Otto Marine

[butcher]

I find something amiss. I think the Otto and the unnamed creditor have been undergoing negotiation all along and legal notices should have been served and the amounts involved here are quite substantial with more than $1m. Think the company should have made known or the auditors should have got notice during the course of their audit work.

How come there is no disclosure of a contingent event that a litigation is probable? I could not locate them in the financial statements, maybe I overlooked.

How come there isn't any modification of audit opinion by the auditors? Winding up application against Otto, this is a serious threat to Otto continuing as a going concern in my perspective.

With due respect to Otto's auditors, I think something is amiss and this points to a mistake and if adequate and relevant works were performed.

With due respect to all auditors, this may again shows, auditors are always looking at the past in which they are good at. But where are the early warnings to investors?

[CityFarmer]

I find something amiss. I think the Otto and the unnamed creditor have been undergoing negotiation all along and legal notices should have been served and the amounts involved here are quite substantial with more than $1m. Think the company should have made known or the auditors should have got notice during the course of their audit work.

How come there is no disclosure of a contingent event that a litigation is probable? I could not locate them in the financial statements, maybe I overlooked.

How come there isn't any modification of audit opinion by the auditors? Winding up application against Otto, this is a serious threat to Otto continuing as a going concern in my perspective.

With due respect to Otto's auditors, I think something is amiss and this points to a mistake and if adequate and relevant works were performed.

With due respect to all auditors, this may again shows, auditors are always looking at the past in which they are good at. But where are the early warnings to investors?

The recent winding-up application isn't the main concern. It involved slightly more than 1 million with a company with market cap of 178 million and close to 17 million in free cash reserve, as in FY2014

The worrying part is the high net gearing of close to 2x, and half of the debt are current, i.e. due within a year. Once the lenders shut the door for re-financing, the company will face a deep financial crisis.

(not vested)

[butcher]

yes, agreed but the problem is whether the auditors have given an appropriate audit opinion and whether enough disclosures on contingent liabilities are being disclosed as per FRS37.

As flagged by cityfarmer, otto have worrying high gearing and half are due within 12 months, company's financial position already very shaky and verge of deep crisis. Given these facts, wonder how come auditors can give clean opinion unless they are satisfied that no threats to going concerns but investors are unaware of the mitigating measures.

Also, now given no disclosure of contingent liabilities, possibly of significant nature. Think the auditor's report doesn't give much assurance to investors afterall. I recalled 1 of my senior management people said before, Big 4 not always right!

May refer to below for reference:-
http://www.asc.gov.sg/2015Volume
http://www.iasplus.com/en/standards/ias/ias37

Edited post with uploaded article which think is interesting and relevant to Otto's case.

[xis]

OTTO MARINE'S AGM: 2015 is year for cost cutting

http://www.nextinsight.net/index.php/sto...arines-agm-

vested @ 6cts

[kelvesy]

Dear xis,

May I know what are the reasons why you decided to invest in Otto Marine?

[xis]

Dear xis,

May I know what are the reasons why you decided to invest in Otto Marine?

Was looking for turnaround company last year. Their books look good with free cash flow and talk of IPO listing of sub-sea business. Debt was high but seem manageable. Did not see oil price coming down ....

[butcher]

OMG, it seems that things are getting uglier, subsidiary down under also got under fire. House of cards falling apart.
Again, where are early warnings by auditors?


http://ottomarine.listedcompany.com/news...CKGI.1.pdf

Otto Marine Limited (the “Company”) wishes to announce that it has been informed by Go
Marine Group Pty Ltd (“Go Marine”) that a creditor (the “Creditor”) of Go Offshore Pty Ltd
(“Go Offshore”), a wholly-owned subsidiary of Go Marine, has filed a winding up
application (the “Application”) with the Singapore High Court (the “Court”) to wind up Go
Offshore (Asia) Pte. Ltd. (“Go Offshore Asia”), another wholly-owned subsidiary of Go
Marine. The Court has made directions for the Application to be heard on 8 May 2015.

The total sum claimed against Go Offshore Asia pursuant to the Application is
approximately USD 118,000 (the “Debt”). As at the date of this announcement, Go
Offshore has fully paid up the Debt to the Creditor, and the Creditor is in the process of
withdrawing the Application.

The Company has taken all reasonable care to ensure that the facts stated in this
announcement are fair and accurate in all material aspects as at the date hereof and that
no material facts have been omitted from this announcement.

The event is not expected to have a material impact on the financials of the Company for
the financial year ending 31 December 2015.

Submitted by
Chong Sieh Jiuan
Chief Financial Officer & Joint Company Secretary
25 April 2015

[thor666]

OMG, it seems that things are getting uglier, subsidiary down under also got under fire. House of cards falling apart.
Again, where are early warnings by auditors?

I am actually of the opinion that some of the smaller auditing firms are more rigorous in issuing opinion based on general analysis. YMMV and not an assessment of this particular case.

Sent from my D5503 using Tapatalk

[butcher]

Hi Thor, I do agree with you somehow. It doesn't really matters if audited by Big 4 although Big 4 names sounds more prestigious and more premium and somehow do gives the impression of being more assured which may not necessary be true. Small names because people never heard of you unless got dealings with small firms do they gain the trust etc.

[CityFarmer]

I believe it is a mistake, it is 3.7 cents, rather than 37 cents for the share price. The debt is not a lot, but i really wonder why the company didn't settle it, before the winding-up application? IIRC, the company has no dispute on the debt...

(not vested)

Otto Marine bonds take a beating on winding-up application

SINGAPORE (April 27): Otto Marine ( Financial Dashboard) is in talks to reach settlement on a debt with a creditor which has filed a bankruptcy application.

The news sent Otto's $70-million 7% bond due in August 2016 sliding down 2 points with an indicative bid as low as 87.45. The bonds had been hovering around 93.375 early last week but dipped to 89.50 on Friday before Otto's announcement emerged on Saturday.

The offshore marine services company's stock, listed on the Singapore Exchange, also took a beating, tumbling 11.9% to 37 cents in the afternoon.
...
http://www.theedgemarkets.com/sg/article...pplication