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

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
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