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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
OTTO MARINE LIMITED AND ITS SUBSIDIARIES
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