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

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.
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