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

Inflation
According to the Indonesian Bureau of Statistics, Indonesia’s annual overall inflation rate as measured by
the consumer price index was approximately 17.1%, 6.6% and 6.6% in 2005, 2006 and 2007, respectively. We
cannot assure you that the inflation rate in Indonesia will decrease or will not increase in the future. We
cannot predict the impact that a sustained increase in inflation will have on our business, financial conditions,
results of operations or prospects.
Seasonality
We generally do not experience any seasonality in our shipbuilding, ship repair and conversion, and ship
chartering businesses. However, we are affected by business cycles. See “Risk Factors — Risks Relating to the
Industries in Which We Operate”.
Trends and Prospects
We expect to continue to grow our business during 2008. Our operations will continue to be affected by
conditions in the markets we operate, specifically, the conditions in the oil and gas industry and other factors
discussed under “— Factors Affecting Our Business, Financial Condition and Results of Operations”. 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. Other factors
affecting our business would include the following:
We expect to continue our shipbuilding activities and the completion and delivery of more vessels.
We expect to expand our ship chartering business, and we have nine new vessels presently under
construction two of which we expect to be delivered in 2008 and seven in 2009.
We are considering establishing a shipyard in China and have entered into a capital investment
agreement with the People’s Government of Qidong City of Jiangsu Province, China for the construction
of a shipyard in China. We are currently evaluating the commercial viability of building a shipyard
in China and are in the process of applying for the relevant licences, operating permits and
authorisations from the provincial and the central Chinese authorities for a wholly foreign-owned
enterprise in China. Subject to our evaluation of the commercial viability of the project and us
obtaining all relevant approvals, licenses and permits, we may commence construction on the project
and we will be incurring the relevant capital expenditure.
We expect to expand our shipyard in Batam, Indonesia and will consequently be incurring capital
expenditure. This will increase our production capacity.
We expect to sell more vessels to our strategic partnerships in which we retain minority interests.
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