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

Order Book
Our order book as at any date represents the total stated contract value of orders not yet delivered less the
portion of revenue in respect of these orders that we have recognised using the percentage-of-completion
method, all as translated into Singapore Dollars, our reporting currency.
Our order book has a significant impact on our future revenues and profits. Our order book as at
31 December 2005, 2006 and 2007 was S$1.8 million, S$411.0 million and S$730.6 million, respectively. As
at 8 August 2008, we have an order book of S$937.1 million, comprising 18 AHTS vessels, four PSVs, three
utility vessels, one offshore construction vessel and one work barge with accommodation for 300 people which
we expect to deliver between 2008 and 2011. We typically take between 16 and 18 months to construct and
deliver a vessel to our customers. See “Our Business — Our Operations — Shipbuilding” and “Our Business
— Significant Shipbuilding Projects”. Our order book includes vessels sold to our strategic partners of
which we retain 49% interest. As at 8 August 2008, the nine vessels sold to our strategic partners amounted to
S$207.9 million in order book.
The new contracts that we secured in FY2005 had a total contract value of S$32.0 million and comprised
two AHTS vessels. In FY2006, we secured new contracts with a total contract value of S$532.1 million, which
comprised 16 AHTS vessels, one work barge with accommodation for 300 people and three flat top barges.
The increase in value of new contracts from FY2005 to FY2006 was mainly due to the increase in the number
of vessels we contracted and particularly from the larger and higher specification vessels, which are of higher
value. In FY2007, we secured new contracts with a total contract value of S$616.2 million which comprised
eight AHTS vessels, one work barge with accommodation for 300 people, five tugs and two flat top barges.
Between 1 January 2008 and 31 May 2008, we secured new contracts with a total contract value of
S$276.9 million which comprised one utility vessel, four PSVs and one work barge with accommodation for
300 people. Between 1 June 2008 and 8 August 2008, we secured new contracts with a total contract value of
S$233.6 million which comprised three utility vessels and one offshore construction vessel.
Because of the effect of foreign currency translations on the calculation of new orders for financial
statement purposes, the amount of new orders for any period will not necessarily reflect the stated contract
value of those new orders in the currency of such orders. The state of our order book at any particular date is
not indicative of the revenue or costs we will recognise in any particular future period as we recognise our
shipbuilding revenue and costs on the percentage-of-completion method. See “— Critical Accounting
Policies — Revenue and Cost of Sales Recognition”.
Factors Affecting Our Business, Financial Condition and Results of Operations
A number of important factors have affected, and we expect will continue to affect, our business,
financial condition, results of operations and prospects. These factors include the following:
Activity Levels in the Oil and Gas Industry
The actual and anticipated price of oil and gas and the resultant impact on the level of activity in offshore
oil and gas exploration, development and production have a significant effect on the demand for new offshore
support vessels and the charter rates of existing vessels. We generally expect higher oil prices to result in
higher activity levels in offshore oil exploration, development and production, which in turn would increase
our customers’ actual and planned capital expenditures for new orders of offshore support vessels and their
existing and planned chartering of vessels from us. Conversely, a sustained period of low oil prices would
generally have a negative impact on the level of oil exploration, development and production which, in turn,
would have an adverse effect on the offshore marine industry that we support. These movements in oil prices
have a significant effect on our business, results of operations and financial condition.
In recent weeks there has been a drastic fall in oil price, in connection with the global economic crisis.
This would likely have a negative impact on the oil and gas industry, if oil price remains unstable and affect
the offshore marine industry. In addition, the prevailing credit crunch may inhibit offshore marine players who
are our existing or potential customers from raising the requisite financing to acquire offshore vessels. This
could have an adverse effect on our business, profitability and prospects.
We have a strategic focus on building offshore support vessels, especially vessels with high technical
specifications. With many oil fields maturing, oil and gas companies are moving into deeper seas and areas
with severe weather conditions to undertake oil exploration, development and production. Such exploration,
development and production work is technically more demanding, which we expect to lead to higher demand
for offshore support vessels with higher technical specifications. We generally generate higher margins from
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