Singapore: Otto Marine Announces Cancellation of Contract for Two Vessels

Otto Marine Limited, a leading offshore marine company which specialises in building complex offshore support vessels, ship chartering and offers specialised offshore services, today issued a profit warning regarding the financial results of the Group for the second quarter ended 30 June 2011 (“Q2”). The Group is expected to report a loss for the upcoming Q2 compared with a profit for the corresponding period in 2010.

The loss is mainly due to the reversal of profits due to the cancellation of contract of two vessels (Hull No. 7048 and Hull No. 7049); and reduced revenue from the Group’s subsidiary, Reflect Geophysical Pte. Ltd. (“Reflect”) as a result of lower utilisation of the seismic vessels operated by Reflect arising from increased mobilization time.

“The reversal of profit from the cancellation of two vessels with Mosvold and lower utilisation from Reflect has hit our bottom line for the second quarter. During this time period, we would sincerely request our shareholders to be patient. The management of Otto Marine is working hard to tackle these issues and we are confident of emerging out of this situation stronger. We are evaluating various options we have on hand to deal with the cancelled vessels. We may either sell these vessels at market value or aim at amalgamating them in the Group’s fleet to charter them out. These very wellbuilt and sophisticated vessels are sister vessels to ‘Deep Sea 1’ that recently attained the coveted maritime class certification from DNV. There is already a steady number of enquiries for these vessels and the world market for this size AHTS has improved in the past months as evidenced by the rise in the charter rates in the North Sea. Hence, we are confident of finding suitable options for the vessels soon, keeping in mind our commitment to maximize shareholders return.” siad Mr Lee Kok Wah, President cum Group Chief Executive Officer.

On Reflect, Mr Lee further commented, “Two of the vessels under Reflect witnessed higher mobilization time for deployment to the two new projects in South America region and thus the bottom line was adversely impacted. The situation is getting better now and we are looking at much higher utilisation rates for Reflect’s vessels for the second half of 2011.” Please note that this profit warning is based on a preliminary review of the unaudited financial results of the Group. Further details of the Group’s performance will be disclosed when Otto Marine announces its unaudited financial results for Q2 in due course.

Otto Marine Limited  is an offshore marine group engaged in specialised shipbuilding of offshore vessels for primarily Deep Sea applications. The shipbuilding includes ship repair and conversion. In addition, Otto Marine is chartering out its own fleet of sophisticated and environmentally friendly (clean/comfort class) Anchor Handling Tugs and Offshore Supply vessels for mainly Deep Sea applications. In continuation of its expansion strategy, Otto Marine is the majority shareholder in the seismic operator, Reflect Geophysical. Headquartered in Singapore, the Company owns and operates one of the largest shipyards in Batam, Indonesia – one of the most sophisticated yards in Asia Pacific. The yard is building to DNV and Norwegian class standards. Its customers are primarily deep sea and offshore operators and equipment companies who provide logistics support and offshore services to companies operating globally in the oil and gas industry. Otto Marine’s specialised approach has allowed it to build up its expertise in constructing high specification deep sea and offshore support vessels, improve its production quality and efficiency and develop a competitive cost structure. This quality and level of sophistication has enabled the Company – as one of the few in Asia – to gain recognition in the construction of complex and sophisticated deep sea and offshore vessels.

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Source: ottomarine, July 29, 2011;