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

In FY2007, our net cash from operating activities amounted to S$71.9 million consisting of operating
cashflow before working capital changes of S$68.5 million and net cash outflow from working capital changes
of S$3.3 million, income tax paid of S$0.2 million and interest received of S$6.9 million.
Cash outflows from changes in working capital of S$3.3 million were primarily due to increases in trade
receivables of S$36.6 million, other receivables of S$44.6 million and inventories of S$60.7 million and a
decrease in other payables of S$0.6 million. The increase in trade receivables was attributable to an increase
in revenues while the increase in inventories was due to an increase in the number of vessels constructed over
the year. The increase in other receivables was due to an increase in prepayments and deposits made to
suppliers attributable to the increase in the number of vessels constructed. These amounts were partially offset
by a decrease in construction work-in-progress of S$9.8 million, and increase in trade payables of S$129.3 million.
The decrease in construction work-in-progress was due to the higher progress billings received in excess
of revenue recognised. The increase in trade payables was in line with the increase in the number of vessels
constructed.
In the five months ended 31 May 2008, our net cash used in operating activities amounted to
S$43.3 million consisting of operating cashflow before working capital changes of S$52.5 million and net cash
outflow from working capital changes of S$97.5 million, income tax paid of S$0.6 million and interest
received of S$2.3 million.
Cash outflows from changes in working capital of S$97.5 million were primarily due to increases in other
receivables of S$74.7 million, construction work-in-progress of S$61.8 million and inventories of S$24.6 million,
which were partially offset by cash inflows from an increase in trade payables of S$55.2 million, a
decrease in trade receivables of S$7.7 million and an increase in other payables of S$0.7 million.
The increase in other receivables of S$74.7 million was primarily attributable to deposits placed with our
equipment suppliers to secure the supply of equipment at current market prices even though the delivery of the
equipment is not immediate. The amount of these deposits increased due to the growth of our business and
due to the fact that we secured supply of higher value equipment. The cash outflows resulting from an increase
in construction work-in-progress of S$61.8 million were primarily attributable to the time lag between the
incurrence of costs of constructing vessels for which contracts have been signed and the collection of the full
contract amount from our customers. See “Our Business — Credit Management”. The cash outflows resulting
from an increase in inventories of S$24.6 million was contributed primarily by the costs incurred to construct
vessels for which no contract for sales had been secured. The increase in construction work-in-progress and
inventories was due to the increase in the number of vessels and higher specification vessels we constructed.
The cash inflows resulting from an increase in trade payables and other payables of S$55.2 million and
S$0.7 million, respectively, were attributable to the general growth of our business. The cash inflows resulting
from a decrease in trade receivables of S$7.7 million were attributable to the collection of amounts invoiced to
customers.
We incur substantial costs for vessel construction, including purchases of equipment and shipyard costs,
in the early stages of the construction process. We collect down payment for our vessels only upon the signing
of the relevant contracts, and we collect the full payment only upon delivery of the vessels. See “Our
Business — Our Operations — Shipbuilding”. As a result of these timing differences, we expend substantial
amounts of cash for each vessel before receiving cash for the full contract value of the vessel. In addition, we
have, in recent years, significantly increased the number of vessels we construct and have focused increasingly
on constructing larger and higher specification vessels, thereby increasing our cash expenditures. As a result,
our cash outflows have exceeded our cash inflows from our operating activities in the five months ended
31 May 2008. We are currently building 27 vessels in our order book that we expect to deliver between 2008
and 2011. Upon delivery and collection of the full contract value, proceeds from the sale of these vessels will
contribute to cash inflows from our operating activities. We have also recently secured additional banking
facilities. See “— Borrowings”.
Cash Flow Used in Investing Activities
In FY2005, our net cash used in investing activities amounted to S$8.3 million primarily due to the
purchase of property, plant and equipment for S$8.4 million, which was partially offset by the proceeds from
disposal of plant and equipment for S$0.1 million.
In FY2006, our net cash used in investing activities amounted to S$7.9 million which was used for the
purchase of property, plant and equipment.
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