not subject to, the registration 

requirement of the Securities Act. The Shares are not being offered and sold in the United States or to US 

persons. 

The Shares will be offered by the Underwriter on behalf of the Company outside the United States to 

non-US persons in offshore transactions in reliance on Regulation S under the Securities Act. 

Each purchaser of our Shares in the Offering outside the United States pursuant to Regulation S and each 

subsequent purchaser of those Shares in resales prior to the expiration of the Distribution Compliance Period, 

by accepting delivery of this document and the Shares, will be deemed to have represented, agreed and 

acknowledged as follows: 

(1) it acknowledges (or if it is a broker-dealer, its customer has confirmed to it that such customer 

acknowledges) that such Shares have not been and will not be registered under the Securities Act; 

(2) it certifies that either (a) it is, or at the time the Shares are purchased will be, the beneficial 

owner of the Shares, and (i) it is not a US person (within the meaning of Regulation S) and it is located 

outside the United States and (ii) it is not an affiliate of the Company or a person acting on behalf of the 

Company or an affiliate of the Company, or (b) it is a broker-dealer acting on behalf of its customer and 

its customer has confirmed to it that (i) such customer is, or at the time the Shares are purchased will be, 

the beneficial owner of the Shares, (ii) such customer is not a US person (within the meaning of 

Regulation S) and it is located outside the United States and (iii) is not an affiliate of the Company or a 

person acting on behalf of the Company or an affiliate of the Company; 

(3) it agrees (or if it is a broker-dealer, its customer has confirmed to it that such customer agrees) 

that prior to the expiration of the Distribution Compliance Period, it (or such customer) will not offer, 

sell, pledge or otherwise transfer such Shares except to a person other than a US person purchasing 

Shares in an offshore transaction meeting the requirements of Regulation S; and 

(4) the Company, the Issue Managers and the Underwriter will rely upon the truth and accuracy of 

the foregoing acknowledgements, representations and agreements. 

Any resale or other transfer, or attempted resale or other transfer, made other than in compliance with the 

above-stated restrictions shall not be recognised by the Company. 

General 

Each purchaser of our Shares in the Offering will be deemed to have represented and agreed that it is 

relying on this document and not on any other information or representation concerning us or our Shares, and 

none of us, the Vendors, the Issue Managers, the Underwriter, or any other person responsible for this 

document or any part of it, will have any liability for any such other information or representation. 

187

CLEARANCE AND SETTLEMENT 

A letter of eligibility has been obtained from the SGX-ST for the listing and quotation of our Shares on 

the Main Board of the SGX-ST. For the purpose of trading on the SGX-ST, a board lot for our Shares will 

comprise 1,000 Shares. Upon listing and quotation on the SGX-ST, our Shares will be traded under the bookentry 

settlement system of the CDP, and all dealings in and transactions of our Shares through the SGX-ST 

will be effected in accordance with the terms and conditions for the operation of securities accounts with the 

CDP, as amended from time to time. 

The CDP, a wholly-owned subsidiary of the Singapore Exchange Limited, is incorporated under the laws 

of Singapore and acts as a Depository and clearing organisation. The CDP holds securities for its 

accountholders and facilitates the clearance and settlement of securities transactions between accountholders 

through electronic book-entry changes in the securities accounts maintained by such accountholders with the 

CDP. 

Our Shares will be registered in the name of the CDP or its nominees and held by the CDP for and on 

behalf of persons who maintain, either directly or through Depository Agents, securities accounts with the 

CDP. Persons named as direct securities account holders and Depository Agents in the Depository Register 

maintained by the CDP, rather than the CDP itself, will be treated, under the Act and our Articles of 

Association, as our members in respect of the number of our Shares credited to their respective securities 

accounts. 

Persons holding our Shares in a securities account with the CDP may withdraw the number of Shares 

they own from the book-entry settlement system in the form of physical share certificates. 

Such share certificates will not, however, be valid for delivery pursuant to trades transacted on the SGX- 

ST, although they will be prima facie evidence of title and may be transferred in accordance with our Articles 

of Association. A fee of S$10 for each withdrawal of 1,000 Shares or less and a fee of S$25 for each 

withdrawal of more than 1,000 Shares will be payable upon withdrawing our Shares from the book-entry 

settlement system and obtaining physical share certificates. In addition, a fee of S$2.00 (or such other amounts 

as our Directors may decide) will be payable to our share registrar for each share certificate issued, and stamp 

duty of S$10 is also payable where our Shares are withdrawn in the name of the person withdrawing our 

Shares, or S$0.20 per S$100 or part thereof of the last-transacted price where our Shares are withdrawn in the 

name of a third party. Persons holding physical share certificates who wish to trade on the SGX-ST must 

deposit with the CDP their share certificates together with the duly executed and stamped instruments of 

transfer in favour of the CDP, and have their respective securities accounts credited with the number of our 

Shares deposited before they can effect the desired trades. A fee of S$20 is payable upon the deposit of each 

instrument of transfer with the CDP. 

Transactions in our Shares under the book-entry settlement system will be reflected by the seller’s 

securities account being debited with the number of our Shares sold and the buyer’s securities account being 

credited with the number of our Shares acquired. No transfer stamp duty is currently payable for the transfer 

of our Shares that are settled on a book-entry basis. 

A Singapore clearing fee for trades in our Shares on the SGX-ST is payable at the rate of 0.05% of the 

transaction value, subject to a maximum of S$200 per transaction. The clearing fee, instrument of transfer 

deposit fees and share withdrawal fee are subject to Goods and Services Tax (“GST”) of 7.0%. 

Dealings in our Shares will be carried out in Singapore Dollars and will be effected for settlement in the 

CDP on a scripless basis. Settlement of trades on a normal “ready” basis on the SGX-ST generally takes place 

on the third Market Day following the transaction date, and payment for the securities is generally settled on 

the following day. The CDP holds securities on behalf of investors in securities accounts. An investor may 

open a direct securities account with the CDP or a securities sub-account with a Depository Agent. A 

Depository Agent may be a member company of the SGX-ST, bank, merchant bank or trust company. 

188

LEGAL MATTERS 

The validity of the Offering Shares and certain legal matters in connection with this Offering will be 

passed upon for us and the Vendors by Arfat Selvam Alliance LLC with respect to matters of Singapore law. 

Certain matters as to Indonesian law will be passed upon for us and the Vendors by Yudha Bahri Sihombing & 

Setiawan and by Adnan Kelana Haryanto and Hermanto. 

Veronia Dewi Setiawan, a partner of Yudha Bahri Sihombing & Setiawan, held an indirect minority 

interest of 5.0% in our subsidiary PT Lestari and and indirect minority interest of 4.778% in our subsidiary 

PT Batamec through her 50.0% shareholding in PT Sentratama. The due diligence report on PT Batamec that 

was prepared in respect of the Offering was prepared by Yudha Bahri Sihombing & Setiawan. On 28 January 

2008, Ms. Setiawan sold off her shares in PT Sentratama. 

Andy Kelana, a partner of Adnan Kelana Haryanto and Hermanto, is a commissioner of PT Batamec. 

Under the articles of association of PT Batamec, as a commissioner of PT Batamec, Mr. Kelana’s primary role 

is to supervise the conduct of the Board of Directors of PT Batamec. Mr. Kelana has no executive capacity 

within PT Batamec and does not have any power to direct the business or operations of PT Batamec. Further, 

Mr. Kelana does not receive any remuneration as a Commissioner of PT Batamec. The due diligence report on 

PT Lestari, which was prepared in respect of the Offering, was prepared by Adnan Kelana Haryanto and 

Hermanto. 

Certain legal matters in connection with this Offering will be passed upon for the Issue Managers, 

Underwriter and Bookrunner by Clifford Chance Wong Pte Ltd, with respect to matters of New York and 

US federal securities law, by TSMP Law Corporation with respect to matters of Singapore law and by Bahar & 

Partners with respect to matters of Indonesian law. 

Each of Arfat Selvam Alliance LLC, Clifford Chance Wong Pte Ltd, TSMP Law Corporation, Bahar & 

Partners, Yudha Bahri Sihombing & Setiawan and Adnan Kelana Haryanto and Hermanto does not make, or 

purport to make, any statement in this document and is not aware of any statement in this document which 

purports to be based on a statement made by it, and it makes no representation, express or implied, regarding, 

and takes no responsibility for, any statement in or omission from this document. 

189

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 

Our consolidated financial statements as at and for the years ended 31 December 2005, 31 December 

2006 and 31 December 2007 included in this document have been audited and our condensed consolidated 

financial statements as at and for the five months ended 31 May 2008 included in this document have been 

reviewed by Deloitte & Touche LLP as stated in their reports appearing in this document. 

For the purposes of complying with the Securities and Futures Act only, Deloitte & Touche LLP has 

given and has not withdrawn its written consent to the issue of this document with the inclusion herein of, and 

all references to (i) its name, (ii) its independent auditors’ report dated 2 September 2008 with respect to our 

consolidated financial statements as at and for the years ended 31 December 2005, 31 December 2006 and 

31 December 2007, (iii) its independent auditors’ review report dated 2 September 2008 with respect to our 

condensed consolidated financial statements as at and for the five months ended 31 May 2008 in the form and 

context in which they are respectively included in this document. A written consent under the Securities and 

Futures Act is different from a consent filed with the United States Securities and Exchange Commission 

under Section 7 of the US Securities Act, which is applicable only to transactions involving securities 

registered under the US Securities Act. As the Offering Shares in the Offering have not and will not be 

registered under the US Securities Act, Deloitte & Touche LLP has not filed consent under Section 7 of the 

US Securities Act. 

Our Directors currently have no intention of changing the auditors of the various companies in our Group 

after the listing of our Company on SGX-ST. 

190

GENERAL AND STATUTORY INFORMATION 

Information on Directors and Executive Officers 

1. The name, address, age, principal occupation and business and working experience of each of our 

Directors and Executive Officers are set out in “Directors and Senior Management”. 

The list of present directorships and past directorships and principal business activity outside of our 

Company and our Group (held in the five years preceding the date of this document) of each of our Directors, 

other than directorships of ours, is as follows: 

Name Present Directorships Past Directorships 

Yaw Chee Siew ...... Group companies Group companies 

Aries Offshore Singapore 

Polar Marine I 

Blue Fin I 

Blue Fin II 

Blue Fin III 

Blue Fin IV 

Blue Fin V 

Tetra I 

Tetra II 

Tetra III 

Tetra IV 

Tetra V 

OM Offshore 

Otto 1 Ltd. 

Otto 2 Ltd. 

Otto Fleet 



Otto Ventures 

Tarpon 1 

Tarpon 2 

Tarpon 3 

Tarpon 4 

Tarpon 5 

PT Batamec 

WAIL 

Polar Marine II 

Non-group companies 

3D Networks (HK) Limited 

3D Networks International Pte. Ltd. 

Allied Win Limited 

B2B Commerce (M) Sdn Bhd 

Brizill International Limited 

Business Companion Investments Limited 

Cebu Island Holdings Inc. 

CEO Technology Asia Limited 

Compass Offshore Hotels Ltd. 

Craigano Investments Limited 

Custody Services Pte. Ltd. 

Eurebon Shipping Pte. Ltd. 

FCS Computer System (S) Pte. Ltd. 

FCS Computer Systems Limited 

FCS Computer Systems Sdn Bhd 

Ipswich Group Limited 

Mass Noble Limited 

Otto Industrial UAE LLC (1) 

Parkcity Philippines Corporation 

Perdana Parkcity Sdn Bhd 

Perdana Parkcity (S) Pte. Ltd. 

Planet One (Hong Kong) Limited 

Planet One Pte. Ltd. 

PSID Investment (AREPDF) Limited 

Richman Investment Pte Ltd 

Sanwa Singapore Agencies (Pte) Ltd. 

South SeaS Land, Inc. 

SunBoat, Inc. 

SunChase Energy (Guangzhou) Company Limited 

(in voluntary liquidation) 

Top Union Holding Ltd. 

Total Elite Limited 

Tourquoise Limited 

Yawson Engineering Works Pte. Ltd. 

Yawson Holding Pte. Ltd. 

191 


3D Networks Holdings (China) Limited 

Allied Fortune Mortgage, Inc. 

Asia Global Forestation Pte. Ltd. 

Asia Tropical Forestation Pte. Ltd. 

A.Z. Kelly, Inc. 

A.Z. Medici, Inc. 

AZ Sun Holdings, Inc. 

BHL of California, Inc. 

Bright skies Developments Limited 

Bushwell Bonsai Limited 

C.A. Almaden Ranch, Inc. 

C.A. Lincoln Crossing, Inc 

Cal X-tra, Inc. 

CA Sun Holdings, Inc. 

C.A. Yuba, Inc. 

Cheerington Limited 

Crossville 

CSY Investments 

CSY Winters, Inc. 

Dynamus Limited 

Fixgain International Limited 

Forever Green Forest Pte. Ltd. 

Global Victory Holdings Corporation 

HKHL of California, Inc. 

KV Investments Limited 

Lambir Enterprise Pte. Ltd. 

Macvin International Limited 

Microport, Inc. 

Nature Wealth International Ltd 

N.V. Big Springs, Inc. 

N.V. Carson Ranch, Inc. 

N.V. Johnson Lane, Inc. 

NV Sun Holdings, Inc. 

Otto Shipyard Pte. Ltd. (2) 

Park City Limited


Yawson Investment Group Limited 

Yawson Investments Limited 

Lee Kok Wah ....... Group Companies 

Aries Offshore Singapore 

Blue Fin I 

Blue Fin II 

Blue Fin III 

Blue Fin IV 

Blue Fin V 

OM Offshore 

Otto 1 Ltd. 

Otto 2 Ltd. 

Otto Fleet 

Otto Investment 


Otto Offshore 


Otto Ventures 

Sea Dolphin Finance Limited 

Tarpon 1 

Tarpon 2 

Tarpon 3 

Tarpon 4 

Tarpon 5 

192 

Prosperoad Investment Ltd. 

Realty Capital Company 

Sino Wood Investment Limited 

Sterling Pacific Assets 

Sterling Pacific Estrella, Inc. 

Sterling Pacific Management Services, Inc. 

Sterling Pacific National, Inc. 

SunChase Capital, Inc. 

SunChase Estrella, Inc. 

SunChase G.A., Inc. 

SunChase G.A. California I, Inc. 

SunChase G.A. California II, Inc. 

SunChase Holdings 

SunChase Holdings International (HK) Inc. 

SunChase International Group (Asia) Limited 

SunChase International Group (China) Limited 

SunChase International Holdings Limited 

SunChase International (Tianjin) Industry 

Development Co. Ltd. 

SunChase Land Fund, Inc. 

Sunchase Management (China) Limited 

SunChase Southwest II, Inc. 

Sunny Place Limited 

Telford Group Limited 

The Greenwich Group International (Asia) Pte. Ltd. 

The Princeton Company Builders and Developers 

Tianjin Jinchang Storage Transportation Co, Ltd. 

Universal Corporation 

Vigers Appraisal & Consulting Limited 

Vigers Architectural Design Services Limited 

Vigers Asia (Holdings) Limited 

Vigers Asia Limited 

Vigers Asia Pacific Holdings Limited 

Vigers Asset Management Limited 

Vigers Asset Management Limited 

Vigers China Limited 

Vigers China Limited 

Vigers Holdings Limited 

Vigers Hong Kong Limited 

Vigers Limited 

Vigers North America Limited 

Vigers Pacific Limited 

Vigers Property Consultants Pty Limited 

Vigers Property Consultants (Shanghai) Ltd. 

Vigers Property Management Services (Hong Kong) 

Limited 

Vigers Property Management Services Limited 

Vigers Property Marketing Limited 

Vigers Research & Publishing Limited 

Vigers Strategic Limited 

V-Space Planning Limited 

Wonder Technique Investments Limited 

Group Companies 

Polar Marine I 

Polar Marine II


Tetra I 

Tetra II 

Tetra III 

Tetra IV 

Tetra V 

WAIL 

Non-group Companies Non-Group Companies 

Eurebon Shipping Pte. Ltd. 

Maystrong Management Services Pte. Ltd. 

Otto Industrial UAE LLC (1) 

Yawson Engineering Works Pte. Ltd. 

Craig Foster Pickett . . . Group Companies 


Non-group Companies 

Phillipcapital Japan Residential Fund Ltd 

William Edward 

Alastair Morrison . . . Group companies 


Reggie Thein ........ Group Companies 



Amtek Engineering Limited 

Asia Precision Metals (Singapore) Pte. Ltd. 

Business Companion Investments Limited 

FinVentures (UK) Ltd 

Metcomp Co (Singapore) Pte. Ltd. 

Metcomp Holdings 

Metcomp Co. 

Merlion India Managers Ltd 

MMI Technoventures Pte. Ltd. 

Scomi Oilfields Limited 

Sei Woo Technologies Limited 

Standard Chartered Private Equity Limited 

Standard Chartered Private Equity (Singapore) Pte. 

Ltd. 

Standard Chartered Private Equity Managers 

(Singapore) Pte. Ltd. 

Standard Chartered Private Equity Managers (Hong 

Kong) Ltd 

Standard Chartered Private Equity (Mauritius) Ltd 

Standard Chartered Private Equity (Mauritius) II Ltd 

Standard Chartered Private Equity (Mauritius) III Ltd 


Ascendas Pte. Ltd. 

DLF Trust Management Pte. Ltd. 

Energy Support Management Pte. Ltd. 

F J Benjamin Holdings Ltd 

Grand Banks Yachts Limited 

Guocoland Limited 

GuocoLeisure Limited 

Haw Par Corporation Limited 

Keppel Telecommunications & Transportation Ltd 

MFS Technology Ltd 

Mobileone Ltd 

Singapore Institute of Directors 

United Overseas Bank Limited 

193 

Brewer’s (Singapore) Pte. Ltd. 

Chi Deh Singapore Pte. Ltd. 

Color-Coffee Art Pte. Ltd. 

Liten Logistics Services Pte. Ltd. 

Otto Shipyard Pte. Ltd. (2) 

Tourquoise Limited 

Utron Management Pte. Ltd. 


None 


None 

Group companies 

None 


98 Holdings Pte. Ltd. 

China Grentech Ltd (previously Powercom Holdings 

Ltd) 

Cognotec Ltd 

NatSteel Ltd 

UNZA Holdings Limited 


None 


Central Properties Limited 

Goodwood Park Hotel Limited 

Haw Par Healthcare Limited 

Hotel Malaysia Limited 

Institute of Management Consultants (Singapore) Pte. 

Ltd. 

Lindeteves — Jacoberg Limited 

Pearl Energy Limited 

RSVP Proguide Pte. Ltd.


Ng Chee Keong ...... Group companies 



Center for Maritime Studies, the National University 

of Singapore 

Mermaid Maritime Public Company Limited 

PSA International Pte. Ltd. 

Group companies 

None 


Antwerp Car Processing Centre N.V. 

Antwerp Container Engineering N.V. 

Car Check Terminal N.V. 

CargoD2D Pte Ltd 

COSCO-PSA Terminal Private Limited 

CWT Limited 

Dalian Container Terminal Co., Ltd. 

Eastern Sea Laem Chabang Terminal Co., Ltd. 

Frontline Technologies Corporation Limited (now 

known as BT Frontline Pte. Ltd.) 

Fujian Straits Pte Ltd 

Guangzhou Container Terminal Co, Ltd. 

Hesse-Noord Natie N.V. 

HNN Balie N.V. 

HNN Logistics N.V. 

Incheon Container Terminal Co., Ltd. 

International Stevedoring Company N.V. 

Norexa N.V. 

Maritime Capital Shipping Limited 

Portnet.com Europe Pte. Ltd. 

Portnet.com International Pte Ltd 

Portnet.com LLC 

Portnet.com Pte Ltd 

Portnet.com Seattle Pte. Ltd. 

Posh SEMCO Pte. Ltd. 

PSA Africa Mid-East Pte. Ltd. 

PSA China Pte Ltd 

PSA Corporation Limited 

PSA Europe Pte Ltd 

PSA India Pte Ltd 

PSA Korea Pte. Ltd. 

PSA Marine (Pte) Ltd 

PSA N E Asia Pte Ltd 

PSA S E Asia Pte Ltd 

PSA SICAL Terminals Limited 

PSA Sines — Terminals de Contentores; S.A. 

PSA World Port Pte. Ltd. 

Sea Consortium Pte. Ltd. 

Singapore Dalian Port Investment Pte Ltd. 

Singapore Guangzhou Port Investment Pte. Ltd. 

Sinport Sinergie Portuall S.p.A. 

STX Pan Ocean Co., Ltd. 

Voltri Terminal Europa S.p.A. 

Vopak Terminals Singapore Pte Ltd 

Notes: 

(1) Our Directors, Yaw Chee Siew and Lee Kok Wah are directors of a UAE incorporated company called 

Otto Industrial UAE LLC, which is in the business of quarry mining. Although this company has a similar 

name as to that of ours, it is in a completely different business and therefore, there is no conflicts of interest 

arising on the part of these two Directors. 

(2) Our Directors, Yaw Chee Siew and Lee Kok Wah, are directors of Otto Shipyard Pte. Ltd., a Singapore 

incorporated company which was struck off in August 2008. 

There is no shareholding qualification for Directors in our Articles of Association. 

Our Executive Chairman, Yaw Chee Siew and our Group Managing Director, Lee Koh Wah have attended 

a course called “Understanding the Regulatory Environment in Singapore” co-organised by the SGX-ST and 

the Singapore Institute of Directors on 6 March 2008. 

Our Non-executive and Non-independent Director, Craig Foster Pickett has been briefed by the Legal 

Advisers to the Offering on the responsibilities and obligations of a director of a public listed company and 

will in due course undergo training on the same. 

Our Independent Directors, Ng Chee Keong and Reggie Thein and our Non-executive and Nonindependent 

Director, William Edward Alastair Morrison have prior experience as directors of public listed 

companies in Singapore. 

194

2. None of our Directors, Executive Officers or Controlling Shareholders: 

(i) has, at any time during the last ten years, had an application or a petition under any bankruptcy 

laws of any jurisdiction filed against him or against a partnership of which he was a partner at the time 

when he was a partner or at any time within two years from the date he ceased to be a partner; 

(ii) has, at any time during the last ten years, had an application or a petition under any law of any 

jurisdiction filed against an entity (not being a partnership) of which he was a director or an equivalent 

person or a key executive, at the time when he was a director or an equivalent person or a key executive 

of that entity or at any time within two years from the date he ceased to be a director or an equivalent 

person or a key executive of that entity, for the winding-up or dissolution of that entity or, where that 

entity is the trustee of a business trust, that business trust, on the ground of insolvency; 

(iii) has any unsatisfied judgment against him; 

(iv) has ever been convicted of any offence, in Singapore or elsewhere, involving fraud or dishonesty 

which is punishable with imprisonment, or has been the subject of any criminal proceedings (including 

any pending criminal proceedings of which he is aware) for such purpose; 

(v) has ever been convicted of any offence, in Singapore or elsewhere, involving a breach of any 

law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere, 

or has been the subject of any criminal proceedings (including any pending criminal proceedings of 

which he is aware) for such breach; 

(vi) has, at any time during the last ten years, had judgment entered against him in any civil 

proceedings in Singapore or elsewhere involving a breach of any law or regulatory requirement that 

relates to the securities or futures industry in Singapore or elsewhere, or a finding of fraud, misrepresentation 

or dishonesty on his part, or has been the subject of any civil proceedings (including any pending 

civil proceedings of which he is aware) involving an allegation of fraud, misrepresentation or dishonesty 

on his part; 

(vii) has ever been convicted in Singapore or elsewhere of any offence in connection with the 

formation or management of any entity or business trust; 

(viii) has ever been disqualified from acting as a director or an equivalent person of any entity 

(including the trustee of a business trust), or from taking part directly or indirectly in the management of 

any entity or business trust; 

(ix) has ever been the subject of any order, judgment or ruling of any court, tribunal or governmental 

body permanently or temporarily enjoining him from engaging in any type of business practice or 

activity; 

(x) has ever, to his knowledge, been concerned with the management or conduct, in Singapore or 

elsewhere, of the affairs of: 

(a) any corporation which has been investigated for a breach of any law or regulatory 

requirement governing corporations in Singapore or elsewhere; 

(b) any entity (not being a corporation) which has been investigated for a breach of any law or 

regulatory requirement governing such entities in Singapore or elsewhere; 

(c) any business trust which has been investigated for a breach of any law or regulatory 

requirement governing business trusts in Singapore or elsewhere; or 

(d) any entity or business trust which has been investigated for a breach of any law or 

regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere, 

in connection with any matter occurring or arising during the period when he was so concerned 

with the entity or business trust; and 

(xi) has been the subject of any current or past investigation or disciplinary proceedings, or has been 

reprimanded or issued any warning, by the Authority or any other regulatory authority, exchange, 

professional body or government agency, whether in Singapore or elsewhere. 

195

Subsidiaries and Associated Companies 

Details of our subsidiaries and associated companies are as follows: 

Company Name 

Date of 

Incorporation 

Place of 

Incorporation 

Principal 

Place of 

Business 

Aries Offshore Singapore . . . 31 December 2007 Singapore 55 Market Street 

#08-01 


BlueFinI............. 31January 2007 Singapore 9 Temasek 

Boulevard, #33-01, 

Suntec Tower Two, 


BlueFinII............ 31January 2007 Singapore 9 Temasek 




BlueFinIII............ 8February 2007 Singapore 9 Temasek 




BlueFinIV............ 8February 2007 Singapore 9 Temasek 




BlueFinV............ 8February 2007 Singapore 9 Temasek 




OM Offshore ........... 6August 2007 Singapore 9 Temasek 




Otto Fleet . . ........... 1February 2008 Singapore 9 Temasek 




Otto Investment . . . ...... 28May2007 Labuan, Malaysia Unit 3(I). Main 

Office Tower, 

Financial Park 

Labuan, Jalan 

Merdeka, 87000 F.T. 

Labuan, Malaysia 

Otto Offshore .......... 15December 2005 Labuan, Malaysia Unit 3(I). Main 

Office Tower, 

Financial Park 

Labuan, Jalan 

Merdeka, 87000 F.T. 

Labuan, Malaysia 

Otto Strategic .......... 13February 2008 Singapore 9 Temasek 




Otto Ventures .......... 28November2006 Singapore 9 Temasek 




Polar Marine I .......... 4February 2008 Singapore 4 Robinson Road 

#05-01 

House of Eden 


Polar Marine II . . . ...... 4February 2008 Singapore 4 Robinson Road 

#05-01 

House of Eden 


PT Batamec ........... 2November1994 Tanjung Uncang — 

Batam, Riau Islands, 

Indonesia 

196 

Jalan Brigjen 

Katamso, Tanjung 

Uncang, Sekupang 

Sub-District, Batam, 

Riau Islands 

Effective 

Ownership 

Interest 

Principal 

Activities 

49.0% Investment holding 

100.0% Chartering 





100.0% Ship Repair, Ship- 

Owners and Ship 

Chartering, 

management and 

engineering support 

and procurement 

services 



100.0% Ship-Owners and 

Sale of Ship 





95.2% Shipbuilding

Company Name 

Date of 

Incorporation 

Place of 

Incorporation 

Principal 

Place of 

Business 

PT Lestari . . ........... 31May2006 Jakarta, Indonesia Sona Topas Tower 

8th Floor, Jl. Jend. 

Sudirman Kav. 26, 

Jakarta-Indonesia 

Sea Dolphin Finance ...... 3December 2004 BVI The offices of 

Offshore 

Incorporations 

Limited, 

P.O. Box 957, 

Offshore 

Incorporations 

Centre, Road Town, 

Tortola, British 

Virgin Islands 

Tarpon 1 . . . ........... 6February 2008 Singapore 9 Temasek 




















Tetra I ............... 31January 2007 Singapore 9 Temasek 




Tetra II. .............. 31January 2007 Singapore 9 Temasek 




Tetra III . . . ........... 8February 2007 Singapore 9 Temasek 




Tetra IV . . . ........... 8February 2007 Singapore 9 Temasek 




Tetra V . . . ........... 8February 2007 Singapore 9 Temasek 




WAIL ............... 26June 2007 St. Vincent and the 

Grenadines 

Register Agent Office 

at 112, Bonadie 

Street, Kingstown, 

Saint Vincent 

Effective 

Ownership 

Interest 

Principal 

Activities 

95.0% Plant hire services 

100.0% Ship-Owners and 

Sale of Ship 

(presently dormant) 












Memorandum and Articles of Association 

1. Memorandum of Association 

The Memorandum of Association of our Company states, among others, that the liability of members of 

our Company is limited, and the objects for which our Company is established include to build, fit out and 

repair, and lend money upon ships and vessels of every description and to construct and repair engines, boilers 

and machinery. The objects of our Company are set out in full in Clause 4 of the Memorandum of Association 

197

which is available for inspection at the registered office of our Company. See “— Documents Available For 

Inspection”. 

2. Articles of Association 

An extract of the relevant provisions of our Articles of Association, providing, inter alia, for: 

(i) a Director’s power to vote on a proposal, arrangement or contract in which the Director is 

interested; 

(ii) the Director’s power to vote on remuneration for himself any other director; 

(iii) the borrowing powers exercisable by the Directors and the variation thereof; 

(iv) the retirement or non-retirement of Directors under an age limit requirement; 

(v) the number of shares, if any, required for a Director’s qualification; 

(vi) the rights, preferences and restrictions attaching to each class of shares; 

(vii) any change in capital; 

(viii) any change in the respective rights of the various classes of shares; 

(ix) any time limit after which a dividend entitlement will lapse; and 

(x) any limitation on the right to own Shares, 

are set out in Appendix 3 of this document. 

Our complete Memorandum and Articles of Association are available for inspection by Shareholders. 

Material Contracts 

The following contracts not being contracts entered into in the ordinary course of business have been 

entered into by us within the two years preceding the date of lodgement of this document and are or may be 

material: 

(i) deed of guarantee dated 17 July 2006, entered into between us and Bangkok Bank for securing 

the US$16.0 million term loan facilities granted to Yawson on 13 July 2006 for the purposes of 

acquisition of nine units of vessels; 

(ii) deed of guarantee dated 7 August 2006, entered into between us and Hong Leong Finance, 

securing the S$2.6 million term loan facilities granted to Yawson on 12 July 2006 for the purposes of 

acquisition of one unit of vessel; 

(iii) deed of guarantee dated 25 August 2006, entered into between us and Hong Leong Finance, 

securing the S$2,097,216 housing loan granted to Yaw Chee Chik and Adeline Margaret Liew Siew Choo 

on 8 August 2006 for the purposes of purchase of a residential property; 

(iv) loan agreement dated 12 September 2006, entered into between PT Lestari and Richman BVI in 

relation to a loan amount of US$7.5 million granted to PT Lestari for the purposes of financing 

PT Lestari’s acquisition of all of the assets owned by PT Batamas during its liquidation process; 

(v) minutes of auction No. 471/2006 dated 9 November 2006, issued by the Office of State 

Receivables and Auction of Batam in relation to the acquisition of the movable assets of PT Batamas by 

PT Lestari for the consideration of IDR 20,000,890,000. through a public auction held at the Office of 

State Receivables and Auction of Batam; 

(vi) minutes of auction No. 498/2006 dated 1 December 2006, issued by the Office of State 

Receivables and Auction of Batam in relation to the acquisition of the fixed assets of PT Batamas by 

PT Lestari for the consideration of IDR 39.18 billion through a public auction held at the Office of State 

Receivables and Auction of Batam; 

(vii) novation of facility agreement dated 30 January 2007, entered into among PT Lestari, Richman 

BVI and Richman Singapore whereby Richman BVI agrees to novate to Richman Singapore all its rights 

and obligations under the loan agreement dated 12 September 2006 entered into between PT Lestari and 

Richman BVI in relation to a loan amount of US$7.5 million; 

198

(viii) subscription agreement dated 15 March 2007, entered into among us, PT Lestari, 

PT Sentratama and the then existing shareholders of PT Lestari in relation to the subscription of 13,300 

new shares of PT Lestari by our Company in consideration of IDR 13.3 billion; 

(ix) loan agreement dated 27 March 2007, entered into between us and PT Lestari in relation to a 

loan amount of US$6.0 million for the purposes of repayment of the obligations due and owing by 

PT Lestari to Richman Singapore; 

(x) shares sale and purchase agreement dated 28 June 2007, entered into between us and Brizill in 

relation to the acquisition of 15,930 fully paid series A shares of PT Batamec (representing 5.437% of its 

issued and paid up share capital) by us from Brizill for a consideration of IDR 3.3 billion; 

(xi) joint venture agreement dated 3 July 2007, entered into among Otto Investment, WAIL, Swiss 

Overseas Invest Ltd. and ABC Maritime in relation to the formation of the joint venture company, WAIL; 

(xii) shares sale and purchase agreement dated 16 August 2007, entered into between us and Brizill 

in relation to the acquisition of 41,963 fully paid series A shares of PT Batamec (representing 14.322% 

of its issued and paid up share capital) by our Company from Brizill for a consideration of IDR 

8.8 billion; 

(xiii) amendment letter agreement dated 26 March 2008, entered into between us and Brizill in 

relation to the deletion of the condition precedent requiring us to obtain the eligibility-to-list letter from 

the SGX-ST for the purposes of completion of the shares sale and purchase agreement entered into 

between us and Brizill dated 16 August 2007 (as described in (xii) above); 

(xiv) capital investment agreement dated 12 October 2007, entered into between OM Offshore and 

the People’s Government of Qidong City of Jiangsu Province, China in relation to OM Offshore’s 

proposed investment of US$99.0 million in a marine project to be implemented by Otto Offshore 

(Qidong); 

(xv) shares sale and purchase agreement dated 18 December 2007, entered into between us and 

Brizill in relation to the acquisition of 15,107 fully paid series A shares and 72,500 fully paid series B 

shares of PT Batamec (representing 29.9% of its issued and paid up share capital) by our Company from 

Brizill for a consideration of IDR 221.0 billion; 

(xvi) amendment letter agreement dated 26 March 2008, entered into between us and Brizill in 

relation to the deletion of the condition precedent requiring us to obtain the eligibility-to-list letter from 

the SGX-ST for the purposes of completion of the shares sale and purchase agreement entered into 

between us and Brizill dated 18 December 2007 (as described in (xv) above); 

(xvii) joint venture agreement dated 17 December 2007, entered into between Otto Investment 

Limited and Aries Offshore Services Norway AS in relation to the formation of the joint venture 

company, Aries; 

(xviii) joint venture agreement dated 2 May 2008, entered into between Otto Marine Limited and 

GC Rieber Shipping ASA in relation to the formation of the joint venture companies Polar Marine I and 

Polar Marine II; 

(xix) call share option agreement dated 30 May 2008, entered into between us and our Controlling 

Shareholder and Chairman, Yaw Chee Siew, in relation to an option granted to and exercisable by us for 

purchasing one ordinary share of Tourquoise Limited held by Yaw Chee Siew; 

(xx) term loan facility agreement dated 30 May 2008, entered into between us and Brizill, in 

relation to conversion of the debt of S$52.0 million owing by us to Brizill into an unsecured interest 

bearing term loan; and 

(xxi) the Cornerstone Share Subscription Agreements entered into between each of the Cornerstone 

Investors and the Company in relation to the Cornerstone Shares. 

Miscellaneous 

1. Our nature of the business has been stated earlier in this document. The corporations which by virtue 

of Section 6 of the Act are deemed to be related to us are set out in the section “Our Restructuring and 

Corporate Structure — Group Structure”. 

199

2. There has been no previous issue of our Shares or offer for sale of our Shares to the public within the 

two years preceding the date of this document. 

3. There have been no public takeover offers by third parties in respect of our Shares or by us in respect 

of other companies’ shares which have occurred during the last and current financial year. 

4. No amount of cash or securities or benefit has been paid or given to any promoter within the two 

years preceding the Latest Practicable Date or is proposed or intended to be paid or given to any promoter at 

any time. 

5. Save as disclosed in the section “Plan of Distribution”, no commission, discount or brokerage has been 

paid or other special terms granted within the two years preceding the Latest Practicable Date or is payable to 

any Director, promoter, expert, proposed director or any other person for subscribing or agreeing to subscribe 

or procuring or agreeing to procure subscriptions for any shares in, or debentures of, ours or any of our 

subsidiaries. 

6. No expert is employed on a contingent basis by us or has an interest, directly or indirectly, in the 

promotion of, or in any property or assets which have, within the two years preceding the Latest Practicable 

Date, been acquired or disposed of by or leased to us or any of our subsidiaries or are proposed to be acquired 

or disposed of by or leased to us or any of our subsidiaries. 

7. Save as disclosed in this document, our Directors and the Vendors are not aware of any relevant 

material information including trading factors or risks which are unlikely to be known or anticipated by the 

general public and which could materially affect the profits of us and our subsidiaries. 

8. Save as disclosed in this document, our financial condition and operations are not likely to be affected 

by any of the following: 

(a) known trends or demands, commitments, events or uncertainties that will result in or are 

reasonably likely to result in our liquidity increasing or decreasing in any material way; 

(b) material commitments for capital expenditure; 

(c) unusual or infrequent events or transactions or any significant economic changes that materially 

affected the amount of reported income from operations; and 

(d) known trends or uncertainties that have had or that we reasonably expect will have a material 

favourable or unfavourable impact on our revenues or operating income. 

9. We currently have no intention of changing our auditors after our listing on the SGX-ST. 

10. Save as disclosed in the section “Legal Matters”, no expert named in this document: 

(a) is employed on a contingent basis by us or our subsidiaries; 

(b) has a material interest, whether direct or indirect, in our Shares or in the shares of our 

subsidiaries; or 

(c) has a material economic interest, whether direct or indirect, in us, including an interest in the 

success of the offer. 

11. As at the Latest Practicable Date, our Directors are not aware of any event which has occurred since 

31 May 2008 which may have a material effect on our financial position and results that is not yet disclosed 

in the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of 

Operations” and “Capitalisation and Indebtedness” of this document. 

Responsibility Statement by Our Directors and the Vendors 

This document has been seen and approved by our Directors and the Vendors and they individually and 

collectively accept full responsibility for the accuracy of the information given herein and confirm, having 

made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and the opinions 

expressed herein are fair and accurate in all material respects as at the date hereof and there are no material 

facts the omission of which would make any statements in this document misleading and that this document 

constitutes full and true disclosure of all material facts about us and the Offering. 

200

Consents 

1. Deloitte & Touche LLP as the Independent Auditors and Reporting Accountants, have given and have 

not withdrawn their written consent to the issue of this document with the inclusion herein of their name and 

reference in the form and context as it appears and inclusion herein of “Independent Auditors’ Report on the 

Consolidated Financial Statements for the Years Ended December 31, 2005, December 31, 2006 and 

December 31, 2007”, as set out in Appendix 1 of this document and “Independent Auditors’ Review Report 

on the Condensed Consolidated Financial Statements for the five months ended May 31, 2008”, as set in 

Appendix 2 of this document in the form and context as they appear and to act in such capacity in relation to 


2. Provenance Capital Pte. Ltd. as the Independent Financial Adviser, has given and has not withdrawn 

its written consent to the issue of this document with the inclusion herein of its name and reference in the 

form and context as it appears and inclusion herein of its letter to the Independent Directors dated 

21 November 2008 in Appendix 6 of this document, in the form and context in which they appear and to act 

in such capacity in relation to this document. 

3. United Overseas Bank Limited as the Issue Manager, Global Coordinator, Underwriter and Bookrunner, 

has given and has not withdrawn its written consent to the issue of this document with the inclusion 

herein of its name and references to its name in the form and context in which they respectively appear in this 

document and to act in such respective capacities in relation to this document. 

4. Credit Suisse (Singapore) Limited as the Issue Manager, has given and has not withdrawn its written 

consent to the issue of this document with the inclusion herein of its name and references to its name in the 

form and context in which they respectively appear in this document and to act in such respective capacities in 

relation to this document. 

5. Braemar Seascope Limited, of 35 Cosway Street, London NW1 5BT, United Kingdom, as the industry 

analyst, has given and has not withdrawn its written consent to the issue of this document with the inclusion 

herein of its name and references in the form and context as it appears and inclusion herein of the section 

“Industry Overview”, in the form and context in which they appear and to act in such capacity in relation to 


6. DTZ Debenham Tie Leung (SEA) Pte. Ltd., of 100 Beach Road, #35-00 Shaw Towers, Singapore 

189702, as an independent valuer, has given and has not withdrawn its written consent to the issue of this 

document with the inclusion herein of its name and references in the form and context as it appears in the 

section “Interested Person Transaction and Conflict of Interests — Present and Ongoing Interested Person 

Transaction — Lease Agreement Between Our Company and Samling Singapore”, in the form and context in 

which they appear and to act in such capacity in relation to this document. 

7. Save for the statements referred to above, the Legal Advisers to our Company, the Legal Advisers to 

the Issue Managers, as to Singapore Law, the Legal Advisers to the Issue Managers, as to Indonesia Law, the 

Legal Advisers to the Issue Managers, as to New York and United States federal securities law, the Share 

Registrar, the Receiving Bank and the Principal Bankers do not make or purport to make any statement in this 

document or any statement upon which a statement in this document is based and, to the maximum extent 

permitted by law, expressly disclaim and take no responsibility for any liability to any person which is based 

on, or arises out of, the statements, information or opinions in this document. 

Documents Available for Inspection 

The following documents or copies thereof may be inspected at our registered office at 9 Temasek 

Boulevard, #33-01 Suntec Tower Two, Singapore 038989, during normal business hours for a period of six 

months from the date of registration of this document: 

(a) our Memorandum and Articles of Association; 

(b) Independent Auditors’ Report and the Consolidated Financial Statements of Otto Marine Limited 

and its Subsidiaries for the financial years ended 31 December 2005, 2006 and 2007, as set out in 

Appendix 1 of this document; 

(c) the audited consolidated financial statements for the years ended 31 December 2005, 31 December 

2006 and 31 December 2007; 

(d) Independent Auditor’s Review Report and the Condensed Consolidated Financial Statements for 

the five months ended 31 May 2008, as set out in Appendix 2 of this document; 

201

(e) the material contracts referred to in “— Material Contracts”; 

(f) the Service Agreements referred to in “Directors and Senior Management — Service 

Agreements”; 

(g) the letters of consent referred to in “— Consents”; 

(h) the report of Seascope referred to in “Industry Overview”; and 

(i) the valuation report of DTZ Debenham Tie Leung (SEA) Pte. Ltd. as referred to in “Interested 

Person Transaction and Conflict of Interests — Present and Ongoing Interested Person Transaction — 

Lease Agreement Between Our Company and Samling Singapore”. 

202

DEFINITIONS 

For the purpose of this document, the accompanying Application Forms and, in relation to the Electronic 

Applications, the instructions appearing on the screens of the ATMs or the IB websites of the relevant 

Participating Banks, unless the context otherwise requires, the following definitions apply where the context so 

admits: 


“Company” or “Otto Marine” ........ Otto Marine Limited, a company incorporated in Singapore and 

formerly known as Otto Industrial Co (Pte) Ltd 

“Aries” or “Aries Offshore Singapore” . . Aries Offshore Singapore Pte. Ltd., a company incorporated in 

Singapore 

“Blue Fin I” ..................... Blue Fin I Pte. Ltd., a company incorporated in Singapore 

“Blue Fin II”. .................... Blue Fin II Pte. Ltd., a company incorporated in Singapore 

“Blue Fin III” .................... Blue Fin III Pte. Ltd., a company incorporated in Singapore 

“Blue Fin IV” .................... Blue Fin IV Pte. Ltd., a company incorporated in Singapore 

“Blue Fin V”. .................... Blue Fin V Pte. Ltd., a company incorporated in Singapore 

“Blue Fin Subsidiaries” ............. Subsidiaries of our Company consisting of Blue Fin I, Blue Fin II, 

Blue Fin III, Blue Fin IV and Blue Fin V 

“Group” ........................ OurCompany, subsidiaries and associated companies 

“GC Rieber” ..................... GCRieber Shipping ASA, a Company incorporated in Norway 

“Otto Fleet” ..................... Otto Fleet Pte. Ltd., a company incorporated in Singapore 

“Otto Investment” ................. Otto Investment Limited, a company incorporated in Federal Territory 

of Labuan, Malaysia 

“OM Offshore” ................... OMOffshore Pte. Ltd., a company incorporated in Singapore 

“Otto Offshore”. .................. Otto Offshore Limited, a company incorporated in the Federal Territory 


“Otto Offshore (Qidong)” ........... Otto Offshore (Qidong) Co. Ltd., a company incorporated in China 

“Otto Strategic”. .................. Otto Strategic Pte. Ltd., a company incorporated in Singapore 

“Otto 1 Ltd.” ..................... Acompany incorporated in St. Vincent and the Grenadines 

“Otto 2 Ltd.” ..................... Acompany incorporated in St. Vincent and the Grenadines 

“Otto Ventures” ................... Otto Ventures Pte. Ltd., a company incorporated in Singapore and 

formerly known as Rig Ventures Pte. Ltd. 

“Polar Marine I” .................. Polar Marine I Pte. Ltd., a company incorporated in Singapore 

“Polar Marine II” ................. Polar Marine II Pte. Ltd., a company incorporated in Singapore 

“PT Batamec” .................... PTBatamec, a company incorporated in Indonesia 

“PT Lestari” ..................... PTLestari Utama Nusantara, a company incorporated in Indonesia 

“Sea Dolphin Finance” ............. SeaDolphin Finance Limited, a company incorporated in the British 

Virgin Islands 

“Tarpon 1” ...................... Tarpon 1 Pte. Ltd., a company incorporated in Singapore 





203

“Tarpon Subsidiaries” .............. Subsidiaries of our Company consisting of Tarpon 1, Tarpon 2, Tarpon 

3, Tarpon 4 and Tarpon 5 

“Tetra Subsidiaries” ................ Subsidiaries of our Company consisting of Tetra I, Tetra II, Tetra 

III, Tetra IV and Tetra V 

“Tetra I” ........................ Tetra I Pte. Ltd., a company incorporated in Singapore 

“Tetra II” ....................... Tetra II Pte. Ltd., a company incorporated in Singapore 

“Tetra III” ....................... Tetra III Pte. Ltd., a company incorporated in Singapore 

“Tetra IV”. ...................... Tetra IV Pte. Ltd., a company incorporated in Singapore 

“Tetra V” ....................... Tetra V Pte. Ltd., a company incorporated in Singapore 

“WAIL” ........................ WestAfrican Invest Ltd., a company incorporated in St.Vincent 

and the Grenadines 

Other Corporations and Agencies 

“ABC Maritime” .................. ABCmaritime AG, a company incorporated in Switzerland 

“Aker” ......................... Aker Yards ASA, a public limited company incorporated in 

Norway 

“ASL”. ......................... ASLMarine Holdings Limited, a public limited company incorporated 

in Singapore 

“Authority” ...................... Monetary Authority of Singapore 

“Bangkok Bank” .................. Bangkok Bank Public Company Limited 

“Bank Niaga” .................... PTBank CIMB Niaga, Tbk 

“Brizill International” .............. Brizill International Limited, a company incorporated in the BVI 

“Business Companion Investments” .... Business Companion Investments Limited, a company incorporated 

in BVI 

“Caterpillar Financial” .............. Caterpillar Financial Services Asia Pte. Ltd. 

“CDP” ......................... TheCentral Depositary (Pte) Limited 

“CEO Technology Asia” ............ CEOTechnology Asia Limited, a company incorporated in BVI 

“CIMB” ........................ CIMBBank Berhad 

“Credit Suisse” ................... Credit Suisse (Singapore) Limited 

“Eurebon” ....................... Eurebon Shipping Pte. Ltd. 

“Goldfame”. ..................... Goldfame International Ltd., a company incorporated in BVI 

“Hong Leong Finance” ............. Hong Leong Finance Limited 

“HSBC Bank” .................... TheHong Kong & Shanghai Banking Corporation Limited 

“IACS”......................... International Association of Classification Societies Ltd. 

“IFS Capital” .................... IFSCapital Assets Private Limited 

“IMO” ......................... International Maritime Organisation 

“ISO” .......................... International Organization for Standardization 

“Jaya” .......................... Jaya Holdings Limited, a company incorporated in Singapore 

“LSH” ......................... LeiShing Hong Limited, a company incorporated in Hong Kong 

“LSH Group” .................... LSHSingapore and LSH Trading 

“LSH Singapore” ................. LeiShing Hong (Singapore) Pte. Ltd. 

204

“LSH Trading” ................... LeiShing Hong Trading Limited, a company incorporated in Hong 

Kong 

“Maju Holdings” .................. MajuHoldings Sdn Bhd 

“OCBC” ........................ Oversea-Chinese Banking Corporation Limited 

“Pantai Bayu” .................... Pantai Bayu Indah Sdn Bhd, a subsidiary of Samling Strategic 

“Pacific Legend” .................. Pacific Legend Ltd., a company incorporated in BVI 

“Participating Banks” .............. UOBanditssubsidiary, Far Eastern Bank Limited (together, the 

“UOB Group”), DBS Bank Ltd. (including POSB) (“DBS”) and 

OCBC 

“Phillip Group” ................... Philip Securities Pte. Ltd. and Phillip Capital Management 

“PT Batamas” .................... PTBatamas Jala Nusantara, a company incorporated in Indonesia 

which has been liquidated 

“PT Sentratama” .................. 

“Primary Sub-Underwriter and Primary 

PTSentratama Karya Abadi, a company incorporated in Indonesia 

Sub-Placement Agent” ............ UOBKayHian 

“Richman Singapore” .............. Richman Investment Pte. Ltd., a company incorporated in 

Singapore 

“Richman BVI”. .................. Richman Hill Ltd., a company incorporated in BVI 

“Rimalco” ....................... Rimalco Sdn Bhd, a company incorporated in Malaysia 

“Samling Global” ................. Samling Global Limited, a company incorporated in Bermuda 

“Samling International” ............. Samling International Limited, a company incorporated in the 

States of Jersey 

“Samling Singapore” ............... Samling Singapore Private Limited, a company incorporated in 

Singapore 

“Samling Strategic” ................ Samling Strategic Corporation Sdn Bhd, a company incorporated in 

Malaysia 

“Sanwa” ........................ Sanwa Singapore Agencies (Pte) Ltd. 

“SCCS” ........................ Securities Clearing and Computer Services (Pte) Limited 

“SCPEL” ....................... Standard Chartered Private Equity Limited, a company incorporated 

in Hong Kong 

“Seascope” ...................... Breamar Seascope Limited 

“SGX-ST”. ...................... Singapore Exchange Securities Trading Limited 

“Share Registrar” ................. M&CServices Private Limited 

“Sumikin Bussan” ................. Sumikin Bussan Corporation, a company incorporated in Japan 

“Tinjar Transport” ................. Tinjar Transport Sdn Bhd, a company incorporated in Malaysia 

“Tourquoise” ..................... Tourquoise Limited, a company incorporated in the Federal Territory 


“UOB” ......................... United Overseas Bank Limited 

“UOB Kay Hian” ................. UOBKayHian Private Limited 

“Vendors” ....................... LeeKokWahandCEOTechnology Asia 

“Victon” ........................ Victon Investment Limited, a company incorporated in the BVI 

“Yaw Holding” ................... YawHolding Sdn Bhd, a company incorporated in Malaysia 

205

“Yawson” ....................... Yawson Engineering Works Pte. Ltd., a company incorporated in 

Singapore 

General 

“Act” .......................... TheCompanies Act, Chapter 50 of Singapore 

“AGM”......................... Annual General Meeting 

“Application Forms” ............... Theprinted application forms to be used for the purpose of the 

Offering and which form part of the Prospectus 

“Applicable Interest” ............... Theinterest accrued on each tranche of S$35.0 million of the 

Exchangeable Loan at the rate of five per cent. per annum 

“Application List” ................. Thelist of applications for subscription of the Offering Shares 

“Argentina” ...................... Argentine Republic 

“Articles” or “Articles of Association” . . The articles of association of our Company, as amended, supplemented 

or modified from time to time 

“Associate” ...................... Hasthemeaning ascribed to it in the Listing Manual 

“associated company” .............. Inrelation to a corporation, means: 

(a) any corporation in which the corporation or its subsidiaries 

have, or the corporation and its subsidiaries together have, a direct 

interest of not less than 20.0% but not more than 50.0% of the total 

votes attached to all voting shares in the corporation; or 

(b) any corporation, other than a subsidiary of the corporation or a 

corporation which is an associated company of the corporation by 

virtue of paragraph (a), the policies of which the corporation or its 

subsidiaries, or the corporation together with its subsidiaries, is or 

are able to control or influence materially 

“ATM”......................... Automated teller machines of a Participating Bank 

“Audit Committee” ................ Audit committee of our Company for the time being 

“Award” ........................ Acontingent award of Shares granted under Rules of Otto Marine 

Share Award Scheme 

“Award Shares” ................... ThenewShares which may be issued under the Share Award 

Scheme. 

“Batamec Restructuring” ............ First Batamec Restructuring, Second Batamec Restructuring and 

Third Batamec Restructuring, collectively 

“BCI Shares” .................... Theordinary shares in the capital of Business Companion 

Investments 

“Board” or “Board of Directors” . . .... Theboard of directors of our Company as at the date of this 

document 

“Brizill Term Loan” ............... TheS$52.0 million owed by us to Brizill International which was 

converted in June 2008 into a five-year interest-bearing term loan 

which is subject to an interest rate of 2.0% above the prime lending 

rate of HSBC Bank (Singapore Branch), which is currently 5.5% 

per annum as at the Latest Practicable Date or 7.0%, whichever is 

higher 

“BVI” .......................... TheBritish Virgin Islands 

“Canada” ....................... Dominion of Canada 

“CEO Shares” .................... Theordinary shares in the capital of CEO Technology Asia 

“Chile” ......................... Republic of Chile 

“China”. ........................ ThePeople’s Republic of China 

206

“Composite Document” ............. Thecomposite document dated 29 January 2008, in relation to the 

scheme of arrangement to privatise LSH 

“Controlling Shareholder” ........... Aperson who holds directly or indirectly 15.0% or more of the our 

voting shares (unless otherwise determined by the SGX-ST), or in 

fact exercises control over us 

“Cornerstone Investors” ............. Bangkok Bank, Maju Holdings and SCPEL 

“Cornerstone Share Subscription 

Agreements” ................... Thecornerstone share subscription agreements entered into 

between each of the Cornerstone Investors and our Company pursuant 

to which the Cornerstone Investors have agreed to purchase an 

aggregate of 146,234,000 Cornerstone Shares 

“CPF” .......................... TheCentral Provident Fund 

“Directors” ...................... Thedirectors of our Company as at the date of this document 

“Depository Register”, “Depositor” or 

“Depository Agent” .............. Havethemeaning ascribed to them in Section 130A of the Act 

“EGM” ......................... Extraordinary General Meeting held or to be held by our Company 

under the Act 

“Egypt”. ........................ Arab Republic of Egypt 

“Electronic Applications” ........... Applications for the Offer Shares made through an ATM or through 

IB websites of one of the relevant Participating Banks in accordance 

with the terms and conditions of this document 

“EPS” .......................... Earnings per share 

“Exchangeable Loan” .............. Thethree year exchangeable loan of S$70.0 million granted by 

SCPEL to Business Companion Investments with an interest rate of 

5.0% per annum, pursuant to the Exchangeable Loan Agreement 

(as defined below) 

“Exchangeable Loan Agreement”. . .... TheExchangeable Loan Agreement dated 8 April 2008, entered 

into amongst Business Companion Investments Limited, Yaw Chee 

Siew and SCPEL 

“Executive Directors” .............. Theexecutive Directors of our Company as at the date of this document, 

namely Yaw Chee Siew and Lee Kok Wah 

“Executive Officers” ............... Theexecutive officers of our Company as at the date of this 

document 

“First Batamec Restructuring” ........ Theshare sale and purchase agreement entered into and between 

us and Brizill International whereby we acquired a 5.437% interest 

held by Brizill International in PT Batamec (consisting of 15,930 

Class A shares in PT Batamec) for a consideration of approximately 


“FY”. .......................... Financial year ended or, as the case may be, ending 31 December 

“Hong Kong” .................... ThePeople’s Republic of China Hong Kong Special Administrative 

Region 

“IB” ........................... Internet banking 

“Independent Directors” ............ Ourindependent Directors as at the date of this document 

“Indonesia” ...................... Republic of Indonesia 

“Interested Persons” ............... Ourinterested persons, namely our Directors, or Controlling Shareholders 

or their Associates as defined in the Listing Manual 

“Labuan” ....................... TheFederal Territory of Labuan, Malaysia 

207

“Latest Practicable Date” ............ 22August 2008, being the latest practicable date prior to the lodgement 

of this document with the Authority 

“Libya” ......................... Great Socialist People’s Libyan Arab Jamahiriya 

“Listing Date” .................... Thecommencement date of dealing in Shares on the SGX-ST 

“Listing Manual”. ................. TheListing Manual of the SGX-ST 

“Malaysia” ...................... TheFederation of Malaysia 

“Management” ................... Directors, Executive Officers and senior management team of our 

Company as at the date of this document 

“Mandated Transaction” ............ Thetransactions with the Interested Persons which will be covered 

by the Shareholders’ Mandate 

“MARPOL” ..................... International Convention for the Prevention of Pollution from Ships 

1973 

“Market Day” .................... Adayonwhich the SGX-ST is open for trading in securities 

“Memorandum” or “Memorandum of 

Association” ................... Memorandum of Association of our Company, as amended, supplemented 

or modified from time to time 

“Merchant Shipping Act” or “MSA” . . . The Merchant Shipping Act, Chapter 179 of Singapore 

“Moratorium Undertakings” .......... Theundertakings given by Business Companion Investments and 

Yaw Chee Siew respectively to the Issue Managers in relation to 

(i) the Shares owned by Business Companion Investments and 

(ii) BCI Shares and CEO Shares owned by Yaw Chee Siew, respectively, 

in connection with the listing of our Shares with SGX-ST. 

Details of which are set out in the section “Plan of Distribution — 

Restrictions on Disposals and Issue of Shares” of this document 

“Moratorium Period” ............... Theperiod of six months commencing from the Listing Date 

“NAV” ......................... Netasset value 

“New Shares” .................... The206,045,000 new Shares for which our Company invites applications 

to subscribe, subject to and on the terms and conditions of 

this document 

“Nominating Committee” ........... Nominating committee of our Company for the time being 

“Non-executive Directors” ........... Non-executive directors of our Company as at the date of this 

document 

“Noon Buying Rate” ............... Noon Buying Rate in New York for cable transfers in Singapore 

Dollars as certified for customs purposes by the Federal Reserve 

Bank of New York 

“NTA” ......................... Nettangible assets 

“Offer Agreement” ................ Theofferagreement dated 21 November 2008 entered into among 

UOB, the Vendors and our Company 

“Offer Shares”. ................... 235,295,000 Offering Shares which are the subject of the Public 

Offer for subscription 

“Offering” ....................... ThePlacement and the Public Offer 

“Offering Price” .................. S$0.51 for each Offering Share 

“Offering Shares” ................. The235,295,000 Shares which are subject to the Offering comprising 

206,045,000 New Shares and 29,250,000 Vendor Shares 

“Otto 1” ........................ Awork barge with accommodation for 300 persons, owned by Otto 

1 Ltd. 

208

“Participants” .................... Anyeligible person selected by the Share Award Committee to participate 

in the Share Award Scheme in accordance with the rules 

thereof 

“Placement” ..................... Theinternational placement of Offering Shares to investors, including 

institutional and other investors in Singapore 

“Placement Agreement”. ............ Theplacement agreement dated 21 November 2008 entered into 

between our Company, the Vendors and UOB 

“Placement Shares” ................ The234,295,000 Offering Shares which are the subject of the 

Placement 

“PPSA”. ........................ Prevention of Pollution at Sea Act (Chapter 243 of Singapore) 

“Prospectus” ..................... TheProspectus dated 21 November 2008 issued by us in respect of 

the Offering 

“Public Offer” .................... TheofferbyusoftheOfferShares to the public in Singapore for 

subscription at the Offering Price upon the terms and subject to the 

conditions of this document 

“Quality Management System” or 

“QMS”....................... Thesetofpolicies, processes and procedures required for planning, 

production, development and service 

“Regulation S” ................... Regulation S under the Securities Act 

“Remuneration Committee” .......... Remuneration committee of our Company for the time being 

“Reserved Shares” ................. 8,915,000 Shares reserved for our employees who have contributed 

to our success and development 

“Restructuring Exercise” ............ Thecorporate restructuring exercise undertaken by us as described 

in “Our Restructuring and Corporate Structure” 

“Russia” ........................ Federation of Russia 

“Securities Account” ............... Thesecurities account maintained by a Depositor with CDP but 

does not include a securities sub-account 

“Securities Act” .................. TheUnited States Securities Act of 1933, as amended 

“Second Batamec Restructuring” . . .... Theshare sale and purchase agreement entered into and between 


held by Brizill International in PT Batamec (consisting of 

41,963 Class A shares in PT Batamec) for a consideration of 

approximately IDR 8.8 billion 

“Service Agreements” .............. Theservice agreements entered into between our Company and our 

Executive Directors, namely, Yaw Chee Siew and Lee Kok Wah as 

described in “Directors and Senior Management — Service Agreements” 

of this document 

“SFA” or “Securities and Futures Act” . . The Securities and Futures Act, Chapter 289 of Singapore 

“SFRS” ......................... Singapore Financial Reporting Standards 

“SGXNET” ...................... Thewebsite maintained by the SGX-ST, including the restricted 

section (accessible with the use of a password and security token) 

for the submission of announcements required under the Listing 

Manual 

“Share Award Committee” ........... Thecommittee comprising our Directors, duly authorised, 

appointed and nominated by the Board to administer the Share 

Award Scheme 

“Share Award Scheme” ............. Otto Marine Share Award Scheme 

209

“Shareholder” .................... Ourregistered shareholders, except where the registered shareholder 

is CDP, the term “Shareholders” shall in relation to such 

Shares, mean the Depositor whose Securities Accounts are created 

with Shares 

“Shareholders’ Mandate” ............ Ourgeneral mandate from Shareholders for the entering into certain 

interested person transactions as having been obtained from 

our shareholders 

“Shares” ........................ Ordinary shares in the capital of our Company 

“Share Split” ..................... Thesub-division of every one (1) share in the share capital of our 

Company into 30 Shares 

“Singapore” ..................... Republic of Singapore 

“SOLAS, 1974” .................. International Convention for the Safety of Life at Sea 1974 

“Substantial Shareholder” ........... AShareholder who has an interest in 5.0% or more of our voting 

shares 

“Sulzer” ........................ Sulzer Ltd., a company incorporated in Switzerland 

“Third Batamec Restructuring” . . . .... Theshare sale and purchase agreement entered into and between 


held by Brizill International in PT Batamec (consisting of 15,107 

Class A shares and 72,500 Class B shares in PT Batamec) for a 

consideration of approximately IDR 221.0 billion 

“Tourquoise Option” ............... Theoption granted by Yaw Chee Siew to us on 30 May 2008, to 

purchase all of the issued shares of Tourquoise 

“Tunisia” ....................... Tunisian Republic 

“UAE” ......................... TheUnited Arab Emirates 

“UK” .......................... TheUnited Kingdom of Great Britain and Northern Ireland 

“US” or “USA”. .................. TheUnited States of America 

“Vendor Shares” .................. The29,250,000 Shares for which the Vendors invite applications to 

purchase on the terms and subject to the conditions of this 

document 

“Venezuela” ..................... Bolivarian Republic of Venezuela 

“Yaw Family” .................... YawChee Siew, Yaw Chee Ming and Hiew Teck Seng, also known 

as Yaw Teck Seng 

Currencies, Units and Others 

“A$”........................... Australian dollars 

“Euros” or “A” ................... 

‘‘$”, “SGD”, “Singapore Dollars” or 

Euros 

“S$” and “cents” ................ Singapore dollars and cents, respectively 

“USD”, “US$” or “US Dollars. ....... United States dollars 

“IDR”, “Rupiah” or “Rp” ........... Indonesian Rupiah 

“RM” or “Ringgit” ................ Malaysian Ringgit 

“Yen”.......................... Japanese Yen 

“%” or “per cent.” ................. Percentum or percentage 

“m” or “m 2 ”..................... metres or metres squared 

210

GLOSSARY OF TECHNICAL TERMS 

To facilitate a better understanding of our business, the following glossary provides a description of some 

of the technical terms and abbreviations commonly found in our industry. The terms and their assigned 

meanings may not correspond to standard industry or common meanings, or usage of these terms, as the case 

may be. 

“ABS” ......................... American Bureau of Shipping 

“AHT” ......................... Anchor Handling Tugs 

“AHTS” ........................ Anchor Handling Tug Supply 

“AIS” .......................... Automatic identification system 

“ballast system” .................. Thesystem of pumping sea water into tanks to achieve stability of 

the vessel 

“bare-boat charter” ................ Anarrangement under which a vessel is hired without crew or 

other provisions 

“barge” ......................... Aflat-bottomed steel vessel used for the transportation of cargoes 

or for accommodation customarily used in commercial ship canals 

and in ports where ships are unable to load or unload at the quay 

due to shallow draft or for beaching operations for the purpose of 

loading and/or unloading cargoes in remote and shallow waters not 

accessible to conventional ships 

“berth” ......................... Thelocation in a shipyard or harbour used specifically for mooring 

vessels while not at sea 

“BHP” or “bhp” .................. Brake horse power, being a measure of engine power 

“BIMCO” ....................... TheBaltic and International Maritime Council 

“blasting” ....................... Aprocess by which surfaces are treated using abrasive copper slag 

or ultra high pressure water 

“block” ......................... Alarge section of the vessel constructed from individual steel components, 

which are welded together to form panels, which is then 

assembled together with other blocks on the erection berth 

“bollard pull” or “BP” .............. Ameasure of the static pull of a vessel which is used to describe 

the pulling capability of towing vessels 

“charter” ........................ Acontract between a shipowner and charterer 

“charterer” ...................... Aperson or firm hiring a vessel for the carriage of goods or other 

purposes 

“classification society” ............. Anyoneofanumber of worldwide non-governmental, experienced 

and reputable organisations or groups of professionals, ship surveyors 

and representatives of offices that promote the safety and protection 

of the environment of vessels and offshore structures by 

setting technical rules, confirming that designs and calculations 

meet these rules, surveying vessels and structures during the process 

of construction and commissioning, and periodically surveying 

vessels to ensure that they continue to meet the rules 

“CNC” ......................... Acomputer numeric control machine, being a powered mechanical 

cutting device typically used for fabricating steel components 

“dock” ......................... Anenclosed basin surrounded by quays used for berthing and 

unberthing vessels 

“docking cradle” .................. Asteel support structure that bears the weight of the vessel to 

allow the vessel to be drydocked or moved 

211

“DP2” .......................... Dynamic position 2 — redundancy allows the vessel to maintain 

position even with failure of one component or subsystem, required 

for vessels which support manned diving operations 

“drydock” or “graving dock” ......... Anarrow basin that can be flooded to allow a vessel to be floated 

in and then drained to allow the vessel to come to rest on a dry 

platform, as further described in the section “Our Business” of this 

document 

“drydocking”. .................... Theprocess by which a vessel manoeuvres into and comes to rest 

in the drydock 

“ducting” ....................... Asystem of ducts used in HVAC which enable air to be circulated, 

delivered and removed, typically in an accommodation area 

“dwt” or “deadweight tonnes” ........ Onedwtequals 1,000 kilograms and is a measure of the total load 

which a ship can carry, including its cargo, provisions, fuel, stores, 

bunker, crew and spares 

“erection berth” ................... Thesite in the shipyard at which blocks are welded together to 

form the vessel before launching 

“GMDSS”. ...................... Global maritime and distress safety system 

“GRT” ......................... Gross registered tonnage 

“high-deck loading barge” ........... Abargewith a deck-loading capacity that is higher than five to 

seven tonnes per square metre 

“hoists” ......................... Lifting devices 

“HVAC”........................ Heating, ventilation and air conditioning 

“jetty” .......................... Anarea where vessels may be berthed afloat 

“IEA” .......................... International Energy Agency 

“Inspection Record” ............... Arecord of inspection of vessels under construction in hard copy 

“ISO Quality Management System” .... Guidelines on quality management issued by the ISO 

“ISO 14001 Safety Management 

System” ........................ Guidelines on safety management issued by the ISO 

“ISO 9000” ...................... Oneofaseries of documents that defines the requirements for the 

ISO Quality Management System standard containing the actual 

requirements with which an organisation must be in compliance to 

become ISO 9001 registered and the current version of which is 

the ISO 9001:2000 

“ISO 9001” ...................... Oneofaseries of documents that defines the requirements for the 

ISO Quality Management System standard containing the actual 

requirements with which an organisation must be in compliance to 

become ISO 9001 registered and the current version of which is 

the ISO 9001:2000 

“launching” ...................... Theoperation of transferring a vessel from dry land to the water 

“mooring” ....................... Theprocess of securing a vessel to a berth 

“newbuilding” .................... Aproject to construct a new vessel 

“offshore support vessel” ............ Avessel that services offshore operations 

“pax” .......................... Persons accommodated, being a measure of size of accommodation 

barges 

“plasma cutting machine” ........... Asteel cutting machine that uses a plasma torch 

“plate blasting shop” ............... Atreatment shop where plate surfaces are blasted 

212

“project manager” ................. Amanager specifically assigned to look after a particular newbuilding 

or ship repair project and who is responsible for overall coordination, 

cost, schedule, quality and warranty follow-up relating 

to the project 

“propulsion” ..................... Thedriving force of a vessel, which typically involves engine and 

propeller systems 

“PSV”. ......................... Platform supply vessel 

“rig” ........................... Astructure housing equipment used to drill into underground reservoirs 

for water, oil or natural gas or into sub-surface mineral 

deposits 

“stern” ......................... Therear of the vessel 

“switchboard” .................... Apanel that enables electricity distribution to all parts of a vessel 

“switchgears” .................... Individual components forming part of a switchboard 

“Syncrolift»”..................... Alarge lifting system, which raises and lowers vessels in and out 

of the water for drydocking ashore 

“thrusters”. ...................... Adevice used to provide side thrust for a vessel 

“time charter” .................... Anarrangement for the charter of a vessel for a fixed period of 

time with crew on board 

“TRIBON»” ..................... Athree-dimensional product model naval architecture program 

originally for designing commercial and naval vessels 

“tug” or “tugboat” ................. Avessel with powerful engines designed for towage and easy 

manoeuvrability that is normally used for berthing and unberthing 

operations 

“wheelhouse control system” ......... Thevessel control system in the wheelhouse 

“winch” ........................ Amachine for towing or moving objects using steel wires on the 

deck 

“work barge”. .................... Abargewith a large deck area and cranage 

“Work Done Report” ............... Arecord of actual work done that is signed by shipyard personnel 

and ship staff and is used for bill negotiation and warranty claims 

213


APPENDIX 1 

INDEPENDENT AUDITORS’ REPORT AND THE 

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS 

ENDED DECEMBER 31, 2007, DECEMBER 31, 2006 AND DECEMBER 31, 2005 

September 2, 2008 

The Board of Directors 


9 Temasek Boulevard 

#33-01 Suntec Tower 2 


Dear Sirs 

Independent Auditors’ Report on the Consolidated Financial Statements of Otto Marine Limited and its 

subsidiaries 

We have audited the accompanying consolidated financial statements of Otto Marine Limited (the 

“Company”) and its subsidiaries (collectively the “Group”), comprising the consolidated balance sheets as at 

December 31, 2007, 2006 and 2005 and its consolidated profit and loss statements, changes in equity and cash 

flow statements for each of the financial years then ended, and a summary of significant accounting policies 

and other explanatory notes, as set out on pages A1-3 to A1-37. 

Management’s Responsibility for the Financial Statements 

Management is responsible for the preparation and fair presentation of these financial statements in 

accordance with the Singapore Financial Reporting Standards. This responsibility includes: devising and 

maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets 

are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and 

that they are recorded as necessary to permit the preparation of true and fair profit and loss account and 

balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; 

and making accounting estimates that are reasonable in the circumstances. 

Auditors’ Responsibility 

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. 

We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we 

comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the 

consolidated financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in 

the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the 

assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud 

or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s 

preparation and fair presentation of the consolidated financial statements in order to design audit procedures 

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness 

of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies 

used and the reasonableness of accounting estimates made by management, as well as evaluating the overall 

presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is 

sufficient and appropriate to provide a basis for our audit opinion. 

Opinion 

In our opinion, the consolidated financial statements of the Group, for the purpose of this report set out in 

the following paragraph, are properly drawn up in accordance with Singapore Financial Reporting Standards 

so as to give a true and fair view of the state of affairs of the Group as at December 31, 2007, 2006 and 2005 

and of the consolidated results, changes in equity and cash flows of the Group for each of the financial years 

then ended. 

A1-1

This report has been prepared solely in connection with the proposed listing of the Company’s shares on 

the Singapore Exchange Securities Trading Limited. This report is made solely to you, as a body, and for no 

other purpose. We do not assume responsibility towards or accept liability to any other person for the contents 

of this report. 

Yours faithfully 

Deloitte & Touche LLP 

Public Accountants and 

Certified Public Accountants 

Singapore 

Ng Peck Hoon 

Partner 

A1-2

A. Consolidated Balance Sheets 

As at December 31, 2007, 2006 and 2005 

OTTO MARINE LIMITED AND ITS SUBSIDIARIES 

Note 2007 2006 2005 

$’000 $’000 $’000 

ASSETS 


Cash and bank balances ................................... 6 18,186 14,238 1,285 

Pledged deposits ........................................ 6 195,718 40,969 138 

Trade receivables. ....................................... 7 25,538 4,239 20,430 

Gross amount due from customers for contract work ............. 8 94,300 27,418 — 

Deposits, prepayments and other receivables. ................... 9 61,757 21,803 7,675 

Inventories . . .......................................... 10 81,465 25,769 21,373 

Total current assets ...................................... 


476,964 134,436 50,901 

Investment in associates ................................... 12 4,709 — — 

Available-for-sale investments .............................. 13 4,080 — — 

Goodwill .............................................. 14 5,101 922 — 

Property, plant and equipment .............................. 15 91,011 18,527 11,717 

Total non-current assets ................................... 104,901 19,449 11,717 

Total assets. ........................................... 581,865 153,885 62,618 



Loans and overdraft ...................................... 16 136,847 38,237 25,754 

Trade payables ......................................... 17 168,765 39,594 20,619 

Gross amount due to customers for contract work. ............... 8 97,341 35,070 277 

Other payables ......................................... 18 6,561 6,210 3,805 

Deferred gain — short-term ................................ 19 482 — — 

Current portion of finance leases ............................ 20 80 25 — 

Income tax payable ...................................... 2,122 905 513 

Total current liabilities .................................... 


412,198 120,041 50,968 

Loans and overdraft ...................................... 16 47,516 — — 

Deferred gain — long-term ................................ 19 12,619 — — 

Finance leases .......................................... 20 347 170 — 

Loan from related parties .................................. 21 51,381 27,872 52,170 

Total non-current liabilities ................................ 


111,863 28,042 52,170 

Issued capital ....................................... 22 32,500 32,500 500 

Capital reserve ...................................... 23 1,656 1,162 294 

Translation reserve ................................... (5,249) (1,158) 13 

Accumulated profits (losses) ............................ 32,904 (9,023) (29,223) 

Equity attributable to equity holders of the Company ........ 61,811 23,481 (28,416) 

Minority interests .................................... 24 (4,007) (17,679) (12,104) 

Total equity (capital deficiency) ........................... 57,804 5,802 (40,520) 

Total liabilities and equity (capital deficiency). ................ 581,865 153,885 62,618 

See accompanying notes to financial statements. 

A1-3


B. Consolidated Profit and Loss Statements 

For the Financial Years Ended December 31, 2007, 2006 and 2005 

Note 2007 2006 2005 

$’000 $’000 $’000 

Revenue ............................................. 25 314,024 147,255 54,689 

Cost of sales .......................................... (232,326) (125,879) (48,591) 

Gross profit .......................................... 81,698 21,376 6,098 

Other (expense) income. ................................. 26 (8,045) 429 (969) 

Administration expenses ................................. (12,356) (5,270) (3,034) 

Share of losses of associates .............................. (268) — — 

Finance costs ......................................... 27 (5,905) (2,383) (2,042) 

Profit before income tax ................................ 55,124 14,152 53 

Income tax expense. .................................... 28 (1,449) (449) (462) 

Profit (Loss) for the year. ............................... 29 53,675 13,703 (409) 

Attributable to: 

Equity holders of the Company ............................ 41,927 20,200 3,082 

Minority interests ...................................... 11,748 (6,497) (3,491) 

53,675 13,703 (409) 

Earnings per share (cents). .............................. 30 

Basic ............................................... 4.30 2.07 0.32 

Diluted .............................................. 4.30 2.07 0.32 


A1-4


C. Statement of Changes in Equity 


Share 

Capital 

Capital 

Reserve Translation 

Reserves 

Accumulated 

Profit (Losses) 

Attributable to 

Equity Holders 

of the Company Minority 

Interest Total 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 

Balance at January 1, 2005 . . 

Currency translation 

500 — — (32,305) (31,805) (8,613) (40,418) 

differences ............. 

Net income recognised 

— — 13 — 13 — 13 

directly in equity ........ — — 13 — 13 — 13 

Profit for the year ......... 

Total recognised income and 

— — — 3,082 3,082 (3,491) (409) 

expense for the year ...... 

Waiver of interest on related 

— — 13 3,082 3,095 (3,491) (396) 

party loans. ............ 

Balance at December 31, 

— 294 — — 294 — 294 

2005 ................. 


500 294 13 (29,223) (28,416) (12,104) (40,520) 



— — (1,171) — (1,171) — (1,171) 

directly in equity ........ — — (1,171) — (1,171) — (1,171) 



— — — 20,200 20,200 (6,497) 13,703 

expense for the year ...... — — (1,171) 20,200 19,029 (6,497) 12,532 

Issue of shares (Note 22) .... 32,000 — — — 32,000 — 32,000 

Group reorganisation ....... 


— — — — — 922 922 

party loans. ............ 


— 868 — — 868 — 868 

2006 ................. 

Gain on available-for-sale 

32,500 1,162 (1,158) (9,023) 23,481 (17,679) 5,802 

investment ............. 


— 462 — — 462 — 462 



— — (4,091) — (4,091) — (4,091) 

directly in equity ........ — 462 (4,091) — (3,629) — (3,629) 



— — — 41,927 41,927 11,748 53,675 

expense for the year ...... 

Acquisition of additional 

shares from minority 

— 462 (4,091) 41,927 38,298 11,748 50,046 

interest ............... 

Arising from acquisition of 

— — — — — 1,898 1,898 

subsidiary (Note 31). ..... 


— — — — — 26 26 

party loans. ............ 


— 32 — — 32 — 32 

2007 ................. 32,500 1,656 (5,249) 32,904 61,811 (4,007) 57,804 


A1-5


D. Consolidated Statements of Cash Flows 


2007 2006 2005 

$’000 $’000 $’000 

Operating activities 

Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Adjustments for: 

55,124 14,152 53 

Shares of losses of associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 — — 

Depreciation of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,054 977 2,390 

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,905 2,383 2,042 

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,934) (164) — 

Deferred gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,101 — — 

Gain on disposal of plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17) — (52) 

Operating cash flows before movements in working capital . . . . . . . . . . . . . . . . . . . . . . . . 68,501 17,348 4,433 

Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,568) 16,191 (15,668) 

Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44,604) (14,128) (5,194) 

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (60,748) (4,396) (7,665) 

Construction work-in-progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,810 6,565 1,284 

Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,345 18,975 7,849 

Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (573) 2,405 2,501 

Cash generated from (used in) operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,163 42,960 (12,460) 

Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (232) (57) — 

Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,934 164 — 

Net cash from (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Investing activities 

71,865 43,067 (12,460) 

Investment in associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,977) — — 

Acquisition of a subsidiary (Note 31) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,186) — — 

Acquisition of additional shares in a subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (564) — — 

Purchases of available-for-sale investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,618) — — 

Purchases of property, plant and equipment (Note A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65,904) (7,938) (8,425) 

Proceeds on disposal of plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387 — 105 

Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Financing activities 

(76,862) (7,938) (8,320) 

Proceeds on bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,349 49,027 39,291 

Repayment of bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31,472) (33,297) (34,004) 

Repayment of finance lease obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56) (15) — 

Repayment of loans from a related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (63,200) (166,312) (80,363) 

Loan from a related party (Note B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,709 169,139 98,672 

Proceeds from issue of shares (Note B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4,875 — 

Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,873) (1,515) (1,748) 

Net cash from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,457 21,902 21,848 

Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,460 57,031 1,068 

Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,456 (3,575) (4,643) 

Effects of exchange rate changes on the balance of cash held in foreign currencies . . . . . . . . . . (12) — — 

Cash and cash equivalents (Overdrawn) at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . 

Cash and cash equivalents (Overdrawn) at end of year include the following: 

213,904 53,456 (3,575) 

Cash (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,186 14,238 1,285 

Pledged deposits (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195,718 40,969 138 

Bank overdraft (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1,751) (4,998) 

213,904 53,456 (3,575) 

Note A: 

During the year, the Group acquired property, plant and equipment with an aggregate cost of approximately 

$66,192,000 (2006: $8,148,000; 2005: $8,425,000) of which approximately $288,000 (2006: $210,000; 2005: $Nil) 

was acquired under finance lease arrangements. 

Note B: 

In 2006, the Company issued 27,125,000 ordinary shares by capitalisation of loans due to a related party of 

$27,125,000 and 4,875,000 ordinary shares for cash of $4,875,000. 


A1-6


E. Notes to the Consolidated Financial Statements 

1 General 

The Company (Registration No. 197902647M) is a private limited company incorporated in 

Singapore as Otto Industrial Co (Pte) Ltd, with its principal place of business and registered office at 

9 Temasek Boulevard #33-01 Suntec Tower Two, Singapore 038989. On October 5, 2006, the Company 

changed its name to Otto Marine Pte Ltd. On March 17, 2008, the Company converted to a public 

limited company and changed its name to Otto Marine Limited. The consolidated financial statements 

are expressed in Singapore dollars. 

The principal activities of the Company and the Group consist of the construction, fabrication, 

repair and conversion, and chartering of ships. 

The principal activities of the subsidiaries and associates are disclosed in Notes 11 and 12 to the 

financial statements. 

The consolidated financial statements of the Group for the financial years ended December 31, 

2007, 2006 and 2005 were authorised for issue by the Board of Directors on September 2, 2008. 

2 Summary of Significant Accounting Policies 

BASIS OF ACCOUNTING — The consolidated financial statements are prepared in accordance 

with the historical cost convention, except as disclosed in the accounting policies below and are drawn 

up in accordance with the Singapore Financial Reporting Standards (“FRS”). 

In the preparation of the consolidated financial statements, the Group has adopted all the new and 

revised FRSs and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for 

the periods presented in the consolidated financial statements. The adoption of these new/revised FRSs 

and INT FRSs does not result in changes to the Group’s accounting policies and has no material effect 

on the financial information except as disclosed below and in the notes to financial statements. 

FRS 39 — Financial Instruments: Recognition and Measurement (Effective date: January 1, 2005) 

FRS 39 requires the recognition and measurement of financial assets and liabilities. The new 

standard moves measurement from a cost base to a fair value base for certain categories of financial 

assets and liabilities. The change in accounting policy has been accounted for prospectively in 

accordance with the transitional provisions of FRS 39. The adoption of FRS 39 has resulted in interestfree 

advances extended by certain related parties to the Group being carried at its fair value. 

In 2005, fair value adjustment of interest-free advance amounting to $294,000 was transferred to 

capital reserve and the imputed interest expense is recognised in the profit and loss. 

The opening retained earnings of the Group for 2005 was not adjusted as the impact of the 

adjustment is not material. 

At the date of authorisation of these financial statements, the following FRSs, INT FRSs and 

amendments for FRS that are relevant to the Group were issued but not effective: 

FRS 1 — Presentation of Financial Statements (Revised) 

FRS 23 — Borrowing Costs (Revised) 

FRS 107 — Financial Instruments: Disclosure 

FRS 108 — Operating Segment 

Amendments to FRS 1 Presentation of Financial Statements relating to Capital Disclosures. 

Consequential amendments were also made to various standards as a result of these new/revised 

standards. 

Other than FRS 107 and FRS 108, the management anticipates that the adoption of the above FRS, 

INT FRS and amendments to FRS that were issued but not yet effective until future periods will not 

have a material impact on the financial statements of the Group. 

A1-7


The application of FRS 107 and the consequential amendments to other FRS will not affect any of 

the amounts recognised in the financial statements, but will change the disclosures presently made in 

relation to the Group’s financial instruments and the objectives, policies and processes for managing 

capital. 

The application of FRS 108 and the consequential amendments to other FRS will not affect any of 

the amounts recognised in the financial statements, but will change the disclosures presently made in 

relation to the segment information disclosures made in relation to the Group’s financial statements. 

BASIS OF CONSOLIDATION — The consolidated financial statements incorporate the financial 

statements of the Company and entities (including special purpose entities) controlled by the Company 

(its subsidiaries) made up to December 31 each year (its subsidiaries). Control is achieved when the 

Company has the power to govern the financial and operating policies of an entity so as to obtain 

benefits from its activities. 

The results of subsidiaries acquired during the year are included in the consolidated profit and loss 

statement from the effective date of acquisition. 

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the 

accounting policies into line with those used by other members of the Group. 

All significant intra-group transactions, balances, income and expenses are eliminated on 

consolidation. 

MINORITY INTERESTS — Minority interests in the net assets of consolidated subsidiaries are 

identified separately from the Group’s equity therein. Minority interests consist of the amount of those 

interests at the date of the original business combination (see below) and the minority’s share of changes 

in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s 

interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent 

that the minority has a binding obligation and is able to make an additional investment to cover its share 

of those losses. 

BUSINESS COMBINATIONS — The acquisition of subsidiaries is accounted for using the purchase 

method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of 

exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in 

exchange for control of the acquiree, plus any costs directly attributable to the business combination. 

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for 

recognition under FRS 103 are recognised at their fair values at the acquisition date. 

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the 

excess of the cost of the business combination over the Group’s interest in the net fair value of the 

identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s 

interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities 

exceeds the cost of the business combination, the excess is recognised immediately in the consolidated 

profit and loss statement. 

The interest of minority shareholders in the acquiree is initially measured at the minority’s 

proportion of the net fair value of the assets, liabilities and contingent liabilities recognised. 

FINANCIAL INSTRUMENTS — Financial assets and financial liabilities are recognised on the 

Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument. 

Effective Interest Method 

The effective interest method is a method of calculating the amortised cost of a financial instrument 

and of allocating interest income or expense over the relevant period. The effective interest rate is the 

rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid 

or received that from an integral part of the effective interest rate, transaction costs and other premiums 

or discounts) through the expected life of the financial instrument, or where appropriate, a shorter 

period. Income is recognised on an effective interest rate basis for debt instruments. 

A1-8


Financial Assets 

Investments are recognised and de-recognised on a trade date where the purchase or sale of an 

investment is under a contract whose terms require delivery of the investment within the timeframe 

established by the market concerned, and are initially measured at fair value, plus transaction costs. 

Other financial assets are classified into the following specified categories: financial assets 

“available-for-sale” and “loans and receivables”. The classification depends on the nature and purpose of 

financial assets and is determined at the time of initial recognition. 

Available-for-sale Financial Assets 

Certain equity shares held by the Group are classified as being available for sale and are stated at 

fair value. Fair value is determined in the manner described in Note 4. Gains and losses arising from 

changes in fair value are recognised directly in the valuation reserve with the exception of impairment 

losses and foreign exchange gains and losses on monetary assets which are recognised directly in profit 

or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss 

previously recognised in the valuation reserve is included in profit or loss for the period. Dividends on 

available-for-sale equity instruments are recognised in profit or loss when the Company’s right to receive 

payments is established. The fair value of available-for-sale monetary assets denominated in a foreign 

currency is determined in that foreign currency and translated at the spot rate at reporting date. The 

change in fair value attributable to translation differences are recognised in equity. 

Loan and Receivables 

Trade and other receivables that have fixed or determinable payments that are not quoted in an 

active market are classified as “loan and receivables”. Loans and receivables are measured at initial 

recognition at fair value, and are subsequently measured at amortised cost using the effective interest 

method less impairment. Interest is recognised by applying the effective interest rate method, except for 

short-term receivables when the recognition of interest would be immaterial. 

Impairment of Financial Assets 

Financial assets, are assessed for indicators of impairment at each balance sheet date. Financial 

assets are impaired where there is objective evidence that, as a result of one or more events that occurred 

after the initial recognition of the financial asset, the estimated future cash flows of the investment have 

been impacted. 

For financial assets carried at amortised cost, the amount of the impairment is the difference between 

the asset’s carrying amount and the present value of estimated future cash flows, discounted at the 

original effective interest rate. 

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial 

assets with the exception of trade receivables where the carrying amount is reduced through the use of an 

allowance account. When a trade receivable is uncollectible, it is written off against the allowance 

account. Subsequent recoveries of amounts previously written off are credited against the allowance 

account. Changes in the carrying amount of the allowance account are recognised in profit or loss. 

With the exception of available-for-sale equity instruments, if in a subsequent period, the amount of 

the impairment loss decreases and the decrease can be related objectively to an event occurring after the 

impairment loss was recognised, the previously recognised impairment loss is reversed through profit and 

loss statement to the extent the carrying amount of the investment at the date the impairment is reversed 

does not exceed what the amortised cost would have been had the impairment not been recognised. 

In respect of available-for-sale equity instruments, any subsequent increase in fair value after an 

impairment loss is recognised directly in equity. 

Derecognition of Financial Assets 

The Group derecognises a financial asset only when the contractual rights to the cash flows from 

the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership 

of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and 

A1-9


rewards of ownership and continues to control the transferred asset, the Group recognises its retained 

interest in the asset and an associated liability for amounts it may have to pay. If the Group retains 

substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues 

to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. 

Financial Liabilities and Equity Instruments 

Classification as Debt or Equity 

Financial liabilities and equity instruments issued by the Group are classified according to the 

substance of the contractual arrangements entered into and the definitions of a financial liability and an 

equity instrument. 

Equity Instruments 

An equity instrument is any contract that evidences a residual interest in the assets of the Group 

after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of 

direct issue costs. 

Financial Liabilities 

Financial liabilities are classified as either financial liabilities “at fair value through profit or loss” 

or other financial liabilities. 

Other Financial Liabilities 

Trade and other payables are initially measured at fair value, net of transaction costs, and are 

subsequently measured at amortised cost, using the effective interest rate method, with interest expense 

recognised on an effective yield basis. 

Interest-bearing loans and overdrafts are initially measured at fair value, and are subsequently 

measured at amortised cost, using the effective interest rate method. Any difference between the 

proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the 

term of the borrowings in accordance with the Group’s accounting policy for borrowing costs (see 

below). 

Financial guarantee contract liabilities are measured initially at their fair values and subsequently at 

the higher of the amount of obligation under the contract recognised as a provision in accordance with 

FRS 37 — Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised 

less cumulative amortisation in accordance with FRS 18 — Revenue. 

Derivative Financial Instruments 

The Group enters into derivative financial instruments i.e foreign exchange forward contracts to 

manage its exposure to foreign exchange rate risk. Details of derivative financial instruments are 

disclosed in Note 32(ii) to the financial statements. 

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and 

are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is 

recognised in the profit and loss statement immediately unless the derivative is designated and effective 

as a hedging instrument, in which event the timing of the recognition in the profit and loss statement 

depends on the nature of the hedge relationship. 

Derecognition of Financial Liabilities 

The Group derecognises financial liabilities when, and only when, the Group’s obligations are 

discharged, cancelled or they expire. 

CONSTRUCTION CONTRACTS — Where the outcome of a long-term construction contract can 

be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the 

contract activity at the balance sheet date, as measured by the completion of a physical proportion of the 

A1-10


contract work. For fixed price contract, the outcome of a construction contract can be estimated reliably 

when all the following conditions are satisfied: 

a) total contract revenue can be measured reliably; 

b) it is probable that the economic benefits associated with the contract will flow to the Group; 

c) both the contract costs to complete the contract and the stage of contract completion at the 

balance sheet date can be measured reliably; and 

d) the contract costs attributable to the contract can be clearly identified and measured reliably so 

that actual contract costs incurred can be compared with prior estimates. 

Variations in contract work, claims and incentive payments are included to the extent that they have 

been agreed with the customer. 

Where the outcome of a long-term construction contract cannot be estimated reliably, contract 

revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. 

Contract costs are recognised as expenses in the period in which they are incurred. 

When it is probable that total contract costs will exceed total contract revenue, the expected loss is 

recognised as an expense immediately. 

LEASES — Leases are classified as finance leases whenever the terms of the lease transfer 

substantially all the risks and rewards of ownership to the lessee. All other leases are classified as 

operating leases. 

The Group as Lessee 

Assets held under finance leases are recognised as assets of the Group at their fair value at the 

inception of the lease or, if lower, at the present value of the minimum lease payments. The 

corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease 

payments are apportioned between finance charges and reduction of the lease obligation so as to achieve 

a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly 

to profit or loss, unless they are directly attributable to qualifying assets, in which case they are 

capitalised in accordance with the Group’s general policy on borrowing costs (see below). 

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the 

term of the relevant lease unless another systematic basis is more representative of the time pattern in 

which economic benefits from the leased asset are consumed. 

In the event that lease incentives are received to enter into operating leases, such incentives are 

recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental 

expense on a straight-line basis, except where another systematic basis is more representative of the time 

pattern in which economic benefits from the leased asset are consumed. 

INVENTORIES — Inventories comprise of raw materials and work in progress and are measured at 

the lower of cost and net realisable value. Raw material cost is determined on weighted average cost 

method and includes all costs that have been incurred in bringing the inventories to their present location 

and condition. Net realisable value represents the estimated selling price less all estimated costs to 

completion and costs to be incurred in marketing, selling and distribution. 

Work in progress comprises vessels under construction for future sale. Cost is made up of direct 

materials, direct labour cost, subcontractors cost, appropriate allocation of fixed and variable production 

overheads. 

PROPERTY, PLANT AND EQUIPMENT — Property, plant and equipment are stated at cost less 

accumulated depreciation and any accumulated impairment losses. 

A1-11


Depreciation is charged so as to write off the cost of assets, other than property, plant and 

equipment under construction, over their estimated useful lives, using the straight-line method, on the 

following bases: 

Leasehold land and building — Over the remaining term of lease which are between 20 

to 30 years 

Vessels 25 years, net of the residual value 

Office equipment, furniture and fittings — 4 to 20 years 

Motor vehicles — 4 to 5 years 

Machinery and equipment — 2 to 8 years 

No depreciation is charged in respect of properties, plant and equipment under construction-inprogress. 

The estimated useful lives, residual values and depreciation method are reviewed at each year end, 

with the effect of any changes in estimate accounted for on a prospective basis. 

Assets held under finance leases are depreciated over their expected useful lives on the same basis 

as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease 

term, the asset shall be fully depreciated over the shorter of the lease term and its useful life. 

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is 

determined as the difference between the sales proceeds and the carrying amounts of the asset and is 

recognised in the profit and loss statement. 

GOODWILL — Goodwill arising on the acquisition of a subsidiary represents the excess of the cost 

of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and 

contingent liabilities of the subsidiary recognised at the date of acquisition. Goodwill is initially 

recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment 

losses. 

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating 

units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill 

has been allocated are tested for impairment annually, or more frequently when there is an indication 

that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the 

carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any 

goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying 

amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a 

subsequent period. 

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of 

the profit or loss on disposal. 

IMPAIRMENT OF ASSETS EXCLUDING GOODWILL — At each balance sheet date, the Group 

reviews the carrying amounts of its assets to determine whether there is any indication that those assets 

have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is 

estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to 

estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of 

the cash-generating unit to which the asset belongs. 

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value 

in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate 

that reflects current market assessments of the time value of money and the risks specific to the asset. 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its 

carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable 

amount. An impairment loss is recognised immediately in the profit and loss statement. 

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating 

unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying 

amount does not exceed the carrying amount that would have been determined had no impairment loss 

A1-12


been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is 

recognised immediately in the profit and loss statement. 

ASSOCIATES — An associate is an entity over which the Group has significant influence and that 

is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate 

in the financial and operating policy decisions of the investee but is not control or joint control over 

those policies. 

The results and assets and liabilities of associates are incorporated in these financial statements 

using the equity method of accounting. Under the equity method, investments in associates are carried in 

the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of 

the net assets of the associate, less any impairment in the value of individual investments. Losses of an 

associate in excess of the Group’s interest in that associate (which includes any long-term interests that, 

in substance, form part of the Group’s net investment in the associate) are not recognised, unless the 

Group has incurred legal or constructive obligations or made payments on behalf of the associate. 

Where a Group entity transacts with an associate on the Group, profits and losses are eliminated to 

the extent of the Group’s interest in the relevant associate. 

PROVISIONS — Provisions are recognised when the Group has a present obligation (legal or 

constructive) as a result of a past event, it is probable that the Group will be required to settle the 

obligation, and a reliable estimate can be made of the amount of the obligation. 

The amount recognised as a provision is the best estimate of the consideration required to settle the 

present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding 

the obligation. Where a provision is measured using the cash flows estimated to settle the present 

obligation, its carrying amount is the present value of those cash flows. 

When some or all of the economic benefits required to settle a provision are expected to be 

recovered from a third party, the receivable is recognised as an asset if it is virtually certain that 

reimbursement will be received and the amount of the receivable can be measured reliably. 

Provision for warranty costs are recognised at the date of sale of the vessel, at the management’s 

best estimate of the expenditure required to settle the Group’s obligation. 

REVENUE RECOGNITION — Revenue is measured at fair value of the consideration received or 

receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. 

Revenue from Long-term Construction Contracts 

Revenue from long-term construction contracts is recognised in accordance with the Group’s 

accounting policy on construction contracts (see above). 

Sale of Vessels (Other Than Those Constructed Under Long-term Construction Contracts Above) 

Revenue from the sale of vessels (other than those constructed under long-term construction 

contracts above) is recognised when all the following conditions are satisfied: 

the Group has transferred to the buyer the significant risks and rewards of ownership of the 

barges; 

the Group retains neither continuing managerial involvement to the degree usually associated with 

ownership nor effective control over the barges sold; 

the amount of revenue can be measured reliably; 

it is probable that the economic benefits associated with the transaction will flow to the 

entity; and 

the costs incurred or to be incurred in respect of the transaction can be measured reliably. 

Revenue from Ship Repair and Conversion 

Revenue from rendering of ship repair and conversion services is recognised when the services have 

been rendered. 

A1-13


Charter Hire Income 

Charter hire income is recognised based on a time proportion basis in accordance with the daily 

charter rate stated in the charter hire agreement for the number of days under charter. 

Interest Income 

Interest income is accrued on a time basis, by reference to the principal outstanding and at the 

effective interest rate applicable. 

BORROWING COSTS — Borrowing costs are recognised in the profit and loss statement in the 

period in which they are incurred. 

RETIREMENT BENEFIT COSTS — Payments to defined contribution retirement benefit plans are 

charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes, 

such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans 

where the Group’s obligations under the plans are equivalent to those arising in a defined contribution 

retirement benefit plan. 

EMPLOYEE LEAVE ENTITLEMENT — Employees’ entitlements to annual leave are recognised 

when they accrue to employees. A provision is made for the estimated liability for annual leave as a 

result of services rendered by employees up to the balance sheet date. 

INCOME TAX — Income tax expense represents the sum of the tax currently payable and deferred 

tax. 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit 

as reported in the profit and loss statement because it excludes items of income or expense that are 

taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. 

The Group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted 

in countries where the Company and its subsidiaries operate by the balance sheet date. 

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in 

the financial statements and the corresponding tax bases used in the computation of taxable profit, and 

are accounted for using the balance sheet liability method. Deferred tax liabilities are generally 

recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that 

it is probable that taxable profits will be available against which deductible temporary differences can be 

utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or 

from the initial recognition (other than in a business combination) of other assets and liabilities in a 

transaction that affects neither the taxable profit nor the accounting profit. 

Deferred tax liabilities are recognised on taxable temporary differences arising on investments in 

subsidiaries and associates, except where the Group is able to control the reversal of the temporary 

difference and it is probable that the temporary difference will not reverse in the foreseeable future. 

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to 

the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part 

of the asset to be recovered. 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability 

is settled or the asset realised based on the tax rates (and tax laws) that have been enacted by the 

balance sheet date. Deferred tax is charged or credited to profit or loss. 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off 

current tax assets against current tax liabilities and when they relate to income taxes levied by the same 

taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. 

Current and deferred tax are recognised as an expense or income in profit or loss. 

FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION — The individual financial 

statements of each Group entity are measured and presented in the currency of the primary economic 

environment in which the entity operates (its functional currency). The consolidated financial statements 

of the Group are presented in Singapore dollars, which is the presentation currency for the consolidated 

financial statements. 

A1-14


In preparing the financial statements of the individual entities, transactions in currencies other than 

the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the 

transaction. At each balance sheet date, monetary items denominated in foreign currencies are 

retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value 

that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the 

fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign 

currency are not retranslated. 

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary 

items are included in profit or loss for the period. Exchange differences arising on the retranslation of 

non-monetary items carried at fair value are included in profit or loss for the period except for 

differences arising on the retranslation of non-monetary items in respect of which gains or losses are 

recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss 

is also recognised directly in equity. 

For the purpose of presenting consolidated financial statements, the assets and liabilities of the 

Group’s foreign operations (including comparatives) are expressed in Singapore dollars using exchange 

rates prevailing on the balance sheet date. Income and expense items (including comparatives) are 

translated at the average exchange rates for the period. Exchange differences arising, if any, are 

classified as equity and transferred to the Group’s translation reserve. Such translation differences are 

recognised in profit or loss in the period in which the foreign operation is disposed of. 

On consolidation, exchange differences arising from the translation of the net investment in foreign 

entities (including monetary items that, in substance, form part of the net investment in foreign entities), 

and of borrowings are taken to the foreign currency translation reserve. 

Goodwill and fair value adjustments arising from the acquisition of a foreign operation are treated 

as assets and liabilities of the foreign operation and translated at the closing rate. 

CASH AND CASH EQUIVALENTS — Cash and bank balances comprise cash on hand and 

demand deposits that are readily convertible to a known amount of cash and are subject to an 

insignificant risk of changes in value. 

3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty 

Critical Judgements in Applying the Group’s Accounting Policies 

In the application of the Group’s accounting policies, which are described in Note 2, management 

is required to make judgements, estimates and assumptions about the carrying amounts of assets and 

liabilities that are not readily apparent from other sources. The estimates and associated assumptions are 

based on historical experience and other factors that are considered to be relevant. Actual results may 

differ from these estimates. 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to 

accounting estimates are recognised in the period in which the estimate is revised if the revision affects 

only that period, or in the period of the revision and future periods if the revision affects both current 

and future periods. 

The critical judgement, apart from those involving estimations, which the management have made 

in the process of applying the entity’s accounting policies, and that has the most significant effect on the 

amounts recognised in the financial statements is as follows: 

Estimation of Percentage of Completion for Construction Contracts 

The Group recognised revenue and costs of construction contracts by reference to the stage of 

completion of the contract activity at the balance sheet date. The stage of completion is measured by the 

completion of a physical proportion of the contract work. Management exercises judgement in 

determining the percentage of completion assigned to each physical milestone achieved. The physical 

milestone is supported by either internally generated engineering reports or surveys performed by 

independent surveyors. Management reviews the internally generated engineer reports and are satisfied 

that the percentage of completion used for revenue recognition on construction contracts is reasonable. 

A1-15


Key Sources of Estimation Uncertainty 

The key assumptions concerning the future, and other key sources of estimation uncertainty at the 

balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts 

of assets and liabilities within the next financial year, are discussed below. 

Impairment of Goodwill 

In respect of certain cash generating unit (CGU), determining whether goodwill is impaired requires 

an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The 

value in use calculation requires the entity to estimate the future cash flows expected to arise from the 

cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount 

of goodwill for which the management uses the value in use to assess its impairment at the balance 

sheet date was $3,384,000 (2006: $922,000; 2005: $Nil). With regards to the other CGU to which the 

remaining goodwill of $1,717,000 (2006: $Nil; 2005: $Nil) relates, whereby the estimate of future cash 

flows cannot be determined reasonably as it is newly acquired and managed by the Group, the Company 

uses its market value to assess its impairment. Details of the impairment calculation are provided in 

Note 14. 

Useful Lives and Residual Values of Property, Plant and Equipment 

The management exercises their judgement in estimating the useful lives and residual values of the 

depreciable assets. 

Depreciation is provided to write off the cost of property, plant and equipment, adjusted for residual 

value, over their estimated useful lives, using the straight-line method. The carrying amounts of property, 

plant and equipment are disclosed in Note 15. 

4 Financial Risks and Management 

i) Foreign Currency Risk 

The Company has a number of investments in foreign subsidiaries, whose net assets are 

exposed to currency translation risk. The Group has substantial revenue denominated in United 

States dollar and the Group’s purchases are mainly denominated in United States dollar and Euro. 

Exposures to foreign currency risks are managed as far as possible by natural hedges of matching 

assets and liabilities. 

The management does not adopt a formal policy to hedge the Group’s foreign exchange risk. 

From time to time, the Group uses foreign exchange contracts to manage the Group’s foreign 

exchange exposure. 

ii) Interest Rate Risk 

Interest rate risk refers to the risk experienced by the Company and the Group as a result of 

the fluctuation in interest rates. The Group’s bank borrowings are at floating rates and thus exposed 

the Group to cash flow interest rate risk. The Group also has interest-bearing fixed deposits, finance 

leases and loan from related parties. The interest rates of the fixed deposits, bank borrowings, 

finance leases and loan from related parties are disclosed in Notes 6, 16, 20 and 21. 

iii) Credit Risk 

Credit risk refers to the risk that a counterparty will default on its contractual obligations 

resulting in a loss to the Group. The Group has adopted a policy of dealing with creditworthy 

counterparties and when necessary, will require advance payments from customers with no track 

record of credit history. 

For shipbuilding revenue, the Group typically requires customers to place a down payment 

upon signing of the sales memorandum. The remaining contract value is payable through progress 

payments and upon delivery of the vessels. The credit terms granted are normally 30 days. 

A1-16

Concentrations of credit risk exist when changes in economic, industry or geographic factors 

similarly affect groups of counterparties where aggregate credit exposure is significant in relation to 

the Group’s total credit exposure. 

As at December 31, 2007, the Group’s top 3 customers account for 78.5% (2006: 65%; 2005: 

80%) of the Group’s outstanding trade receivables from outside parties. 

The Group has cash balances placed with reputable international financial institutions. 

iv) Liquidity Risk 

Liquidity risk refers to the risk in which the Group has difficulties in meeting its short-term 

obligations. Liquidity risk is managed by matching the payment and receipt cycle. The Group’s 

operations are financed mainly through internally generated cash flows, bank borrowings and 

related party advances. 

v) Fair Value of Financial Assets and Financial Liabilities 

The carrying amounts of cash and bank balances, trade and other receivables, available-forsale 

investments, trade and other payables and short-term bank loans approximates their fair value 

due to the relatively short-term maturity of these financial instruments. 

The carrying amounts of certain other financial assets approximate their fair values. The fair 

value of publicly traded instruments is based on quoted market values. 

The fair value of finance leases and loan from related parties is stated in Notes 20 and 21. 

5 Other Related Party Transactions 

Related parties, other than subsidiaries, are entities with common direct or indirect shareholders 

and/or directors. Parties are considered to be related if one party has the ability to control the other party 

or exercise significant influence over the other party in making financial and operating decisions. 

Some of the transactions and arrangement of the Group are with related parties and the effects of 

these transactions on the basis determined between the parties are reflected in these financial statements. 

The balances are unsecured, interest-free and repayable on demand unless otherwise stated. 

(A) Related Parties Transactions 


2007 2006 2005 

$’000 $’000 $’000 

Transactions with associates 

Sale of vessels built under long-term contracts ................... 65,785 — — 

Transactions with other related parties — common 

shareholders/directors 

Sale of barges (Note) ..................................... 23,938 10,714 6,116 

Purchase of barges ....................................... 33,618 — — 

Purchase of goods and materials ............................. 5,077 — — 

Sale of steel plates (Included in ship repair) ..................... 250 2,988 — 

Management fee expense. .................................. — 905 582 

Rental expense .......................................... 305 120 120 

Proceeds on sale of motor vehicle ............................ 86 — — 

Note: 

Sale of barges to other related parties amounted to $23,938,000 (2006: $9,680,000; 2005: $Nil) and 

were repurchased at cost in 2007 of $33,618,000 (2006: $Nil; 2005: $Nil) to accommodate certain 

financing arrangements. 

A1-17


(B) Compensation of Directors and Key Management Personnel 

The remuneration of directors and other members of key management during the year was as 

follows: 

2007 2006 2005 

$’000 $’000 $’000 

Short-term benefits. ......................................... 2,310 1,362 714 

Post-employment benefits ..................................... 105 22 18 

2,415 1,384 732 

6 Cash and Bank Balances 

2007 2006 2005 

$’000 $’000 $’000 

Fixed deposits . ............................................ 121 7,533 — 

Cash at bank . . ............................................ 18,010 6,679 1,045 

Cash on hand . . ............................................ 55 26 240 

18,186 14,238 1,285 

Fixed deposits — Pledged ..................................... 195,718 40,969 138 

Cash and bank balances comprise cash held by the Group and short-term bank deposits with an 

original maturity of three months or less. The carrying amounts of these assets approximate their fair 

values. 

Fixed deposits bear interest at an average rate of 4.49% (2006: 4.17%; 2005: 3.75%) per annum 

and for a tenure of approximately 30 days (2006: 7 days; 2005: 30 days). 

Fixed deposits relating to advances collected from customers are pledged to a bank for performance 

refund guarantees issued by the bank. 

The Group’s cash, bank balances and fixed deposits pledged that are not denominated in the 

functional currencies of the respective entities are as follow: 

2007 2006 2005 

$’000 $’000 $’000 

United States dollar ......................................... 173,514 54,582 1,002 

Euro .................................................... 31,742 — — 

Indonesian rupiah ........................................... 1,056 60 10 

Japanese yen . . ............................................ 17 18 19 

7 Trade Receivables 

2007 2006 2005 

$’000 $’000 $’000 

Related parties (Note 5) ....................................... 497 — 1,551 

Outside parties .............................................. 25,041 4,239 18,879 

25,538 4,239 20,430 

The average credit term on ship repair, conversion and chartering to customers is 30 days (2006 

and 2005: 30 days). There is no credit term for shipbuilding customers as down payment is required 

upon signing of contract and the full contract sum is paid upon delivery of vessel. 

The Group’s trade receivables that are not denominated in the functional currencies of the 

respective entities are as follows: 

2007 2006 2005 

$’000 $’000 $’000 

United States dollars ........................................... 4,260 585 14,531 

A1-18

8 Construction Contracts 


2007 2006 2005 

$’000 $’000 $’000 

Contract cost incurred ..................................... 181,787 33,931 11,356 

Profit recognised ......................................... 73,113 24,413 4,473 

254,900 58,344 15,829 

Progress billings ......................................... (257,941) (65,996) (16,106) 

Work-in-progress. ........................................ (3,041) (7,652) (277) 

Gross amount due from customers for contract work .............. 94,300 27,418 — 

Gross amount due to customers for contract work . . .............. (97,341) (35,070) (277) 

(3,041) (7,652) (277) 

Advances received from customers for contract work amounted to $93,349,000 (2006: $18,072,000; 

2005: $Nil). 

9 Deposits, Prepayments and Other Receivables 

2007 2006 2005 

$’000 $’000 $’000 

Deposits. .................................................. 1,396 145 312 

Prepaid expenses ............................................ 59,481 16,456 2,589 

Related parties (Note 5) ....................................... — — 1,355 

Other receivables ............................................ 880 5,202 3,419 

61,757 21,803 7,675 

Prepaid expenses comprise primarily of prepayments for equipment to be used for construction 

contracts. 

The Group’s other receivables that are not denominated in the functional currencies of the 

respective entities are as follows: 

2007 2006 2005 

$’000 $’000 $’000 

United States dollar ............................................. 306 2,924 625 

Indonesian rupiah .............................................. 146 257 3,150 

10 Inventories 

2007 2006 2005 

$’000 $’000 $’000 

Raw materials . ............................................ 19,594 7,090 3,516 

Work in progress — vessels ................................... 61,871 18,679 17,857 

81,465 25,769 21,373 

Raw materials include $2,061,000 (2006: $2,150,000; 2005: $1,957,000) held at third party for 

blasting work. 

Inventories amounting to $19,594,000 (2006: $7,799,000 ; 2005: $Nil) were pledged as security for 

a bank loan (Note 16). 

A1-19

11 Subsidiaries 

Details of the subsidiaries at end of each financial year are as follows: 

Name of Subsidiary 

Country of 

Incorporation/ 

(or Registration) 

and Operation 

Proportion of 

Ownership 

Interest/ 

Voting Power Held Principal Activities 

2007 2006 2005 

% % % 

PT Batamec (a) 

Indonesia, Batam 51 46 39 Ship repair and ship 

building 

Sea Dolphin Finance Limited (b) 

British Virgin Islands 100 100 100 Procurement and sale of 

vessels 

Otto Offshore Limited Malaysia, Labuan 100 100 100 Procurement and sale of 

vessels 

PT Lestari Utama Nusamtara (c) 

Indonesia, Jakarta 

(Operations: Batam) 

95 — — Land rental 

OM Offshore Pte. Ltd. (d) 

Singapore 100 — — Investment holdings 

Blue Fin I Pte. Ltd. (d) 

Singapore 100 — — Owning and chartering 

of vessels 

Blue Fin II Pte. Ltd. (d) 


of vessels 

Blue Fin III Pte. Ltd. (d) 


of vessels 

Blue Fin IV Pte. Ltd. (d) 


of vessels 

Blue Fin V Pte. Ltd. (d) 


of vessels 

Tetra I Pte. Ltd. (d) 


of vessels 

Tetra II Pte. Ltd. (d) 


of vessels 

Tetra III Pte. Ltd. (d) 


of vessels 

Tetra IV Pte. Ltd. (d) 


of vessels 

Tetra V Pte. Ltd. (d) 


of vessels 

Otto Investment Limited (c) 

Malaysia, Labuan 100 — — Investment holdings 

Otto Offshore (Qidong) Company 

Limited (c) 


People’s Republic of 

China 

100 — — Dormant 

(a) In 2006 and 2005, although the Company does not own more than 50% of the equity shares of PT 

Batamec, and consequently does not control more than half the voting power of these shares, it has 

the power to govern the financial and operating policies of the subsidiary. As a result, PT Batamec 

is controlled by the Company and is consolidated in these financial statements. 

(b) During 2006, Sea Dolphin Finance Limited ceased operations and became dormant. 

(c) Acquired on December 5, 2007 

(d) Incorporated during year 2007 

All the subsidiaries were audited by Deloitte & Touche LLP, Singapore for consolidation purposes 

only, except for Otto Offshore (Qidong) Company Limited which is dormant. 

A1-20

12 Associates 

2007 2006 2005 

$’000 $’000 $’000 

Cost of investment in associates .................................... 49 — — 

Quasi capital .................................................. 4,928 — — 

Share of post-acquisition results .................................... (268) — — 

4,709 — — 

Details of the associates at end of each financial year are as follows: 

Name of Associate 


Country of 



and Operation 

Proportion of 

Ownership 

Interest/ 


2007 2006 2005 

% % % 

West African Invest Ltd (a) ...... St.Vincent and the 

Grenadines 

49 — — Investment holding 

Otto 1 Limited (a) ............. 

Aries Offshore Singapore Pte 

St.Vincent and the 

Grenadines 

49 — — Ship chartering 

Ltd (a) .................... Singapore 49 — — Ship chartering 

(a) Incorporated during year 2007 

Summarised financial information in respect of the Group’s associates is set out below: 

2007 2006 2005 

$’000 $’000 $’000 

Total assets .................................................. 51,379 — — 

Total liabilities. ............................................... (41,769) — — 

Net assets ................................................... 9,610 — — 

Group’s share of associates’ net assets .............................. 4,709 — — 

Revenue .................................................... 3,842 — — 

Loss for the year .............................................. 548 — — 

Group’s share of associates’ loss for the year ......................... 268 — — 

13 Available-for-sale Investments 

2007 2006 2005 

$’000 $’000 $’000 

Quoted equity shares, at fair value. .................................. 4,080 — — 

Quoted equity shares offer the Group opportunity for return through dividend income and fair value 

gains. They have no fixed maturity or coupon rate. The fair values of these shares are based on the 

quoted closing market prices on the last market day of the financial year. 

The Group’s available-for-sale investments are denominated in Norwegian Krone. 

A1-21

14 Goodwill 


Cost: 

At January 1, 2005 and December 31, 2005 ........................................ — 

Arising on acquisition of additional interest in a subsidiary. . . .......................... 922 

At December 31, 2006 ....................................................... 922 

Arising on acquisition of a subsidiary (Note 31) ..................................... 1,717 

Arising on acquisition of additional interest in a subsidiary. . . .......................... 2,462 

At December 31, 2007 ....................................................... 5,101 

Carrying amount: 

At December 31, 2007 ....................................................... 5,101 

At December 31, 2006 ....................................................... 922 

At December 31, 2005 ....................................................... — 

The Group tests goodwill annually for impairment, or more frequently if there are indications that 

goodwill might be impaired. 

The goodwill relates primarily to two cash generating units (“CGU”). In determining the recoverable 

amounts of the CGUs, management uses value in use for one CGU and market value for another 

CGU. The value in use method is used for the first CGU as it has been controlled and actively managed 

by the Company for more than one year and as such, the Company is able to reasonably estimate the 

future cash flows from this CGU. The market value for the other CGU is used to assess the impairment 

of goodwill in relation to this CGU as it is acquired and managed by the Company from December 

2007. The management is not able to reasonably estimate the future cash flows of this CGU. 

For the CGU where its recoverable amounts are determined from value in use calculations, the key 

assumptions for the value in use calculations are those regarding the discount rates, growth rates and 

expected changes to selling prices and direct costs during the period. Management estimates discount 

rates using pre-tax rates that reflect current market assessments of the time value of money and the risks 

specific to the CGUs. The growth rates are based on industry growth forecasts. Changes in selling prices 

and direct costs are based on past practices and expectations of future changes in the market. 

The Group prepares cash flow forecasts derived from the expected project revenue based on the 

completion date as estimated by management for the next five years. 

The rate used to discount the forecast cash flows from the CGU is 12% per annum. 

A1-22 

$’000

15 Property, Plant and Equipment 


Office 

Leasehold 

Land and 

Equipment 

Furniture Motor 

Machinery 

and Construction 

Vessels Building and Fittings Vehicles Equipment In-progress Total 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 

Cost: 

At January 1, 2005 ..... — 3,800 345 70 30,525 — 34,740 

Additions ............ — 285 150 270 2,932 4,788 8,425 

Disposals ............ — — (54) (9) — — (63) 

At December 31, 2005 . . — 4,085 441 331 33,457 4,788 43,102 

Additions ............ — 2,181 216 279 3,444 2,028 8,148 

Transfers ............ — 1,435 240 — 3,091 (4,766) — 

At December 31, 2006 . . — 7,701 897 610 39,992 2,050 51,250 

Arising on acquisition . . . — 6,342 — — 3,489 — 9,831 

Additions ............ 35,559 — 326 479 1,479 28,349 66,192 

Transfers ............ — 2,710 — — 1,231 (3,941) — 

Disposals ............ — — (311) (186) (30,128) — (30,625) 

At December 31, 2007 . . 35,559 16,753 912 903 16,063 26,458 96,648 

Accumulated depreciation: 

At January 1, 2005 ..... — 1,208 210 26 26,554 — 27,998 

Depreciation .......... — 140 56 59 3,142 — 3,397 

Disposals ............ — — (6) (4) — — (10) 

At December 31, 2005 . . — 1,348 260 81 29,696 — 31,385 

Depreciation .......... — 159 96 102 981 — 1,338 

At December 31, 2006 . . — 1,507 356 183 30,677 — 32,723 

Arising on acquisition . . . — 379 — — 436 — 815 

Depreciation .......... 200 336 207 190 1,429 — 2,362 

Exchange difference .... (8) — — — — — (8) 

Disposals ............ — — (280) (119) (29,856) — (30,255) 

At December 31, 2007 . . 192 2,222 283 254 2,686 — 5,637 

Carrying value: 

At December 31, 2007 . . 35,367 14,531 629 649 13,377 26,458 91,011 

At December 31, 2006 . . — 6,194 541 427 9,315 2,050 18,527 

At December 31, 2005 . . — 2,737 181 250 3,761 4,788 11,717 

Certain motor vehicles with carrying amount of $480,000 (2006: $210,000; 2005: $Nil) are under 

finance leases arrangements (Note 20). 

The carrying amounts of property, plant and equipment mortgaged as security for bank loans 

(Note 16) are as follows: 

Vessels 

Leasehold 

Land and 

Building 

Office 

Equipment 

Furniture 

and Fittings 

Motor 

Vehicles 

Machinery 

and 

Equipment Construction 

In-progress Total 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 

At December 31, 2007. . . . . 31,984 8,568 553 169 10,324 4,769 56,367 

At December 31, 2006. . . . . — 6,194 525 124 9,315 2,050 18,208 

At December 31, 2005. . . . . — 2,737 181 126 3,761 4,788 11,593 

A1-23

16 Loans and Overdraft 


2007 2006 2005 

$’000 $’000 $’000 

Bank overdraft (Note a) . . . .................................. — 1,751 4,998 

Loan from a third party (Note b) ............................... — — 5,418 

Bank loan 1 (Note c) ....................................... — — 15,338 

Bank loan 2 (Note d) ....................................... 76,903 25,751 — 

Bank loan 3 (Note e) ....................................... 17,277 — — 

Bank loan 4 (Note f). ....................................... 90,183 10,735 — 

184,363 38,237 25,754 

Presented as: 

Current ................................................ 136,847 38,237 25,754 

Non - current. ........................................... 47,516 — — 

184,363 38,237 25,754 

In 2005, the Group did not meet one of the financial covenants required by the lending bank for 

Bank loan 1. Accordingly, the loan is classified as current liability in the balance sheet as at 

December 31, 2005. The loan was fully repaid in 2006. 

The Group’s borrowings that are not denominated in the functional currencies of the respective 

entities are as follow: 

2007 2006 2005 

$’000 $’000 $’000 

United States dollar ........................................ 181,305 36,486 20,756 

Note a: 

The bank overdraft was repayable on demand. The average effective borrowing interest rate on 

bank overdraft approximated 5.5% per annum for both 2006 and 2005 and is determined based on 

Singapore dollar prime lending rate. The bank overdraft is secured by: 

a charge over the Company’s plant and equipment; 

a charge over a related party’s interest in quoted shares; 

a corporate guarantee from a related party; 

fixed and floating debentures over asset of the Company and a related party respectively; and 

joint and several guarantees from shareholders and a director. 

Note b: 

In 2005, the loan from a third party bore interest at 4.5% per annum. The loan was secured by a 

guarantee from a shareholder and a charge over the shares of the subsidiary. The loan was fully repaid 

in 2006. 

Note c: 

In 2005, Bank loan 1 was arranged at floating interest rates which were subject to change at the 

bank’s discretion and exposed the Group to cash flow interest rate risk. The effective interest rate 

averaged at 7.8% per annum. The bank loan was secured by a charge over one of the subsidiary’s 

property, plant and equipment. 

Note d: 

In 2007 and 2006, Bank loan 2 is arranged at floating interest rates which are subject to change at 

the bank’s discretion and exposes the Group to cash flow interest rate risk. The effective interest rate 

averages at 8% per annum for both 2007 and 2006. Out of the total Bank loan 2 of $76,903,000, 

A1-24


$43,530,000 is expected to be repaid within 12 months from December 31, 2007 and $33,373,000 is 

expected to be repaid between January 2009 and August 2009. 

The bank loan is secured by: 

a deed of encumbrance for land and building located at the subsidiary’s premise; 

fiduciary transfer of machineries and equipment located at the subsidiary’s premise; 

fiduciary transfer of inventory located at the subsidiary’s premise; 

a charge over one of the subsidiary’s receivables arising from contracts entered into or to be 

entered into in relation to the vessels construction and/or repairs; and 

corporate guarantee from the Company. 

Note e: 

In 2007, Bank loan 3 is drawn down to finance the acquisition of vessels by certain subsidiaries. 

The loan arranged at floating interest rates which are subject to change at the bank’s discretion and 

exposes the Group to fair value interest rate risk. The bank loan bears interest at floating rate at 1% 

below the bank’s Prime Lending Rate. The average interest rate approximates 6.5%. Bank loan 3 is 

repayable in 84 monthly instalments of US$180,000 commencing from November 2007. The bank loan 

is secured by: 

a charge over related parties’ interest in quoted shares; 

personal guarantee from a director; 

all monies legal mortgages over the vessels under finance (“mortgaged vessels”); and 

assignment of all income, sales and purchase agreement, shipyard contracts and insurances taken 

over the mortgaged vessels. 

Note f: 

In 2007 and 2006, Bank loan 4 is arranged at floating interest rates which are subject to change at 

the bank’s discretion and exposes the Group to cash flow interest rate risk. The bank loans bear interest 

at floating rate at 0.5% below the bank’s US$ prime lending rate and are expected to be repaid within 

12 months from December 31, 2007. The average interest rate ranges from 6% to 11.8% (2006: 7.8%) 

per annum. The security of Bank loan 4 is disclosed in Note e above. 

17 Trade Payables 

2007 2006 2005 

$’000 $’000 $’000 

Related parties (Note 5) . . . .................................. 4,646 — 4,579 

Accruals — trade .......................................... 63,953 10,686 2,414 

Outside parties ............................................ 100,166 28,908 13,626 

168,765 39,594 20,619 

The average credit period on purchases of goods from third parties is 90 to 180 days (2006: 90 to 

180 days; 2005: 90 days). 

Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. 

A1-25


The Group’s trade payables that are not denominated in the functional currencies of the respective 

entities are as follows: 

2007 2006 2005 

$’000 $’000 $’000 

Swedish Kroner .............................................. 277 — — 

Singapore dollar .............................................. 4,754 — — 

Japanese yen ................................................ 4,625 — — 

British pound ................................................ 1,235 — — 

Euro ...................................................... 28,844 682 290 

Indonesian rupiah ............................................. 1,668 741 1,065 

Norwegian Kroner ............................................ 3,887 367 — 

United States dollar ........................................... 19,824 1,525 1,670 

18 Other Payables 

2007 2006 2005 

$’000 $’000 $’000 

Related parties (Note 5) ......................................... 2,201 1,416 700 

Advance customer billings ....................................... — — 1,034 

Other creditors ................................................ 2,783 3,595 1,113 

Provision for retirement benefit obligation . . . ........................ 575 550 464 

Salary related accruals .......................................... 1,002 649 494 

6,561 6,210 3,805 

Salary related accruals include $288,000 (2006: $220,000; 2005: $10,000) due to directors. The 

amount due to directors is unsecured, interest-free and repayable within 12 months. 

The Group’s other payables that are not denominated in the functional currencies of the respective 

entities are as follows: 

2007 2006 2005 

$’000 $’000 $’000 

Singapore dollar. .............................................. 105 — — 

Indonesian rupiah. ............................................. 2,109 1,406 1,015 

United States dollar ............................................ 2,734 — — 

19 Deferred Gain 

2007 2006 2005 

$’000 $’000 $’000 

Deferred gain ................................................. 13,101 — — 

Current portion ................................................ (482) — — 

Non-current portion. ............................................ 12,619 — — 

The deferred gain relates to the Group’s share of the unrealised profit from the sale of vessels to 

associates. The deferred gain will be amortised over the remaining useful life of the vessels against the 

results of the associates in the profit and loss statement. 

A1-26

20 Finance Leases 


Minimum 

Lease Payments 

Present Value of 

Minimum Lease Payment 

2007 2006 2005 2007 2006 2005 

$’000 $’000 $’000 $’000 $’000 $’000 

Amounts payable under finance leases: 

Within one year ................................. 103 38 — 80 25 — 

In the second to fifth year inclusive. .................. 374 202 — 332 170 — 

More than five years. ............................. 15 — — 15 — — 

492 240 — 427 195 — 

Less: Future finance charges ........................ (65) (45) — NA NA — 

Present value of lease obligations .................... 427 195 — 427 195 — 

Less: Amount due for settlement within 12 months (shown 

under current liabilities) ......................... (80) (25) — 

Amount due for settlement after 12 months ............. 347 170 — 

The average effective borrowing rates was 5.8% (2006: 6.6%; 2005: Nil) per annum. Interest rates 

are fixed at the contract date and thus expose the Group to fair value interest rate risk. 

All lease obligations are denominated in Singapore dollars. 

The fair value of the Group’s lease obligations approximates their carrying amount. 

The Group’s obligations under finance leases are secured by the lessors’ title to the leased assets. 

21 Loans from Related Parties 

2007 2006 2005 

$’000 $’000 $’000 

Trade and other receivables ................................. 94,911 63,969 46,770 

Other payables .......................................... (146,292) (91,841) (98,940) 

Loans at amortised cost — net ............................... (51,381) (27,872) (52,170) 

The trade and other receivables balance included amount collected by related parties on behalf of 

the Group and receivables arising from the sales of barges to a related party. The other payables balance 

pertains to amount paid to suppliers by related party on behalf of the Group and advances to the Group. 

The entities in the Group and the related party have entered into an offsetting arrangement to setoff 

the receivables and payables balances. 

Loans from related parties have an average credit period of 180 days and bear interest at 4% per 

annum on overdue balances. These loans are unsecured, interest-free and are not repayable within the 

next twelve months. 

These loans are initially measured at fair value and are subsequently measured at amortised cost 

using the effective interest method, with interest expense recognised on an effective yield basis. 

During 2006, the Company has issued 27,125,000 new ordinary shares by capitalisation of loan 

amounting to $27,125,000. 

A1-27

22 Issued Capital 

2007 2006 2005 2007 2006 2005 

’000 ’000 ’000 $’000 $’000 $’000 

Number of ordinary shares 

Issued and paid: 

At beginning of the year ................ 32,500 500 500 32,500 500 500 

Issue of shares . . ...................... — 32,000 — — 32,000 — 

At end of the year ..................... 32,500 32,500 500 32,500 32,500 500 

In 2006, the Company issued 27,125,000 ordinary shares by capitalisation of loans due to related 

parties of $27,125,000 and 4,875,000 ordinary shares for cash of $4,875,000. 

As a result of the Companies (Amendment) Act 2005 which came into effect on January 30, 2006, 

the concept of authorised share capital and par value has been abolished. 

The Company has one class of ordinary shares which carry no right to fixed income. 

23 Capital Reserves 


Valuation 

Reserves 

Deemed Capital 

Contribution Total 

$’000 $’000 $’000 

At January 1, 2005. .................................... — — — 

Arising during the year. ................................. — 294 294 

At December 31, 2005 .................................. — 294 294 

Arising during the year. ................................. — 868 868 

At December 31, 2006 .................................. — 1,162 1,162 

Arising during the year. ................................. 462 32 494 

At December 31, 2007 .................................. 462 1,194 1,656 

The capital reserves of $1,194,000 (2006: $1,162,000; 2005: $294,000) relate to deemed capital 

contribution arising from the waiver of interest on related party loans. 

24 Minority Interests 

In 2007, 2006 and 2005, one of the Company’s subsidiaries, PT Batamec, was in a capital deficit 

position and is dependent on the Company and a shareholder with 44.2% (2006: 51.0% ; 2005: 49.6%) 

equity interest for continuing financial support. As the shareholder has provided such undertaking, the 

shareholder continues to share net losses of PT Batamec beyond its capital contribution which resulted 

in a minority interest receivable balance. 

25 Revenue 

2007 2006 2005 

$’000 $’000 $’000 

Long-term construction contracts .............................. 262,066 127,296 31,382 

Ship repair and conversion .................................. 18,761 15,674 17,191 

Sale of barges ............................................ 23,938 4,285 6,116 

Charter income ........................................... 9,259 — — 

314,024 147,255 54,689 

A1-28

26 Other (Expense) Income 


2007 2006 2005 

$’000 $’000 $’000 

Interest income .............................................. 6,934 164 — 

Gain on disposal of property, plant and equipment .................... 17 — — 

Other income ............................................... 42 — — 

Rental income. .............................................. — — 307 

Net foreign exchange (loss) gain ................................. (1,937) 265 (1,276) 

Deferred gain from sale of vessels to associates (Note 19) .............. (13,101) — — 

(8,045) 429 (969) 

27 Finance Costs 

2007 2006 2005 

$’000 $’000 $’000 

Interest expense to related parties .................................. 

Interest expense to outside parties: 

32 868 294 

Bank loans ................................................. 5,852 1,509 1,748 

Finance leases .............................................. 21 6 — 

5,905 2,383 2,042 

28 Income Tax Expense 

2007 2006 2005 

$’000 $’000 $’000 

Current. ...................................................... 1,449 449 513 

Overprovision in prior year . . . ..................................... — — (51) 

1,449 449 462 

The income tax expense varied from the amount of income determined by applying the Singapore 

income tax rate of 18% (2006: 20%; 2005: 20%) to profit before income tax as a result of the following 

differences: 

2007 2006 2005 

$’000 $’000 $’000 

Profit before income tax ...................................... 55,124 14,152 53 

Tax at statutory tax rate ....................................... 9,922 2,830 11 

Non-deductible expenses ...................................... 7,777 1,756 903 

Non taxable income ......................................... (11,443)* (5,436) (845) 

Tax effect of partial tax exemption and rebate ...................... (40) (11) (11) 

Effect of different tax rates .................................... (4,767) (1,307) (684) 

Utilisation of deferred tax assets previously not recognised. ............ — — (229) 

Deferred tax benefits not recognised ............................. — 2,617 1,368 

Overprovision of current tax in prior years ......................... — — (51) 

1,449 449 462 

* Certain of the non-taxable income relates to income derived from shipping operations which is 

exempted from income tax under Section 13A of the Singapore Income Tax Act, Cap. 134. 

As at the balance sheet date, deferred tax liability arising from undistributed profits of subsidiaries have 

not been recognised because the Group controls the dividend policy of the subsidiaries and has 

A1-29

determined the profits will not be distributed in the foreseeable future. The amount of undistributed 

profits amounted to $86,419,000 (2006: $27,030,000; 2005: $4,232,000). 

29 Profit (Loss) for the Year 

Profit (loss) for the year has been arrived at after charging (crediting): 

2007 2006 2005 

$’000 $’000 $’000 

Depreciation of property, plant and equipment 

Included in cost of sales ...................................... 927 918 2,359 

Included in administrative expenses. ............................. 127 59 31 

Capitalised in construction in progress ........................... 1,308 361 1,007 

2,362 1,338 3,397 

Directors’ remuneration ........................................ 

Employee benefits expense (including directors’ remuneration) 

1,040 619 417 

Defined contribution plans .................................... 410 178 166 

Others ................................................... 8,794 7,102 4,558 

Total employee benefits expense .................................. 9,204 7,280 4,724 

Included in cost of sales ...................................... 2,378 3,395 2,510 

Included in administrative expenses. ............................. 6,826 3,885 2,214 

9,204 7,280 4,724 

Cost of inventories recognised as expenses .......................... 5,083 11,623 7,471 

Bad trade receivables written off. ................................. 1,333 427 295 

Gain on disposal of property, plant and equipment .................... (17) — (52)* 

* Included in cost of sales 


30 Earnings per Share 

For illustrative purpose, the calculation of the basic earnings per share is based on the net profit 

attributable to equity holders of the Company for each of the financial years ended December 31, 2007, 

2006 and 2005 and pre-invitational share capital of 975,000,000 shares in issue as at the date of this 

report, representing the pre-invitational share capital. 

There were no diluted earnings per share for each of the financial years ended December 31, 2007, 

2006 and 2005 as there were no potential ordinary shares outstanding. 

31 Acquisition of Subsidiary 

In December 2007, the Company acquired a subsidiary, incorporated in Indonesia, for a cash 

consideration of $2,190,000. 

A1-30

The net assets acquired in the transaction are as follows: 

2007 

Carrying Amount 

Before Combination 

Fair Value 

Adjustments Fair Value 

$’000 $’000 $’000 

Net assets acquired: 

Cash and bank balances ........................ 4 — 4 

Other receivables ............................. 227 — 227 

Property, plant and equipment .................... 9,016 — 9,016 

Trade payables ............................... (7,983) — (7,983) 

Other payables ............................... (765) — (765) 

Minority interests ............................. (26) — (26) 

Goodwill ................................... 1,717 — 1,717 

Total consideration, satisfied by cash. .............. 2,190 — 2,190 

Net cash outflow arising on acquisition: 

Cash consideration ............................ 2,190 — 2,190 

Bank balances and cash of subsidiary acquired ....... (4) — (4) 

Net cash outflow on acquisition of subsidiary ........ 2,186 — 2,186 

The subsidiary did not contribute to the Group’s profit before tax between the date of acquisition 

and the balance sheet date. 

If the acquisition had been completed on January 1, 2007, the impact will be a reduction of the 

Group profit for the year by $491,000. There will be no impact on the Group revenue as the subsidiary 

derived its revenue solely from the Group. 

32 Commitments 

2007 2006 2005 

$’000 $’000 $’000 

i) Capital expenditure contracted but not provided for in the consolidated 

financial statements in respect of acquisition of property, plant and 

equipment. . . ............................................ 39,186 12,254 17,468 

Included in the capital expenditure commitment was $Nil (2006: $10,225,000; 2005: $16,122,050) 

relating to the purchase of tugs and barges from an outside party. At the same time, the Group has also 

entered into a back-to-back arrangement with a related party with common shareholders/directors to sell 

these tugs and barges to the related party. 

ii) Outstanding Forward Foreign Exchange Contracts 

2007 2006 2005 

$’000 $’000 $’000 

Notional Principal: 

Buy Euro 1,000,000 ........................................... 2,105 — — 

Sell US$1,445,000 ............................................ 2,097 — — 

33 Operating Lease Arrangements 

The Group as a lessee 


2007 2006 2005 

$’000 $’000 $’000 

Minimum lease payments under operating leases recognised as an expense in the 

year ........................................................ 305 120 120 

A1-31

At the balance sheet date, the Group have outstanding commitment under non-cancellable operating 

leases which fall due as follows: 

2007 2006 2005 

$’000 $’000 $’000 

Within one year. ............................................... 582 305 120 

In the second to fifth year inclusive ................................. 703 1,056 50 

1,285 1,361 170 

Operating lease payments represent rentals payable by the Group for its office premises. Leases are 

negotiated and rentals are fixed for an average of 2 years. 

34 Contingent Liabilities 


2007 2006 2005 

$’000 $’000 $’000 

Joint guarantee with a related party given to banks in respect of facilities 

utilised by the related party with common shareholders/directors ......... — 27,168 — 

Guarantee given to banks in respect of facilities utilised by a related party 

with common shareholders/directors .............................. 2,097 2,097 — 

In November 2007, the Company received a notice of arbitration from a supplier. The supplier 

alleged that pursuant to an agreement, the Company is required to make an additional payment of 

RM4.4 million in connection with services rendered by the supplier prior to 2005. Arbitration is pending 

and the Company will be defending against the claims made by the supplier. The directors are currently 

unable to determine the outcome of this arbitration and has not provided for the claim. 

Regardless of the outcome of this arbitration, the Group will be relying on the indemnity provided 

by a related party to seek full reimbursement for all costs, expenses and liabilities that may arise on the 

Group’s part due to the arbitration proceedings. 

35 Business and Geographical Segments 

A business segment is a group of assets and operations engaged in providing products or services 

that are subject to risks and returns that are different from those of other business segments. A 

geographical segment is engaged in providing products or services within a particular economic 

environment that are subject to risks and returns that are different from those of segments operating in 

other economic environments. 

Business Segment 

The Group is primarily engaged in the operating division of ship building, ship repair and 

conversion, and and chartering of vessels. The principal activities are as follows: 

Ship building — Construction of small, medium and large offshore and other support vessels. 

Ship repair and conversion — Servicing and conversions of wide range of vessels. 

Ship chartering — Chartering of offshore support vessels. 

a) Segment revenue and expenses 

Segment revenue and expenses are revenue and expenses reported in the consolidated financial 

statements that are either directly attributable to a segment or can be allocated on a reasonable basis 

to a segment. 

b) Segment assets and liabilities 

Segment assets are all operating assets that are employed by a segment in its operating 

activities and are either directly attributable to the segment or can be allocated to the segment on a 

reasonable basis. 

A1-32


Segment liabilities are all operating liabilities that are employed by a segment in its operating 

activities and are either directly attributable to the segment or can be allocated to the segment on a 

reasonable basis. 

Segment information for the financial years ended December 31, 2007, 2006 and 2005 are as 

follows: 

Ship Repair 

and 

Chartering Shipbuilding Conversion Total 

$’000 $’000 $’000 $’000 

December 31, 2007 

Revenue 

External revenue ........................... 9,259 286,004 18,761 314,024 

External cost of sales ....................... (6,011) (214,060) (12,255) (232,326) 

Segment results. ........................... 3,248 71,944 6,506 81,698 

Other expenses ............................ (8,045) 

Unallocated expenses ....................... (12,356) 

Share of losses of associates .................. (268) 

Finance costs ............................. (5,905) 

Profit before income tax ..................... 55,124 

Income tax expense. ........................ (1,449) 

Profit after income tax ...................... 53,675 

Assets 

Segment assets ............................ 45,328 504,360 8,009 557,697 

Unallocated corporate assets .................. 24,168 

Total assets ............................... 581,865 

Liabilities 

Segment liabilities. ......................... 23,156 437,728 5,464 466,348 

Unallocated corporate liabilities ................ 57,713 

Total liabilities ............................ 524,061 

Other information 

Capital expenditure 

Allocated .............................. 35,559 29,678 524 65,761 

Unallocated ............................. 431 

66,192 

Depreciation: 

Allocated .............................. 200 1,911 125 2,236 

Unallocated ............................. 126 

2,362 

A1-33


Ship Repair 

and 


$’000 $’000 $’000 $’000 


Revenue 

External revenue ........................... — 131,581 15,674 147,255 

External cost of sales ....................... — (111,787) (14,092) (125,879) 

Segment results. ........................... — 19,794 1,582 21,376 

Other income ............................. 429 


Finance costs ............................. (2,383) 

Profit before income tax ..................... 14,152 

Income tax expense. ........................ (449) 

Profit after income tax ...................... 13,703 

Assets 

Segment assets ............................ — 125,647 12,986 138,633 


Total assets ............................... 153,885 

Liabilities 

Segment liabilities. ......................... — 102,831 8,130 110,961 




Capital expenditure ......................... 

Depreciation: 

— 4,074 4,074 8,148 

Allocated .............................. — 819 459 1,278 

Unallocated ............................. 60 

1,338 


Revenue 

External revenue ........................... — 37,498 17,191 54,689 

External cost of sales ....................... — (33,619) (14,972) (48,591) 

Segment results. ........................... — 3,879 2,219 6,098 

Other expense ............................. (969) 


Finance costs ............................. (2,042) 

Profit before income tax ..................... 53 

Income tax expense. ........................ (462) 

Loss after income tax ....................... (409) 

A1-34


Ship Repair 

and 


$’000 $’000 $’000 $’000 

Assets 

Segment assets ............................ — 44,327 10,144 54,471 


Total assets ............................... 62,618 

Liabilities 

Segment liabilities. ......................... — 28,086 4,578 32,664 




Capital expenditure ......................... 

Depreciation: 

— 4,213 4,212 8,425 

Allocated .............................. — 2,187 1,180 3,367 

Unallocated ............................. 30 

3,397 

Geographical Segments 

The Group’s business segments operate mainly in four geographical areas namely Singapore, 

Indonesia, Middle East and Europe. 

The revenue by geographical segments is based on location of the customers. Segment assets and 

capital expenditure are based on the geographical location of the assets and capital expenditure. 

2007 2006 2005 

$’000 $’000 $’000 

Revenue 

Asia Pacific ............................................. 228,991 61,124 23,363 

North America ........................................... 48,096 7,236 31,326 

Europe ................................................. 27,678 46,274 — 

Middle East ............................................. 9,259 32,621 — 

314,024 147,255 54,689 

Carrying amount of segment assets 

People’s Republic of China .................................. 21,689 — — 

Singapore ............................................... 460,182 94,829 24,558 

Middle East ............................................. 37,902 — — 

Indonesia ............................................... 62,092 59,056 38,060 

581,865 153,885 62,618 

Capital expenditure 

People’s Republic of China .................................. 21,689 — — 

Singapore ............................................... 430 255 155 

Middle East ............................................. 35,559 — — 

Indonesia ............................................... 8,514 7,893 8,270 

66,192 8,148 8,425 

A1-35

36 Events After the Balance Sheet Date 

(a) Subsequent to financial year ended December 31, 2007, the Group acquired/incorporated the 

following wholly-owned subsidiaries: 



Country of Incorporation/ 

(or Registration) and Operation Principal Activities 

Otto Ventures Pte. Ltd. ................. Singapore Investment holdings 

Otto Fleet Pte. Ltd. .................... Singapore Investment holdings 

Otto Strategic Pte. Ltd. ................. Singapore Investment holdings 

Tarpon 1 Pte. Ltd. ..................... Singapore Dormant 





(b) Subsequent to financial year ended December 31, 2007, the Group acquired an additional 44.2% 

equity interest in PT Batamec from a related party at a consideration of $34,460,000, resulting in 

an increase in goodwill of $35,269,000. Following the acquisition, the Group’s equity interest in 

PT Batamec increased from 51% to 95%. 

(c) At an Extraordinary General Meeting (“EGM”) held on February 29, 2008, the Shareholders 

approved, inter alia, the following: 

(i) the conversion of the Company into a public limited company; 

(ii) the change of the Company’s name from “Otto Marine Pte Ltd” to “Otto Marine 

Limited”; and 

(d) 

(iii) the adoption of a new set of Articles of Association; 

On May 30, 2008, the Company was granted an option by a shareholder of the Company to 

purchase all of the issued shares of Tourquoise Limited, a company incorporated in the Federal 

Territory of Labuan, Malaysia at a purchase price equal to the fair market value of the entire issued 

share capital of Tourquoise Limited, based on an independent valuation, to be determined by a 

qualified independent valuer jointly appointed by that shareholder and the Company. 

(e) In June 2008, the Group converted $52,000,000 of the loan from a related party into a five-year 

interest bearing term loan. It is unsecured and bears interest at 2% per annum above the prime 

lending rate or 7% per annum whichever is higher. It is repayable in 20 equal quarterly instalments 

of $2,600,000 commencing September 2008. 

(f) At an EGM held on 2 September 2008, the shareholders of the Company approved, inter alia, the 

following: 

(i) the shareholders’ mandate in relation to ongoing transactions with interested persons; 

(ii) the sub-division of every one ordinary share in the Company’s share capital into 30 shares; 

(iii) the allotment and issue of new shares pursuant to the public offer of the Company’s shares; 

(iv) the adoption of the Otto Marine Share Award Scheme; and 

(v) the Directors be authorised, pursuant to Section 161 of the Companies Act, to: (i) allot and 

issue shares in the Company; and (ii) issue convertible securities and any shares in the 

Company pursuant to the conversion of such convertible securities (whether by way of rights, 

bonus or otherwise) at any time and from time to time thereafter upon such terms and 

conditions and for such purposes and to such persons as the Directors shall in their absolute 

discretion deem fit, provided that the aggregate number of shares to be issued pursuant to such 

authority shall not exceed 50.0% of the post offering issued share capital and that the 

aggregate number of shares to be issued other than on a pro-rata basis to the then existing 

shareholders shall not exceed 20.0% of the post offering issued share capital, and, unless 

revoked or varied by the Company in general meeting, such authority shall take effect from 

A1-36


the date of listing of the Company’s shares on the Singapore Exchange Securities Trading 

Limited and shall continue to be in force until the next Annual General Meeting or the date by 

which the next Annual General Meeting is required by law or by the Company’s Articles of 

Association to be held, whichever is earlier. For this purpose, the percentage of the issued 

share capital is based on the Company’s post offering issued share capital, after adjusting for 

new shares arising from the conversion or exercise of any outstanding or subsisting options at 

the time of the passing of the resolution approving the mandate, provided the issue of shares 

or such convertible securities are made in compliance with the Listing Manual and subsequent 

consolidation or subdivision of shares. 

(g) Subsequent to financial year ended December 31, 2007, a controlling shareholder transferred 

27,625,000 ordinary shares in the Company to Business Companion Investments, incorporated in 

the British Virgin Islands. Consequently, Business Companion Investments became the holding 

company. 

(h) Bangkok Bank Public Company Limited, Maju Holdings Sdn Bhd and Standard Chartered Private 

Equity Limited (collectively, the “Cornerstone Investors”) has entered into a cornerstone share 

subscription agreement with the Company (collectively, the “Cornerstone Share Subscription 

Agreements”) on August 19, July 21, and July 28, 2008 respectively, to purchase certain amount of 

shares, at the offering price, conditional upon the purchase agreement and offer agreement having 

been entered into and not having been terminated pursuant to their terms on or prior to the listing 

date. 

A1-37

Statement of Directors 

In the opinion of the directors, the accompanying consolidated financial statements set out on pages A1-3 

to A1-37 are drawn up so as to give a true and fair view of the state of affairs of the Group as at December 31, 

2007, 2006 and 2005, and of the results, changes in equity and cash flows of the Group for each of the 

financial years then ended, and at the date of this statement, there are reasonable grounds to believe that the 

Group will be able to pay its debts when they fall due. 

ON BEHALF OF THE DIRECTORS 

Yaw Chee Siew 

Lee Kok Wah 



A1-38

APPENDIX 2 

INDEPENDENT AUDITORS’ REVIEW REPORT AND THE 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

FOR THE FIVE MONTHS ENDED MAY 31, 2008 


Independent Auditors’ Review Report on the Condensed Consolidated Financial Statements 


The Board of Directors 



#33-01 Suntec Tower 2 


Dear Sirs, 

Introduction 

We have reviewed the accompanying condensed consolidated financial statements of Otto Marine Limited 

(the “Company”) and its subsidiaries (the “Group”) which comprise the condensed consolidated balance sheet 

of the Group as of May 31, 2008, the related condensed consolidated profit and loss statement, condensed 

consolidated statement of changes in equity and condensed consolidated cash flow statement of the Group for 

the five months financial period then ended, and selected explanatory notes as set out on pages A2-2 to A2-13. 

Management is responsible for the preparation and presentation of this condensed consolidated financial 

statements in accordance with the Singapore Financial Reporting Standard 34, Interim Financial Reporting 

(“FRS 34”). Our responsibility is to express a conclusion on this condensed consolidated financial statements 

based on our review. 

Scope of Review 

We conducted our review in accordance with Singapore Standard on Review Engagements 2410, Review 

of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of the 

condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for 

financial and accounting matters, and applying analytical and other review procedures. A review is 

substantially less in scope than an audit conducted in accordance with Singapore Standards on Auditing and 

consequently does not enable us to obtain assurance that we would become aware of all significant matters 

that might be identified in an audit. Accordingly, we do not express an audit opinion. 

Conclusion 

Based on our review, nothing has come to our attention that causes us to believe that the accompanying 

condensed consolidated financial statements is not prepared, in all material respects, in accordance with FRS 

34. 

This report has been prepared in connection with the proposed listing of the Company’s shares on the 

Singapore Exchange Securities Trading Limited. This report is made solely to you, as a body, and for no other 

purpose. We do not assume responsibility towards or accept liability to any other person for the contents of 

this report. 

Deloitte & Touche LLP 

Public Accountants and 

Certified Public Accountants 

Singapore 

Ng Peck Hoon 

Partner 

A2-1

A. Condensed Consolidated Balance Sheet 

As at May 31, 2008 


Note 

As at 

May 31, 

2008 

As at 

December 31, 

2007 

$’000 $’000 

ASSETS 


Cash and bank balances ........................................ 10,082 18,186 

Pledged deposits .............................................. 151,183 195,718 

Trade receivables ............................................. 19,370 25,538 

Gross amount due from customers for contract work ................... 6 177,055 94,300 

Deposits, prepayments and other receivables ......................... 115,503 61,757 

Inventories .................................................. 67,056 81,465 

Total current assets ............................................ 


540,249 476,964 

Investment in associates ........................................ 8,692 4,709 

Available-for-sale investments .................................... 4,187 4,080 

Goodwill ................................................... 8 40,370 5,101 

Property, plant and equipment .................................... 9 96,123 91,011 

Total non-current assets. ........................................ 149,372 104,901 

Total assets ................................................. 689,621 581,865 



Loans ...................................................... 10(a) 134,426 136,847 

Trade payables ............................................... 224,603 168,765 

Gross amount due to customers for contract work ..................... 6 84,637 97,341 

Other payables ............................................... 7,152 6,561 

Deferred gain — short term ...................................... 482 482 

Current portion of finance leases .................................. 10(b) 80 80 

Income tax payable ............................................ 2,005 2,122 

Total current liabilities ......................................... 


453,385 412,198 

Loans ...................................................... 10(a) 41,526 47,516 

Deferred gain — long term ...................................... 12,218 12,619 

Finance leases ............................................... 10(b) 315 347 

Loan from related parties ....................................... 10(c) 102,828 51,381 

Total non-current liabilities ...................................... 


156,887 111,863 

Share capital. ................................................ 32,500 32,500 

Capital reserves .............................................. 11 1,666 1,656 

Translation reserves ........................................... (20,441) (5,249) 

Accumulated profits ........................................... 65,615 32,904 

Equity attributable to equity holders of the Company ................ 79,340 61,811 

Minority interests ............................................. 9 (4,007) 

Total equity ................................................. 79,349 57,804 

Total liabilities and equity. ..................................... 689,621 581,865 


A2-2


B. Condensed Consolidated Profit and Loss Statement 

For the 5 Months Ended May 31, 2008 

Note 

5 Months Financial 

Period Ended 

May 31, May 31, 

2008 2007 

$’000 $’000 

Revenue ...................................................... 219,533 86,308 

Cost of sales . . . ................................................ (162,467) (71,293) 

Gross profit ................................................... 57,066 15,015 

Other (expense) income ........................................... (12,853) 1,554 

Administration expenses .......................................... (7,448) (4,753) 

Share of profits of associates ....................................... 4,571 — 

Finance costs. . . ................................................ (4,919) (1,067) 

Profit before income tax ......................................... 36,417 10,749 

Income tax expense .............................................. 12 (500) (649) 

Profit for the period. ............................................ 35,917 10,100 

Attributable to: 

Equity holders of the Company ................................... 32,711 8,964 

Minority interests. ............................................. 3,206 1,136 

35,917 10,100 

Earnings per share (cents) 

Basic and diluted ................................................ 13 3.35 0.92 


A2-3


C. Condensed Consolidated Statement of Changes in Equity 


Share 

Capital 

Capital 

Reserves Translation 

Reserves 

Accumulated 

Profits 




Interests Total 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 

Balance at January 1, 2008 . . . 


32,500 1,656 (5,249) 32,904 61,811 (4,007) 57,804 



— — (15,192) — (15,192) — (15,192) 

directly in equity ........ — — (15,192) — (15,192) — (15,192) 

Profit for the period ........ 


— — — 32,711 32,711 3,206 35,917 

expense for the period .... 

Acquisition of additional 

shares from minority 

— — (15,192) 32,711 17,519 3,206 20,725 

interest ................ 


— — — — — 810 810 

party loans ............. — 10 — — 10 — 10 

Balance at May 31, 2008 .... 32,500 1,666 (20,441) 65,615 79,340 9 79,349 


A2-4


C. Condensed Consolidated Statement of Changes in Equity (cont’d) 


Share 

Capital 

Capital 

Reserves Translation 

Reserves 

Accumulated 

Profits 




Interests Total 

$’000 $’000 $’000 $’000 $’000 $’000 $’000 

Balance at January 1, 2007 . . . 


32,500 1,162 (1,158) (9,023) 23,481 (17,679) 5,802 

differences. ............. 

Net income recognised directly 

— — 465 — 465 — 465 

in equity ............... — — 465 — 465 — 465 

Profit for the period. ........ 


— — — 8,964 8,964 1,136 10,100 

expense for the period ..... — — 465 8,964 9,429 1,136 10,565 

Balance at May 31, 2007 ..... 32,500 1,162 (693) (59) 32,910 (16,543) 16,367 


A2-5


D. Condensed Consolidated Statement of Cash Flows 


5 Months Financial 

Period Ended 

May 31, May 31, 

2008 2007 

$’000 $’000 

Operating activities 

Profit before income tax ................................................ 

Adjustments: 

36,417 10,749 

Shares of profits of associates .......................................... (4,571) — 

Depreciation of property, plant and equipment .............................. 1,010 850 

Interest expense ..................................................... 4,919 1,067 

Interest income ..................................................... (2,339) (1,875) 

Deferred gain ...................................................... 17,008 — 

Write off/Loss on disposal of property, plant and equipment .................... 12 147 

Operating cash flows before movements in working capital ...................... 52,456 10,938 

Trade receivables .................................................... 7,710 (1,509) 

Other receivables .................................................... (74,716) (31,360) 

Inventories. ........................................................ (24,555) (12,221) 

Construction work-in-progress .......................................... (61,827) 34,769 

Trade payables. ..................................................... 55,238 89,580 

Other payables. ..................................................... 691 (2,536) 

Cash (used) generated from operations ...................................... (45,003) 87,661 

Income tax paid ..................................................... (617) (175) 

Interest received .................................................... 2,339 1,875 

Net cash (used in) from operating activities ................................ 

Investing activity 

(43,281) 89,361 

Purchases of property, plant and equipment .................................. (16,782) (10,136) 

Net cash used in investing activity ........................................ 

Financing activities 

(16,782) (10,136) 

Proceeds on bank loans ................................................. 41,715 22,703 

Repayment of bank loans. ............................................... (39,091) (7,787) 

Repayment of finance lease obligations ..................................... (32) (10) 

Repayment of loans from a related party .................................... (8,279) (33,774) 

Loan from a related party ............................................... 25,266 32,035 

Interest paid ......................................................... (4,908) (1,067) 

Net cash from financing activities ........................................ 14,671 12,100 

Net (decrease) increase in cash and cash equivalents ......................... (45,392) 91,325 

Cash and cash equivalents at beginning of period. ........................... 213,904 53,456 

Effects of exchange rate changes on the balance of cash held in foreign currencies .. (7,247) 1 

Cash and cash equivalents at end of period ................................ 161,265 144,782 

Cash and cash equivalents at end of period include the following: 

Cash . . . ............................................................ 10,082 10,228 

Pledged deposits ...................................................... 151,183 134,554 

Total . . . ............................................................ 161,265 144,782 


A2-6


E. Notes to the Condensed Consolidated Financial Statements 

1. General 

The Company (Registration No. 197902647M) is a public limited company (with effective from 

17 March 2008) incorporated in Singapore with its principal place of business and registered office at 

9 Temasek Boulevard #33-01 Suntec Tower Two, Singapore 038989. The condensed consolidated 

financial statements are expressed in Singapore dollars. 

The principal activities of the Company and the Group consist of the construction, fabrication, 

repair and conversion, and chartering of ships. 

The condensed consolidated financial statements of the Group for the 5 months ended May 31, 

2008 were authorised for issue by the Board of Directors on September 2, 2008. 

2. Basis of Preparation 

The condensed consolidated financial statements have been prepared using accounting policies 

consistent with Singapore Financial Reporting Standards and in accordance with Singapore Financial 

Reporting Standards 34 “Interim Financial Reporting”. 

In the preparation of the condensed financial statements, the Group has adopted Singapore Financial 

Reporting Standards 107 “Financial Instruments — Disclosure” for the financial period beginning 

January 1, 2008. However, FRS 107 is not applicable for the condensed consolidated financial 

statements. The application of FRS 107 will not affect any of the amounts recognised in the financial 

statements but will change the disclosure presently made in relation to the Group’s financial instruments 

and the objectives, policies and processes for managing capital. 

3. Significant Accounting Policies 

The condensed consolidated financial statements have been prepared in accordance with the 

historical cost convention, except for the revaluation of certain financial instruments. 

The same accounting policies, presentation and methods of computation are followed in these 

condensed consolidated financial statements as were applied in the preparation of the Group’s financial 

statements for the year ended December 31, 2007. 

4. Operations in the Interim Period 

The Group’s revenue and expenses do not accrue evenly throughout a financial period or financial 

year for reasons explained below: 

Recognition of Revenue and Expenses Under Long-term Construction Contracts 

The majority of our revenue and costs are recognised based on percentage of completion basis. The 

percentage of completion is determined on the achievement of certain physical milestones. As a result, 

the revenue and costs of sales do not accrue evenly throughout the reporting periods. 

5. Related Party Transactions 

Related parties are entities with common direct or indirect shareholders and/or directors. Parties are 

considered to be related if one party has the ability to control the other party or exercise significant 

influence over the other party in making financial and operating decisions. 

Some of the transactions and arrangement of the Group are with related parties and the effects of 

these transactions on the basis determined between the parties are reflected in these condensed 

consolidated financial statements. The related party balances are unsecured, interest-free and repayable 

on demand unless otherwise stated. 

A2-7

5 Months Financial Period 

Ended 

May 31, 2008 May 31, 2007 

$’000 $’000 

Associates 

Sale of vessels built under long-term contracts ...................... 108,374 — 

Other related parties — common shareholders/directors 

Acquisition of equity shares in a subsidiary ........................ 34,460 — 

Charter expense ............................................. — 589 

Rental expense. ............................................. 182 51 

Sale of barges .............................................. — 20,723 

6. Construction Contracts 

As at 

May 31, 

2008 

As at 

December 31, 

2007 

$’000 $’000 

Contract cost incurred .......................................... 236,809 181,787 

Profit recognised .............................................. 77,974 73,113 

314,783 254,900 

Progress billings .............................................. (222,365) (257,941) 

Work-in-progress .............................................. 92,418 (3,041) 

Gross amount due from customers for contract work. ................... 177,055 94,300 

Gross amount due to customers for contract work ...................... (84,637) (97,341) 

92,418 (3,041) 

7. Investment in Subsidiaries 

The change in the equity interest of the subsidiaries of the Group since December 31, 2007 is as 

follows: 



Country of 



and Operation 

Proportion of 

Ownership Interest/ 


May 31, 

2008 

December 31, 

2007 

% % 

PT Batamec (a) ................ Indonesia, Batam 95 51 Ship repair and 

ship building 

Otto Ventures Pte. Ltd. (b) ........ Singapore 100 — Investment holdings 

Otto Fleet Pte. Ltd. (c) ........... Singapore 100 — Investment holdings 

Otto Strategic Pte. Ltd. (c) ........ Singapore 100 — Investment holdings 

Tarpon 1 Pte. Ltd. (c) ............ Singapore 100 — Dormant 





(a) The Group acquired additional 44% equity interest from a related party as disclosed in Note 8. 

(b) The subsidiary was incorporated in 2006 and was previously known as Rig Ventures Pte. Ltd. 

(c) These subsidiaries were newly incorporated during the period. 

A2-8

8. Goodwill 


Cost: 

At December 31, 2007. ...................................................... 5,101 

Arising on acquisition of additional interest in a subsidiary. ........................... 35,269 

At May 31, 2008 ........................................................... 40,370 

Carrying amount: 

At May 31, 2008 ........................................................... 40,370 

At December 31, 2007. ...................................................... 5,101 

During the five months financial period ended May 31, 2008, the Group acquired an additional 

44% equity interest in a subsidiary, PT Batamec, from a related party for a consideration of $34,460,000 

resulting in an increase in goodwill by S$35,269,000. The goodwill represents the excess of consideration 

over the carrying amount of minority interest acquired. 

The Group tests goodwill annually for impairment, or more frequently if there are indications that 

goodwill might be impaired. The goodwill relates primarily to two cash generating units (“CGU”). 

In 2007, in determining the recoverable amounts of the CGUs, management used value in use for 

one CGU and market value for another CGU. 

During the five months financial period ended May 31, 2008, the management used the fair value 

of the identifiable assets of the subsidiaries, market value to assess the impairment of goodwill in 

relation to both CGUs. 

9. Property, Plant and Equipment 

During the five months financial period ended May 31, 2008, the Group spent approximately 

$16,782,000 on construction-in-progress and on additions to its machinery and equipment. 

There was property, plant and equipment with carrying value amounting to $12,000 written off 

during the five months financial period ended May 31, 2008. 

10. Loans and Finance Leases 

(a) Loans 

During the five months financial period ended May 31, 2008, the Group: 

(i) obtained three new bank loans amounting to $3,000,000, US$9,367,000 (approximately 

$12,768,000) and US$4,985,000 (approximately $6,795,000) respectively, of which 

$150,000 was repaid during the five-month financial period; 

(ii) drew down US$14,050,000 (approximately $19,152,000) from existing banking facilities, 

of which US$1,000,000 (approximately $1,363,000) was repaid during the five months 

financial period; the remaining amount is repayable within 12 months from May 31, 

2008; and 

(iii) repaid loan of US$26,668,000 (approximately $36,351,000) upon delivery of a mortgaged 

vessel and repaid US$900,000 (approximately $1,227,000) of its bank loan drawn down 

in 2007. 

The bank loan amounting to $3,000,000 is arranged at floating interest rates which are subject 

to change at the bank’s discretion and exposes the Group to cash flow interest rate risk. The bank 

loan bears interest at the bank’s prime lending rate and is repayable in 60 monthly instalments of 

$50,000. This loan is secured by a personal guarantee from a director, all monies legal mortgages 

over the vessels under finance (“mortgaged vessels”), an assignment of charter agreement and 

insurances taken over the mortgaged vessels and a deed of corporate guarantee of the Company. 

The bank loan amounting to US$9,367,000 is arranged at floating interest rates which are 

subject to change at the bank’s discretion. The bank loan bears interest at floating rate at 1.85% 

A2-9 

$’000

above bank’s monthly LIBOR rate which ranges from 4.55% to 4.68%. The bank loan is secured 

by a personal guarantee from a director, an assignment of shipyard contracts and insurance taken 

over the mortgaged vessels, and refund guarantee provided by the shipyards to a subsidiary, and, 

corporate guarantee from a subsidiary. This loan is repayable upon the delivery of the mortgaged 

vessels, which is expected to be more than 12 months after May 31, 2008. 

The bank loan amounting to US$4,985,000 is arranged at floating interest rates which are 

subject to change at the bank’s discretion which ranges from 4.50% to 4.75%. The bank loan bears 

interest at floating rate at 1.5% above the bank’s monthly US$ LIBOR rate. The bank loan is 

secured by an assignment of corporate guarantee from a supplier and an assignment of shipyard 

contracts. The loan is repayable upon the delivery of the mortgaged vessels, which is expected to 

be within 12 months after May 31, 2008. 

(b) Finance Leases 

During the five months financial period ended May 31, 2008, the Group has not entered into 

new finance lease agreement. 

(c) Loan from Related Parties 

During the five months financial period ended May 31, 2008, the Group had obtained 

additional advances of $51,447,000 of which $34,460,000 (Note 5) arose due to acquisition of 

additional shareholding of a subsidiary from the related party. Loans from related parties have an 

average credit period of 180 days and bear interest at 4% per annum on overdue balances. These 

loans are unsecured, interest-free and are not repayable within the next twelve months. 

(d) Pledged Assets 

The following assets have been pledged or mortgaged for the bank loans and finance leases: 

As at 

May 31, 

2008 

As at 

December 31, 

2007 

$’000 $’000 

Pledged/Mortgaged: 

Fixed deposits ............................................. 151,183 195,718 

Inventories ............................................... 28,481 19,594 

Gross amount due from customers for contract work. ................ 103,169 73,593 

Carrying value of property, plant and equipment 

— Bank loans ........................................... 79,462 56,367 

— Finance leases ......................................... 430 480 

11. Capital Reserves 


Valuation 

Reserves 

Deemed Capital 

Contribution Total 

$’000 $’000 $’000 

At January 1, 2007 and May 31, 2007 ................... — 1,162 1,162 

Arising during the year/period ......................... 462 32 494 

At December 31, 2007 .............................. 462 1,194 1,656 

Arising during the period ............................ — 10 10 

At May 31, 2008 .................................. 462 1,204 1,666 

12. Income Tax Expense 

The interim period income tax expense is accrued based on the estimated average annual effective 

income tax rate of the respective entities. 

A2-10


13. Earnings per Share 

For illustrative purpose, the calculation of the basic earnings per share is based on the net profit 

attributable to equity holders of the Company for each of the financial periods ended May 31, 2008 and 

2007 over the pre-invitational share capital of 975,000,000 shares in issue as at the date of this report, 

representing the pre-invitational share capital. 

There were no diluted earnings per share for each of the financial periods ended May 31, 2008 and 

2007 as there were no potential ordinary shares outstanding. 

14. Commitments 

During the five months financial period ended May 31, 2008, the Group has committed an 

additional $7,588,000 for yard development and has entered into forward foreign exchange contracts to 

buy Euro 20,000,000 and to sell US$29,451,000. 

15. Business Segments 

A business segment is a group of assets and operations engaged in providing products or services 

that are subject to risks and returns that are different from those of other business segments. 

Primary Segment — Business Segment 

The Group is primarily engaged in the operating division of ship building, ship repair and 

conversion, and chartering of vessels. The principal activities are as follows: 

Ship building — Construction of small, medium and large offshore and other support vessels. 

Ship repair and conversion — Servicing and conversion of wide range of vessels. 

Ship chartering — Chartering of offshore support vessels. 

Segment revenue and expenses are revenue and expenses reported in the condensed consolidated 

financial statements that are either directly attributable to a segment or can be allocated on a reasonable 

basis to a segment. 

A2-11


Segment information for the respective financial periods are as follows: 

Condensed Consolidated Profit and Loss Statement 

Ship Repair & 


$’000 $’000 $’000 $’000 

5 months financial period ended May 31, 2008 

External revenue ......................... 6,126 206,435 6,972 219,533 

External cost of sales ...................... (758) (158,203) (3,506) (162,467) 

Segment results .......................... 5,368 48,232 3,466 57,066 

Other expense ........................... (12,853) 

Share of profits of associates ................ 4,571 

Unallocated expenses ...................... (7,448) 

Finance costs. ........................... (4,919) 

Profit before income tax ................... 36,417 

Income tax expense ....................... (500) 

Profit after income tax ..................... 35,917 

5 months financial period ended May 31, 2007 

External revenue ......................... 1,075 78,605 6,628 86,308 

External cost of sales ...................... (1,014) (64,693) (5,586) (71,293) 

Segment results .......................... 61 13,912 1,042 15,015 

Other income. ........................... 1,554 

Unallocated expenses ...................... (4,753) 

Finance costs. ........................... (1,067) 

Profit before income tax ................... 10,749 

Income tax expense ....................... (649) 

Profit after income tax ..................... 10,100 

16. Events After the Balance Sheet Date 

(a) On May 30, 2008, the Company was granted an option by a shareholder of the Company to 

purchase all of the issued shares of Tourquoise Limited, a company incorporated in the Federal 

Territory of Labuan, Malaysia at a purchase price equal to the fair market value of the entire issued 

share capital of Tourquoise Limited, based on an independent valuation, to be determined by a 

qualified independent valuer jointly appointed by that shareholder and the Company. 

(b) In June 2008, the Group converted $52,000,000 of the loan from a related party into a five-year 

interest bearing term loan. It is unsecured and bears interest at 2% per annum above the prime 

lending rate or 7% per annum whichever is higher. It is repayable in 20 equal quarterly instalments 

of $2,600,000 commencing September 2008. 

(c) At an Extraordinary General Meeting held on September 2, 2008, the shareholders of the Company 

approved, inter alia, the following: 

(i) the shareholders’ mandate in relation to ongoing transactions with interested persons. 

(ii) the sub-division of every one ordinary share in the Company’s share capital into 30 shares. 

(iii) the allotment and issue of new shares pursuant to the public offer of the Company’s shares. 

(iv) the adoption of the Otto Marine Share Award Scheme; and 

(v) the Directors be authorised, pursuant to Section 161 of the Companies Act, to: (i) allot and 

issue shares in the Company; and (ii) issue convertible securities and any shares in the 

Company pursuant to the conversion of such convertible securities (whether by way of rights, 

bonus or otherwise) at any time and from time to time thereafter upon such terms and 

A2-12


conditions and for such purposes and to such persons as the Directors shall in their absolute 

discretion deem fit, provided that the aggregate number of shares to be issued pursuant to such 

authority shall not exceed 50.0% of the post offering issued share capital and that the 

aggregate number of shares to be issued other than on a pro-rata basis to the then existing 

shareholders shall not exceed 20.0% of the post offering issued share capital, and, unless 

revoked or varied by the Company in general meeting, such authority shall take effect from 

the date of listing of the Company’s shares on the Singapore Exchange Securities Trading 

Limited and shall continue to be in force until the next Annual General Meeting or the date by 

which the next Annual General Meeting is required by law or by the Company’s Articles of 

Association to be held, whichever is earlier. For this purpose, the percentage of the issued 

share capital is based on the Company’s post offering issued share capital, after adjusting for 

new shares arising from the conversion or exercise of any outstanding or subsisting options at 

the time of the passing of the resolution approving the mandate, provided the issue of shares 

or such convertible securities are made in compliance with the Listing Manual and subsequent 

consolidation or subdivision of shares. 

(d) Bangkok Bank Public Company Limited, Maju Holdings Sdn Bhd and Standard Chartered Private 

Equity Limited (collectively, the “Cornerstone Investors”) has entered into a cornerstone share 

subscription agreement with the Company (collectively, the “Cornerstone Share Subscription 

Agreements”) on July 21, August 19 and July 28, 2008 respectively, to purchase certain amount of 

shares, at the offering price, conditional upon the purchase agreement and offer agreement having 

been entered into and not having been terminated pursuant to their terms on or prior to the listing 

date. 

17. Comparatives Figures 

The comparative figures for the 5 months ended May 31, 2007 have not been audited nor reviewed. 

A2-13

Statement of Directors 

In the opinion of the directors, the accompanying condensed consolidated financial statements of the 

Group set out on pages A2-2 to A2-13 are drawn up so as to give a true and fair view of the state of affairs of 

the Group as at May 31, 2008 and of the results, changes in equity and cash flows of the Group for the five 

months financial period then ended and at the date of this statement, there are reasonable grounds to believe 

that the Group will be able to pay its debts as and when they fall due. 

ON BEHALF OF THE DIRECTORS 

Yaw Chee Siew 

Lee Kok Wah 



A2-14

APPENDIX 3 

SUMMARY OF OUR MEMORANDUM AND ARTICLES OF ASSOCIATION 

The summary below provides information regarding certain provisions of our Memorandum and Articles 

of Association constituted in accordance with Singapore laws. Any description or information given below is 

only a summary and is qualified by reference to Singapore law and our Memorandum and Articles of 

Association. 

Memorandum of Association and Registration Number 

Our Memorandum of Association states, among others, that the liability of our members is limited, and 

our objects include to build, fit out and repair, and lend money upon ships and vessels of every description 

and to construct and repair engines, boilers and machinery. Our objects are set out in full in Clause 4 of our 

Memorandum of Association. 

Our company registration number is 197902647M. 

Directors 

Ability of Interested Directors to Vote 

A Director shall not vote in respect of any transaction or proposed transaction or arrangement in which 

he has directly or indirectly a personal material interest and if he shall do so his vote shall not be counted. 

Notwithstanding his interest, a Director may be counted in the quorum present at any meeting of the 

Directors. 

Remuneration 

The remuneration of the Directors shall from time to time be determined by us in general meeting. Such 

remuneration shall not be increased except pursuant to an ordinary resolution passed at a general meeting 

where notice of the proposed increase shall have been given in the notice convening the meeting. Such 

remuneration shall be divided amongst the Directors in such proportions and in such manner as they may 

agree and in default of agreement, equally, except that in the latter event any Director who shall hold office 

for part only of the period in respect of which such remuneration is payable shall be entitled to rank in such 

division for the proportion of the remuneration related to the period during which he has held office. 

Any Director who is appointed to any executive office or serves on any committee or who otherwise 

performs or renders services which, in the opinion of the Directors, are outside his ordinary duties as a 

Director, may be paid such remuneration as the Directors may determine but such remuneration shall not 

include a commission on or a percentage of turnover. Fees payable to a Non-executive Director shall be by a 

fixed sum and not by a commission on or percentage of profits or turnover. No Director shall be remunerated 

by a commission on or percentage of turnover. 

Borrowing Powers 

The Directors may exercise all of our powers to borrow money and to mortgage or charge our 

undertaking, property and uncalled capital, or any part thereof, and to issue debentures and other securities 

whether outright or as security for any of our debt, liability, or obligation or of any third party. 

Retirement Age Limit 

There is no retirement age limit for Directors under our Articles of Association. Section 153(1) of the 

Act, however, provides that no person of or over the age of 70 years shall be appointed or act as a director of 

a public company, unless he is appointed or reappointed as a director or authorised to continue in office as a 

director by way of an ordinary resolution passed at an AGM. 

Shareholding Qualification 

There is no shareholding qualification for Directors in our Articles. 

Share Rights and Restrictions 

We currently have one class of shares namely, ordinary shares. 

A3-1

Without prejudice to any special rights or privileges attached to any then existing shares in our capital, 

any shares may be issued upon such terms and conditions, and with such rights and privileges attached thereto, 

as our Shareholders by special resolution may direct or, if no such direction be given, as the Directors shall 

determine, and in particular such shares may be issued with preferential, qualified or deferred right to 

dividends and in the distribution of our assets, and with a special or restricted right of voting, and any 

preference share may be issued on the terms that it is, or is at our option, liable to be redeemed. 

Further preference shares ranking equally with, or in priority to preference shares already issued may be 

issued by us. Preference shareholders shall have the same rights as ordinary shareholders as regards receiving 

notices, reports and balance sheets, and attending our general meetings. The repayment of preference capital 

other than redeemable preference capital, or alteration of preference shareholders’ rights, may only be made 

pursuant to a special resolution of the preference shareholders concerned, provided always that where the 

necessary majority for such a special resolution is not obtainable at the meeting, consent in writing if obtained 

from the holders of three-quarters of the issued shares of the class concerned within two months of the 

meeting shall be as valid and effectual as a special resolution carried at the meeting. Preference shareholders 

shall also have the right to vote at any meeting convened for the purpose of reducing the capital, or winding 

up, or sanctioning a sale of our undertaking, or where the proposition to be submitted to the meeting directly 

affects their rights and privileges, or when the dividend on the preference shares is in arrears for more than six 

months. 

No member shall be entitled to receive any dividend or to be present or vote at any meeting or upon a 

poll, or to exercise any privilege as a member until he shall have paid all calls for the time being due and 

payable on every share held by him, whether alone or jointly with any other person, together with interest and 

expenses (if any). 

Transferability of Our Shares 

Subject to the Articles any member may transfer all or any of his shares. Every transfer must be in 

writing and in the usual form or in any form approved by the Directors and by any stock exchange upon 

which we may be listed. The instrument of transfer of a share shall be signed by or on behalf of both the 

transferor and the transferee, and by the witness or witnesses thereto, provided that an instrument of transfer in 

respect of which the transferee is the Depository shall be effective although not signed or witnessed by or on 

behalf of the Depository. The transferor shall be deemed to remain the holder of the share until the name of 

the transferee is entered in the Register of Members in respect thereof. Shares of different classes shall not be 

comprised in the same instrument of transfer. 

The Directors may decline to register any transfer of shares not being fully paid shares to a person not 

approved by them and may also decline to register any transfer of shares on which we have a lien. Save as 

aforesaid or where required by law or by the rules, by-laws or listing rules of the SGX-ST, there shall be no 

restriction on the transfer of fully paid-up shares. 

The Directors may decline to accept any instrument of transfer unless: 

(a) such fee not exceeding S$2.00 as the Directors may from time to time determine is paid to us in 

respect thereof; 

(b) the instrument of transfer is duly stamped in accordance with any law for the time being in force 

relating to stamp duty; 

(c) the instrument of transfer is deposited at the office or at such other place (if any) as the Directors 

may appoint accompanied by a certificate of payment of stamp duty (if any), the certificates of the shares 

to which the transfer relates and such other evidence as the Directors may reasonably require to show the 

right of the transferor to make the transfer and, if the instrument of transfer is executed by some other 

person on his behalf, the authority of the person so to do; and 

(d) such fee not exceeding S$2.00 as the Directors may from time to time determine is paid to us in 

respect of the registration of any probate, letters of administration, certificate of marriage or death, power 

of attorney or any document relating to or affecting the title to the shares. 

The Directors shall refuse to register the transfer of any share: 

(a) if the share has not been fully paid or is subject to a lien; or 

(b) if the provisions of the Articles relating to the transfer of shares have not been complied with. 

A3-2

Voting Rights 

Every member (other than a holder of treasury shares) shall be entitled to be present and to vote at any 

general meeting either personally or by proxy in respect of any shares upon which all calls due to us have 

been paid 

Subject to any rights or restrictions for the time being attached to any class or classes of shares, at a 

meeting of members or classes of members each member entitled to vote may vote in person or by proxy or 

by attorney. On a show of hands every member present in person or by proxy shall have one vote. Subject to 

any rights or restrictions for the time being attached to any class or classes of shares, on a poll every member 

present in person or by proxy shall have one vote for each share he holds. 

For the purpose of determining the number of votes which a member, being a Depositor, or his proxy 

may cast at any general meeting on a poll, the reference to shares held or represented shall, in relation to 

shares of that Depositor, be the number of shares entered against his name in the Depository Register as at 

48 hours before the time of the relevant general meeting as supplied by the Depositor to us. 

In the case of joint holders any one of such persons may vote, but if more than one of such persons shall 

be present at a meeting, the senior alone shall be entitled to vote to the exclusion of the other joint holders; 

and for this purpose seniority shall be determined by the order in which the names stand in the Register of 

Members (as the case may be) the Depository Register in respect of the share. 

Change in Capital 

We may from time to time by ordinary resolution do one or more of the following: 

(a) increase the share capital by such sum to be divided into shares of such amount as the resolution 

shall prescribe; 

(b) consolidate and divide all or any of its share capital into shares of larger amount than its existing 

shares; 

(c) subdivide its shares or any of them into shares of a smaller amount than is fixed by the 

Memorandum provided that the proportion between the amount paid and the amount (if any) unpaid on 

each reduced share shall be the same as it was in the case of the share from which the reduced share is 

derived; 

(d) subject to the provisions of the Articles and the Act, convert any class of shares into any other 

class of shares; and 

(e) cancel shares which at the date of the passing of the resolutions in that behalf have not been 

taken or agreed to be taken by any person or which have been forfeited and diminish the amount of its 

share capital by the amount of the shares so cancelled. 

Subject to any direction to the contrary that may be given by us in general meeting or except as permitted 

under the listing rules of the SGX-ST, all new shares shall, before issue, be offered to such persons as at the 

date of the offer are entitled to receive notices from us of general meetings in proportion, as nearly as the 

circumstances admit, to the amount of the existing shares to which they are entitled. The offer shall be made 

by notice specifying the number of shares offered, and limiting a time within which the offer, if not accepted, 

will be deemed to be declined, and, after the expiration of that time, or on the receipt of an intimation from 

the person to whom the offer is made that he declines to accept the shares offered, the Directors may dispose 

of those shares in such manner as they think most beneficial to us. The Directors may likewise so dispose of 

any new shares which (by reason of the ratio which the new shares bear to shares held by persons entitled to 

an offer of new shares) cannot, in the opinion of the Directors, be conveniently offered in accordance with the 

Articles. 

Notwithstanding the preceding paragraph, we may by ordinary resolution in a general meeting, give to 

the Directors a general mandate, either conditionally or unconditionally to issue: 

(a) shares in our capital (whether by way of bonus, rights or otherwise); 

(b) convertible securities; 

(c) additional convertible securities arising from adjustments made to the number of convertible 

securities previously issued in the event of rights, bonus or capitalisation issues; or 

(d) shares arising from the conversion of convertible securities, 

A3-3

at any time and upon such terms and conditions and for such purpose as the Directors may in their absolute 

discretion deem fit provided that: 

(a) the aggregate number of shares and convertible securities that may be issued shall not be more 

than 50.0% of the our issued share capital as at the date the general mandate is passed or such other limit 

as may be prescribed by the SGX-ST; 

(b) the aggregate number of shares and convertible securities to be issued other than on a pro-rata 

basis to existing shareholders shall be not more than 20.0% of our issued share capital as at the date the 

general mandate is passed or such other limit as may be prescribed by the SGX-ST; 

(c) for the purpose of determining the aggregate number of shares that may be issued under subparagraphs 

(a) and (b) above, the percentage of issued share capital shall be calculated based on our 

issued share capital as at the date the general mandate is passed after adjusting for new shares arising 

from the conversion of any convertible securities or exercise of any employee options in issue as at the 

date the general mandate is passed and any subsequent consolidation or subdivision of our shares; and 

(d) unless earlier revoked or varied by us in general meeting, such authority shall continue in force 

only until the next annual general meeting or the date by which the next annual general meeting is 

required by law to be held, whichever is earlier. 

Subject to and in accordance with the provisions of the Act, we may purchase or otherwise acquire shares 

issued by it on such terms as we may think fit and in the manner prescribed by the Act. Unless as permitted 

under the next paragraph, all shares repurchased by us shall be deemed to be cancelled on purchase or 

acquisition by us. In the cancellation of any share as aforesaid, the rights and privileges attached to that share 

shall expire. In any other instance, we may hold or deal with any such share so purchased or acquired by us in 

such manner as may be permitted by, and in accordance with, the Act. 

We may hold or deal with our treasury shares in the manner authorised by, or prescribed pursuant to, the 

Act. The treasury shares shall have no voting rights and shall not be entitled to any dividend or other 

distribution (whether in cash or otherwise) of our assets (including any distribution of assets to members on a 

winding up) that may be made by us. 

We may by special resolution reduce our share capital in any manner and subject to, any incident 

authorised, and consent required by law. 

Variation of Rights of Existing Shares or Classes of Shares 

If at any time the share capital is divided into different classes of shares, the rights attached to any class 

(unless otherwise provided by the terms of issue of the shares of that class) may, whether or not we are being 

wound up, be varied with the consent in writing of the holders of three-quarters of the issued shares of that 

class, or with the sanction of a special resolution passed at a separate general meeting of the holders of the 

shares of the class. To every such separate general meeting the provisions of the Articles relating to general 

meetings shall mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding 

or representing by proxy one-third of the issued shares of the class and that any holder of shares of the class 

present in person or by proxy may demand a poll, provided always that where the necessary majority for such 

a special resolution is not obtained at the meeting, consent in writing if obtained from the holders of threequarters 

of the issued shares of the class concerned within two months of the meeting shall be as valid and 

effectual as a special resolution carried at the meeting. 

The rights conferred upon the holder of the shares of any class issued with preferred or other rights shall, 

so far as they are not expressed in the Articles, be expressed with necessary amendments to the Articles. 

Furthermore, unless otherwise expressly provided by the terms of issue of the shares of that class, those 

aforesaid rights shall be deemed to be varied by the creation or issue of further shares ranking equally with, or 

in priority to such shares. 

Time Limits on Dividend Entitlements 

We may declare dividends in general meeting, but no dividend shall exceed the amount recommended by 

the Directors. The Directors may from time to time pay to the members such interim dividends as appear to 

the Directors to be justified by our profits. 

The dividends, interest and bonuses and any other benefits and advantages in the nature of income 

receivable in respect of our investments, and any of our commissions, trusteeship, agency, transfer and other 

A3-4

fees and current receipts shall, subject to the payment thereout of the expenses of management, interest upon 

borrowed money and other expenses which in the opinion of the Directors are of a revenue nature, constitute 

our profits available for dividend. 

Appreciations of capital assets, investments and realised profits resulting in a sale of capital assets or 

investments (except so far as representing interest or dividend accrued and unpaid) shall either be carried to 

the credit of capital reserve or shall be applied in providing for depreciation or contingencies or for writing 

down the value of the assets. It is expressly declared that in ascertaining our profits available for dividend it 

shall not be necessary to make good any losses or depreciation in value of any of our investments or any of 

our other assets except circulating capital. 

The Directors may, before recommending any dividend, set aside out of our profits such sums as they 

think proper as reserves which shall, at the discretion of the Directors, be applicable for any purpose to which 

our profits may be properly applied. The Directors may divide the reserve into such special funds as they 

think fit and may consolidate into one fund any special funds or any part of any special funds into which the 

reserve may have been divided. The Directors may also, without placing the same to reserve, carry forward 

any profits. In carrying sums to reserve and in applying the same, the Directors shall comply with the relevant 

statutory provisions. 

Subject to the rights or restrictions attached to any shares or class of shares and except as otherwise 

permitted under the Act: 

(a) all dividends in respect of shares shall be declared and paid according to the number of shares 

held by a member but where shares are partly paid all dividends must be apportioned and paid 

proportionately to the amounts paid or credited as paid on the partly paid shares; and 

(b) all dividends shall be apportioned and paid proportionately to the amounts paid or credited as 

paid on the shares during any portion or portions of the period in respect of which the dividend is paid; 

but if any share is issued on terms providing that it shall rank for dividend as from a particular date that 

share shall rank for dividend accordingly, 

and for the purposes thereof, an amount paid or credited as paid on a share in advance of a call is to be 

ignored. 

Any general meeting declaring a dividend or bonus may direct payment of such dividend or bonus wholly 

or partly by the distribution of specific assets and in particular of paid-up shares, debentures or debenture 

stock of any other company or in any one or more of such ways and the Directors shall give effect to such 

resolution, and where any difficulty arises in regard to such distribution, the Directors may settle the same as 

they think expedient, and fix the value for distribution of such specific assets or any part thereof and may 

determine that cash payments shall be made to any members upon the footing of the value so fixed in order to 

adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to the 

Directors. 

A transfer of a share shall not pass the right to any dividend declared in respect thereof before the 

transfer has been registered. 

Limitations on the Right to Own Shares 

Except as required by law, no person shall be recognised by us as holding any share upon any trust, and 

we shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any 

equitable, contingent, future or partial interest in any share or unit of a share or (except only as by the Articles 

or by law otherwise provided) any other rights in respect of any share except an absolute right to the entirety 

thereof in the registered holder thereof or (as the case may be) the person whose name is entered in the 

Depository Register in respect of that share. 

There are no limitations on the rights of our shareholders who are regarded as non-residents of Singapore 

to hold or vote their shares. 

A3-5


APPENDIX 4 

SUMMARY OF THE RELEVANT LAWS AND REGULATIONS 

APPLICABLE TO US 

Summary of the Laws and Regulations of the Republic Of Indonesia Applicable to Us. 

Industry Law 

The principal rules governing industry in Indonesia can be found in Law No. 5 of 1984 regarding 

Industry (the “Industry Law”). The Industry Law sets forth the general principles and policies governing 

industry in Indonesia. Principally, establishment of new industrial company and/or each expansion of such 

industrial company require an Industrial Business License (“IUI”) under the Industry Law. As such, the IUI is 

the main principal license in order to establish and/or operate an industrial company. The Industry Law 

stipulates that certain industrial sectors which are deemed important and strategic for the state and control the 

well-being of the people are mandated to be controlled by the state. The Industry Law also prescribes for the 

protection of small-industries and mandates the reservations of certain business sectors for the promotion of 

small-industries. The Industry Law requires all industrial companies to protect the environment and prevent 

the occurrences of environmental damage and pollution in the course of performing their business activities. 

Investment Law 

Direct foreign investments in Indonesia used to be governed by Law Number 1 of 1967 as amended by 

Law Number 11 of 1970 regarding Foreign Investment (the “Foreign Investment Law”) and its implementing 

regulations. Law Number 1 of 1967 was recently replaced by Law No. 25 of 2007 which became effective 

from 26 April 2007 (the “New Investment Law”). Under the New Investment Law, the dichotomy between 

foreign investment and domestic investment is largely limited to (i) the form of the business entities that can 

be used as the vehicle for the investments and (ii) the areas of business that can be entered into by the 

respective investors. The New Investment Law stipulates that foreign investment can only be made in the form 

of a limited liability company whereby domestic investment can be made through a limited liability company 

or other forms of business entities, including sole proprietorship. In addition, certain business areas are closed 

for foreign investments or opened with certain conditions. However, the rights and obligations accorded to the 

domestic investors and foreign investors are largely the same. The following are the salient features of the 

New Investment law: 

(a) Investment Protection 

Similar to the Foreign Investment Law, the New Investment Law provides for assurances that the 

government will not conduct nationalization except where it is declared by law and then only upon 

payment of fair market price (Article 7). In addition, the New Investment Law also includes assurances 

that investors will have the rights to repatriate capital denominated in foreign exchange in the form of 

capital, after-tax profits, repayments of debts, etc. However, the New Investment Law stipulates that such 

right is subject to (i) the government’s authority to impose rules requiring reports on the transfer of funds; 

(ii) the right of the government to collect taxes, royalties, and other form of state’s revenues; (iii) the laws 

protecting the rights of creditors; and (iv) law enforcement to avoid losses to the state. 

The New Investment Law also includes an assurance from the government that it would extend the 

same treatment to all investors irrespective of their country of origins. However, such assurances would 

not preclude the government from extending special treatments to investors from certain country under a 

bilateral agreement with Indonesia. 

(b) Labour Practices 

The New Investment Law imposes the obligation to foreign investment company to prioritize the 

employment of Indonesian nationals (Article 10). However, the New Investment Law allows the 

employment of expatriates at certain positions and expertises. The employment of expatriates also 

requires the said expatriate to conduct transfer of knowledge, technology and expertise to Indonesiannational 

employees in accordance with the prevailing law and regulation. Under Indonesian law, a foreign 

investment company may employ expatriates to serve as its directors and commissioners, except for the 

director in charge of personnel affairs who is required to be an Indonesian citizen. 

A4-1

(c) Areas of Business 

The New Investment Law stipulates that all business sectors or areas are open for investments, 

except certain areas that are closed or opened with certain conditions. In connection with the implementation 

of the New Investment Law, the government had recently enacted Presidential Regulation No. 77 of 

2007 as amended by Presidential Regulation No. 111 of 2007 regarding business areas that are closed or 

opened for foreign investment. Under this new regulation, most business sectors had been opened to 

foreign direct investment, except for certain sectors specifically determined by the government. In 

addition, conditions may be imposed for foreign investment in certain business sectors. These conditions 

include, amongst others, the obligations to maintain certain minimum Indonesian participation and the 

obligations to cooperate with small businesses or cooperatives. The obligations to maintain minimum 

Indonesian participation, in most cases in the form of the requirement for Indonesians to hold at the 

minimum 5.0% of the shareholding in the foreign investment company, are applied to foreign investments 

in the areas such as power generation, plantation, certain industry using land area or has production 

capacity above certain threshold, etc. 

Note that Article 33 of the New Investment Law stipulates that any investor (whether domestic or 

foreign) investing in the shares of an Indonesian limited liability company is prohibited from entering 

into an agreement and/or making a statement asserting that share ownership in such limited liability 

company is for and on behalf of another person. Such agreement or statement is deemed null and void by 

operation of law. 

(d) Rights and Obligations of Investors 

The New Investment Law stipulates that investor is entitled to receive: 

(i) legal and right certainty as well as protection; 

(ii) freedom of information; 

(iii) rights to be served; and 

(iv) other facilities as provided by the prevailing regulations. 

However, the New Investment law also imposes extensive obligations and responsibilities to 

investors. These obligations include (i) the obligation to implement good corporate practices and 

corporate social responsibilities; (ii) the responsibility to ensure that the invested fund comes from 

legitimate sources; and (iii) the obligation to protect the environment and to observe fair competitive 

practices. 

Pursuant to Article 34 of the New Investment Law, failure to comply with the aforesaid obligations 

may lead to the imposition of certain administrative sanctions, including the restriction on business 

activities or the revocation of the businesses and/or investment facilities by an authorised agency or 

institution in accordance with the prevailing laws and regulations. In addition to administrative sanctions, 

business entities or sole proprietorship may be imposed with other sanctions in accordance with the 

prevailing laws and regulations. 

(e) Permits and Licenses 

Under the New Investment Law, all matters relating to investments will be handled by the Indonesian 

Investment Coordinating Board (Badan Koordinasi Penanaman Modal, or “BKPM”) under the so-called 

“one-roof” policy. This policy has the objective of reducing the bureaucratic formalities which are 

currently existing in various business sectors. However, the implementation of this policy remains unclear 

as the government has not enacted the relevant implementation regulation. 

BKPM had issued implementing regulations under the previous Foreign Investment Law pertaining 

to guidelines and procedures for filing applications for foreign investment and the approval of foreign 

investment. These implementing regulations remain effective until the government issued new implementing 

regulations under the New Investment Law. 

Environmental Protection Law 

Indonesian companies operating in the industrial sectors are generally subject to various environmental 

laws relating to water, air and noise pollution and the management of hazardous and toxic waste. The principal 

environmental regulations in Indonesian are Law No. 23/1997 concerning Environmental Management, 

Government Regulation No. 27/1999 concerning Analysis on Environmental Impact (“ANDAL”) and their 

A4-2

espective implementation regulations. In addition, there were various ministerial decrees, provincial and local 

regulations regarding the environmental protection and the maintenance of the environmental quality. 

The Indonesian environmental regulations require all parties to protect the environment and prohibit any 

business or activity that degrades the quality of the environment. Industries whose operation and activities may 

have certain impacts to the environment are required prepare and file certain documents such as ANDAL, 

Environment Management Plan (“RKL”) and the Environment Monitoring Plan (“RPL”) concerning the impact 

of its activities. In addition, such industries are obligated to conduct monitoring, prevention, maintenance and 

reporting obligations depending on the type of waste produced by them. If such industries breach their 

obligation, they may be required to pay compensation to the injured party, remedy the condition of the 

pollution, and/or be subject to criminal sanctions. 

Employment Law 

On February 25, 2003, the Indonesian Parliament passed a new employment law, Law No. 13 of 2003 

(the “Employment Law”), which took effect on March 25, 2003. The Employment Law includes certain 

protection for the employees which were not available or clearly prescribed in the preceding employment 

regulations. Such protections include (i) the requirement for an employer to obtain a ruling from the Industrial 

Relations Court for the termination of the employment of an employee in certain situations; (ii) the obligation 

of the employer to pay certain increment of severance amount, service and compensation payment to 

employees in the event that the employment of such employees are terminated; (iii) the right of an employee 

to resign in the event of mergers, consolidations and acquisitions and to receive certain severance amount upon 

such resignation; (iv) the restrictions on the ability of the employer to outsource the essential parts of their 

business activities to a third party contractor (e.g. to a labour supplier company); (v) the rights for the 

employees to unionize without intervention from employers and (vi) the rights for the employees to hold a 

legal, orderly and peaceful strike. 

Company Law 

Indonesia recently adopted a new Company Law, Law No. 40 of 2007. The new Company Law replaces 

the previous Company Law, Law No. 1 of 1995. Although the new Company Law retains much of the 

provisions of the old law, it also introduces certain significant changes and new concepts or ideas. One of the 

most important changes brought by the new Company Law is the imposition of an obligation to companies 

operating in the areas involving management or extraction of natural resources to implement certain corporate 

social and environmental responsibilities. Details of the corporate social and environmental responsibilities will 

be set out in a new government regulation, which will serve as the principal implementation regulation for this 

new matter. In addition to the corporate social and environmental responsibilities, the new Company Law also 

espouses the creation of a simpler system for the incorporation of new companies, reporting of amendments to 

the companies’ articles of association and the establishment of a centralized registration system which will be 

accessible to the public. 

Under the new Company Law, Indonesian companies can no longer issue bearer shares. All shares issued 

by Indonesian companies must be in the form of registered shares. The new Company Law also expands the 

scope of companies subjected to the mandatory requirement to have their financial reports audited by public 

accountant. Under the new Company Law, companies operating in the financial sectors, or issuing debentures 

to the public, or having assets or business circulation in excess of Rp 50 billion are required to have their 

financial statements audited by public accountant. 

The new Company Law also clarifies certain areas that are previously ambiguous or unclear under the old 

law. Such clarifications include, amongst others, the restatement that dividends may only be distributed if the 

company has a positive net profit. If in the course of a financial year, a company distributes interim dividend 

but at the end of such financial year suffers a loss, the dividend interim is required to be returned to the 

company. If such interim dividend is not returned, members of the company’s board of directors and board of 

commissioners are jointly and severally liable for the losses suffered by the company. 

Summary of Other Laws and Regulations Applicable to Us. 

We own sets of tugs and barges which are operating in the Middle East. As these vessels are registered in 

Singapore, they are subject to Singapore legislation and Singapore-ratified Conventions, as described below. 

Apart from these, we have acquired a 49.0% share in WAIL, which in turn owns Otto 1 Ltd., the company 

which owns Otto 1. Otto 1 and other vessels purchased by entities in which our associated companies have 

A4-3

interests and which are incorporated in Saint Vincent and the Grenadines, will fly the Saint Vincent and the 

Grenadines flag. 

Singapore Merchant Shipping Act (“MSA”) 

Singapore registered vessels have to comply with the various requirements set out in the Merchant 

Shipping Act. Such requirements include, among others: 

(a) the number and standard of competence of officers and seamen operating and manning our 

vessels; 

(b) crew agreements, engagement and discharge of seamen; 

(c) installation of safety equipment onboard vessels; and 

(d) surveys and inspections to be undertaken on vessels. 

Singapore Prevention of Pollution of the Sea Act (“PPSA”) 

Under Part III of the PPSA, among other offences, the master, the owner and the agent of the ship shall 

each be guilty of an offence if: (i) any disposal of discharge of refuse, garbage, waste matter, trade effluent, 

plastics or marine pollutant in packaged form occurs from any ship into Singapore waters; (ii) any discharge 

of oil or oily mixture occurs from a Singapore ship into any part of the sea or from any ship into Singapore 

waters, being a substance or mixture carried as cargo or part cargo in bulk, occurs from a Singapore ship into 

the sea or from any ship into Singapore waters; or (iii) any discharge of a noxious liquid substance, or of a 

mixture containing a noxious liquid substance, being a substance or mixture carried as cargo or part cargo in 

bulk, occurs from a Singapore ship into the sea or from any ship into Singapore waters. The penalties for 

these offences differ and the party convicted may be liable for a fine or imprisonment or both. The master, the 

owner of the ship and the agent may each be guilty of the offence and individually liable for the specified 

penalty. Further, Section 17 and Section 18 of the PPSA provide that the owner of the ship found to have 

discharged any of the above-mentioned substances shall be liable for the costs of removing the same and for 

preventing or reducing any damage caused in Singapore which results from such discharge. 

It is not however, an offence, if discharge is necessary (a) for the purpose of securing the safety of a ship 

or saving life at sea, or (b) in consequence of damage, other than intentional damage, to the ship or its 

equipment and all reasonable precautions were taken after the occurrence of the damage or the discovery of 

the discharge for the purpose of preventing or minimising the escape of the matter or substances described in 

the preceding paragraph; or (c) in the case of (ii) and (iii) in the preceding paragraph, if the discharge was for 

the purpose of combating specific pollution incidents in order to minimise the damage from pollution and was 

approved by the appointed authority, and, where the discharge occurred in the jurisdiction of the government 

of a country other than Singapore, by that government. 

Singapore Merchant Shipping (Civil Liability and Compensation for Oil Pollution) Act (“CLCA”) 

The CLCA gives effect to the International Convention on Civil Liability for Oil Pollution Damage 1992 

(“the CLC”) and to the International Convention on the Establishment of an International Fund for Compensation 

for Oil Pollution Damage 1992. 

The CLCA provides that owners of vessels which cause damage in the territory of Singapore by 

contamination resulting from the discharge or escape of oil shall be liable for such damage, the cost of any 

measures taken after such discharge or escape for the purpose of preventing or reducing such damage and for 

damage caused in the territory of Singapore by the measures so taken. The CLCA also provides for the 

limitation of liability for damage caused by the discharge or escape of oil and for the availability of an 

international fund for compensation to the person suffering the damage caused. Such international fund is 

contributed to by importers as well as receivers of oil. 

International Conventions 

The ownership, operation and/or management of ships are highly regulated, and are subject to 

international conventions, national, state and local laws and regulations in force in the countries in which our 

vessels may operate or are registered, as well as other applicable codes, guidelines and standards recommended 

by the International Maritime Organization (“IMO”), the flag state governments, classification societies and 

maritime industry organisations. Under our charter agreements in relation to the vessels, the operators of the 

A4-4

vessels would be responsible for complying with all applicable regulations and maintaining all requisite 

licences. 

The IMO has adopted various international conventions, rules and regulations (collectively the “IMO 

Regulations”) which are in turn adopted and implemented by member states who have ratified or acceded to 

the IMO. 

The relevant IMO Regulations to which our vessels are subject (together with any amendments and 

annexes thereto) are as follows: 

IMO Convention, 1948 

International Convention for the Safety of Life at Sea (SOLAS), 1974 

International Convention on Load Lines, 1966 

International Convention on Tonnage Measurement of Ships, 1969 

Convention on the International Regulation for Preventing Collisions at Sea, 1972 (COLREGs) 

International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978 

International Convention on Maritime Search and Rescue, 1979 

Convention on the International Maritime Satellite Organization, 1976 

Convention on Facilitation of International Maritime Traffic, 1965 

International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol 

of 1978 relating thereto (MARPOL 73/78) 

International Convention on Civil Liability for Oil Pollution Damage (CLC), Protocol 1992 

International Convention on the Establishment of an International Fund for Compensation for Oil 

Pollution Damage (FUND), 1971 

Convention on Limitation of Liability for Maritime Claims (LLMC), 1976 

Convention for Suppression of Unlawful Acts Against the Safety of Maritime Navigation, 1988 

International Convention on Oil Pollution Preparedness, Response and Co-operation, 1990 

International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 

The International Management Code for the Safe Operation of Ships and for Pollution Prevention 

(“ISM Code”); and 

The International Ship and Port Facility Security Code (“ISPS Code”); 

International Convention for the Safety of Life at Sea 

One of the conventions adopted by IMO is SOLAS, 1974, which specifies minimum standards for the 

construction, equipment and operation of vessels including the installation of fire-fighting systems and 

machinery and electrical equipment which are essential for the safety of the vessel under various emergency 

conditions. We are classed by American Bureau Shipping. 

International Convention on Load Lines (“LL”) 

The IMO has also adopted the LL conventions, which impose a variety of standards to regulate design 

and operational features of ships and safety of the crew. The LL conventions standards are revised 

periodically. 

Global Maritime Distress and Safety System Regulations (“GMDSS”) 

The GMDSS regulations, which constitute part of the SOLAS Convention, apply to vessels of 300 GRT 

or above and became mandatory for such vessels from 1 February 1999. The GMDSS convention requires 

such vessels to be able to transmit ship-to-shore distress alerts by at least two separate and independent means, 

each using a different radio communication service, as well as transmit and receive ship-to-ship distress alerts. 

A4-5

International Convention for the Prevention of Pollution from Ships (“MARPOL”) 

Our vessels are also required to comply with the requirements of the PPSA which gives effect to 

MARPOL, as added to by the protocol of 1978. MARPOL is another convention introduced by IMO. 

MARPOL prescribes regulations which deal with or relate to pollution and environmental issues, 

including accidental or operational oil pollution, pollution caused by chemicals, cargoes or goods transported 

or sewage. Our vessels comply with all relevant MARPOL regulations. In Singapore, the MARPOL is given 

effect by the PPSA. 

The International Convention on Tonnage Measurement of Ships 1969 

The International Convention on Tonnage Measurement of Ships, 1969, adopted by IMO in 1969, 

establishes a universal tonnage measurement system. Ship tonnage often forms the basis for port and other 

dues, manning regulations, safety rules and registration fees. The convention provides for gross and net 

tonnages, both of which are calculated independently. All our vessels carry 1969 Tonnage Certificates. 

The International Convention on Civil Liability for Oil Pollution Damage, Protocol 1992 

Many countries have ratified and currently follow the liability plan adopted by the IMO and set out in the 

International Convention on Civil Liability for Oil Pollution Damage of 1969. Singapore has, however, 

denounced the 1969 Convention and has instead acceded to the 1992 Protocol of the same. Under this 

Protocol, a vessel’s registered owner is strictly liable for pollution damage caused in the territorial waters of a 

contracting state and in Exclusive Economic Zones by the discharge of oil, subject to certain complete 

defences. For vessels of 5,000 to 140,000 gross tons (a unit of measurement for the total enclosed spaces 

within a vessel), liability will be limited to approximately US$3.8 million plus approximately US$538 for each 

additional gross ton over 5,000. For vessels of over 140,000 gross tons, liability will be limited to 

approximately US$76.5 million. The right to limit liability is forfeited where the spill is caused by the owner’s 

actual fault; a shipowner cannot limit liability where the spill is caused by the owner’s personal act or 

omission, committed with the intent to cause such damage, or recklessly and with knowledge that such 

damage would probably result. Vessels trading in jurisdictions that are parties must provide evidence of 

insurance covering the liability of the owner. In jurisdictions where either the Convention or the Protocol(s) 

has not been adopted, including the United States, various legislative schemes or common law govern, and 

liability is imposed either on the basis of fault or in a manner similar to that convention. In Singapore, the 

CLC and the International Convention on the Establishment of an International Fund for Compensation for Oil 

Pollution Damage 1991 are given effect by the CLCA. 

The International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 

(“STCW”) 

STCW prescribes minimum standards relating to training, certification and watchkeeping for seafarers on 

an international level, which countries are obliged to meet or exceed. By December 2000, STCW had 135 

parties representing 97.5 per cent. of world shipping tonnage. Previously the standards of training, certification 

and watchkeeping of officers and ratings were established by individual governments, usually without 

reference to practices in other countries. As a result standards and procedures varied widely. STCW also 

includes requirements for seafarers to hold valid certificates for employment at sea and port state control. One 

especially important feature of STCW is that it applies to ships of non-party states when visiting ports of states 

which are parties to STCW. 

ISM Code 

The ISM Code provides an international standard for the safe management and operation of ships and for 

pollution prevention, which we and our vessels duly comply. 

The ISM Code requires the ship owner, or any other person who has assumed responsibility for the 

operation of the ship from the ship owner, such as the manager or the bareboat charterer, to develop, 

implement and maintain a Safety Management System (“SMS”) in relation to the ISM Code. The SMS should 

include, inter alia, the following requirements: 

a safety and environmental protection policy, to be implemented and maintained both ship based as 

well as shore based; 

A4-6

instructions and procedures in an effort to achieve the safe operation of the ships and protection of the 

environment in compliance with relevant international and flag state legislation; 

procedures for reporting accidents, or to prepare for and respond to emergency situations, and 

procedures for internal audits and reviews. 

ISPS Code 

In view of growing threats from terrorist activities, recent amendments were made to the SOLAS dealing 

specifically with maritime security, most of which are contained in the ISPS Code and impose various detailed 

security obligations on vessels and port authorities, which came into effect on 1 July 2004. 

Among the various requirements are onboard installation of automatic information system, or AIS, to 

enhance vessel-to-vessel and vessel-to-shore communications, on-board installation of ship security alert 

systems, the development of vessel security plans, and compliance with flag state security certification 

requirements. 

Inspection by Classification Societies 

Classification societies are independent, self-regulating, externally audited bodies. A new vessel is 

classified by a technical review of its design plans and related documents to verify compliance with the 

applicable rules of the classification society as well as attendance at its construction in the shipyard by a 

classification society surveyor(s) to verify that the construction is in compliance with the applicable rules of 

the classification society. In view of the operational elements covered by classification of vessels, we intend 

only to invest in vessels certified by major classification societies which are members of IACS such as 

American Bureau of Shipping, Bureau Veritas, China Classification Society, Det Norske Veritas, Germanischer 

Lloyd, Lloyd’s Register and Nippon Kaiji Kyokai. 

Every seagoing vessel is required to be “classed” by a classification society, who will certify that the 

vessel is “in class” signifying that the vessel has been built and is being maintained in accordance with the 

rules of the classification society and complies with applicable rules and regulations of the vessel’s country of 

registration and the international conventions of which that country is a signatory. 

In addition, where required to do so by international conventions and corresponding laws and ordinances 

of a flag state, the classification society will also undertake surveys on application or by official order, acting 

on behalf of the authorities concerned. 

The classification society may also undertake on request such other surveys that are required by 

regulations and requirements of the flag state. These surveys are subject to agreements made between the 

vessels’ classification society and the flag state concerned and/or to the regulations of the flag state. 

For maintenance of the class, regular and special surveys of hull and machinery, including the electrical 

plant, safety equipment, communication equipment and any special equipment classed, are required to be 

performed according to the following schedule: 

Annual surveys: This is conducted at intervals of 12 months (from the commencement date of the class 

period) for the hull and machinery (including the electrical plant, safety equipment, communication 

equipment and any special equipment classed). 

Intermediate surveys: Intermediate surveys, which are extended annual surveys, are normally conducted 

two and one-half years after each class renewal, and usually carried out on the second or third annual 

survey. 

Class renewal or special surveys: This is conducted at such intervals indicated by the type or 

classification for the hull of the vessel, and is usually carried out every four to five years. In a special 

survey, apart from the usual survey of hull and machinery, including the electrical plant, safety 

equipment, communication equipment and any special equipment classed, the vessel is thoroughly 

examined to determine the integrity of the structure, in particular the thickness of the steel structure. If 

there is excessive wear and tear suffered by the vessel, substantial cost may have to be incurred to 

reinforce the steel structure in order to allow the vessel to pass the survey. 

The classification society may grant a three to six month grace period for the completion of the special 

survey. In addition, the classification society may agree with the ship owner on an arrangement whereby the 

A4-7

vessel is subject to a continuous survey cycle, in which every part of the vessel would be surveyed within a 

five-year cycle (subject to any grace period granted) according to an agreed schedule on a staggered basis. 

Vessels are required to be dry-docked, usually twice in five years, for survey of the underwater parts and 

for repairs related to the inspections. 

If any defects are found by the classification surveyor during any survey of the vessel, he may require an 

immediate repair to be carried out. If, however, the surveyor considers it safe for the vessel to continue in 

service without an immediate repair, the surveyor will issue a condition of class, which will require the defect 

to be rectified by the ship owner within prescribed time limits. Any conditions of class must be repaired at the 

due time set out by the surveyor(s). 

All insurance underwriters make it a condition for insurance coverage that a vessel be certified as “in 

class” by a classification society. In addition, charterers will impose as a condition of the charter contract, that 

the vessel under charter must be duly certified by a classification society. 

A4-8

1. 

APPENDIX 5 

RULES OF THE OTTO MARINE SHARE AWARD SCHEME 

Name of the Share Award Scheme 

This Scheme shall be called the “Otto Marine Share Award Scheme”. 

2. Definitions 

2.1 In this Share Award Scheme, unless the context otherwise requires, the following words and expressions 

shall have the following meanings: - 

“Adoption Date” : The date on which the Share Award Scheme is adopted by resolution of 

the Shareholders of the Company 

“Articles” : The Articles of Association of the Company as amended or modified from 

time to time 

“Associate” : (i) In relation to a Controlling Shareholder (being an individual), means: 

(a) his/her spouse, child, adopted child, step-child, sibling and parent 

(his “immediate family”); 

(b) the trustees of any trust of which he/she or his/her immediate 

family is a beneficiary or, in the case of a discretionary trust, is a 

discretionary object; and 

(c) any company in which he/she and his/her immediate family 

together (directly or indirectly) have an interest of 30.0% or 

more; or 

(ii) in relation to a Controlling Shareholder (being a company) means any 

other company which is its Subsidiary or holding company or is a 

Subsidiary of such holding company or one in the equity of which it 

and/or such other company or companies taken together (directly or 

indirectly) have an interest of 30.0% or more 

“Auditors” : The auditors for the time being of the Company 

“Award” : A contingent award of Shares granted under Rule 5 of the Share Award 

Scheme 

“Award Letter” : A letter in such form as the Committee shall approve confirming an Award 

granted to a Participant by the Committee 

“Board” : The board of Directors for the time being of the Company 

“CDP” : The Central Depository (Pte) Limited 

“Committee” : A committee comprising Directors, which at all times shall include one 

independent Director, duly authorised and appointed by the Board to 

administer the Share Award Scheme. 

“Companies Act” : The Companies Act, Chapter 50 of Singapore, as amended or modified 

from time to time 

“Company” : Otto Marine Limited, a company incorporated in the Republic of Singapore 

“control” : the capacity to dominate decision-making, directly or indirectly, in relation 

to the financial and operating policies of a company 

“Controlling Shareholder” : A person who: 

(i) holds directly or indirectly 15.0% or more of the value of all voting 

shares in the Company; or 

“Date of Grant” 

(ii) in fact exercises control over the Company, 

: In relation to an Award, the date on which the Award is granted to a 

Participant 

“Director” : A director for the time being of the Company 

“Employee” : Any person who is a full-time employee (including an Executive Director) 

of the Company or any of its Subsidiaries 

“Executive Director” : A director from time to time of the Company and/or any of its 

Subsidiaries, holding office in an executive capacity in the Company and/ 

or such Subsidiary 

“Group” : The Company and its Subsidiaries 

“Market Day” : A day on which the SGX-ST is open for trading of securities 

A5-1

“Market Price” : The average of the dealt price for a Share as determined by reference to 

the last dealt prices of the Shares for the three (3) consecutive Market 

Days immediately preceding the date on which the Award shall be vested 

“New Shares” : The new Shares which may be allotted and issued from time to time 

pursuant to the release of Awards granted under the Share Award Scheme 

“Non-Executive Director” : A director (other than an Executive Director) from time to time of the 

Company and/or any of its Subsidiaries 

“Participant” : Any eligible person selected by the Committee to participate in the Share 

Award Scheme in accordance with the rules thereof 

“Performance-related : An Award in relation to which a Performance Condition is specified 

Award” 

“Performance Condition” : In relation to a Performance-related Award, the condition specified on the 

Date of Grant in relation to that Award 

“Performance Period” : In relation to a Performance-related Award, a period, the duration of which 

is to be determined by the Committee on the Date of Grant, during which 

the Performance Condition is to be satisfied 

“Record Date” : The date as at the close of business (or such other time as may have been 

prescribed by the Company) on which Shareholders of the Company must 

be registered in order to participate in the dividends, rights, allotments or 

other distributions (as the case may be) 

“Release” : In relation to an Award, the release at the end of the Vesting Period 

relating to that Award of all or some of the Shares to which that Award 

relates in accordance with Rule 7 and, to the extent that any Shares which 

are the subject of the Award are not released pursuant to Rule 7, the Award 

in relation to those Shares shall lapse accordingly, and “Released” shall be 

construed accordingly 

“Released Award” : An Award in respect of which the Vesting Period relating to that Award 

has ended and which has been released in accordance with Rule 7 

“Rules” : Rules of the Share Award Scheme and any reference to a particular Rule 

shall be construed accordingly 

“Scheme” : The Otto Marine Share Award Scheme, as the same may be modified or 

altered from time to time 

“SGX-ST” : Singapore Exchange Securities Trading Limited 

“Shares” : Ordinary shares in the capital of the Company 

“Shareholders” : Registered holders of Shares or in the case of Depositors, Depositors who 

have Shares entered against their names in the Depository Register 

“Subsidiary” : A company (whether incorporated within or outside Singapore and 

wheresoever resident) being a subsidiary for the time being of the 

Company within the meaning of Section 5 of the Companies Act 

“Vesting” : In relation to Shares which are the subject of a Released Award, the 

absolute entitlement to all or some of the Shares which are the subject of a 

Released Award and “Vest” and “Vested” shall be construed accordingly 

“Vesting Date” : In relation to Shares which are the subject of a Released Award, the date 

(as determined by the Committee and notified to the relevant Participant) 

on which those Shares have Vested pursuant to Rule 7 

“Vesting Period” : In relation to an Award, a period or periods, the duration of which is to be 

determined by the Committee at the Date of Grant 

“S$” : Singapore dollars 

‘‘%” or “per cent.” : Per centum or percentage 

2.2 The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings ascribed 

to them, respectively, in Section 130A of the Companies Act or any statutory modification thereof, as 

the case may be. 

2.3 Words importing the singular number shall, where applicable, include the plural number and vice versa. 

Words importing the masculine gender shall, where applicable, include the feminine and neuter gender. 

2.4 Any reference to a time of a day in the Share Award Scheme is a reference to Singapore time. 

A5-2

2.5 Any reference in the Share Award Scheme to any enactment is a reference to that enactment as for the 

time being amended or re-enacted. Any word defined under the Companies Act or any statutory 

modification thereof and used in the Share Award Scheme shall have the meaning assigned to it under 

the Companies Act. 

3. Objectives of the Share Award Scheme 

3.1 The Share Award Scheme is a share incentive scheme and is an integral part of employee incentive 

compensation in the Company’s variable wage system. The Share Award Scheme will give Participants 

an opportunity to have a direct interest in the value of the Company’s Shares and help achieve the 

following objectives: 

(a) to motivate Participants to optimise their performance standards, productivity and efficiency, to 

strive toward performance excellence and to maintain a high level of contribution to the Group by 

relating their total remuneration to the performance of the Group; 

(b) to make employee remuneration sufficiently competitive to attract potential employees with relevant 

skills to contribute to our Group by recognising contributions made or to be made and to create 

value for the Shareholders; 

(c) to retain key employees and directors of our Group whose contributions are essential to the longterm 

growth and profitability of our Group; 

(d) to promote commitment, dedication and instill loyalty, thereby resulting in a stronger identification 

by employees with the long-term prosperity of the Group; and 

(e) to foster an ownership culture within the Group which aligns the interest of the Participants with 

the interest of the Shareholders. 

4. Eligibility of Participants 

4.1 The following persons (except (i) directors and employees of the Company who are Controlling 

Shareholders or Associates of a Controlling Shareholder and (ii) Lee Kok Wah, the current Group 

managing director of the Company) shall be eligible to participate in the Share Award Scheme at the 

absolute discretion of the Committee at the Date of Grant : 

(a) he shall be: 

(i) an Employee; or 

(ii) a Non-Executive Director; 

(b) he shall have attained the age of twenty-one (21) years; and 

(c) he shall not be an undischarged bankrupt. 

4.2 The Participants to participate in the Share Award Scheme, and the number of Shares which are the 

subject of each Award to be granted to a Participant in accordance with the Share Award Scheme and 

the Vesting Period shall be determined at the absolute discretion of the Committee, which shall take into 

account: 

(a) the financial performance of the Group; 

(b) in respect of a Participant being an Employee, criteria such as his rank, job performance, potential 

for future development and his contribution to the success and development of the Group; and 

(c) in respect of a Participant being a Non-Executive Director, criteria such as his contribution to the 

success and development of the Group. 

In addition, for Performance-related Awards, the extent of effort required to achieve the Performance 

Condition within the Performance Period shall also be considered. 

4.3 Subject to the Companies Act and any requirement of the SGX-ST, the terms of eligibility for 

participation in the Share Award Scheme may be amended from time to time at the absolute discretion 

of the Committee. 

A5-3

5. Grant of Awards 

5.1 Awards represent the right of a Participant to receive fully paid Shares, their equivalent cash value or 

combinations thereof free of charge, upon the Participant achieving prescribed performance targets and 

upon expiry of the prescribed Vesting Periods. 

5.2 Performance Conditions in relation to Performance-related Awards set under the Share Award Scheme 

are intended to based on medium-term corporate objectives covering market competitiveness, quality of 

returns, business growth and productivity growth. 

5.3 The total number of Shares which are the subject of each Award to be granted to a Participant shall not 

exceed twenty five (25.0%) per cent. of the total Shares in respect of which the Company may grant 

Awards. 

5.4 Subject as provided in Rule 8, the Committee may grant Awards to Participants as the Committee may 

select in its absolute discretion, at any time during the period when the Share Award Scheme is in force. 

5.5 The Committee shall decide, in its absolute discretion, in relation to each Award: - 

(a) the Participant; 

(b) the Date of Grant; 

(c) the number of Shares which are the subject of the Award; 

(d) the prescribed Vesting Period(s); 

(e) the extent to which Shares which are the subject of that Award shall be Released at the end of each 

prescribed Vesting Period; 

(f) in the case of a Performance-related Award, the Performance Period and the Performance 

Condition; and 

(g) such other condition which the Committee may determine in relation to the Award. 

5.6 The Committee may amend or waive the Vesting Period(s) and, in the case of a Performance-related 

Award, the Performance Period and/or the Performance Condition in respect of any Award: 

(a) in the event of a general offer (whether conditional or unconditional) being made for all or any part 

of the Shares, or a scheme of arrangement or compromise between the Company and its 

Shareholders being sanctioned by the Court under the Companies Act, or a proposal to liquidate or 

sell all or substantially all of the assets of the Company; or 

(b) in the case of a Performance-related Award, if anything happens which causes the Committee to 

conclude that: 

(i) a changed Performance Condition would be a fairer measure of performance, and would be no 

less difficult to satisfy; or 

(ii) the Performance Condition should be waived as the Participant has achieved a level of 

performance that the Committee considers satisfactory notwithstanding that the Performance 

Condition may not have been fulfilled, 

and shall notify the Participants of such change or waiver (but accidental omission to give notice to any 

Participant(s) shall not invalidate any such change or waiver). 

5.7 Subject to prevailing legislation and SGX-ST guidelines, the Company will have the flexibility to deliver 

Shares to the Participants upon vesting of their Awards by way of an issue of Shares deemed to be fully 

paid upon their issuance and allotment and/or by way of the transfer of treasury shares (by way of 

purchase of existing Shares from the market for delivery to the Participants). 

5.8 In determining whether to issue Shares or to purchase existing Shares and transfer them to the 

Participants for purposes of satisfying Awards, the Company shall have the right to take into account 

factors such as (but not limited to) the number of Shares to be delivered, the prevailing market price of 

the Shares and the cost to the company of either issuing Shares, or purchasing existing Shares. 

A5-4

5.9 As soon as reasonably practicable after making an Award, the Committee shall send to each Participant 

an Award Letter confirming the Award and specifying in relation to the Award: - 

(a) the Date of Grant; 

(b) the number of Shares which are the subject of the Award; 

(c) the prescribed Vesting Period(s); 

(d) the extent to which Shares which are the subject of that Award shall be released at the end of each 

prescribed Vesting Period; and 

(e) in the case of a Performance-related Award, the Performance Period and the Performance 

Condition. 

5.10 Participants are not required to pay for the grant of Awards. 

5.11 An Award or Released Award shall be personal to the Participant to whom it is granted and no Award or 

Released Award or any rights thereunder shall be transferred, charged, assigned, pledged, mortgaged, 

encumbered or otherwise disposed of, in whole or in part, and if a Participant shall do, suffer or permit 

any such act or thing as a result of which he would or might be deprived of any rights under an Award 

or Released Award, that Award or Released Award shall immediately lapse. 

5.12 The grant of an Award to a Participant shall be accepted by the Participant within 30 days from the Date 

of Grant. The Participant may accept or refuse the whole but not part of a grant of an Award. If the 

grant of any Award is not accepted by the Participant within 30 days from the day of the grant, the offer 

shall upon the expiry of the 30-day period automatically lapse and shall be null and void. 

6. Events Prior to the Vesting Date 

6.1 An Award, to the extent not yet Released, shall forthwith become void and cease to have effect on the 

occurrence of any of the following events (and in such an event, the Participant shall have no claim 

whatsoever against the Company, its Directors or employees): 

(a) a Participant, being an Employee, ceasing for any reason whatsoever, to be in the employment of 

the Company and/or the relevant Subsidiary or in the event the company by which the Employee is 

employed ceases to be a company in the Group; 

(b) a Participant, being a Non-Executive Director, ceasing to be a director of the Company and/or the 

relevant Subsidiary, as the case may be, for any reason whatsoever; 

(c) upon the bankruptcy of the Participant or the happening of any other event which results in him 

being deprived of the legal or beneficial ownership of or interest in such Award; or 

(d) death of a Participant; 

(e) a Participant commits any breach of any of the terms of his Award; and/or 

(f) misconduct on the part of a Participant as determined by the Company in its discretion. 

For the purpose of Rules 6.1(a) above, an Employee shall be deemed to have ceased to be in the 

employment of the Company or the Subsidiary (as the case may be) on the date on which he gives 

notice of termination of employment, unless prior to the date on which termination takes effect, the 

Employee has (with the consent of the Company or the Subsidiary (as the case may be)) withdrawn 

such notice. 

For the purpose of Rule 6.1(b), a Participant shall be deemed to have ceased to be a Non-Executive 

Director as at the date the notice of resignation of or termination of directorship, as the case may be, is 

tendered by or is given to him, unless such notice shall be withdrawn prior to its effective date. 

6.2 The Committee may in its absolute discretion and on such terms and conditions as it deems fit, preserve 

all or any part of any Award notwithstanding the provisions of any other Rules including Rules 6.1 and 

7.1. Further to such exercise of discretion, the Awards shall be deemed not to have become void nor 

cease to have effect in accordance with the relevant provisions in Rule 6.1. 

A5-5

6.3 Without prejudice to the provisions of Rules 5.6 and 7.1, to the extent of an Award yet to be Released, 

if any of the following occurs: 

(a) a general offer (whether conditional or unconditional) being made for all or any part of the Shares; 

(b) a scheme of an arrangement or compromise between the Company and its Shareholders being 

sanctioned by the Court under the Companies Act; 

(c) an order for the compulsory winding-up of the Company is made; or 

(d) a resolution for a voluntary winding-up (other than for amalgamation or reconstruction) of the 

Company being made, 

the Committee may consider, at its discretion, whether or not to Release such Award. If the Committee 

decides to Release such Award, then in determining the number of Shares to be Vested in respect of 

such Award, the Committee will have regard to the proportion of the Vesting Period(s) which has 

elapsed and the extent to which the Performance Condition (if any) has been satisfied. Where such 

Award is Released, the Committee will, as soon as practicable after such Release, procure the allotment 

or transfer to each Participant of the number of Shares so determined, such allotment or transfer to be 

made in accordance with Rule 7. 

7. Release of Awards 

7.1 (a) In relation to each Performance-related Award, as soon as reasonably practicable after the end of 

the relevant Performance Period, the Committee shall review the Performance Condition specified 

in respect of that Award and determine whether it has been satisfied and, if so, the extent to which 

it has been satisfied. 

If the Committee determines in its sole discretion that the Performance Condition has not been 

satisfied or if the relevant Participant (being an Employee) has not continued to be an Employee 

from the Date of Grant up to the end of the relevant Performance Period, that Award shall lapse 

and be of no value and the provisions of Rule 7 (save for this Rule 7.1(a)) shall be of no effect. 

The Committee shall have the discretion to determine whether the Performance Condition has been 

satisfied (whether fully or partially) or exceeded and, in making any such determination, the 

Committee shall have the right to make reference to the audited results of the Company or the 

Group, as the case may be, to take into account such factors as the Committee may determine to be 

relevant, including changes in accounting methods, taxes and extraordinary events. 

Subject to: 

(i) in relation to a Performance-related Award, the Committee having determined that the 

Performance Condition has been satisfied; 

(ii) the relevant Participant (being an Employee) having continued to be an Employee from the 

Date of Grant up to the end of the relevant Vesting Period; 

(iii) the Committee being of the opinion that the job performance of the relevant Participant has 

been satisfactory; 

(iv) such consents (including any approvals required by the SGX-ST) as may be necessary; 

(v) compliance with the terms of the Award, the Share Award Scheme, the Articles and the 

Memorandum of Association of the Company; 

(b) 

(vi) where Shares are to be allotted or transferred on the release of an Award, the Participant 

having a securities account with CDP and compliance with the applicable requirements of 

CDP; and 

(vii) where New Shares are to be allotted on the release of an Award, the Company being satisfied 

that the Shares which are the subject of the Released Award will be listed for quotation on the 

SGX-ST, 

upon the expiry of each Vesting Period in relation to an Award, the Company shall Release to the 

relevant Participant the Shares to which his Award relates on the Vesting Date. 

Shares which are the subject of a Released Award shall be Vested to a Participant on the Vesting 

Date, which shall be a Market Day falling as soon as practicable after the Release of such Award in 

A5-6

accordance with Rule 7.1(a) and, the Company shall within ten (10) Market Days after the Vesting 

Date, allot the relevant Shares and dispatch to CDP the relevant share certificates by ordinary post 

or such other mode as the Committee may deem fit, or in the case of a transfer of Shares, do such 

acts or things which are necessary for the transfer to be effective. 

(c) Where new Shares are allotted upon the Vesting of any Award, the Company shall, as soon as 

practicable after such allotment, apply to the SGX-ST for the listing and quotation of such Shares. 

7.2 Shares which are allotted or transferred on the Release of an Award to a Participant shall be registered 

in the name of, or transferred to, CDP to the credit of the securities account of that Participant 

maintained with CDP or the securities sub-account of that Participant maintained with a Depository 

Agent. 

7.3 New Shares allotted and issued and/or Shares transferred, upon the Release of an Award shall: 

(a) be subject to all the provisions of the Articles and the Memorandum of Association of the 

Company; and 

(b) rank for any dividend, right, allotment or other distribution on the Record Date of which is on or 

after the relevant Vesting Date and (subject as aforesaid) will rank pari passu in all respects with 

the Shares then existing. 

7.4 The Committee may determine to vest an Award, wholly or partly, in the form of cash rather than 

Shares, in which event the Participant shall receive, in lieu of all or part of the Shares which would 

otherwise have been allotted or transferred to him on the release of this Award, the aggregate Market 

Price of such Shares. In determining whether to release an Award, wholly or partly, in the form of cash 

rather than Shares, the Committee will take into account factors such as (but not limited to) the cost to 

the Company of releasing an Award, wholly or partly, in the form of cash rather than Shares. 

In considering the cost factor, the Committee will take into account relevant factors such as taxation 

issues arising from the issue of new Shares and/or purchase of existing Shares and the payment of cash, 

the availability of cash for payment and cost of funding the cash payment, if necessary 

8. Limitation on the Size of the Share Award Scheme 

The total number of new Shares which may be issued pursuant to Awards granted on any date, when 

added to the number of new Shares issued and issuable in respect of all Awards granted under the Share 

Award Scheme, shall not exceed fifteen (15.0) per cent. of the issued share capital of the Company on 

the day preceding that date. 

The number of existing Shares which may be purchased from the market for delivery pursuant to 

Release of Awards granted under the Share Award Scheme, will not be subject to any limit. 

Alternatively, the Company may make a release of Awards in cash instead of Shares and Participants 

entitled to such Awards will receive in lieu of Shares, the aggregate market value of such Shares. Such 

methods will not be subject to any limit as they do not involve the issue of any New Shares. 

9. Adjustment Events 

9.1 If a variation in the issued share capital of the Company (whether by way of a capitalisation of profits 

or reserves, rights issue, reduction, subdivision, consolidation, distribution or otherwise) shall take place, 

then: 

(a) the number of Shares which are the subject of an Award to the extent not yet Vested and the rights 

attached thereto; and/or 

(b) the number of Shares in respect of which Awards may be granted under the Share Award Scheme, 

may, at the option of the Committee, be adjusted in such manner as the Committee may determine to be 

appropriate, provided that any such adjustment shall be made in such a way that a Participant will not 

receive a benefit that a Shareholder does not receive. 

A5-7

9.2 Unless the Committee considers an adjustment to be appropriate: 

(a) the issue of securities as consideration for an acquisition or a private placement of securities; 

(b) the increase in the number of issued shares as a consequence of the exercise of options or other 

convertibles entitling holders of such options or convertibles to acquire Shares in the capital of the 

Company; 

(c) the cancellation of issued shares purchased or acquired by the Company by way of a market 

purchase of such shares undertaken by the Company on the SGX-ST during the period when a 

share purchase mandate granted by Shareholders (including any renewal of such mandate) is in 

force; and 

(d) the increase in the issued share capital of the Company as a consequence of the delivery of Shares 

pursuant to the Vesting of Awards from time to time by the Company or through any other sharebased 

incentive schemes implemented by the Company, 

shall not normally be regarded as a circumstance requiring adjustment. 

9.3 Notwithstanding the provisions of Rule 9.1, any adjustment (except in relation to a capitalisation issue) 

must be confirmed in writing by the Auditors (acting only as experts and not as arbitrators) to be in 

their opinion, fair and reasonable. 

9.4 Upon any adjustment being made pursuant to this Rule 9, the Company shall notify the Participant (or 

his duly appointed personal representatives where applicable) in writing and deliver to him (or his duly 

appointed personal representatives where applicable) a statement setting forth the number of Shares 

thereafter to be issued or transferred on the Vesting of an Award and the date on which such adjustment 

shall take effect. 

9.5 Notwithstanding the provisions of Rule 9.1 or that no adjustment is required under the provisions of the 

Share Award Scheme, the Committee may, in any circumstances where it considers that no adjustment 

should be made or that it should take effect on a different date or that an adjustment should be made to 

any of the matters referred to in Rule 9.1 notwithstanding that no adjustment is required under the said 

provisions (as the case may be), request the Auditors to consider whether for any reasons whatsoever the 

adjustment or the absence of an adjustment is appropriate or inappropriate as the case may be, and, after 

such consideration, no adjustment shall take place or the adjustment shall be modified or nullified or an 

adjustment made (instead of no adjustment made) in such manner and on such date as shall be 

considered by such Auditors (acting only as experts and not as arbitrators) to be in their opinion 

appropriate. 

10. Administration of the Share Award Scheme 

10.1 The Share Award Scheme shall be administered by the Committee in its absolute discretion, with such 

powers and duties as are conferred on it by the Board, provided that no member of the Committee shall 

participate in any deliberation or decision in respect of Awards granted or to be granted to him or held 

by him. 

10.2 The Committee shall have the power, from time to time, to make and vary such arrangements, guidelines 

and/or regulations (not being inconsistent with the Share Award Scheme) for the implementation and 

administration of the Share Award Scheme, to give effect to the provisions of the Share Award Scheme 

and/or to enhance the benefit of the Awards and the Released Awards to the Participants, as it may, in 

its absolute discretion, think fit. 

10.3 The Company shall bear the costs of establishing and administering the Share Award Scheme. 

11. Notices 

11.1 A Participant shall not by virtue of being granted any Award be entitled to receive copies of any notices 

or other documents sent by the Company to the holders of Shares. 

11.2 Any notice or other communication between the Company and a Participant may be given by sending 

the same by prepaid post or by personal delivery to, in the case of the Company, its registered office 

and, in the case of the Participant, his address as notified by him to the Company from time to time. 

A5-8

11.3 Any notice or other communication sent by post: 

(a) by the Company shall be deemed to have been received 24 hours after the same was put in the post 

properly addressed and stamped; 

(b) by the Participant shall be deemed to have been received when the same is received by the 

Company at the registered office of the Company. 

12. Modifications to the Share Award Scheme 

12.1 Any or all the provisions of the Share Award Scheme may be modified and/or altered at any time and 

from time to time by resolution of the Board, except that: 

(a) no modification or alteration shall be made which would adversely affect the rights attached to any 

Award granted prior to such modification or alteration except with the prior consent in writing of 

such number of the Participants who, if their Awards were Released to them upon the expiry of all 

the Vesting Periods applicable to their Awards, would be entitled to not less than seventy-five 

(75.0) per cent. of the aggregate value of the Shares which would fall to be vested upon the Release 

of all outstanding Awards upon the expiry of all the Vesting Periods applicable to all such 

outstanding Awards; 

(b) no modification or alteration to the definitions of “associate”, “Committee”, “Controlling Shareholders”, 

“Employee”, “Participant”, “Performance Period” and “Vesting Period” and the provisions 

of Rules 4, 5, 7, 8, 9, 10 and this Rule 12 shall be made to the advantage of the Participants except 

with the prior approval of the Shareholders of the Company in general meeting; and 

(c) no modification or alteration shall be made without the prior approval of the SGX-ST and such 

other regulatory authorities as may be necessary. 

12.2 Notwithstanding anything to the contrary contained in Rule 12.1, the Board may at any time by 

resolution (and without other formality, save for the prior approval of the SGX-ST) amend or alter the 

Share Award Scheme in any way to the extent necessary to cause the Share Award Scheme to comply 

with any statutory provision or the provision or the regulations of any regulatory or other relevant 

authority or body (including the SGX-ST). 

12.3 Written notice of any modification or alteration made in accordance with this Rule 12 shall be given to 

all Participants but accidental omission to give notice to any Participant(s) shall not invalidate any such 

modifications or alterations. 

13. Terms of Employment Unaffected 

Notwithstanding the provisions of any other Rule: 

(a) the Share Award Scheme or any Award shall not form part of any contract of employment between 

the Company and/or any Subsidiary and/or any Employee and the rights and obligations of any 

individual under the terms of the office or employment with any such company shall not be affected 

by his participation in the Share Award Scheme or any right which he may have to participate in it 

or any Award which he may be granted and the Share Award Scheme or any Award shall afford 

such an individual no additional rights to compensation or damages in consequence of the 

termination of such office or employment for any reason whatsoever (whether lawful or not); and 

(b) the Share Award Scheme shall not confer on any person any legal or equitable rights (other than 

those constituting the Awards themselves) against the Company and/or any Subsidiary directly or 

indirectly or give rise to any cause of action at law or in equity against any such company, its 

directors or employees. 

14. Duration of the Share Award Scheme 

14.1 The Share Award Scheme shall continue to be in operation at the discretion of the Committee for a 

maximum period of ten (10) years commencing on the Adoption Date, provided always that the Share 

Award Scheme may, subject to applicable laws and regulations, continue beyond the above stipulated 

period with the approval of the Shareholders by ordinary resolution in general meeting and of any 

relevant authorities which may then be required. 

A5-9

14.2 The Share Award Scheme may be terminated at any time by the Committee and by resolution of the 

Shareholders in general meeting, subject to all relevant approvals which may be required and if the 

Share Award Scheme is so terminated, no further Awards shall be granted by the Company hereunder. 

14.3 The termination of the Share Award Scheme shall not affect Awards which have been granted, whether 

such Awards have been Released (whether fully or partially) or not. 

15. Annual Report Disclosure 

The Company shall make the following disclosures in its annual report to Shareholders for the duration 

of the Share Award Scheme: 

15.1 the names of the members of the Committee; 

15.2 information as required in the table below for the following Participants: 

(a) Participants who are Directors; 

(b) Participants who are Controlling Shareholders or Associates of Controlling Shareholders; 

(c) Participants (other than those in paragraphs (a) and (b) above) who have received Shares pursuant 

to the release of Awards granted under the Share Award Scheme which, in aggregate, represent five 

(5) per cent. or more of the aggregate of the total number of New Shares available under the Share 

Award Scheme, 

the following information: 

1. name of the Participant; 

2. the aggregate number of Shares comprised in the Awards granted during the financial year under 

review; 

3. the number of New Shares allotted to such Participant during the financial year under review; 

4. the number of existing Shares purchased for delivery pursuant to release of Awards under the Shaer 

Award Scheme during the financial year under review; 

5. the aggregate number of Shares comprised in Awards which have not been released as at the end of 

the financial year under review; 

6. the aggregate number of Shares comprised in the Awards granted from the commencement of the 

Share Award Scheme to the end of financial year under review; 

7. the number of New Shares allotted to such Participant since the commencement of the Share Award 

Scheme to the end of financial year under review; and 

8. the number of existing Shares transferred to such Participant since the commencement of the Share 

Award Scheme to the end of the financial year under review. 

15.3 in relation to the Share Award Scheme, the following particulars: 

(a) the aggregate number of Shares comprised in Awards vested since the commencement of the Share 

Award Scheme to the end of the financial year under review; 

(b) the aggregate number of New Shares issued which are comprised in Awards vested during the 

financial year under review; and 

(c) the aggregate number of Shares comprised in Awards which have not been released as at the end of 

the financial year under review. 

If any of the disclosure above in the foregoing of this Rule 15 is not applicable, an appropriate negative 

statement will be included in the annual report. 

16. Taxes, Costs and Expenses of the Share Award Scheme 

16.1 Notwithstanding anything herein, each Participant shall be responsible for all fees of CDP relating to or 

in connection with the issue and allotment of any Shares or transfer of Shares pursuant to the Release of 

any Award in CDP’s name, the deposit of share certificate(s) with CDP, the Participant’s securities 

account with CDP, or the Participant’s securities sub-account with a CDP Depository Agent. 

A5-10

16.2 The Participants shall be responsible for obtaining any governmental or other official consent that may 

be required by any country or jurisdiction in order to permit the grant or Vesting of the relevant Award. 

All taxes (including income tax) arising from the grant or Vesting of any Award under the Share Award 

Scheme shall be borne by that Participant. The Company shall not be responsible for any failure by the 

Participant to obtain any such consent or for any tax or other liability to which the Participant may 

become subject as a result of his participation in the Share Award Scheme. 

17. Disclaimer of Liability 

Notwithstanding any provisions herein contained, the Company, its Directors or employees or the 

Committee shall not under any circumstances be held liable for any costs, losses, expenses liabilities or 

damages whatsoever and howsoever arising in respect of any matter under or in connection with the 

Share Award Scheme, including but not limited to any delay or failure to issue the Shares or procure the 

transfer of the Shares or to apply for or procure the listing of new Shares on the SGX-ST in accordance 

with Rule 7.1(c) (and any other stock exchange on which the Shares are quoted or listed). 

18. Disputes 

Any disputes or differences of any nature arising hereunder (other than matters to be confirmed by 

the Auditors in accordance with the Share Award Scheme) shall be referred to the Committee and its 

decision shall be final and binding in all respects (including any decisions pertaining to disputes as to 

interpretation of the Share Award Scheme or any Rule, regulation, procedure thereunder or as to any 

rights under the Share Award Scheme). 

19. Governing Law 

The Share Award Scheme shall be governed by, and construed in accordance with, the laws of the 

Republic of Singapore. The Participants, by being granted Awards in accordance with the Share Award 

Scheme, and the Company submit to the exclusive jurisdiction of the courts of the Republic of 

Singapore. 

A5-11


APPENDIX 6 

LETTER FROM INDEPENDENT FINANCIAL ADVISER 

TO THE INDEPENDENT DIRECTORS 

PROVENANCE CAPITAL PTE. LTD. 

(Company Registration No: 200309056E) 

(Incorporated in Singapore) 

138 Cecil Street #09-01 Cecil Court 


21 November 2008 

To: The Directors of Otto Marine Limited 

(deemed to be independent in respect of the Interested Person Transactions) 

Lee Kok Wah 

William Edward Alastair Morrison 

Craig Foster Pickett 

Reggie Thein 

Ng Chee Keong 

Dear Sirs, 

THE PROPOSED ADOPTION OF THE SHAREHOLDERS’ MANDATE FOR INTERESTED PERSON 

TRANSACTIONS 

Unless otherwise defined or the context otherwise requires, all terms used herein have the same meanings as 

defined in the Prospectus. 

1. Introduction 

Otto Marine Limited (the “Company”) is proposing to adopt a shareholders’ approval for a general 

mandate for the Company and its subsidiaries which are considered to be “entities at risk” within the 

meaning of Chapter 9 of the Listing Manual (together, the “Group”), or any member of the Group (the 

“Shareholders’ Mandate”), to enter into certain transactions (the “Mandated Transactions”) with a 

specified class of interested person, namely, Rimalco Sdn Bhd, and its subsidiaries and associated 

companies (“Rimalco”). 

It is anticipated that the Group would, in the ordinary course of its business, enter into recurring 

transactions with Rimalco with some degree of frequency and could arise at any time and from time to 

time. The details of these transactions are set out in “Interested Person Transactions and Conflicts of 

Interests — Present and Ongoing Interested Persons Transactions — Purchase of Sawn Timber by Us 

from Rimalco” on page 163 of the Prospectus. 

In accordance with Rule 906 of the Listing Manual, the Company is required to obtain Shareholders’ 

approval for any interested person transactions (or series of interested person transactions with the 

same interested person during the same financial year) of a value equal to or more than 5.0% of the 

Group’s latest audited NTA. Based on the Group’s audited NTA of approximately S$52.7 million as at 

31 December 2007, the relevant 5.0% threshold would be approximately S$2.6 million. 

The Group is proposing to adopt the Shareholders’ Mandate to cover the on-going and recurring 

transactions with the Interested Person. To comply with the requirements of Chapter 9 of the Listing 

Manual, Provenance Capital Pte. Ltd. (“Provenance Capital”) has been appointed as the independent 

financial adviser to provide an opinion on whether the review procedures set out in the Shareholders’ 

Mandate as described in the section “Interested Person Transactions and Conflicts of Interest” of the 

Prospectus under the sub-section “Shareholders’ Mandate” of the Prospectus, for determining the 

transaction prices and terms of the Mandated Transactions are sufficient to ensure that the transactions 

will be carried out on normal commercial terms and will not be prejudicial to the interests of the 

Company or its minority Shareholders. This letter (“Letter”) has been prepared for the use of the 

directors of the Company who are considered independent for the purposes of the proposed adoption of 

the Shareholders’ Mandate (the “Independent Directors”) and is to be incorporated into the Prospectus 

A6-1

in relation to the Offering which provides, inter alia, the details of the Shareholders’ Mandate and the 

recommendation of the Independent Directors thereon. 

2. Terms of Reference 

The objective of this Letter is to provide an independent opinion, for the purposes of Chapter 9 of 

the Listing Manual, on whether the review procedures set out in the Shareholders’ Mandate for 

determining the terms of the Mandated Transactions are sufficient to ensure that the transactions will be 

carried out on normal commercial terms and will not be prejudicial to the interests of the Company or 

the minority Shareholders of the Company. 

Provenance Capital’s views as set forth in this Letter are based on the prevailing market and 

economic conditions, and our analysis of the information provided in the Prospectus as well as 

information provided to us by the Company, as at the Latest Practicable Date, as defined in the 

Prospectus. Accordingly, this opinion shall not take into account any event or condition which occurs 

after the Latest Practicable Date. Provenance Capital is not and was not involved in any aspect of the 

discussions on the scope of the Shareholders’ Mandate, nor were we involved in the deliberations 

leading up to the decision by the Directors to obtain the Shareholders’ Mandate. 

In the course of our evaluation of the review procedures proposed in connection with the 

Shareholders’ Mandate, we have held discussions with the Directors and management of the Company. 

We have not independently verified information furnished by the Directors and management of the 

Company or any representation or assurance made by them, whether written or verbal, and accordingly 

cannot and do not warrant or accept responsibility for the accuracy or completeness of such information, 

representation or assurance. Nevertheless, the Directors have confirmed to us that to the best of their 

knowledge and belief, the information provided to us (whether written or verbal) as well as the 

information contained in the Prospectus constitutes a full and true disclosure, in all material respects, of 

all material facts relating to the Shareholders’ Mandate and there is no material information the omission 

of which would make any of the information contained herein or in the Prospectus inaccurate, 

incomplete or misleading in any material respect. 

We have also made reasonable enquiries and used our judgement in assessing such information and 

have found no reason to doubt the reliability of such information. We have further assumed that all 

statements of fact, belief, opinion and intention made by the Directors in the Prospectus have been 

reasonably made after due and careful enquiry. We have not conducted a comprehensive review of the 

business, operations and financial condition of the Company, the Group or the transactions described in 

the Prospectus. 

Our opinion is addressed to the Independent Directors for their benefit and deliberation on the 

Shareholders’ Mandate. The recommendations made to the Shareholders in relation to the Shareholders’ 

Mandate shall remain the responsibility of the Independent Directors. In preparing this Letter, we have 

not had regard to the specific investment objectives, financial situation, tax position or unique needs and 

constraints of any Shareholder. As different Shareholders would have different investment objectives, we 

would advise the Independent Directors to recommend that any individual Shareholder who may require 

specific advice in relation to his Shares should consult his stockbroker, bank manager, solicitor, 

accountant or other professional advisers. Our opinion in relation to the Shareholders’ Mandate 

should be considered in the context of the entirety of this Letter and the Prospectus. 

3. Evaluation of the Proposed Review Procedures for Interested Person Transactions 

3.1 General 

Background information on Rimalco and the nature of the Mandated Transactions are set out in 

“Interested Person Transactions and Conflicts of Interest — Present and Ongoing Interested Persons 

Transactions — Purchase of Sawn Timber by Us from Rimalco” on page 163 of the Prospectus. 

It is anticipated that the Group would, in the ordinary course of business, continue to purchase 

sawn timber from Rimalco. Further, with the expansion of its shipbuilding activities, the Group may 

increase its purchases of sawn timber from Rimalco. It is likely that such transactions will occur with 

some degree of frequency and could arise at any time and from time to time. In view of the timesensitive 

nature of commercial transactions, it would be advantageous for the Group to obtain the 

Shareholders’ Mandate to enter into certain Interested Person Transactions in its normal course of 

A6-2

usiness, provided that all such transactions are carried out on normal commercial terms and are not 

prejudicial to the Company or the minority Shareholders of the Company. 

Pursuant to Chapter 9 of the Listing Manual, transactions entered into by the Group with an 

interested person that is below S$100,000 in value for each of such transaction are not subject to the 

requirements of Chapter 9. Therefore, the Shareholders’ Mandate does not relate to any such Interested 

Person Transactions. In addition, the Shareholders’ Mandate will cover only recurrent transactions of a 

revenue or trading nature or those necessary for the day-to-day operations of the Group (such as the 

purchase and sale of supplies and materials) and will not cover transactions relating to the purchase or 

sale of assets, undertakings or businesses. 

Transactions with Interested Persons that do not fall within the ambit of the Shareholders’ Mandate 

shall be subject to the relevant provision of Chapter 9 and/or any other applicable provisions of the 

Listing Manual. 

3.2 Rationale for and Benefits of the Shareholders’ Mandate 

The full text of the Directors’ rationale for, and the benefits of adopting, the Shareholders’ Mandate 

can be found in the section “Interested Person Transactions and Conflicts of Interest” of the Prospectus 

under the sub-section “Rationale for and Benefits of the Shareholders’ Mandate” on page 167 of the 

Prospectus. 

We note, inter alia, the following: 

(a) the transactions with Rimalco entered into or to be entered into by the Group are in the 

ordinary course of business. They are recurring transactions that are likely to occur with some 

degree of frequency and arise at any time and from time to time. Having taken into 

consideration pertinent factors including, but not limited to the quality and reliability of 

product, pricing terms, delivery time and the track record of Rimalco, the Directors are of the 

view that it will be beneficial to the Group to transact or continue to transact with Rimalco; 

(b) the Shareholders’ Mandate and the renewal of the Shareholders’ Mandate on an annual basis 

will eliminate the need to convene separate general meetings from time to time to seek 

Shareholders’ approval as and when potential interested person transactions with Rimalco 

arise, thereby reducing substantially the administrative time and expenses in convening such 

meetings, without compromising the corporate objectives or adversely affecting the business 

opportunities available to the Group; and 

(c) the Shareholders’ Mandate is intended to facilitate transactions in the Group’s normal course 

of business which are transacted from time to time with the Interested Person, provided that 

they are carried out on normal commercial terms and are not prejudicial to the interests of the 

Company or the minority Shareholders of the Company. 

3.3 Guidelines and Review Procedures for Interested Person Transactions 

In general, there are procedures established by the Group to ensure that the Mandated Transactions 

with Rimalco are undertaken on an arm’s length basis and on normal commercial terms consistent with 

the Group’s usual business practices and policies, and on terms which are generally no more favourable 

to Rimalco than those extended to unrelated third parties. 

In particular, the following review procedures have been implemented: 

When purchasing sawn timber from Rimalco, the Group will obtain two other quotations from 

unrelated third party suppliers for comparison to ensure Rimalco’s quotations are fair and 

reasonable so as not to compromise the interests of minority Shareholders. The purchase price shall 

not be higher than the most competitive price of the two other quotations from unrelated third party 

suppliers. In determining the most competitive purchase price, all pertinent factors, including but 

not limited to quality, reliability, delivery time, credit and payment terms and track record will be 

taken into consideration. 

Each of the transactions with Rimalco in relation to the purchase of sawn timber will be 

monitored as an individual transaction and, based on the value of the transaction, will require the 

prior approval of the corresponding approving authority who shall be a Director or management 

employee of the Group (but not an interested person or his Associate) and who does not have any 

A6-3

interests, whether direct or indirect, in relation to the transaction (the “Relevant Approving 

Authority”). Guidelines for the Relevant Approving Authority are as follows: 

Approval Limits Relevant Approving Authority 

Transactions not exceeding S$250,000 .... AnytwoDirectors and the CFO 

Transactions above S$250,000 .......... AnytwoAudit Committee members, one of whom 

must be the Chairman of the Audit Committee 

As at the Latest Practicable Date, the Group Managing Director Lee Kok Wah, the Non-executive 

Director Craig Foster Pickett and the Audit Committee members namely Reggie Thein, William Edward 

Alastair Morrison and Ng Chee Keong, are not related to Rimalco. Reggie Thein is the Chairman of the 

Audit Committee. 

3.4 Other Review Procedures 

The Group has also implemented the following procedures for the identification of Interested 

Persons and the recording of all interested person transactions: 

(i) the CFO will maintain a register of all transactions carried out with the Interested Persons (and 

the basis, including the quotations obtained to support such basis, on which these transactions 

are entered into), whether mandated or non-mandated; 

(ii) on a quarterly basis, the CFO will submit a report to the Audit Committee of all recorded 

interested person transactions, and the basis of such transactions, entered into by the Group; 

(iii) the Company’s internal auditor shall review, on a quarterly basis, all Mandated Transactions 

entered into pursuant to the Shareholders’ Mandate to ensure that the relevant approvals have 

been obtained and the review procedures in respect of such transactions had been adhered to. 

The internal auditor shall report directly to the Audit Committee; and 

(iv) the Audit Committee shall review from time to time such internal controls and review 

procedures for interested person transactions to determine if they are adequate and/or 

commercially practicable in ensuring that the transactions between the Group and the 

Interested Persons are conducted on normal commercial terms and not prejudicial to the 

interests of the Company or minority Shareholders. In conjunction with such review, the Audit 

Committee will also ascertain whether the established review procedures have been complied 

with. Further, if during these periodic reviews by the Audit Committee, the Audit Committee 

is of the view that the internal controls and review procedures for interested person transactions 

are inappropriate or not sufficient to ensure that the interested person transactions will be on 

normal commercial terms and not prejudicial to the interests of the Company and minority 

Shareholders, the Audit Committee will (pursuant to Rule 920(1)(b)(iv) and (vii) of the Listing 

Manual) revert to Shareholders for a fresh Shareholders’ Mandate based on new internal 

controls and review procedures for transactions with the Interested Persons. All Mandated 

Transactions shall be reviewed and approved by the Audit Committee prior to entry while a 

fresh mandate is being sought from Shareholders. 

For the purposes of the above review of the internal controls and review procedures, any of the 

Directors or members of the Audit Committee who are not considered independent, will abstain from 

participating in the Audit Committee’s review of the internal controls and review procedures. 

The Board and the Audit Committee will have overall responsibility for determining the review 

procedures, with the authority to delegate this responsibility to individuals or committees within the 

Group as they deem appropriate. 

4. Conclusion 

In arriving at our opinion on whether the guidelines and review procedures for determining the 

transaction prices and terms of the Mandated Transactions for purposes of the Shareholders’ Mandate, as 

set out in the section “Interested Person Transactions and Conflicts of Interest” of the Prospectus, are 

sufficient to ensure that the Mandated Transactions will be carried out on normal commercial terms and 

A6-4

will not be prejudicial to the interests of the Company or minority Shareholders, we have considered the 

following: 

(a) the Directors’ rationale for, and the benefits accruing to the Group arising from, the 

Shareholders’ Mandate; 

(b) the class of Interested Person and the Mandated Transactions to be covered by the 

Shareholders’ Mandate; and 

(c) the guidelines and review procedures for the Mandated Transactions. 

Based on the above, Provenance Capital is of the opinion that the current guidelines and review 

procedures for determining the transactions prices and terms of the Mandated Transactions, as set out in 

the section “Guidelines and Review Procedures for Mandated Interested Person Transactions” of the 

Prospectus, if adhered to, are sufficient to ensure that the Mandated Transactions will be carried out on 

normal commercial terms and will not be prejudicial to the interests of the Company or minority 

Shareholders. 

Our recommendations are addressed to the Independent Directors for their benefit, in connection 

with and for the purposes of their consideration of the Shareholders’ Mandate, but any recommendations 

made by the Independent Directors in respect of the Shareholders’ Mandate shall remain their 

responsibility. Our recommendations may not be used and/or relied on by any other person for any 

purpose at any time and in any manner except with our prior written consent in each specific case. 

This Letter is governed by, and construed in accordance with, the laws of Singapore, and is strictly 

limited to the matters stated herein and does not imply implication to any other matter. Nothing herein shall 

confer or be deemed or is intended to confer any right of benefit to any third party and the Contracts (Rights 

of Third Parties) Act, Chapter 53B, of Singapore and any re-enactment thereof shall not apply. 

Yours faithfully, 

For and on behalf of 

PROVENANCE CAPITAL PTE. LTD. 

Wong Bee Eng 

Chief Executive Officer 

A6-5


APPENDIX 7 

TERMS, CONDITIONS AND PROCEDURES FOR 

APPLICATION AND ACCEPTANCE 

You are invited to apply and subscribe for the Offering Shares at the Offering Price subject to the 

following terms and conditions: 

1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 OFFERING SHARES AND 

INTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF 

SHARES WILL BE REJECTED. 

2. Your application for Offer Shares may be made by way of Offer Shares Application Forms or by way of 

Electronic Applications through ATMs belonging to the Participating Banks (“ATM Electronic Applications”) 

or through Internet Banking (“IB”) websites of the relevant Participating Banks (“Internet 

Electronic Applications”, which together with ATM Electronic Applications, shall be referred to as 

“Electronic Applications”). Your application for the Placement Shares (other than Reserved Shares) may 

only be made by way of Placement Shares Application Forms or in any other form of application as 

may be deemed appropriate by UOB. Should you be eligible, your application for Reserved Shares may 

only be made by way of Reserved Shares Application Forms or in any other form of application as may 

be deemed appropriate by UOB. YOU MAY NOT USE CPF FUNDS TO APPLY FOR THE 

SHARES. 

If you submit an application for Offer Shares by way of an Application Form, you MAY NOT 

submit another application for Offer Shares by way of an Electronic Application and vice versa. 

Such separate applications shall be deemed to be multiple applications and may be rejected at our 

discretion, except in the case of applications by approved nominee companies, where each 

application is made on behalf of a different beneficiary. 

If you submit an application for Offer Shares by way of an ATM Electronic Application, you 

MAY NOT submit another application for Offer Shares by way of an Internet Electronic 

Application and vice versa. Such separate applications shall be deemed to be multiple applications 

and may be rejected at our discretion. 

If you, other than an approved nominee company, have submitted an application for Offer 

Shares in your own name, you should not submit any other application for Offer Shares, whether 

by way of an Application Form or by way of an Electronic Application, for any other person. Such 

separate applications shall be deemed to be multiple applications and may be rejected at our 

discretion. 

Joint or multiple applications for the Offer Shares shall be rejected. If you submit or procure 

submissions of multiple share applications for Offer Shares, you may be deemed to have committed 

an offence under the Penal Code, Chapter 224 of Singapore and the SFA, and your applications 

may be referred to the relevant authorities for investigation. Multiple applications or those 

appearing to be or suspected of being multiple applications (other than as provided herein) may be 

liable to be rejected at our discretion. 

Multiple applications may be made in the case of applications by any person for (i) the 

Placement Shares (including Reserved Shares) only, or (ii) the Placement Shares (including 

Reserved Shares) together with a single application for the Offer Shares, provided you adhere to 

the terms and conditions of this document. Such separate applications shall NOT be treated as 

multiple applications. 

3. We will not accept applications from any person under the age of 21 years, undischarged bankrupts, 

sole-proprietorships, partnerships, chops or non-corporate bodies, joint Securities Account holders of 

CDP and from applicants whose addresses (furnished in their Application Forms or, in the case of 

Electronic Applications, contained in the records of the relevant Participating Banks) bear post office 

box numbers. No persons acting or purporting to act on behalf of a deceased person is allowed to apply 

under the Securities Account with CDP in the deceased name at the time of application. 

4. We will not recognise the existence of a trust. An application by a trustee or trustees must therefore be 

made in his/her/their own name(s) and without qualification or, where the application is made by way of 

an Application Form by a nominee, in the name(s) of an approved nominee company or companies after 

complying with paragraph 6 below. 

A7-1

5. WE WILL ACCEPT APPLICATIONS FROM APPROVED NOMINEE COMPANIES ONLY. 

Approved nominee companies are defined as banks, merchant banks, finance companies, insurance 

companies, licensed securities dealers in Singapore and nominee companies controlled by them. 

Applications made by nominees other than approved nominee companies shall be rejected. 

6. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECU- 

RITIES ACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICA- 

TION. If you do not have an existing Securities Account with CDP in your own name at the time of 

your application, your application will be rejected (if you apply by way of an Application Form), or you 

will not be able to complete your Electronic Application (if you apply by way of an Electronic 

Application). If you have an existing Securities Account with CDP but fail to provide your Securities 

Account number or provide an incorrect Securities Account number in Section B of the Application 

Form or in your Electronic Application, as the case may be, your application is liable to be rejected. 

Subject to paragraph 8 below, your application shall be rejected if your particulars such as name, NRIC/ 

passport number, nationality and permanent residence status provided in your Application Form or in the 

records of the relevant Participating Bank at the time of your Electronic Application, as the case may 

be, differ from those particulars in your Securities Account as maintained with CDP. If you possess 

more than one individual direct Securities Account with CDP, your application shall be rejected. 

7. If your address as stated in the Application Form or, in the case of an Electronic Application, 

contained in the records of the relevant Participating Bank, as the case may be, is different from 

the address registered with CDP, you must inform CDP of your updated address promptly, failing 

which the notification letter on successful allotment and other correspondence from CDP will be 

sent to your address last registered with CDP. 

8. We reserve the right to reject any application which does not conform strictly to the instructions 

set out in the Application Form and in this document or which does not comply with the 

instructions for Electronic Applications or with the terms and conditions of this document or, in 

the case of an application by way of an Application Form, which is illegible, incomplete, 

incorrectly completed or which is accompanied by an improperly drawn remittance or improper 

form of remittance. We further reserve the right to treat as valid any applications not completed 

or submitted or effected in all respects in accordance with the instructions set out in the 

Application Forms or the instructions for Electronic Applications or the terms and conditions of 

this document and also to present for payment or other processes all remittances at any time after 

receipt and to have full access to all information relating to, or deriving from, such remittances or 

the processing thereof. 

9. We reserve the right to reject or to accept, in whole or in part, or to scale down or to ballot any 

application, without assigning any reason therefor, and no enquiry and/or correspondence on the decision 

of ours will be entertained. This right applies to applications made by way of Application Forms and by 

way of Electronic Applications. In deciding the basis of allotment and/or allocation, due consideration 

will be given to the desirability of allotting and/or allocating the Offering Shares to a reasonable number 

of Applicants with a view to establishing an adequate market for the Shares. 

10. Share certificates will be registered in the name of CDP and will be forwarded only to CDP. It is 

expected that CDP will send to you, at your own risk, within 15 Market Days after the close of the 

Application List, a statement of account stating that your Securities Account has been credited with the 

number of Offering Shares allotted and/or allocated to you. This will be the only acknowledgement of 

application monies received and is not an acknowledgement by us. You irrevocably authorise CDP to 

complete and sign on your behalf as transferee or renouncee any instrument of transfer and/or other 

documents required for the issue or transfer of the Offering Shares allotted and/or allocated to you. This 

authorisation applies to applications made by way of Application Forms and by way of Electronic 

Applications. 

11. In the event that we lodge a supplementary or replacement prospectus (“Relevant Document”) pursuant 

to the SFA or any applicable legislation in force from time to time prior to the close of the Offering, 

and the Offering Shares have not been issued, we will (as required by law) at our sole and absolute 

discretion either: 

(i) within seven days of the lodgement give you a copy of the Relevant Document and provide you 

with an option to withdraw; or 

A7-2

(ii) deem your application as withdrawn and cancelled and refund your application monies (without 

interest or any share of revenue or other benefit arising therefrom) to you within seven days from 

the lodgement of the Relevant Document. 

Where you have notified us with 14 days from the date of lodgement of the Relevant Documents of 

your wish to exercise your option under the SFA to withdraw your application, we shall pay to you all 

monies paid by you on account of your application for the Offering Shares without interest or any share 

of revenue or other benefit arising there from and at your own risk, within seven days from the receipt 

of such notification. 

In the event that at any time at the time of the lodgement, the Offering Shares have already been 

issued but trading has not commenced, we will (as required by law) either: 

(i) within seven days of the lodgement give you a copy of the relevant document and provide you with 

an option to return the shares; or 

(ii) deem the issue as void and refund your payment for the shares (without interest or any share of 

revenue or other benefit arising therefrom) within seven days from the lodgement of the relevant 

document. 

Where you have notified us within 14 days from the date of lodgement of the Relevant Document 

of your wish to exercise your option under the SFA to return the Offering Shares to you, you shall return 

all documents, if any, purporting to be evidence of title to those Offering Shares, whereupon we shall 

pay to you all monies paid by you on account of your application for the Offering Shares without 

interest or any share of revenue or other benefit arising there from and at your own risk, within seven 

days from the receipt of such notification. 

Additional terms and instructions applicable upon the lodgement of the supplementary or replacement 

prospectus, including instructions on how you can exercise the option to withdraw, may be found 

in such supplementary or replacement prospectus. 

12. In the event of an under-subscription for Offer Shares as at the close of the Application List, that 

number of Offer Shares under-subscribed shall be made available to satisfy applications for Placement 

Shares to the extent that there is an over-subscription for Placement Shares as at the close of the 

Application List. 

Any of the Reserved Shares not taken up will be made available first to satisfy applications for the 

Placement Shares to the extent that there is an over-subscription for the Placement Shares and then to 

satisfy applications for Offer Shares to the extent that there is an over-subscription for Offer Shares as at 

the close of the Application List. 

In the event of an under-subscription for Placement Shares (other than Reserved Shares) as at the 

close of the Application List, that number of Placement Shares (other than Reserved Shares) undersubscribed 

shall be made available to satisfy applications for Offer Shares to the extent that there is an 

over-subscription for Offer Shares as at the close of the Application List. 

In the event of an over-subscription for Offer Shares as at the close of the Application List and 

Placement Shares are fully subscribed or over-subscribed as at the close of the Application List, the 

successful applications for Offer Shares will be determined by ballot or otherwise as determined by us 

and approved by the SGX-ST, if required. 

In all the above instances, the basis of allotment of the Offering Shares as may be decided by our 

Directors in ensuring a reasonable spread of shareholders of our Company, shall be made public, as soon 

as practicable, via an announcement through the SGX-ST and by advertisement in a generally circulating 

daily press. 

13. You consent to the disclosure of your name, NRIC/passport number, address, nationality, permanent 

residence status, CDP Securities Account number, CPF Investment Account number (if applicable) and 

share application amount from your account with the relevant Participating Bank to the Share Registrar, 

SCCS, SGX-ST, CDP, our Company and the Issue Managers. You irrevocably authorise CDP to disclose 

the outcome of your application, including the number of Offering Shares allotted and/or allocated to 

you pursuant to your application, to the Issue Managers and the Underwriter and any other parties so 

authorised by the foregoing persons. CDP shall not be liable for any delays, failures or inaccuracies in 

the recording, storage or transmission or delivery of data relating to Electronic Application. 

A7-3

14. Any reference to “you” or the “Applicant” in this section shall include an individual, a corporation, an 

approved nominee and trustee applying for the Offer Shares by way of an Application Form or by way 

of an Electronic Application, a person applying for the Placement Shares and a person applying for the 

Reserved Shares. 

15. By completing and delivering an Application Form or by making and completing an Electronic 

Application by (in the case of an ATM Electronic Application) pressing the “Enter” or “OK” or 

“Confirm” or “Yes” or any other relevant key on the ATM (as the case may be) or by (in the case of an 

Internet Electronic Application) clicking “Submit” or “Continue” or “Yes” or “Confirm” or any other 

relevant button on the IB website screen (as the case may be) in accordance with the provisions of this 

document, you: 

(a) irrevocably offer to subscribe for the number of Offering Shares specified in your application (or 

such smaller number for which the application is accepted) at the Offering Price and agree that you 

will accept such Offering Shares as may be allotted and/or allocated to you, in each case subject to 

the conditions set out in this document and the Memorandum and Articles of Association of our 

Company; 

(b) agree that, in the event of any inconsistency between the terms and conditions set for application 

set out in this document and those set out in the IB websites or ATMs of the Participating Banks, 

the terms and conditions set out in this document shall prevail; 

(c) agree that the aggregate Offering Price for the Offering Shares applied for is due and payable to 

our Company forthwith; 

(d) warrant the truth and accuracy of the information contained, and representations and declarations 

made, in your application, and acknowledge and agree that such information, representations and 

declarations will be relied on by us in determining whether to accept your application and/or 

whether to allot and/or allocate any Offering Shares to you; and 

(e) agree and warrant that, if the laws of any jurisdictions outside Singapore are applicable to your 

application, you have complied with all such laws and none of us, the Issue Managers, Underwriter, 

Primary Sub-Underwriter or Primary Sub-Placement Agent will infringe any such laws as a result 

of the acceptance of your application. 

16. Our acceptance of applications will be conditional upon, inter alia, us being satisfied that: 

(a) permission has been granted by the SGX-ST to deal in and for quotation for all our existing Shares 

(including Vendor Shares) and the New Shares on the Official List of SGX-ST; 

(b) the Offer Agreement and the Placement Agreement referred to in “Plan of Distribution” have 

become unconditional and have not been terminated; and 

(c) the Authority has not served a stop order which directs that no or no further shares to which this 

document relates be allotted and/or allocated. 

17. In the event that a stop order in respect of the Offering Shares is served by the Authority or other 

competent authority, and: 

(a) the Offering Shares have not been issued, we will (as required by law) deem all applications 

withdrawn and cancelled and we shall refund the application monies (without interest or any share 

of revenue or other benefit arising there from) to you within 14 days of the date of the stop 

order; or 

(b) If the Offering Shares have already been issued but trading has not commenced, the issue will (as 

required by law) be deemed void and 

(i) if documents purporting to evidence title had been issued to you, we shall, inform you to 

return such documents to us within 14 days from that date; and 

(ii) we will refund the application monies (without interest or any share of revenue or other benefit 

arising therefrom) to you within seven days from the date of receipt of those documents (if 

applicable) or the date of the stop order, whichever is later. 

This shall not apply where only an interim stop order has been served. 

A7-4

18. In the event that an interim stop order in respect of the Offering Shares is served by the Authority or 

other competent authority, no Offering Shares shall be issued to you until the Authority revokes the 

interim stop order. 

19. The Authority is not able to serve a stop order in respect of the Offering Shares if the Offering Shares 

have been issued and listed on a securities exchange and trading in them has commenced. 

20. In the event of any changes in the closure of the Application List or the time period during which the 

Offering is open, we will publicly announce the same through a SGXNET announcement to be posted 

on the Internet at the SGX-ST website (http://www.sgx.com) and through a paid advertisement in a local 

newspaper. 

21. We will not hold any application in reserve. 

22. We will not allot or allocate shares on the basis of this document later than six months after the date of 

registration of this document. 

23. Additional terms and conditions for applications by way of Application Forms are set out in “— Additional 

Terms and Conditions For Applications Using Application Forms” of this document. 

24. Additional terms and conditions for applications by way of Electronic Applications are set out in 

“— Additional Terms and Conditions for Electronic Applications” of this document. 

Additional Terms and Conditions for Applications Using Application Forms 

Applications by way of an Application Form shall be made on, and subject to, the terms and conditions 

of this document including but not limited to the terms and conditions appearing below as well as those set 

out under the section on “TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEP- 

TANCE” in this document, as well as our Memorandum and Articles of Association. 

1. Your application must be made using the WHITE Application Forms and WHITE official envelopes 

“A” and “B” for Offer Shares, the BLUE Application Forms for Placement Shares (other than Reserved 

Shares) or in any other form of application as may be deemed appropriate by UOB or PINK Application 

Forms or in any other form of application as may be deemed appropriate by UOB for Reserved Shares 

accompanying and forming part of this document. We draw your attention to the detailed instructions 

contained in the respective Application Forms and this document for the completion of the Application 

Forms which must be carefully followed. We reserve the right to reject applications which do not 

conform strictly to the instructions set out in the Application Forms and this document or to the 

terms and conditions of this document or which are illegible, incomplete, incorrectly completed or 

which are accompanied by improperly drawn remittances or improper form of remittance. 

2. Your Application Forms must be completed in English. Please type or write clearly in ink using 

BLOCK LETTERS. 

3. All spaces in the Application Forms except those under the heading “FOR OFFICIAL USE ONLY” 

must be completed and the words “NOT APPLICABLE” or “N.A.” should be written in any space that 

is not applicable. 

4. Individuals, corporations, approved nominee companies and trustees must give their names in full. If you 

are an individual, you must make your application using your full names as it appears in your identity 

cards (if you have such an identification document) or in your passport and, in the case of a corporation, 

in your full name as registered with a competent authority. If you are not an individual, you must 

complete the Application Form under the hand of an official who must state the name and capacity in 

which he signs the Application Form. If you are a corporation completing the Application Form, you are 

required to affix your Common Seal (if any) in accordance with your Memorandum and Articles of 

Association or equivalent constitutive documents of the corporation. If you are a corporate applicant and 

your application is successful, a copy of your Memorandum and Articles of Association or equivalent 

constitutive documents must be lodged with our Share Registrar. We reserve the right to require you to 

produce documentary proof of identification for verification purposes. 

5. (a) You must complete Sections A and B and sign page 1 of the Application Form. 

(b) You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Form. Where 

paragraph 7(a) is deleted, you must also complete Section C of the Application Forms with 

particulars of the beneficial owner(s). 

A7-5

(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, on page 1 

of the Application Form, your application is liable to be rejected. 

6. You (whether you are an individual or corporate applicant, whether incorporated or unincorporated and 

wherever incorporated or constituted) will be required to declare whether you are a citizen or permanent 

resident of Singapore or a corporation in which citizens or permanent residents of Singapore or any 

body corporate constituted under any statute of Singapore having an interest in the aggregate of more 

than 50 per cent. of the issued share capital of or interests in such corporations. If you are an approved 

nominee company, you are required to declare whether the beneficial owner of the Shares is a citizen or 

permanent resident of Singapore or a corporation, whether incorporated or unincorporated and wherever 

incorporated or constituted, in which citizens or permanent residents of Singapore or any body corporate 

whether incorporated or unincorporated and wherever incorporated or constituted under any statute of 

Singapore have an interest in the aggregate of more than 50 per cent. of the issued share capital of or 

interests in such corporation. 

7. Your application must be accompanied by a remittance in Singapore currency for the full amount 

payable, in respect of the number of Offering Shares applied for, in the form of a BANKER’S DRAFT 

or CASHIER’S ORDER drawn on a bank in Singapore, made out in favour of “OTTO SHARE ISSUE 

ACCOUNT” crossed “A/C PAYEE ONLY”, and with your name and address written clearly on the 

reverse side. Applications not accompanied by any payment or accompanied by ANY OTHER FORM OF 

PAYMENT WILL NOT BE ACCEPTED. We will reject remittances bearing “NOT TRANSFERABLE” 

or “NON TRANSFERABLE” crossings. No acknowledgement or receipt will be issued for applications 

and application monies received. 

8. Monies paid in respect of unsuccessful applications are expected to be returned (without interest or any 

share of revenue or other benefit arising therefrom) to you by ordinary post within 24 hours of balloting 

of applications at your own risk. Where your application is rejected or accepted in part only, the full 

amount or the balance of the application monies, as the case may be, will be refunded (without interest 

or any share of revenue or other benefit arising therefrom) to you by ordinary post at your own risk 

within 14 days after the close of the Application List, provided that the remittance accompanying such 

application which has been presented for payment or other processes have been honoured and 

application monies have been received in the designated share issue amount. In the event that the 

Offering does not proceed for any reason, the application monies received will be refunded (without 

interest or any share of revenue or other benefit arising therefrom) to you by ordinary post or telegraphic 

transfer at your own risk within five Market Days of the termination of the Offering. In the event that 

the Offering is cancelled by us following the issuance of a stop order by the Authority, the application 

monies received will be refunded (without interest or any share of revenue or other benefit arising 

therefrom) to you by ordinary post or telegraphic transfer at your own risk within 14 days from the date 

of the stop order. 

9. Capitalised terms used in the Application Forms and defined in this document shall bear the meanings 

assigned to them in this document. 

10. By completing and delivering the Application Form, you agree that: 

(a) in consideration of us having distributed the Application Form to you and agreeing to close the 

Application List at 12.00 noon on 26 November 2008 or such other time or date as we may, in 

consultation with the Issue Managers, decide and by completing and delivering the Application 

Form: 

(i) your application is irrevocable; and 

(ii) your remittance will be honoured on first presentation and that any monies returnable may be 

held pending clearance of your payment without interest or any share of revenue or other 

benefit arising therefrom; 

(b) all applications, acceptances and contracts resulting therefrom under the Offering shall be governed 

by and construed in accordance with the laws of Singapore and that you irrevocably submit to the 

non-exclusive jurisdiction of the Singapore courts; 

(c) in respect of the Offering Shares for which your application has been received and not rejected, 

acceptance of your application shall be constituted by written notification and not otherwise, 

notwithstanding any remittance being presented for payment by or on behalf of our Company; 

A7-6

(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at any time after 

acceptance of your application; 

(e) in making your application, reliance is placed solely on the information contained in this document 

and that none of us, the Issue Managers, the Underwriter or any other person involved in the 

Offering shall have any liability for any information not so contained; and 

(f) you irrevocably agree and undertake to subscribe for the number of Offering Shares applied for as 

stated in the Application Form or any smaller number of such Offering Shares that may be allotted 

and/or allocated to you in respect of your application. In the event that our Company decides to 

allot and/or allocate a smaller number or not allot and/or allocate any Offering Shares to you, you 

agree to accept such decision as final. 

Applications for Offer Shares 

1. Your application for Offer Shares MUST be made using the WHITE Offer Shares Application Forms 

and WHITE official envelopes “A” and “B”. ONLY ONE APPLICATION should be enclosed in each 

envelope. 

2. You must: 

(a) enclose the WHITE Offer Shares Application Form, duly completed and signed, together with the 

correct remittance in accordance with the terms and conditions of this document in the WHITE 

envelope “A” provided; 

(b) in the appropriate spaces on WHITE envelope “A”: 

(i) write your name and address; 

(ii) state the number of Offer Shares applied for; and 

(iii) affix adequate Singapore postage; 

(c) SEAL WHITE ENVELOPE “A”; 

(d) write, in the special box provided on the larger WHITE envelope “B” addressed to UNITED 

OVERSEAS BANK LIMITED, 80 RAFFLES PLACE #03-03, UOB PLAZA 1, SINGAPORE 

048624, the number of Offer Shares you have applied for; and 

(e) insert WHITE envelope “A” into WHITE envelope “B”, seal WHITE envelope “B” and thereafter 

DESPATCH BY ORDINARY POST OR DELIVER BY HAND at your own risk to UNITED 

OVERSEAS BANK LIMITED, 80 RAFFLES PLACE #03-03, UOB PLAZA 1, SINGAPORE 

048624, to arrive by 12.00 noon on 26 November 2008 or such other time as we may, in 

consultation with UOB, decide. Local Urgent Mail or Registered Post must NOT be used. No 

acknowledgement of receipt will be issued for any application or remittance received. 

3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperly drawn 

remittances or improper form of remittance or which are not honoured upon their first presentation are 

liable to be rejected. 

Applications for Placement Shares (Other Than Reserved Shares) 

1. Your application for Placement Shares (other than Reserved Shares) MUST be made using the BLUE 

Placement Shares Application Forms or in any other form of application as may be deemed appropriate 

by UOB. ONLY ONE APPLICATION should be enclosed in each envelope. 

2. The completed Application Form and the correct remittance in full in respect of the number of 

Placement Shares applied for (in accordance with the terms and conditions of this document) with your 

name and address written clearly on the reverse side, must be enclosed and sealed in an envelope to be 

provided by you. The sealed envelope must be DESPATCHED BY ORDINARY POST OR DELIV- 

ERED BY HAND at your own risk to UNITED OVERSEAS BANK LIMITED, 80 RAFFLES 

PLACE #03-03, UOB PLAZA 1, SINGAPORE 048624, to arrive by 12.00 noon on 26 November 

2008 or such other time as we may, in consultation with UOB, decide. Local Urgent Mail or 

Registered Post must NOT be used. No acknowledgement of receipt will be issued for any application 

or remittance received. 

A7-7




Applications for Reserved Shares 

1. Your application for Reserved Shares MUST be made using the PINK Reserved Shares Application 

Forms or in any other form of application as may be deemed appropriate by UOB. ONLY ONE 

APPLICATION should be enclosed in each envelope. 

2. The completed Application Form and the correct remittance (in accordance with the terms and 

conditions of this document) with your name and address written clearly on the reverse side, must be 

enclosed and sealed in an envelope to be provided by you. The sealed envelope must be DESPATCHED 

BY ORDINARY POST OR DELIVERED BY HAND at your own risk to our registered office at 9 

Temasek Boulevard #33-01, Suntec Tower Two, Singapore 038989 to arrive by 12.00 noon on 

26 November 2008 or such other time as we may, in consultation with UOB, decide. Local Urgent 

Mail or Registered Post must NOT be used. No acknowledgement of receipt will be issued for any 

application or remittance received. 




Additional Terms and Conditions for Electronic Applications 

The procedures for Electronic Applications are set out on the ATM screens (in the case of ATM 

Electronic Applications) and the IB website screens (in the case of Internet Electronic Applications) of the 

relevant Participating Banks. Currently, UOB Group and DBS, are the only Participating Banks through which 

Internet Electronic Applications can be made. For illustration purposes, the procedures for Electronic 

Applications through ATMs and the IB website of UOB are set out respectively in the “Steps for an Electronic 

Application through ATMs of UOB” and the “Steps for an Internet Electronic Application through the IB 

website of UOB” (collectively, the “Steps”) appearing in this document. The Steps set out the actions that you 

must take at an ATM or the IB website of UOB to complete an Electronic Application. Please read carefully 

the terms of this document, the Steps and the terms and conditions for Electronic Applications set out below 

before making an Electronic Application. Any reference to “you” in the additional terms and conditions for 

Electronic Applications and the Steps shall refer to you making an application for Offer Shares through an 

ATM or the IB website of a relevant Participating Bank. 

Applicants applying for the Offer Shares by way of Electronic Applications may incur an administrative 

fee and/or such related charges as stipulated by the respective Participating Banks from time to time. 

You must have an existing bank account with and be an ATM cardholder of one of the Participating 

Banks before you can make an Electronic Application at the ATMs. An ATM card issued by one Participating 

Bank cannot be used to apply for Offer Shares at an ATM belonging to other Participating Banks. For an 

Internet Electronic Application, you must have an existing bank account with and an IB User Identification 

(“User ID”) and a Personal Identification Number/Password (“PIN”) given by the relevant Participating Bank. 

The Steps set out the actions that you must take at ATMs or the IB website of UOB to complete an Electronic 

Application. The actions that you must take at ATMs or the IB websites of other Participating Banks are set 

out on the ATM screens or the IB website screens of the relevant Participating Banks. Upon the completion of 

your ATM Electronic Application transaction, you will receive an ATM transaction slip (“Transaction 

Record”), confirming the details of your Electronic Application. Upon completion of your Internet Electronic 

Application through the IB website of UOB Group, there will be an on-screen confirmation (“Confirmation 

Screen”) of the application which can be printed for your record. The Transaction Record or your printed 

record of the Confirmation Screen is for your retention and should not be submitted with any Application 

Form. 

You must ensure that you enter your own Securities Account number when using the ATM card 

issued to you in your own name. If you fail to use your own ATM card or if you do not key in your own 

Securities Account number, your application will be rejected. If you operate a joint bank account with 

any of the Participating Banks, you must ensure that you enter your own Securities Account number 

when using the ATM card issued to you in your own name. Using your own Securities Account number 

A7-8

with an ATM card which is not issued to you in your own name will render your ATM Electronic 

Application liable to be rejected. 

You must ensure, when making an Internet Electronic Application, that your mailing address for the 

account selected for the application is in Singapore and the application is being made in Singapore and you 

will be asked to declare accordingly. Otherwise your application is liable to be rejected. 

You shall make an Electronic Application in accordance with and subject to the terms and conditions of 

this document including but not limited to the terms and conditions appearing below and those set out under 

the section on “TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE” in 

this document as well as our Memorandum and Articles of Association. 

1. In connection with your Electronic Application for Offer Shares, you are required to confirm statements 

to the following effect in the course of activating your Electronic Application: 

(a) that you have received a copy of this document (in the case of an ATM Electronic Application 

only) and have read, understood and agreed to all the terms and conditions of application for 

Offer Shares and this document prior to effecting the Electronic Application and agree to be 

bound by the same; 

(b) that you consent to the disclosure of your name, NRIC/passport number, address, nationality, 

permanent residence status, share application amount, CPF Investment Account number (if 

applicable) and CDP Securities Account number and application details (the “Relevant 

Particulars”) with the relevant Participating Bank to the CDP, CPF, SCCS, SGX-ST, Share 

Registrar, us and the Issue Managers or other authorised operators (the “Relevant Parties”); 

and 

(c) that this is your only application for Offer Shares and it is made in your own name and at 

your own risk. 

Your application will not be successfully completed and cannot be recorded as a completed 

transaction in the ATM or on the IB website unless you press the “Enter” or “Confirm” or “Yes” or 

“OK” or any other relevant key in the ATM or click “Confirm” or “OK” or “Submit” or “Continue” or 

“Yes” or any other relevant button on the IB website screen. By doing so, you shall be treated as 

signifying your confirmation of each of the above three statements. In respect of statement 1(b) above, 

such confirmation, shall signify and shall be treated as your written permission, given in accordance 

with the relevant laws of Singapore including Section 47(2) of the Banking Act (Chapter 19) of 

Singapore to the disclosure by the relevant Participating Bank of the Relevant Particulars to the Relevant 

Parties. 

2. BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOT 

APPLYING FOR OFFER SHARES AS A NOMINEE OF ANY OTHER PERSON AND THAT 

ANY ELECTRONIC APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE 

BY YOU AS THE BENEFICIAL OWNER. 

3. You must have sufficient funds in your bank account with your Participating Bank at the time you make 

your Electronic Application, failing which your Electronic Application will not be completed or 

accepted. Any Electronic Application which does not conform strictly to the instructions set out in 

this document or on the screens of the ATM or the IB website of the relevant Participating Bank 

through which your Electronic Application is being made shall be rejected. 

You may make an ATM Electronic Application at the ATM of any Participating Bank or an Internet 

Electronic Application at the IB website of the relevant Participating Bank for the Offer Shares using 

only cash by authorising such Participating Bank to deduct the full amount payable from your account 

with such Participating Bank. 

4. You irrevocably agree and undertake to subscribe for and to accept the number of Offer Shares applied 

for as stated on the Transaction Record or the Confirmation Screen or any lesser number of Offer Shares 

that may be allotted and/or allocated to you in respect of your Electronic Application. In the event that 

we decide to allot and/or allocate any lesser number of such Offer Shares or not to allot and/or allocate 

any Offer Shares to you, you agree to accept such decision as final. If your Electronic Application is 

successful, your confirmation (by your action of pressing the “Enter” or “Confirm” or “Yes” or “OK” or 

any other relevant key on the ATM or clicking “Confirm” or “OK” or “Submit” or “Continue” or “Yes” 

or any other relevant button on the IB website screen) of the number of Offer Shares applied for shall 

A7-9

signify and shall be treated as your acceptance of the number of Offer Shares that may be allotted 

and/or allocated to you and your agreement to be bound by our Memorandum and Articles of 

Association. 

5. We will not keep any applications in reserve. Where your Electronic Application is unsuccessful, the 

full amount of the application monies will be refunded (without interest or any share of revenue or other 

benefit arising therefrom) to you by being automatically credited to your account with your Participating 

Bank within 24 hours of balloting of the applications, provided that the remittance in respect of such 

application which has been presented for payment or other processes have been honoured and the 

application monies have been received in the designated share issue account. 

Where your Electronic Application is rejected or accepted in part only, the full amount or the 

balance of the application monies, as the case may be, will be refunded (without interest or any share of 

revenue or other benefit arising therefrom) to you by being automatically credited to your account with 

your Participating Bank within 14 days after the close of the Application List provided that the 

remittance in respect of such application which has been presented for payment or other processes have 

been honoured and the application monies have been received in the designated share issue account. 

Responsibility for timely refund of application monies from unsuccessful or partially successful 

Electronic Applications lies solely with the respective Participating Banks. Therefore, you are 

strongly advised to consult your Participating Bank as to the status of your Electronic Application 

and/or the refund of any monies to you from unsuccessful or partially successful Electronic 

Application, to determine the exact number of Offer Shares allotted to you before trading the 

Offer Shares on SGX-ST. You may also call CDP Phone at 6535 7511 to check the provisional 

results of your application by using your T-pin (issued by CDP upon your application for the 

service) and keying in the stock code (that will be made available together with the results of the 

allotment via an announcement through the SGX-ST and by advertisement in a generally 

circulating daily press). To sign up for the service, you may contact CDP customer service officers. 

Neither the SGX-ST, the CDP, the SCCS, the Participating Banks, our Company nor the Issue 

Managers assume any responsibility for any loss that may be incurred as a result of you having to 

cover any net sell positions or from buy-in procedures activated by the SGX-ST. 

6. If your Electronic Application is unsuccessful, no notification will be sent by the Participating Banks. 

If you make Electronic Applications through the ATMs of the following Participating Banks, you 

may check the results of your Electronic Applications as follows: 

Bank Telephone Available at ATM Operating hours 

UOB Group . . . . . . . 1800 222 2121 ATM (Other Transactions — 

“IPO Enquiry”) (1) 

http:/www.uobgroup.com (1)(2) 

DBS............ 18003396666 

(for POSB Account 

holders) 

1800 111 1111 

(for DBS Account 

holders) 

Internet Banking 

http://www.dbs.com (2) 

OCBC. . . . . . . . . . . 1 800 363 3333 ATM / Internet Banking / 

Phone Banking 

http://www.ocbc.com.sg (3) 

ATM / Phone 

Banking 

-24 hours a day 

Internet Banking 


Service expected 

from 

Evening of the 

balloting day 


balloting day 

24 hours a day Evening of the 

balloting day 

ATM / Phone 

Banking 



balloting day 

Notes: 

(1) If you make your Electronic Applications through the ATMs or IB website of UOB Group, you may 

check the results of your application through UOB Personal Internet Banking, UOB Group ATMs or 

UOB Phone Banking Services. 

A7-10

(2) If you make your Internet Electronic Application through the IB website of UOB Group or DBS, 

you may check the result of your application through the same channels listed in the table above in 

relation to ATM Electronic Application made at ATMs of UOB Group or DBS. 

(3) If you have made your Electronic Application through the ATMs of OCBC, you may check the 

result of your Electronic Application through OCBC Personal Internet Banking, OCBC ATMs or 

OCBC Phone Banking Services. 

7. You irrevocably agree and acknowledge that your Electronic Application is subject to risks of electrical, 

electronic, technical and computer-related faults and breakdowns, fires, acts of God and other events 

beyond the control of the Participating Banks, us and the Issue Managers and if, in any such event, our 

Company, the Issue Managers and/or the relevant Participating Bank do not receive your Electronic 

Application, or data relating to your Electronic Application or the tape or any other devices containing 

such data is lost, corrupted or not otherwise accessible, whether wholly or partially for whatever reason, 

you shall be deemed not to have made an Electronic Application and you shall have no claim 

whatsoever against us, the Issue Managers and/or the relevant Participating Bank for Offer Shares 

applied for or for any compensation, loss or damage. 

8. Electronic Applications shall close at 12.00 noon on 26 November 2008 or such other time as we may, 

in consultation with UOB, decide. Subject to the paragraph above, an Internet Electronic Application is 

deemed to be received only upon its completion, that is, when there is an on-screen confirmation of the 

application. 

9. You are deemed to have irrevocably requested and authorised us to: 

(a) register the Offer Shares allotted and/or allocated to you in the name of CDP for deposit into your 

Securities Account; 

(b) send the relevant Share certificate(s) to CDP; 

(c) return or refund (without interest or any share of revenue earned or other benefit arising therefrom) 

the application monies, should your Electronic Application be unsuccessful, by automatically 

crediting your bank account with your Participating Bank with the relevant amount within 24 hours 

of the balloting of application; and 

(d) return or refund (without interest or any share of revenue or other benefit arising therefrom) the 

balance of the application monies, should your Electronic Application be accepted in part only, by 

automatically crediting your bank account with your Participating Bank with the relevant amount 

within 14 days after the close of the Application List. 

10. We do not recognise the existence of a trust. Any Electronic Application by a trustee must be made in 

your own name and without qualification. We will reject any application by any person acting as 

nominee except those made by approved nominee companies only. 

11. All your particulars in the records of your relevant Participating Bank at the time you make your 

Electronic Application shall be deemed to be true and correct and your relevant Participating Bank and 

the Relevant Parties shall be entitled to rely on the accuracy thereof. If there has been any change in 

your particulars after the time of the making of your Electronic Application, you shall promptly notify 

your relevant Participating Bank. 

12. You should ensure that your personal particulars as recorded by both CDP and the relevant 

Participating Bank are correct and identical, otherwise, your Electronic Application is liable to be 

rejected. You should promptly inform CDP of any change in address, failing which the notification 

letter on successful allotment will be sent to your address last registered with CDP. 

13. By making and completing an Electronic Application, you are deemed to have agreed that: 

(a) in consideration of us making available the Electronic Application facility, through the Participating 

Banks as our agents, at the ATMs and IB websites (if any): 

(i) your Electronic Application is irrevocable; and 

(ii) your Electronic Application, our acceptance and the contract resulting therefrom under the 

Offering shall be governed by and construed in accordance with the laws of Singapore and you 

irrevocably submit to the non-exclusive jurisdiction of the Singapore courts; 

A7-11

(b) none of us, the Issue Managers or the Participating Banks shall be liable for any delays, failures or 

inaccuracies in the recording, storage or in the transmission or delivery of data relating to your 

Electronic Application to us or CDP due to breakdowns or failure of transmission, delivery or 

communication facilities or any risks referred to in paragraph 7 above or to any cause beyond our 

respective controls; 

(c) in respect of Offer Shares for which your Electronic Application has been successfully completed 

and not rejected, acceptance of your Electronic Application shall be constituted by written 

notification by or on behalf of our Company and not otherwise, notwithstanding any payment 

received by or on behalf of our Company; 

(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at any time after 

acceptance of your application; and 

(e) in making your application, reliance is placed solely on the information contained in this document 

and that none of us, the Issue Managers, the Underwriter or any other person involved in the 

Offering shall have any liability for any information not so contained. 

Steps for electronic applications through ATMs and the IB website of UOB Group 

The instructions for Electronic Applications will appear on the ATM screens and the IB website screens 

of the respective Participating Banks. For illustrative purposes, the steps for making an Electronic Application 

through the ATMs or through the IB website of UOB Group are shown below. Instructions for Electronic 

Applications appearing on the ATM screens and the IB website screens (if any) of the relevant Participating 

Banks (other than UOB Group) may differ from that represented below. 

Owing to space constraints on UOB Group’s ATM screens, the following terms will appear in abbreviated 

form: 

“&” : AND 

“A/C” and “A/CS” : ACCOUNT AND ACCOUNTS, respectively 

“ADDR” : ADDRESS 

“AMT” : AMOUNT 

“APPLN” : APPLICATION 

“CDP” : THE CENTRAL DEPOSITORY (PTE) LIMITED 

“CPF” : CENTRAL PROVIDENT FUND BOARD 

“CPFINVT A/C” : CPF INVESTMENT ACCOUNT 

“ESA” : ELECTRONIC SHARE APPLICATION 

“IC/PSSPT” : NRIC or PASSPORT NUMBER 

“NO” or “NO.” : NUMBER 

“PERSONAL NO” : PERSONAL IDENTIFICATION NUMBER 

“REGISTRARS” : SHARE REGISTRARS 

“SCCS” : SECURITIES CLEARING AND COMPUTER SERVICES (PTE) 

LIMITED 

“YR” : YOUR 

Steps for an Electronic Application through ATMs of UOB 

Step 1: Insert your personal Unicard, Uniplus card or UOB VISA/MASTER card and key in your personal 

identification number. 

2: Select “CASHCARD/OTHER TRANSACTIONS”. 

3: Select “SECURITIES APPLICATION”. 

4: Select “ESA-FIXED”. 

5: Select the share counter which you wish to apply for. 

A7-12

6: Read and understand the following statements which will appear on the screen: 

— THIS OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE IN, OR 

ACCOMPANIED BY, A COPY OF THE PROSPECTUS/DOCUMENT OR SUPPLEMEN- 

TARY DOCUMENTS. ANYONE WISHING TO ACQUIRE THESE SECURITIES (OR 

UNITS OF SECURITIES) WILL NEED TO MAKE AN APPLICATION IN THE MAN- 

NER SET OUT IN THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY DOCU- 

MENT 

(Press “ENTER” to continue) 

— PLEASE CALL 1800-22-22-121 IF YOU WOULD LIKE TO FIND OUT WHERE YOU 

CAN OBTAIN A COPY OF THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY 

DOCUMENT 

— WHERE APPLICABLE, A COPY OF THE PROSPECTUS/DOCUMENT OR SUPPLE- 

MENTARY DOCUMENT HAS BEEN LODGED WITH AND REGISTERED BY THE 

MONETARY AUTHORITY OF SINGAPORE WHO ASSUMES NO RESPONSIBILITY 

FOR THE CONTENTS OF THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY 

DOCUMENT 

(Press the “ENTER” key to confirm that you have read and understood the above 

statements) 

7: Read and understand the following terms which will appear on the screen: 

— YOU HAVE READ, UNDERSTOOD & AGREED TO ALL THE TERMS OF THE 

PROSPECTUS/DOCUMENT/SUPPLEMENTARY DOCUMENT & THIS ELECTRONIC 

APPLICATION 


— YOU CONSENT TO DISCLOSE YOUR NAME, IC/PSSPT, NATIONALITY, ADDR, 

APPLN AMT, CPFINVT A/C NO & CDP A/C NO FROM YOUR A/CS TO CDP, CPF, 

SCCS, SHARE REGISTRARS, SGX-ST & ISSUER/VENDOR(S) 

— THIS IS YOUR ONLY FIXED PRICE APPLN & IS IN YOUR NAME & AT YOUR 

RISK 


8: Screen will display: 

NRIC/Passport No: XXXXXXXXXXXX 

IF YOUR NRIC NO / PASSPORT NO IS INCORRECT, PLEASE CANCEL THE 

TRANSACTION AND NOTIFY THE BRANCH PERSONALLY. 

(Press “CANCEL” or “CONFIRM”) 

9: Select mode of payment i.e. “CASH ONLY”. You will be prompted to select Cash Account type to 

debit (i.e., “CURRENT ACCOUNT / I- ACCOUNT”, “CAMPUS” OR “SAVINGS ACCOUNT / TX 

ACCOUNT”). Should you have a few accounts linked to your ATM card, a list of linked account 

numbers will be displayed for you to select. 

10: After you have selected the account, your CDP Securities Account number will be displayed for you 

to confirm or change (This screen with your CDP Securities Account number will be shown if your 

CDP Securities Account number is already stored in the ATM system of UOB Group). If this is the 

first time you are using UOB Group’s ATM to apply for Shares, your CDP Securities Account 

number will not be stored in the ATM system of UOB Group, and the following screen will be 

displayed for your input of your CDP Securities Account number. 

11: Read and understand the following terms which will appear on the screen: 

1. YOU ARE REQUIRED TO ENTER YOUR CDP ACCOUNT NUMBER FOR YOUR FIRST 

IPO APPLICATION. THIS ACCOUNT NUMBER WOULD BE DISPLAYED FOR 

FUTURE APPLICATIONS. 

2. DO NOT APPLY FOR JOINT ACCOUNT HOLDER OR THIRD PARTIES. 

A7-13

3. PLEASE ENTER YOUR OWN CDP ACCOUNT NUMBER (12 DIGITS) AND PRESS 

‹ENTER›. 

(If you wish to terminate the transaction, please press “CANCEL”). 

12: Key in your CDP Securities Account number (12 digits) and press the “ENTER” key. 

13: Select your nationality status. 

14: Key in the number of Shares you wish to apply for and press the “ENTER” key. 

15: Check the details of your Electronic Application on the screen and press “ENTER” key to confirm 

your Electronic Application. 

16: Select “NO” if you do not wish to make any further transactions and remove the Transaction 

Record. You should keep the Transaction Record for your own reference only. 

Owing to space constraints on UOB Group’s IB website screens, the following terms will appear in 

abbreviated form: 

“CDP” : The Central Depository (Pte) Limited 

“CPF” : The Central Provident Fund 

“NRIC” or “I/C” : National Registration Identity Card 

“PR” : Permanent Resident 

“SGD” or “S$” : Singapore dollars 

“SCCS” : Securities Clearing and Computer Services (Pte) Limited 

“SGX-ST” : Singapore Exchange Securities Trading Limited 

Steps for an Internet Electronic Application through the IB website of UOB 

Step 1: Connect to UOB website at http://www.uobgroup.com. 

2: Locate the Login icon on the left hand side next to “Internet Banking”. 

3: Click on “Login” and at drop down menu select “Personal Internet Banking”. 

4: Enter your Username and Password and click “Submit”. 

5: Select “Investment Services” (“IPO” should be the default transaction that appears, select 

“Application”). 

6: Read the IMPORTANT notice and complete the declarations found on the bottom of the page by 

answering Yes/No to the questions. 

7: Click “Continue”. 

8: Select your country of residence (you must be residing in Singapore to apply), and click “Continue”. 

9: Select the share counter from the drop down menu (if there are concurrent IPOs) and click 

“Continue”. 

10: Check the share counter, select the mode of payment and account number to debit and click 

“Continue”. 

11: Read the important instructions and click on “Confirm” to confirm that: 

1. You have read, understood and agreed to all terms and conditions of this application and 

the Prospectus/Document or Supplementary Document. 

2. You consent to disclose your name, I/C or passport number, address, nationality, CDP 

Securities Account number, CPF Investment Account number (if applicable), and application 

details to the share registrars, CDP, SGX, SCCS, CPF Board and issuer/vendor(s). 

3. This application is made in your own name, for your own account and at your own risk. 

4. For FIXED/MAX price share application, this is your only application. For TENDER 

price share application, this is your only application at the selected tender price. 

5. For FOREIGN CURRENCY securities, subject to the terms of the issue, please note the 

following: The application monies will be debited from your bank account in S$, based on 

the Bank’s prevailing board rates at the time of application. The different prevailing 

A7-14

6. 

board rates at the time of the application and at the time of refund of applications monies 

may result in either a foreign exchange profit or loss, or application monies may be 

debited and refunds credited in S$ at the same exchange rate. 

For 1ST-COME-1ST SERVE securities, the number of securities applied for may be 

reduced, subject to the availability at the point of application. 

12: (a) Check your personal details, details of the share counter you wish to apply for and account to 

debit; 

(b) Select your “Nationality”; 

(c) Enter: (i) your CDP Securities Account number; and 

(ii) the number of shares applied for. 

13: Click “Submit”, “Clear” or “Cancel”. 

14: Print the Confirmation Screen (optional) for your reference and retention only. 

A7-15






#33-01 Suntec Tower Two 


Tel +65 6863 2366 

Fax +65 6863 1127 

OTTO MARINE LIMITED

O TTO M ARINE L IMITED - Microsoft Internet Explorer - SGX

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?