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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”.
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