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

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
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