PST MANAGEMENT PTE. LTD.

Transcription

1 CIRCULAR DATED 28 NOVEMBER 2011 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt in relation to this Circular or as to the action that you should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. If you have sold or transferred all of your units in Pacifi c Shipping Trust, you should immediately forward this Circular together with the Notice of Extraordinary General Meeting and the attached Proxy Form to the purchaser or the transferee or to the bank, stockbroker or agent through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee. The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular. This Circular, the Exit Offer Letter and the FAA (all as defi ned herein) shall not be construed as, and may not be used for the purposes of, and do not constitute a notice or proposal or advertisement or an offer or invitation or solicitation in any jurisdiction or in any circumstance in which such a notice or proposal or advertisement or an offer or invitation or solicitation is unlawful or not authorised, or to any person to whom it is unlawful to make such a notice or proposal or advertisement or an offer or invitation or solicitation. (a business trust constituted on 25 April 2006 under the laws of the Republic of Singapore) (Registration Number: ) Managed By PST MANAGEMENT PTE. LTD. (Incorporated in the Republic of Singapore) (Company Registration Number: M) As Trustee-Manager of Pacifi c Shipping Trust CIRCULAR TO UNITHOLDERS IN RELATION TO THE PROPOSED VOLUNTARY DELISTING OF PACIFIC SHIPPING TRUST PURSUANT TO RULES 1307 AND 1309 OF THE SGX-ST LISTING MANUAL Independent Financial Adviser to the Independent Directors of PST Management Pte. Ltd. PricewaterhouseCoopers Corporate Finance Pte Ltd (Incorporated in the Republic of Singapore) (Company Registration No : H) IMPORTANT DATES AND TIMES Last date and time for lodgement of Proxy Form : 14 December 2011 at a.m. Date and time of Extraordinary General Meeting : 16 December 2011 at a.m. Venue of Extraordinary General Meeting : NTUC Centre No. 1 Marina Boulevard #08-00, Room 801 Singapore

2 CONTENTS DEFINITIONS... 2 INDICATIVE TIMETABLE... 6 LETTER TO UNITHOLDERS Introduction The Delisting Proposal The Exit Offer Financial Aspects of the Exit Offer Information on the Offeror Information on PST The Rationale for the Delisting The Offeror s Intentions Relating to PST Implications of Compulsory Acquisition, Delisting and Winding-up for Unitholders Confi rmation of Financial Resources Exemption Relating to Directors Recommendations Advice of Independent Financial Adviser to the Independent Directors Independent Directors Recommendations Overseas Unitholders Extraordinary General Meeting Action to be Taken by Unitholders Directors Responsibility Statement Additional Information Appendix I : Letter from PwCCF to the Independent Directors Appendix II : Additional Information on PST Appendix III : Rights of Unitholders in Respect of Voting, Distributions, the Units, and the Winding-up of PST Appendix IV : General Information Page Appendix V : Audited Consolidated Financial Statements of the PST Group for the Financial Year ended 31 December Appendix VI : Unaudited Consolidated Financial Statements of the PST Group for the Nine Months ended 30 September Appendix VII : Letter from PwCCF in relation to the Q3 Interim Results Appendix VIII : Letter from KPMG in relation to the Q3 Interim Results Appendix IX : Valuation Reports from Team Shipbrokers NOTICE OF EXTRAORDINARY GENERAL MEETING PROXY FORM 1

3 DEFINITIONS Except where the context otherwise requires, the following defi nitions apply throughout this Circular: Approval of Delisting Resolution Condition Books Closure Date Business Trusts Act CDP Circular Closing Date Code Companies Act Conditions DBS Bank Delisting Delisting Proposal Delisting Resolution Directors EGM EGM Notice Encumbrances Exit Offer Exit Offer Letter : Shall have the meaning ascribed to it in Section of the Letter to Unitholders : Shall have the meaning ascribed to it in Section of the Letter to Unitholders : The Business Trusts Act (Chapter 31A of Singapore), as amended or modifi ed from time to time : The Central Depository (Pte) Limited : This circular issued by the Trustee-Manager to the Unitholders in relation to the Delisting : 5.30 p.m. on 30 December 2011, or such later date(s) as may be announced from time to time by or on behalf of the Offeror : The Singapore Code on Take-overs and Mergers : The Companies Act (Chapter 50 of Singapore), as amended or modifi ed from time to time : The Approval of Delisting Resolution Condition and the Minimum Acceptance Condition : DBS Bank Ltd., the fi nancial adviser to the Offeror in relation to the Delisting and the Exit Offer : The voluntary delisting of PST from the Offi cial List of the SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual : The proposal by the Offeror dated 30 September 2011 presented to the Trustee-Manager to seek the Delisting : The resolution to be proposed at the EGM to approve the Delisting : The directors of the Trustee-Manager (including the Independent Directors) as at the Latest Practicable Date : The extraordinary general meeting of Unitholders to be convened on 16 December 2011 to seek the approval of Unitholders for the Delisting, and any adjournment thereof, notice of which is set out on page 206 of this Circular : Shall have the meaning ascribed to it in Section 15 of the Letter to Unitholders : Liens, equities, mortgages, charges, encumbrances, rights of preemption and other third party rights and interests of any nature whatsoever : The exit offer by DBS Bank, for and on behalf of the Offeror, to acquire all the Offer Units in connection with the Delisting : The letter dated 28 November 2011 issued by DBS Bank, for and on behalf of the Offeror, in respect of the Exit Offer 2

4 DEFINITIONS Exit Offer Price FAA : Subject to the terms of the Exit Offer Letter, US$0.43 in cash for each Offer Unit : Form of Acceptance and Authorisation FY : Financial year ended or ending (as the case may be) on 31 December of a particular year as stated IFA Letter Independent Directors Joint Announcement Joint Announcement Date KPMG Latest Practicable Date Letter to Unitholders Liquidation Costs Listing Manual Market Day Minimum Acceptance Condition NAV : Shall have the meaning ascribed to it in Section 12.1 of the Letter to Unitholders : The Directors who are considered to be independent for the purposes of making recommendations to Unitholders in relation to the Delisting and the Exit Offer, namely, Benedict Kwek Gim Song, Eugene Ooi Chin Chai, Christopher Adrian Jones, Lim Ah Doo and Esben Sofren Poulsson : The joint announcement made by the Trustee-Manager and the Offeror dated 4 October 2011 in relation to the Delisting and the Exit Offer : 4 October 2011, being the date of the Joint Announcement : KPMG LLP, the auditors of PST : 22 November 2011, being the latest practicable date prior to the printing of this Circular : The letter found on pages 7 to 21 of this Circular : Shall have the meaning ascribed to it in Section 9.3 of the Letter to Unitholders : The listing manual of the SGX-ST, as amended or modifi ed from time to time : A day on which the SGX-ST is open for trading in securities : Shall have the meaning ascribed to it in Section of the Letter to Unitholders : Net asset value Non-Independent Directors : Kuan Kim Kin and Teo Choo Wee Offeror Offeror Group Offeror Securities Offer Units Post-Announcement Distributions : Pacifi c International Lines (Private) Limited : The Offeror and its subsidiaries : Instruments convertible into, rights to subscribe for, and options in respect of equity share capital of the Offeror : Units other than those held, directly or indirectly, by the Offeror as at the date of the Exit Offer : Shall have the meaning ascribed to it in Section of the Letter to Unitholders 3

5 DEFINITIONS PST PST Group : Pacifi c Shipping Trust : PST and its subsidiaries PST Securities : (i) Units; (ii) (iii) (iv) securities which carry voting rights in PST; instruments convertible into Units or securities which carry voting rights in PST; or rights to subscribe for or options in respect of Units or securities which carry voting rights in PST Proxy Form PwCCF : The proxy form for the EGM : PricewaterhouseCoopers Corporate Finance Pte Ltd, the independent fi nancial adviser to the Independent Directors Q3 Distribution : The cash distribution of 0.73 US cents per Unit as announced by the Trustee-Manager on 19 October 2011 Q3 Interim Results : Unaudited consolidated fi nancial statements of the PST Group for the nine months ended 30 September 2011 Register Registrar SIC SGX-ST Ship Management Agreement Team Shipbrokers Trust Deed Trustee-Manager Unitholders Units US$ and cents Valuation Reports Vessels : The register of Unitholders, as maintained by the Registrar : Boardroom Corporate and Advisory Services Pte. Ltd. : Securities Industry Council of Singapore : Singapore Exchange Securities Trading Limited : Shall have the meaning ascribed to it in paragraph 7 of Appendix II of this Circular : Team Shipbrokers (S) Pte Ltd : The trust deed dated 25 April 2006 executed by the Trustee-Manager constituting PST, and supplemented by a fi rst supplemental deed dated 25 February 2008 : PST Management Pte. Ltd., as trustee-manager of PST : Holders of Units : Units in PST : United States dollars and cents respectively, being the lawful currency of the United States of America : Shall have the meaning ascribed to it in paragraph 10 of Appendix II of this Circular : Shall have the meaning ascribed to it in paragraph 7 of Appendix II of this Circular 4

6 DEFINITIONS VWAP : Volume weighted average price % or per cent. : Per centum or percentage All references to PST are to it acting through the Trustee-Manager. The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. The term related corporation shall have the meaning ascribed to it in Section 6 of the Companies Act. The term controlling Unitholder shall have the meaning ascribed to it in the Listing Manual. The term acting in concert shall have the meaning ascribed to it in the Code. Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall, where applicable, include corporations. Any reference in this Circular to any enactment is a reference to the enactment as for the time being amended or re-enacted. Any word defi ned in the Business Trusts Act, the Companies Act, the Code or the Listing Manual (or any modifi cation thereof) and used in this Circular shall have the meaning assigned to it under the Business Trusts Act, the Companies Act, the Code or the Listing Manual (or any modifi cation thereof), as the case may be, unless the context otherwise requires. Any reference to a time of day and date in this Circular shall be a reference to Singapore time and date respectively, unless otherwise stated. Any differences between the amounts and the totals thereof are due to rounding; accordingly, fi gures shown as totals may not be an arithmetic aggregation of the fi gures that precede them. All statements other than statements of historical facts included in this Circular are or may be forwardlooking statements. Forward-looking statements include but are not limited to those using words such as expect, anticipate, believe, intend, project, plan, strategy, forecast and similar expressions or future or conditional verbs such as will, would, should, could, may and might. These statements refl ect the Trustee-Manager or, as the case may be, the Offeror s current expectations, beliefs, hopes, intentions or strategies regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual results may differ materially from those described in such forward-looking statements. Unitholders and investors should not place undue reliance on such forward-looking statements, and neither the Trustee-Manager, the Offeror, PwCCF nor DBS Bank undertakes any obligation to update publicly or revise any forward-looking statements, subject to compliance with all applicable laws and regulations and/or rules of the SGX-ST and/or any other regulatory or supervisory body or agency. 5

7 INDICATIVE TIMETABLE Last date and time for lodgement of the Proxy Form : 14 December 2011 at a.m. Date and time of the EGM : 16 December 2011 at a.m. Expected commencement date of the Exit Offer : 28 November 2011 Expected Closing Date of the Exit Offer : 5.30 p.m. on 30 December 2011 or such later date(s) as may be announced from time to time by or on behalf of the Offeror Expected settlement date in respect of Offer Units : Within ten days of the later of (i) accepted pursuant to the Exit Offer the Exit Offer becoming or being declared unconditional in all respects in accordance with its terms (i.e. upon the satisfaction of the Approval of Delisting Resolution Condition); or (ii) the date of receipt of the valid acceptances of the Exit Offer in respect of such Offer Units Expected date for the delisting of the Units from the : 21 February 2012 SGX-ST Unitholders should note that save for the last date and time for lodgement of the Proxy Form, and the date and time of the EGM, the above timetable is indicative only and may be subject to change. For events listed above which are described as expected, please refer to future announcement(s) by or on behalf of the Trustee-Manager and/or the Offeror via SGXNET for the exact dates and times of such events. UNITHOLDERS SHOULD NOTE THAT THE EXIT OFFER IS CONDITIONAL UPON THE APPROVAL OF DELISTING RESOLUTION CONDITION BEING FULFILLED. APPROVAL OF THE DELISTING RESOLUTION DOES NOT MEAN THAT YOU HAVE ACCEPTED THE EXIT OFFER. IF YOU WISH TO ACCEPT THE EXIT OFFER, PLEASE REFER TO PARAGRAPH 12 AND APPENDIX II OF THE EXIT OFFER LETTER FOR INSTRUCTIONS ON HOW TO ACCEPT THE EXIT OFFER. 6

8 LETTER TO UNITHOLDERS (a business trust constituted on 25 April 2006 under the laws of the Republic of Singapore) (Registration Number: ) Registered Office of the Trustee-Manager: 140 Cecil Street #07-01 PIL Building Singapore Directors of the Trustee-Manager: Benedict Kwek Gim Song (Chairman, Independent and Non-Executive Director) Eugene Ooi Chin Chai (Independent and Non-Executive Director) Christopher Adrian Jones (Independent and Non-Executive Director) Lim Ah Doo (Independent and Non-Executive Director) Esben Sofren Poulsson (Independent and Non-Executive Director) Kuan Kim Kin (Non-Independent and Non-Executive Director) Teo Choo Wee (Non-Independent and Non-Executive Director) 28 November 2011 To: The Unitholders of Pacifi c Shipping Trust Dear Sir / Madam PROPOSED VOLUNTARY DELISTING OF PACIFIC SHIPPING TRUST PURSUANT TO RULES 1307 AND 1309 OF THE LISTING MANUAL 1. INTRODUCTION 1.1 On 4 October 2011, the Trustee-Manager and the Offeror jointly announced that the Offeror had presented the Delisting Proposal to the Directors to seek the voluntary delisting of PST from the Offi cial List of the SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual. Under the terms of the Delisting Proposal, DBS Bank, for and on behalf of the Offeror, will make the Exit Offer to acquire all the Offer Units at the Exit Offer Price of US$0.43 in cash for each Offer Unit. 1.2 Having reviewed the Delisting Proposal, the Directors have resolved, inter alia, to convene the EGM to seek the approval of the Unitholders for the Delisting. 1.3 The purpose of this Circular is to provide Unitholders with information relating to the Delisting Proposal and the Exit Offer and to seek the approval of Unitholders for the Delisting Resolution to be proposed at the EGM. 2. THE DELISTING PROPOSAL 2.1 Terms of the Delisting Proposal. Under the terms of the Delisting Proposal, the Delisting and the Exit Offer are conditional on: the Delisting Resolution: (i) being approved by a majority of at least 75 per cent. of the total number of issued Units held by the Unitholders present and voting, on a poll, either in person or by proxy at the EGM to be convened for the Unitholders to vote on the Delisting Resolution (the Directors and controlling Unitholders need not abstain from voting on the Delisting Resolution); and 7

9 LETTER TO UNITHOLDERS (ii) not being voted against by 10 per cent. or more of the total number of issued Units held by the Unitholders present and voting, on a poll, either in person or by proxy at the EGM, (the Approval of Delisting Resolution Condition ); and the Offeror having received, by the close of the Exit Offer, valid acceptances in respect of such number of Offer Units that, when taken together with the Units owned, controlled or agreed to be acquired by the Offeror (either before or during the Exit Offer and pursuant to the Exit Offer or otherwise), will result in the Offeror holding such number of Units carrying not less than 75 per cent. of the total voting rights attributable to the Units (the Minimum Acceptance Condition ). The Offeror has reserved the right to waive the Minimum Acceptance Condition, provided that such waiver is made after obtaining the consent of the SIC. In the event that the Minimum Acceptance Condition is waived, the Exit Offer shall remain open for not less than 14 days following the announcement of such waiver and Unitholders who have accepted the Exit Offer will be permitted to withdraw their acceptance within eight days of notifi cation of the waiver. As announced by DBS Bank for and on behalf of the Offeror on 31 October 2011, the Minimum Acceptance Condition has been satisfi ed and the Exit Offer (when made pursuant to the Exit Offer Letter) has become unconditional as to acceptances. Accordingly, following the satisfaction of the Minimum Acceptance Condition, the Delisting and the Exit Offer remain subject only to the satisfaction of the Approval of Delisting Resolution Condition. 2.2 Rule 1307 of the Listing Manual. Under Rule 1307 of the Listing Manual, the SGX-ST may agree to an application by PST to delist from the Offi cial List of the SGX-ST if: PST convenes an extraordinary general meeting to obtain the approval of its Unitholders for the Delisting; the Delisting Resolution is approved by a majority of at least 75 per cent. of the total number of issued Units held by Unitholders present and voting, on a poll, either in person or by proxy at the EGM; and the Delisting Resolution is not voted against by 10 per cent. or more of the total number of issued Units held by Unitholders present and voting, on a poll, either in person or by proxy at the EGM. Unitholders should note that under Rule 1307 of the Listing Manual, all Unitholders (including the Offeror and parties acting in concert with the Offeror who hold Units) are entitled to vote on the Delisting Resolution. Accordingly, the Offeror is entitled to and has, in the Joint Announcement, indicated its intention to vote all its Units in favour of the Delisting Resolution at the EGM. As at the Latest Practicable Date, the Offeror owns 446,866,240 Units, representing approximately per cent. of the total number of issued Units. 2.3 Rule 1309 of the Listing Manual. In addition, under Rule 1309 of the Listing Manual, if PST is seeking to delist from the SGX-ST: a reasonable exit alternative, which should normally be in cash, should be offered to all Unitholders; and PST should normally appoint an independent fi nancial adviser to advise on the Exit Offer. 8

10 LETTER TO UNITHOLDERS 2.4 Application to the SGX-ST. The Trustee-Manager had, on 28 October 2011, made an application to the SGX-ST to delist PST from the Offi cial List of the SGX-ST. The SGX-ST has, on 17 November 2011, confi rmed that it has no objections to the Delisting, subject to compliance with Rules 1307 and 1309 of the Listing Manual. However, the decision of the SGX-ST is not to be taken as an indication of the merits of the Exit Offer or the proposed Delisting. Accordingly, the Delisting Resolution, if approved by Unitholders at the EGM in accordance with Rule 1307 of the Listing Manual, will result in the Delisting. 2.5 Application to the SIC. An application was made by the Offeror to the SIC to seek clarifi cation regarding the extent to which the provisions of the Code applied to the Exit Offer. The SIC has, on 28 September 2011, ruled, inter alia, that: it consents to the Delisting and the Exit Offer being conditional on the Minimum Acceptance Condition; the Offeror may reserve the right to waive the Minimum Acceptance Condition after obtaining the SIC s consent. The SIC s consent, if granted, will be subject to: (i) (ii) the Exit Offer remaining open for another 14 days following the announcement of such waiver by or on behalf of the Offeror; and Unitholders who have accepted the Exit Offer being permitted to withdraw their acceptance within eight days of notifi cation of such waiver; the Exit Offer is exempted from compliance with Rules 22.1, 22.2 and 22.3 of the Code, subject to the following conditions: (i) (ii) (iii) disclosure in this Circular of the NAV per Unit based on the latest published accounts prior to the date of this Circular; disclosure in this Circular of particulars of all known material changes as of the Latest Practicable Date which may affect the NAV per Unit referred to in Section 2.5.3(i) of this Letter to Unitholders or a statement that there are no such known material changes; and the Exit Offer remaining open for at least: (a) (b) 21 days after the date of the despatch of the Exit Offer Letter if the Exit Offer Letter is despatched after Unitholders approval for the Delisting has been obtained; or 14 days after the date of the announcement of Unitholders approval of the Delisting if the Exit Offer Letter is despatched on the same date as the Delisting Circular; and the Non-Independent Directors are exempted from the requirement to make a recommendation to the Unitholders on the Exit Offer as they face irreconcilable confl icts of interests in doing so, being parties acting in concert with the Offeror. The Non-Independent Directors must, nonetheless, accept responsibility for the accuracy of the facts stated and opinions expressed in documents issued by, or on behalf of, PST to the Unitholders in connection with the Exit Offer. 2.6 Exit Offer Letter. The Exit Offer Letter and the FAA will be despatched to Unitholders by ordinary post. 9

11 LETTER TO UNITHOLDERS 3. THE EXIT OFFER 3.1 Exit Offer. As stated in the Exit Offer Letter, DBS Bank, for and on behalf of the Offeror, has made the Exit Offer to acquire all the Offer Units on the terms and subject to the conditions set out in the Exit Offer Letter (including the FAA). 3.2 Terms of the Exit Offer. As stated in the Exit Offer Letter: The Exit Offer is made on the following basis: For each Offer Unit: US$0.43 in cash The Exit Offer Price shall be applicable to any number of Offer Units that are tendered in acceptance of the Exit Offer. Unitholders may choose to accept the Exit Offer in respect of all or part of their holdings of Offer Units The Offer Units will be acquired fully paid and free from all Encumbrances, and together with all rights, benefi ts and entitlements attached thereto as at the Joint Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends and other distributions and return of capital (if any) announced, declared, paid or made thereon by PST on or after the Joint Announcement Date ( Post-Announcement Distributions ) Without prejudice to the generality of the paragraph above, the Exit Offer Price has been determined on the basis that the Offer Units will be acquired with the right to receive any Post-Announcement Distributions, including the Q3 Distribution. The Trustee-Manager announced on 19 October 2011 that the Transfer Books and Register will be closed on 28 October 2011 ( Books Closure Date ) for the purpose of determining Unitholders entitlements to the Q3 Distribution and that the Q3 Distribution is expected to be paid on or about 29 November As the settlement date in respect of the Offer Units accepted pursuant to the Exit Offer falls after the Books Closure Date, the Offeror will not receive the Q3 Distribution in respect of such Offer Units. Accordingly, the Exit Offer Price to be paid in respect of such Offer Units will be reduced by an amount which is equal to the Q3 Distribution. On the basis that there is no other Post-Announcement Distributions apart from the Q3 Distribution, the net Exit Offer Price will be US$ per Offer Unit. An illustrative example of the net Exit Offer Price payable after the deduction of the Q3 Distribution is provided below. Illustration of the net Exit Offer Price payable following deduction of the Q3 Distribution: Exit Offer Price: US$0.43 Q3 Distribution: 0.73 US cents (or US$0.0073) Number of Offer Units tendered by an accepting Unitholder: 1,000 Total amount payable by the Offeror to the accepting Unitholder: (US$0.43 US$0.0073) x 1,000 = US$ Acceptance of the Exit Offer by a Unitholder will be deemed to constitute an unconditional and irrevocable warranty by that Unitholder that each Offer Unit in respect of which the Exit Offer is accepted and sold by him, as or on behalf of the benefi cial owner(s), is fully paid and free from all Encumbrances, and together with all rights, benefi ts and entitlements attached thereto as at the Joint Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends and other distributions and return of capital (if any) announced, declared, paid or made thereon by PST on or after the Joint Announcement Date. 10

12 LETTER TO UNITHOLDERS 3.3 Conditions for the Delisting and the Exit Offer. As set out in the Exit Offer Letter, the Delisting and Exit Offer are subject to the Approval of Delisting Resolution Condition being fulfi lled. 3.4 Duration of Exit Offer. Information relating to the commencement of the Exit Offer and the Closing Date has been extracted in toto from paragraph 2.5 of the Exit Offer Letter (and reproduced below), and all terms and expressions used in the extract below shall bear the same meanings as attributed to them in the Exit Offer Letter unless otherwise stated: 2.5 Duration of the Exit Offer (a) Closing Date The Exit Offer is open for acceptance from the date of despatch of this Exit Offer Letter and the FAA. Unitholders may choose to accept the Exit Offer before the EGM. However, such acceptances would be conditional and if the Delisting Resolution is not approved at the EGM, the condition to the Delisting and the Exit Offer will not be fulfi lled and the Exit Offer will lapse, and both the Unitholders and the Offeror will cease to be bound by any prior acceptances of the Exit Offer by any Unitholder. If the Delisting Resolution is approved by the Unitholders at the EGM, the Exit Offer will continue to be open for acceptance by the Unitholders for at least 14 days after the date of announcement of the fulfi llment of the Approval of Delisting Resolution Condition. Accordingly, the Exit Offer will close at 5.30 p.m. on 30 December 2011 or such later date(s) as may be announced from time to time by or on behalf of the Offeror (the Closing Date ). (b) (c) (d) (e) Exit Offer to Remain Open for 14 Days Pursuant to Rule 22.6 of the Code, if the Exit Offer becomes or is declared to be unconditional as to acceptances, the Exit Offer will remain open for acceptances for not less than 14 days after the date on which it would otherwise have closed, in order to give those Unitholders who have not accepted the Exit Offer the opportunity to do so. Final Day Rule Pursuant to Rule 22.9 of the Code, the Exit Offer (whether revised or not) will not be capable of being kept open after 5.30 p.m. on the 60th day after the date of posting of this Exit Offer Letter, provided that the Offeror may extend the Exit Offer beyond such 60-day period with the permission of the SIC. Subsequent Closing Date If there is an extension of the Exit Offer, pursuant to Rule 22.4 of the Code, any announcement of an extension of the Exit Offer will state the next closing date or if the Exit Offer is unconditional as to acceptances, a statement may be made that the Exit Offer will remain open until further notice. In the latter case, those Unitholders who have not accepted the Exit Offer will be notifi ed in writing at least 14 days before the Exit Offer is closed. Revision If the Exit Offer is revised, pursuant to Rule 20.1 of the Code, the Exit Offer will remain open for acceptance for a period of at least 14 days from the date of dispatch of the written notifi cation of the revision to the Unitholders. In any case, where the terms are revised, the benefi t of the Exit Offer (as so revised) will be made available to each of the Unitholders who had previously accepted the Exit Offer. 11

13 LETTER TO UNITHOLDERS (f) Time for Fulfillment of other Conditions Under Rule of the Code, except with the consent of the SIC, all conditions of the Exit Offer must be fulfi lled or the Exit Offer must lapse within 21 days of the fi rst Closing Date or the date the Exit Offer becomes or is declared unconditional as to acceptances, whichever is the later. In respect of the Exit Offer, save for the Approval of Delisting Resolution Condition set out in paragraph 2.3 above, th e Exit Offer is unconditional in all other respects. 4. FINANCIAL ASPECTS OF THE EXIT OFFER The fi nancial aspects of the Exit Offer have been extracted in toto from paragraph 2.2 of the Exit Offer Letter (and reproduced below), and all terms and expressions used in the extract below shall bear the same meanings as attributed to them in the Exit Offer Letter unless otherwise stated: 2.2 Benchmarking the Exit Offer Price The Exit Offer Price exceeds the highest transacted price of the Units in the last three years preceding the Joint Announcement Date and represents the following premia over the historical transacted prices of the Units on the SGX-ST: Description Unit Price (US$) (1) Premium over Unit Price (2) (a) Last transacted price per Unit on 29 September 2011 (being the Last Trading Day) % (b) (c) (d) (e) VWAP for the one-month period prior to and including the Last Trading Day VWAP for the three-month period prior to and including the Last Trading Day VWAP for the six-month period prior to and including the Last Trading Day VWAP for the 12-month period prior to and including the Last Trading Day % % % % Notes: (1) Source: Bloomberg L.P. (2) Computed based on the Unit prices which were rounded to the nearest three decimal places. 5. INFORMATION ON THE OFFEROR Information on the Offeror has been extracted in toto from paragraph 5 of the Exit Offer Letter (and reproduced below), and all terms and expressions used in the extract below shall bear the same meanings as attributed to them in the Exit Offer Letter unless otherwise stated: 5. INFORMATION ON THE OFFEROR The Offeror is a company incorporated in Singapore on 16 March It is a shipowner/operator with business comprising logistics related activities such as supply chain management, consolidation/distribution facilities, warehousing, container depot operations, trucking as well as having interest in ship-agencies, container manufacturing, marine engineering and real estate. The Offeror is the holding company of both PST and the Trustee-Manager. As at the Latest Practicable Date, the Offeror holds 446,866,240 Units, representing approximately % of the total number of issued Units. 12

14 LETTER TO UNITHOLDERS As at the Latest Practicable Date, the directors of the Offeror are as follows: Teo Woon Chang Yun Chung; Teo Chew Peter Chang; Teo Siong Seng; Tan Chor Kee; Teo Choo Kiong; Teo Cho Keng; Teo Tiou Seng; Teo Teng Seng; TCW; KKK; Khoo Cheng Lock Eric; and Tay Kian Phuan William. Appendix III of this Exit Offer Letter sets out certain additional information on the Offeror. 6. INFORMATION ON PST PST is a business trust constituted pursuant to the Trust Deed. It was admitted to the Offi cial List of the SGX-ST on 26 May PST is established with the principal objective of providing an opportunity to the public to invest primarily in vessels which are intended to be chartered to ship operators on either bareboat or time charters. PST is managed by the Trustee-Manager which was incorporated in Singapore on 24 February The Trustee-Manager is a wholly-owned subsidiary of the Offeror and has the dual responsibility of safeguarding the interests of the Unitholders and managing the business conducted by PST. Additional information on PST is set out in Appendix II to this Circular. 7. THE RATIONALE FOR THE DELISTING The rationale for the Delisting has been extracted in toto from paragraph 6 of the Exit Offer Letter (and reproduced below), and all terms and expressions used in the extract below shall bear the same meanings as attributed to them in the Exit Offer Letter unless otherwise stated: 6. RATIONALE FOR THE DELISTING 6.1 Opportunity to Realise Investments with an Upfront Premium The Exit Offer Price exceeds the highest transacted price of the Units in the three years preceding the Joint Announcement Date and represents a premium of approximately 15% over the last transacted price per Unit of US$0.375 as at 29 September 2011, being the Last Trading Day, and a premium of approximately 19% and 21% over the VWAP per Unit for the one-month and three-month periods, respectively, prior to the Joint Announcement Date. Through the Delisting Proposal, the accepting Unitholders will have an opportunity to realise their investments in PST for a cash consideration at a premium over the market prices of the Units prior to the Joint Announcement Date, without incurring brokerage and other trading costs. 6.2 Greater Operating Flexibility For as long as PST remains a listed business trust and seeks to expand its business and vessel portfolio, PST would have to fund such new vessels through a combination of equity, debt and/or internal cash resources. 13

15 LETTER TO UNITHOLDERS Any potential acquisitions will be benchmarked against PST s distribution yield to ensure that they are accretive to Unitholders. This places a constraint on PST s ability to issue new Units since its investment decision will be compared against its distribution yield, which is in turn a function of the prevailing trading prices of the Units. At the same time, the amount of debt that PST can take on for each acquisition is limited by and subject to credit, debt service and prudence considerations. Taken together, this has constrained PST s operational fl exibility as a listed trust, and inhibited its business expansion. Accordingly, the Offeror takes the view that delisting PST would liberate PST from these constraints and provide more fl exibility to respond to changing dynamics in the shipping market. The Exit Offer would therefore provide Unitholders with an opportunity to realise their investment in PST at the Exit Offer Price, whilst providing the Offeror and PST, as a nonlisted entity, greater operational fl exibility to pursue opportunities and make investment decisions without being constrained by market-based yield expectations, market sentiment and price volatility. 6.3 Compliance Costs of Maintaining Listing In maintaining PST s listing status, PST incurs additional compliance and associated costs. PST will be able to gain cost-savings as a non-listed entity by dispensing with costs associated with complying with listing requirements and other regulatory requirements and human resources that have to be committed for such compliance as well. The Delisting, if approved, will eliminate the costs of compliance with the listing rules and regulations, thereby allowing PST to focus its resources on its business operations. 6.4 Low Trading Liquidity The trading liquidity of the Units on the SGX-ST has been low, with an average daily trading volume of approximately 284,718 Units over the 12-month period immediately preceding the Joint Announcement Date, representing approximately 0.1% of the total free fl oat 3 of the issued Units as at the Joint Announcement Date. The Exit Offer will provide an exit option for those Unitholders who wish to realise their investment in the Units but fi nd it diffi cult to do so due to the low trading liquidity of the Units. 3 Free fl oat is the number of Units held by the public (as defi ned in the Listing Manual). 8. THE OFFEROR S INTENTIONS RELATING TO PST The Offeror s intentions relating to PST have been extracted in toto from paragraph 7 of the Exit Offer Letter (and reproduced below), and all terms and expressions used in the extract below shall bear the same meanings as attributed to them in the Exit Offer Letter unless otherwise stated: 7. OFFEROR S INTENTIONS Following the close of the Exit Offer, the Offeror intends to streamline the structure of the PST Group (along with that of the Offeror Group) which may entail the disposal of the shipping assets of PST to the Offeror Group, the redeployment of certain employees to other entities within the Offeror Group and the winding up of PST. Subject to the above, the Offeror has no other plans to (a) make material changes to the existing business, (b) re-deploy the fi xed assets, or (c) discontinue the employment of the existing employees of the PST Group other than in the ordinary course of business. Nonetheless, depending on the outcome of the Exit Offer, the Offeror retains the fl exibility at any time to consider any options or opportunities which may present themselves and which they regard to be in the interests of the Offeror and/or PST. 14

16 LETTER TO UNITHOLDERS 9. IMPLICATIONS OF COMPULSORY ACQUISITION, DELISTING AND WINDING-UP FOR UNITHOLDERS 9.1 Compulsory Acquisition of Units by the Offeror. Information relating to the compulsory acquisition of Units by the Offeror have been extracted in toto from paragraph 8 of the Exit Offer Letter (and reproduced below), and all terms and expressions used in the extract below shall bear the same meanings as attributed to them in the Exit Offer Letter unless otherwise stated: 8. COMPULSORY ACQUISITION Pursuant to Section 40A(1) of the Business Trusts Act, if the Offeror receives valid acceptances pursuant to the Exit Offer (or otherwise acquires Units at a price not exceeding the Exit Offer Price during the period when the Exit Offer is open for acceptance) for not less than 90% of the Units (other than those already held by the Offeror, its related corporations and their respective nominees as at the date of the Exit Offer), the Offeror would be entitled to exercise the right to compulsorily acquire, at the Exit Offer Price, all the Units of Unitholders who have not accepted the Exit Offer. If entitled, the Offeror currently intends to exercise its right of compulsory acquisition under Section 40A(1) of the Business Trusts Act. In addition, Unitholders who have not accepted the Exit Offer have the right under and subject to Section 40A(4) of the Business Trusts Act to require the Offeror to acquire their Units in the event that the Offeror or its nominees acquire, pursuant to the Exit Offer, such number of Units which, together with the Units held by the Offeror, its related corporations and/or their respective nominees, comprise 90% or more of the total number of issued Units. Unitholders who have not accepted the Exit Offer and who wish to exercise their rights under Section 40A(4) of the Business Trusts Act are advised to seek their own independent legal advice. 9.2 Implications of Delisting for Unitholders. Unitholders should note that shares or units of unlisted or delisted entities could be valued at a discount to the shares or units of comparable listed entities due to the lack of marketability. In the event the Conditions to the Exit Offer are met, but: the Offeror is not entitled to acquire, pursuant to Section 40A(1) of the Business Trusts Act, all Units of Unitholders who have not accepted the Exit Offer; or Unitholders do not become entitled under Section 40A(4) of the Business Trusts Act to require the Offeror to acquire their Units at the Exit Offer Price, PST will nevertheless be delisted, and Unitholders who have not accepted the Exit Offer will hold delisted Units. In the event the Delisting takes place under such circumstances, it is likely to be diffi cult for Unitholders who have not accepted the Exit Offer to sell their Units in the absence of a public market for the Units. As an unlisted registered business trust, PST will no longer be obliged to comply with the listing requirements of the SGX-ST, in particular the continuing corporate disclosure requirements under Chapter 7 of the Listing Manual and Appendices 7.1 to 7.4 to the Listing Manual. For so long as PST remains a business trust registered under the Business Trusts Act, the Trustee-Manager will be required to comply with the provisions of the Business Trusts Act applicable to registered business trusts and the interests of Unitholders who do not accept the Exit Offer will be protected to the extent provided for under such provisions and the Trust Deed. Upon the Delisting, a confi rmation note representing your delisted Units will be sent by ordinary post and at your own risk, to your mailing address as it appears in the records of CDP. Unitholders who are in doubt of their position should seek independent professional advice. 15

17 LETTER TO UNITHOLDERS 9.3 Implications of Winding-up for Unitholders. As set out in the Exit Offer Letter and Section 8 of this Letter to Unitholders, following the close of the Exit Offer, the Offeror intends to streamline the structure of the PST Group and this may entail the disposal of the shipping assets of PST to the Offeror Group, the redeployment of certain employees to other entities within the Offeror Group, and the winding-up of PST. Such winding-up and/or disposal is required to be conducted in accordance with the provisions of the Trust Deed and in accordance with the Business Trusts Act. The manner of liquidation (including the rights of Unitholders) in respect of the winding-up of PST is set out in paragraph 1.5 in Appendix III to this Circular. As set out in the Trust Deed, in the event that PST is to be wound up, the Trustee-Manager shall, subject to the terms of the Trust Deed, sell all the assets of PST and distribute the cash proceeds after repaying any outstanding borrowing effected by PST and all other debts and liabilities in respect of PST, provided that the Trustee-Manager is entitled to retain a full provision for all fees, costs, charges, expenses, claims and demands incurred by the Trustee-Manager in connection with the liquidation of PST (the Liquidation Costs ). For illustrative purposes only, taking into account the respective amounts set out in Appendix IX of this Circular as the charter free and charter attached market values of each of the vessels, as determined by the Independent Valuer as at 21 October 2011, and the amount refl ected as the Total liabilities in PST s fi nancial statements for the nine months ended 30 September 2011, the NAV that may be attributable to each Unit (without factoring in Liquidation Costs) would be (a) US$0.012 (based on the aggregate charter free value of each of the vessels) or (b) US$0.165 (based on the aggregate charter-attached value of each of the vessels), as set out in paragraph 7.6 of the IFA Letter. Unitholders should however note that should all the vessels be sold in the event of a winding-up, the amount that could be distributed in respect of each Unit may not be equal to the NAV set out above. This is because the aggregate proceeds fi nally available for distribution would depend on, amongst other things, (i) the price at which each vessel is sold; (ii) the Liquidation Costs incurred in effecting the winding-up and (iii) the amount of all of PST s debt and liabilities outstanding at the time of such winding-up. Furthermore, the price at which each vessel can be sold would depend on various factors, including the prevailing market conditions at the time of its sale, and the amount that is fi nally obtained for a particular vessel could be lower or higher than its valuation. 10. CONFIRMATION OF FINANCIAL RESOURCES The confi rmation of fi nancial resources has been extracted in toto from paragraph 10 of the Exit Offer Letter (and reproduced below), and all terms and expressions used in the extract below shall bear the same meanings as attributed to them in the Exit Offer Letter unless otherwise stated: DBS Bank, being the Offeror s fi nancial adviser for the Delisting and in connection with the Exit Offer, has confi rmed that suffi cient fi nancial resources are available to the Offeror to satisfy in full, all acceptances of the Exit Offer on the basis of the Exit Offer Price. 11. EXEMPTION RELATING TO DIRECTORS RECOMMENDATIONS The Offeror made an application to the SIC on 1 September 2011 to seek the SIC s confirmation that Kuan Kim Kin and Teo Choo Wee (who are both directors of the Offeror), be exempted from the requirement to make a recommendation to Unitholders in respect of the Exit Offer. The SIC ruled on 28 September 2011 that it has exempted both Kuan Kim Kin and Teo Choo Wee (also defined in this Circular as the Non-Independent Directors ) from making a recommendation to the Unitholders on the Exit Offer as they faced irreconcilable confl icts of interests in doing so, being parties acting in concert with the Offeror. However, the SIC ruled that the Non-Independent Directors must, nonetheless, accept responsibility for the accuracy of the facts stated and opinions expressed in documents issued by, or on behalf of, PST to the Unitholders in connection with the Exit Offer. 16

18 LETTER TO UNITHOLDERS 12. ADVICE OF INDEPENDENT FINANCIAL ADVISER TO THE INDEPENDENT DIRECTORS 12.1 Independent Financial Adviser. PwCCF has been appointed as the independent fi nancial adviser to the Independent Directors. The letter from PwCCF setting out its advice to the Independent Directors is set out in Appendix I to this Circular (the IFA Letter ). Unitholders are advised to read and consider the IFA Letter in its entirety IFA Letter. Information relating to the advice of PwCCF to the Independent Directors and the key factors it has taken into consideration have been extracted in toto from Section 8 of the IFA Letter (and reproduced below), and all terms and expressions used in the extract below shall bear the same meanings as attributed to them in the IFA Letter unless otherwise stated: In arriving at our opinion, we have taken into account a range of factors which we consider, based on available information, to be pertinent and have a signifi cant bearing on our assessment of the Exit Offer. Accordingly, it is important that our IFA Letter, in particular, all the considerations and information we have taken into account, be read in its entirety. The principal factors that we have taken into consideration in forming our opinion are as summarised below: (i) The rationale for the Delisting Proposal, details of which are set out in Section 7.1 of our IFA Letter; (ii) Since IPO, the Units have traded between a high of US$0.465 per Unit in October 2006 and July 2007 to a low of US$0.130 per Unit in December Thus, the Exit Offer Price represents a premium of approximately 230.8% over the lowest transacted price and a discount of approximately 7.5% over the highest transacted price; (iii) (iv) (v) (vi) (vii) (viiii) The Exit Offer Price represents a premium of 15%, 19%, 21%, 21% and 21% over the VWAP of the Units over the last traded price, 1-month period, 3-month period, 6-month period and 1-year period which the Units were traded prior to the Joint Announcement Date respectively; In relation to the Selected Delisting / Privatisation Transactions, we note that the premium implied in the Exit Offer Price for the 1-day, 1-month, 3-month and 6-month periods in which the Units were traded prior to the Joint Announcement Date is below the average and median but within the range of the relevant premiums for the Selected Successful Delisting / Privatisation Transactions. We note that as shares in the companies are held mainly for their capital growth potential, premiums offered in delisting / privati sation for companies would generally be higher than premiums for units in a business trust, which are held mainly for distribution yields; In relation to the Selected Successful Delisting / Privatisation Transactions of business trusts, the premium implied by the Exit Offer Price for PST for the 1-day, 1-month, 3-month and 6-month periods in which the Units were traded prior to the Joint Announcement Date is higher compared to that of HWT. We note that the delisting of HWT is the only delisting / privati sation transaction involving business trust from 2010 to 2011 and is hence more relevant; The EV/EBITDA ratio of 11.2x implied by the Exit Offer Price is above the average EV/ EBITDA ratio of the Comparable Entities of 6. 8x; The P/B ratio implied by the Exit Offer Price of 1.0x is above the average P/B ratio of the Comparable Entities of 0.4x; The Exit Offer Price implies a premium of approximately 6.7 %, 3.9% and 0.7% over the NAV per Unit for the fi nancial year ended 2009 and 2010 and the third quarter ended 30 September 2011; 17

19 LETTER TO UNITHOLDERS (ix) (x) (xi) The Exit Offer Price implies a premium of approximately 3,483.3% and 160.6% over the RNAV per Unit implied by the charter-free and charter-attached market valuations respectively; PST s LTM distribution yield of 7.6% implied by the Exit Offer Price is lower than the average of comparable shipping trusts and other trusts of 9.4% and 8.1% respectively and higher compared to the average of the REITs and property related business trusts of 6.2%; and The other considerations outlined in Section 7.9 of this Letter. Based on the above analysis including the qualifications made therein, we are of the opinion that, on balance, the financial terms of the Exit Offer are fair and reasonable and are not prejudicial to the interests of the Unitholders under current market conditions as at the Latest Practicable Date, and we advise the Independent Directors to recommend that Unitholders VOTE IN FAVOUR of the Delisting Resolution and ACCEPT THE EXIT OFFER in the event that the Delisting Resolution is passed and Unitholders are not prepared to hold Units in an unlisted registered business trust. Unitholders are advised to read the extract above in conjunction with, and in the context of, the full text of the IFA Letter. 13. INDEPENDENT DIRECTORS RECOMMENDATIONS Unitholders are advised by the Independent Directors to read and consider carefully the following recommendations of the Independent Directors and the advice of PwCCF contained in the IFA Letter in its entirety. The Independent Directors also draw the attention of the Unitholders to Section 9 of this Letter to Unitholders entitled Implications of Compulsory Acquisition, Delisting and Winding-up for Unitholders. In reaching the recommendations set out below, the Independent Directors have considered carefully, amongst other things, the terms of the Delisting Proposal including the Exit Offer and the advice given by PwCCF. Having taken the above matters into consideration, the Independent Directors concur with the advice of PwCCF in respect of the Delisting Resolution and the Exit Offer and accordingly recommend that Unitholders VOTE IN FAVOUR of the Delisting Resolution. In the event that the Delisting Resolution is passed, the Independent Directors recommend that Unitholders ACCEPT the Exit Offer. Alternatively, Unitholders could sell their Units in the open market or choose not to accept the Exit Offer. Unitholders who wish to retain all or part of their investment in the Units may consider the general economic conditions and the implications of holding Units in an unlisted or delisted business trust as set out in Section 9.2 of this Letter to Unitholders in the event that the Conditions are met. In making their recommendations, the Independent Directors have not had regard to the specific investment objectives, financial situation, tax position, or particular needs and constraints of any individual Unitholder. As each Unitholder would have different investment objectives and profiles, any individual Unitholder who may require specific advice in relation to his investment objectives or portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. 18

20 LETTER TO UNITHOLDERS 14. OVERSEAS UNITHOLDERS 14.1 Overseas Unitholders. Information relating to the availability of the Exit Offer to overseas Unitholders have been extracted in toto from paragraph 13 of the Exit Offer Letter (and reproduced below), and all terms and expressions used in the extract below shall bear the same meanings as attributed to them in the Exit Offer Letter unless otherwise stated: 13. OVERSEAS UNITHOLDERS The availability of the Exit Offer to Unitholders whose addresses are outside Singapore, as shown in the records of CDP (each, an Overseas Unitholder ) may be affected by the laws of the relevant overseas jurisdictions. Accordingly, any Overseas Unitholder should inform himself about and observe any applicable legal requirements, and exercise caution in relation to the Exit Offer, as this Exit Offer Letter and the FAA have not been reviewed by any regulatory authority in any overseas jurisdiction. Where there are potential restrictions on sending this Exit Offer Letter and the FAA to any overseas jurisdiction, the Offeror, DBS Bank and CDP each reserves the right not to send these documents to such overseas jurisdictions. For the avoidance of doubt, the Exit Offer is open to all Unitholders holding Offer Units, including those to whom this Exit Offer Letter and the FAA have not been, or may not be, sent. Copies of this Exit Offer Letter, the FAA and any other formal documentation relating to the Exit Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any jurisdiction where the making of or the acceptance of the Exit Offer would violate the applicable law of that jurisdiction ( Restricted Jurisdiction ) and will not be capable of acceptance by any such use, instrumentality or facility within any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. The Exit Offer (unless otherwise determined by the Offeror and permitted by applicable law and regulation) will not be made, directly or indirectly, in or into, or by the use of mails of, or by any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, any Restricted Jurisdiction and the Exit Offer will not be capable of acceptance by any such use, means, instrumentality or facilities. Overseas Unitholders may, nonetheless, obtain copies of this Exit Offer Letter, the FAA and any related documents, during normal business hours, from the date of this Exit Offer Letter and up to the Closing Date, from the Offeror through its receiving agent, Boardroom Corporate & Advisory Services Pte. Ltd., at 50 Raffl es Place, #32-01 Singapore Land Tower, Singapore Alternatively, an Overseas Unitholder may write in to the Offeror through Boardroom Corporate & Advisory Services Pte. Ltd. at the address listed above to request for this Exit Offer Letter, the FAA and any related documents to be sent to an address in Singapore by ordinary post at the Overseas Unitholder s own risk (the last day for despatch in respect of such request shall be a date falling three market days prior to the Closing Date). It is the responsibility of any Overseas Unitholder who wishes to (a) request for this Exit Offer Letter, the FAA and any related documents, and/or (b) accept the Exit Offer, to satisfy himself as to the full observance of the laws of the relevant jurisdiction in that connection, including the obtaining of any governmental or other consent which may be required, and compliance with all necessary formalities or legal requirements and the payment of any taxes, imposts, duties or other requisite payments due in such jurisdiction. Such Overseas Unitholder shall be liable for any such taxes, imposts, duties or other requisite payments payable and the Offeror, DBS Bank, CDP and/or any person acting on its behalf shall be fully indemnifi ed and held harmless by such Overseas Unitholder for any such 19

21 LETTER TO UNITHOLDERS taxes, imposts, duties or other requisite payments as the Offeror, DBS Bank, CDP and/ or any person acting on its behalf may be required to pay. In ( a) requesting for this Exit Offer Letter, the FAA and/or any related documents and/or ( b) accepting the Exit Offer, the Overseas Unitholder represents and warrants to the Offeror, CDP and DBS Bank that he is in full observance of the laws of the relevant jurisdiction in that connection, and that he is in full compliance with all necessary formalities or legal requirements. ANY OVERSEAS UNITHOLDER WHO IS IN ANY DOUBT ABOUT HIS POSITION SHOULD CONSULT HIS PROFESSIONAL ADVISER IN THE RELEVANT JURISDICTION. The Offeror and DBS Bank each reserves the right to (a) reject any acceptance of the Exit Offer where it believes, or has reason to believe, that such acceptance may violate the applicable laws of any jurisdiction; and (b) notify any matter, including the despatch of this Exit Offer Letter, any formal documentation relating to the Exit Offer, and the fact that the Exit Offer has been made, to any or all Unitholders (including the Overseas Unitholders) by announcement to the SGX-ST and if necessary, paid advertisement in a newspaper published and circulated in Singapore, in which case such notice shall be deemed to have been suffi ciently given notwithstanding any failure by any Unitholder to receive or see such announcement or advertisement Copies of Circular. As there may be potential restrictions on sending this Circular, the Exit Offer Letter and the FAA to any overseas jurisdictions, PST reserves the right not to send this Circular to such overseas jurisdiction. Subject to compliance with applicable laws, any affected overseas Unitholder may, nonetheless, attend in person and obtain copies of this Circular during normal business hours and up to 5.30 p.m. on the Closing Date, from the Registrar, Boardroom Corporate and Advisory Services Pte. Ltd., at 50 Raffl es Place, #32-01 Singapore Land Tower, Singapore Alternatively, an overseas Unitholder may, subject to compliance with applicable laws, write in to the Registrar at the above-stated address to request that this Circular be sent to an address in Singapore by ordinary post at his own risk, at any time up to fi ve Market Days prior to the Closing Date. 15. EXTRAORDINARY GENERAL MEETING The EGM, as convened by the notice set out on page 206 of this Circular (the EGM Notice ), will be held on 16 December 2011 at a.m. at NTUC Centre, No. 1 Marina Boulevard, #08-00, Room 801, Singapore for the purpose of considering and, if thought fi t, proposing and passing with or without amendments, the Delisting Resolution in accordance with the requirements of Rules 1307 and 1309 of the Listing Manual, as set out in the EGM Notice. A Depositor shall not be regarded as a Unitholder entitled to attend the EGM and to speak and vote thereat unless his name appears on the Depository Register, as certifi ed by CDP at least 48 hours before the EGM. 16. ACTION TO BE TAKEN BY UNITHOLDERS 16.1 Action to be taken in respect of the EGM. You will fi nd enclosed with this Circular, the EGM Notice and Proxy Form. If you are unable to attend the EGM and you wish to appoint a proxy/ proxies to attend and vote on your behalf, you should complete and sign the Proxy Form in accordance with the instructions printed thereon. In the event the Proxy Form is not completed and signed in accordance with the instructions printed thereon, the appointed proxy/proxies may be allowed to attend and observe the EGM but will not be allowed to vote. You should then return the completed and signed Proxy Form to PST s registered offi ce at 140 Cecil Street, #07-01 PIL Building, Singapore , not later than 48 hours before the time fi xed for the EGM. Your completion and return of the Proxy Form will not prevent you from attending and voting in person at the EGM if you so wish, in place of your proxy/proxies. 20

22 LETTER TO UNITHOLDERS 16.2 Action to be taken in respect of the Exit Offer. Unitholders who wish to accept the Exit Offer should complete, sign and return the FAA in accordance with the provisions and instructions stated in the Exit Offer Letter and the FAA. Additional information on the procedures for acceptance and settlement of the Exit Offer is set out in Appendix II to the Exit Offer Letter. Unitholders should note that if the Approval of Delisting Resolution Condition is not met, the Conditions to the Exit Offer will not be fulfi lled. In such an event, Offer Units which have been tendered in acceptance of the Exit Offer shall be returned to the relevant Unitholders in accordance with the procedures set out in the FAA. Unitholders who do not wish to accept the Exit Offer need not take any action in respect of the FAA. In the event that the Conditions are met and PST is delisted from the Offi cial List of the SGX-ST, you will continue to hold Units in PST which will not be listed on the SGX-ST. Upon the Delisting, a confi rmation note representing your delisted Units will be sent by ordinary post and at your own risk, to your mailing address as it appears in the records of CDP. Unitholders who are in doubt of their position should seek independent professional advice. The Offeror s intentions relating to PST after the Delisting and the implications of Delisting for Unitholders are set out in Sections 8 and 9 of this Letter to Unitholders. 17. DIRECTORS RESPONSIBILITY STATEMENT 17.1 The Directors collectively and individually accept full responsibility for the accuracy of the information given in this Circular and confi rm after making all reasonable enquiries that, to the best of their knowledge and belief, this Circular constitutes full and true disclosure of all material facts about the Delisting and the PST Group (excluding those relating to (a) the Offeror, the Delisting Proposal and the Exit Offer, as qualifi ed by Section 17.2 of this Letter to Unitholders and (b) the IFA Letter for which PwCCF has taken responsibility), and the Directors are not aware of any facts the omission of which would make any statement in this Circular misleading Where information in this Circular has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in the Circular in its proper form and context. 18. ADDITIONAL INFORMATION Your attention is drawn to the additional information in the Appendices which form part of this Circular. Yours faithfully for and on behalf of the Board of Directors of PST MANAGEMENT PTE. LTD. as trustee-manager of PACIFIC SHIPPING TRUST Benedict Kwek Gim Song Chairman 21

23 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS 28 November 2011 The Independent Directors PST Management Pte. Ltd. (as a trustee-manager of PST) 140 Cecil Street #07-01 PIL Building Singapore Dear Sirs PROPOSED VOLUNTARY DELISTING OF PACIFIC SHIPPING TRUST PURSUANT TO RULES 1307 AND 1309 OF THE SGX-ST LISTING MANUAL Unless otherwise defi ned or the context otherwise requires, all terms defi ned in the Circular dated 28 November 2011 shall have the same meaning herein. 1. INTRODUCTION This IFA Letter has been prepared for inclusion in the Circular in connection with, inter alia, the Delisting Proposal. This IFA Letter sets out our view on the Delisting Proposal and our recommendations to the Independent Directors. This IFA Letter sets forth factors considered by PwCCF in arriving at its view. The Circular and Letter to Unitholders included therein will provide, inter alia, details of the Delisting Proposal and the recommendation(s) of the Independent Directors in relation to the Delisting Proposal, having considered PwCCF s advice in this Letter. 1.1 Background On 4 October 2011, the Trustee-Manager and the Offeror jointly announced that the Offeror had presented the Delisting Proposal to the board of directors of the Trustee-Manager to seek the voluntary delisting of PST from the Offi cial List of the SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual. Under the terms of the Delisting Proposal, DBS Bank, for and on behalf of the Offeror, will make the Exit Offer to acquire all the Offer Units at the Exit Offer Price of US$0.43 in cash for each Offer Unit. Having reviewed the Delisting Proposal, the Directors have resolved, inter alia, to convene the EGM to seek the approval of the Unitholders for the Delisting. Hence, it is in this context that PwCCF has been appointed to advise the Independent Directors of the Trustee-Manager on whether the Delisting is based on normal commercial terms and is not prejudicial to the interests of PST and its minority Unitholders. Detailed information on the Delisting is set out in paragraphs 1 to 18 of the Letter to Unitholders in the Circular. We recommend that the Independent Directors advise Unitholders to read the aforementioned sections carefully. 2. TERMS OF REFERENCE PwCCF has been appointed to advise the Independent Directors on the Exit Offer pursuant to Rule 1309 (2) of the Listing Manual. We have confi ned our evaluation on the bases set out herein to the fi nancial terms of the Exit Offer. 22

24 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS Our terms of reference do not require us to evaluate or comment on the rationale for, commercial risks and/or commercial merits of the Delisting Proposal or the future prospects and earnings potential of PST, and we have not made such evaluation or comment. Such evaluation or comments, if any, remains the sole responsibility of the Directors and the Trustee-Manager, although we may draw upon their views to the extent deemed necessary or appropriate by us in arriving at our opinion as set out in this letter. We have not been requested to, and we do not, express any opinion on the relative merits of the Delisting Proposal or the Exit Offer as compared to any other alternative proposals or transactions. We were not involved in negotiations pertaining to the Delisting Proposal or the Exit Offer nor were we involved in the deliberation leading up to the decision to put forth the Delisting Proposal to the Unitholders. We have not been requested or authorised to solicit, and we have not solicited, any indication of interest from any third party with respect to the Units. We have held discussions with the Directors and management of the Trustee-Manager and have examined publicly available information collated by us as well as information, both written and verbal, provided to us by the Directors and management of the Trustee-Manager and its professional advisers. We have not independently verifi ed such information, whether written or verbal, and accordingly we cannot and do not represent or warrant, expressly or impliedly, and do not accept any responsibility for the accuracy, completeness or adequacy of such information. We have nevertheless made enquiries and exercised our judgment as we deemed necessary or appropriate in assessing such information and are not aware of any reason to doubt the reliability of the information. We have not made an independent valuation of the vessels owned by PST. We have, however, been furnished with the vessels valuation certifi cates issued by Team Shipbrokers (S) Pte Ltd (the Independent Valuer ). With respect to the independent valuation, we are not experts and do not hold ourselves to be experts in the valuation of the vessels owned by PST but have relied upon the valuation conducted by the Independent Valuer. The valuation certifi cates prepared by the Independent Valuer are set out in Appendix IX of the Circular. We have relied upon the assurances of the Directors that the Directors collectively and individually accept full responsibility for the accuracy of the information given in the Circular and confi rm after making all reasonable enquiries that, to the best of their knowledge and belief, the Circular constitutes full and true disclosure of all material facts about the Delisting and the PST Group (excluding those relating to (a) the Offeror, the Delisting Proposal and the Exit Offer, as qualifi ed by Section 17.2 of the Letter to Unitholders and (b) the IFA Letter for which PwCCF has taken responsibility), and the Directors are not aware of any facts the omission of which would make any statement in the Circular misleading. Where information in the Circular has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in the Circular in its proper form and context. The foregoing is as set out in the Directors Responsibility Statement in Section 17 of the Letter to Unitholders. Our opinion as set out in this letter is based upon prevailing market, economic, industry, monetary and other conditions (if applicable) and the information made available to us contained in the Circular as of the Latest Practicable Date. Such conditions may change signifi cantly over a relatively short period of time and accordingly, we assume no responsibility to update, revise or reaffirm our opinion in light of any subsequent development after the Latest Practicable Date that may affect our opinion contained herein. In addition, our terms of reference do not require us to express, and we do not express, an opinion on the future growth prospects, earnings potential and/or fi nancial position of PST. Unitholders should take note of any announcement relevant to their consideration of the Delisting Proposal or Exit Offer, which may be released by PST after the Latest Practicable Date. 23

25 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS In rendering our opinion, we have not considered specifi c objectives, fi nancial situation, tax position, risk profi le or particular needs and constraints of any individual Unitholder. As each Unitholder would have different investment objectives and profi les, we recommend that any individual Unitholder who may require specifi c advice in relation to his specifi c investment portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other appropriate professional adviser immediately. This letter is addressed to the Independent Directors and is for their benefi t in connection with and for the purpose of their consideration of the Exit Offer. However, the recommendations made by them shall remain the responsibility of the Independent Directors. PST has been separately advised by its other advisers in the preparation of the Circular (other than this letter). We have had no role or involvement and have not provided any advice, fi nancial or otherwise, whatsoever in the preparation, review and verifi cation of the Circular. Accordingly, we take no responsibility for, and express no views (express or implied) on, the contents of the Circular (other than this letter). Our opinion in relation to the Exit Offer should be considered in the context of the entirety of this letter and the Circular. 3. DELISTING PROPOSAL Details of the Delisting Proposal are set out in Section 2 of the Circular, which Unitholders are advised to refer to. A summary of the key terms of the Delisting Proposal is set out below. We note that the Delisting and the Exit Offer are subject to the following conditions: 3.1 Approval of Delisting Resolution Condition where the Delisting Resolution is: (i) (ii) approved by a majority of at least 75 per cent. of the total number of issued Units held by the Unitholders present and voting, on a poll, either in person or by proxy at the EGM to be convened for the Unitholders to vote on the Delisting Resolution (the Directors and controlling Unitholders need not abstain from voting on the Delisting Resolution); and not being voted against by 10 per cent. or more of the total number of issued Units held by the Unitholders present and voting, on a poll, either in person or by proxy at the EGM 3.2 Minimum Acceptance Condition where the Offeror has received, by the close of the Exit Offer valid acceptances in respect of such number of Offer Units that, when taken together with the Units owned, controlled or agreed to be acquired by the Offeror (either before or during the Exit Offer and pursuant to the Exit Offer or otherwise), will result in the Offeror holding such number of Units carrying not less than 75 per cent. of the total voting rights attributable to the Units in PST. The Offeror has reserved the right to waive the Minimum Acceptance Condition, provided that such waiver is made after obtaining the consent of the SIC. In the event that the Minimum Acceptance Condition is waived, the Exit Offer shall remain open for not less than 14 days following the announcement of such waiver and Unitholders who have accepted the Exit Offer will be permitted to withdraw their acceptance within eight days of notifi cation of the waiver. As announced by DBS Bank for and on behalf of the Offeror on 31 October 2011, the Minimum Acceptance Condition has been satisfi ed and the Exit Offer has become unconditional as to acceptances. Accordingly, the Delisting and the Exit Offer remain subject only to the satisfaction of the Approval of Delisting Resolution Condition. 24

26 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS 4. THE EXIT OFFER Details of the Exit Offer are set out in Section 3 of the Circular, which Unitholders are advised to refer to. We reproduce below a summary of certain key terms of the Exit Offer as set out in Section 3 of the Circular. 4.1 Exit Offer As stated in the Exit Offer Letter, DBS Bank, for and on behalf of the Offeror, has made the Exit Offer to acquire all the Offer Units on the terms and subject to the conditions set out in the Exit Offer Letter (including the FAA). 4.2 Terms of the Exit Offer Price The Exit Offer is made on the following basis: For each Offer Unit tendered: US$0.43 in cash The Exit Offer Price shall be applicable to any number of Offer Units that are tendered in acceptance of the Exit Offer. Unitholders may choose to accept the Exit Offer in respect of all or part of their holdings of Offer Units The Offer Units will be acquired fully paid and free from all Encumbrances, and together with all rights, benefi ts and entitlements attached thereto as at the Joint Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends and other distributions and return of capital (if any) announced, declared, paid or made thereon by PST on or after the Joint Announcement Date. Without prejudice to the generality of the foregoing paragraph, the Exit Offer Price has been determined on the basis that the Offer Units will be acquired with the right to receive any Post- Announcement Distributions, including the Q3 Distribution. It was also announced on 19 October 2011 that the Transfer Books and Register will be closed on the Books Closure Date for the purpose of determining Unitholders entitlements to the Q3 Distribution and that the Q3 Distribution is expected to be paid on or about 29 November As the settlement date in respect of the Offer Units accepted pursuant to the Exit Offer falls after the Books Closure Date, the Offeror will not receive the Q3 Distribution in respect of such Offer Units. Accordingly, the Exit Offer Price paid in respect of such Offer Units will be less the amount of the Q3 Distribution. An illustrative example of the net Exit Offer Price payable after the deduction of the Q3 Distribution is provided below: Illustration of the net Exit Offer Price payable following deduction of the Q3 Distribution: Exit Offer Price: US$0.43 Q3 Distribution: US$ Number of Offer Units tendered by an accepting Unitholder: 1,000 Total amount payable by the Offeror to the accepting Unitholder: (US$0.43 US$0.0073) x 1,000 = US$ Acceptance of the Exit Offer by a Unitholder will be deemed to constitute an unconditional and irrevocable warranty by that Unitholder that each Offer Unit in respect of which the Exit Offer is accepted is sold by him as, or on behalf of, the benefi cial owner(s) is fully paid and free from all Encumbrances, and together with all rights, benefi ts and entitlements attached thereto as at the Joint Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends and other distributions and return of capital (if any) announced, declared, paid or made thereon by PST on or after the Joint Announcement Date 25

27 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS 4.3 Conditions for the Delisting and the Exit Offer As set out in the Circular and the Exit Offer Letter, the Delisting and Exit Offer are subject to the Approval & Delisting Condition being met. 4.4 Duration of Exit Offer Information on the duration of the Exit Offer is set out in Section 3.4 of the Circular. We recommend that all Unitholders read this section carefully. 5. INFORMATION ON THE OFFEROR The Offeror, together with its subsidiaries, is a ship-owner/operator with business comprising logistics related activities such as supply chain management, consolidation/distribution facilities, warehousing, container depot operations, trucking as well as having interest in ship-agencies, container manufacturing, marine engineering and real estate. The Offeror is the holding company of both PST and the Trustee-Manager. More information on the Offeror is set out in Section 5 of the Circular. 6. OFFEROR S INTENTIONS RELATING TO PST Following the close of the Exit Offer, the Offeror intends to streamline the group structure of PST and its subsidiaries (along with that of the Offeror Group) which may involve the disposal of the shipping assets of PST to the Offeror Group, the redeployment of certain employees to other entities within the Offeror Group and the winding up of PST. More details of the Offeror s intentions relating to PST are set out in Section 8 of the Circular, which Unitholders are advised to refer to. 7. ASSESSMENT OF THE FINANCIAL TERMS OF THE EXIT OFFER In assessing the fi nancial terms of the Exit Offer, we have considered the following factors: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) The rationale for the Delisting Proposal and the Exit Offer; The historical trading performance of the Units; Comparison with relevant delisting and privatisation transactions; Comparison with the implied valuation ratios of comparable listed trusts; Valuation of the vessels as appraised by the Independent Valuer; Comparison with the Net Asset Value ( NAV ) per Unit and Revised Net Asset Value ( RNAV ) per Unit of PST; Comparison of the Last Twelve Months ( LTM ) distribution yields; and Other relevant signifi cant considerations. These factors are discussed in greater detail in the ensuing paragraphs. 7.1 Rationale for the Delisting Proposal The rationale for the Delisting Proposal and the Exit Offer is set out in Section 7 of the Circular. We recommend that the Independent Directors advise Unitholders to read this section of the Circular carefully. 26

28 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS We would like to highlight a key rationale for the Delisting Proposal. Under Section 7 of the Circular, it is the Offeror s view that PST would have greater operating fl exibility if it were to be successfully delisted. To expand its business and vessel portfolio, PST would have to seek funding through a combination of equity, debt and/or internal cash resources. Any such potential expansion will be constrained by PST s distribution yield (which is a function of PST s prevailing unit price and distribution provided) and credit, debt service and prudence considerations. It is the Offeror s view that this has constrained PST s operational fl exibility as a listed trust, and inhibited its business expansion. Accordingly, the Offeror takes the view that delisting PST would liberate PST from these constraints and provide more fl exibility to respond to changing dynamics in the shipping market. 7.2 Historical trading performance of the Units Under ordinary circumstances, the market valuation of Units traded on a recognised stock exchange may be affected by, inter alia, its relative liquidity, the size of its free fl oat, the extent of research coverage, the investor interest it attracts and the general market sentiment at a given period in time. Unitholders should also note that the past trading performance of the Units should not be relied upon as a guide of its future trading performance. Therefore, this analysis serves as an illustrative guide only. We set out below the chart showing the trend of the daily closing prices and volume traded since IPO up to 29 September 2011, being the last full day of trading in the Units on the SGX-ST prior to the Joint Announcement Date ( Last Trading Day ). PST Share Price Graph Share Price (US$) Volume (mn) May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Volume PST STI Scaled (Source: Capital IQ, a unit of Standard & Poor s, and PwCCF analysis) 27

29 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS A summary of the salient announcements on key corporate developments by PST during the last 2-year period is set out below. Announcement Date October 4, 2011 September 21, 2011 September 6, 2011 November 26, 2010 October 11, 2010 June 28, 2010 Events Proposed Voluntary Delisting of PST PST Takes Delivery of its Second 180,000 deadweight tonnage ( DWT ) Capesize Bulk Carrier PST Takes Delivery of its First 180,000 DWT Capesize Bulk Carrier PST to Acquire Five New 57,000 DWT Supramax Bulk Carriers PST to Acquire Two New 24,000 DWT Multi-Purpose Vessels PST to Acquire Two New 180,000 DWT Capesize Bulk Carriers (Source: SGX-ST announcements) We have also compared the Exit Offer Price to the VWAP and other trading statistics of the Units for selected reference periods as follows: Description VWAP 1 (US$) Premium over VWAP 2 Periods Prior to the Joint Announcement Date Last Trading Day % 1 month % 3 months % 6 months % 12 months % (Source: Joint Announcement) Notes: (1) Computed based on the VWAP which were rounded to the nearest three decimal places (2) The Last Trading Day is on 29 September 2011 being the last full day of trading in the Units on the SGX-ST prior to the Joint Announcement Date. Based on the information above, we note the following: (i) The unit price has not traded above US$0.43 since June 2008; (ii) (iii) Since PST s Initial Public Offering ( IPO ), the Units have traded between a high of US$0.465 per Unit in October 2006 and July 2007 to a low of US$0.130 per Unit in December Thus, the Exit Offer Price represents a premium of approximately 230.8% over the lowest transacted price and a discount of approximately 7.5% over the highest transacted price; We note that in spite of the announcements of the various acquisitions and the delivery of vessels between 28 June 2010 and 21 September 2011, the unit price performance was relatively subdued and traded below its NAV ; 28

30 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS (iv) (v) The Exit Offer Price represents a premium of 15%, 19%, 21%, 21% and 21%, over the VWAP of the Units over the last traded price, 1-month period, 3-month period, 6-month period and 1-year period which the Units were traded prior to the Joint Announcement Date respectively; and Between the Joint Announcement Date and the Latest Practicable Date, the Units have traded at a VWAP of US$ per Unit on an average daily trading volume of approximately 2.95 million Units. The Exit Offer Price represents a premium of approximately 0.1% based on the VWAP of the said period. The market price and trading volume of the Units have shown appreciable differences before and after the Joint Announcement Date. As such, Unitholders should note that there is no assurance that the market price and/or trading volume of the Units will continue to remain at the level prevailing as at the Latest Practicable Date after the close of the Exit Offer. Unitholders should also note that past trading performance of the Units should not be relied upon as an indication of its future trading performance. 7.3 Comparison with selected successful delisting/privatisation transactions of companies listed on the SGX-ST We note that it is the intention of the Offeror to delist PST from the SGX-ST. In assessing the reasonableness of the Exit Offer Price, we have compared the fi nancial terms of the Exit Offer with those of: (i) (ii) (iii) Selected completed delisting offers under Rule 1307 and 1309 of the Listing Manual and selected completed privatisation transactions, whether by way of scheme of arrangement under Section 210 of the Singapore Companies Act or general offer under the Code, from 1 January 2010 to the Joint Announcement Date, where the primary intention of the offeror is to delist the target from the offi cial list of the SGX-ST; Selected delisting offers and privatisation transactions where the offeror already has a majority interest in the target company prior to the transaction, and where the offeror has stated its intention to delist the target company from the offi cial list of the SGX-ST; Selected delisting offers and privatisation transactions where the target company is of similar market capitalisation with PST. (collectively referred to as the Selected Successful Delisting / Privatisation Transactions ). A key factor guiding our selection of the delisting / privatisation transactions is that the offerors are the controlling shareholders of the target companies, as offers tendered by third parties would normally incorporate a control premium into the offer price to entice the incumbent controlling shareholders to accept such offers. This analysis serves as a general indication of the relevant premium/discount that the offerors have paid in order to acquire the target companies without having regard to their specifi c industry characteristics or other considerations. However, we wish to highlight that the target companies set out under the Selected Successful Delisting / Privatisation Transactions are not directly comparable to PST in terms of size of operations, market capitalisation, business activities, asset base, geographical spread, track record, fi nancial performance, operating and fi nancial leverage, risk profi le, liquidity, future prospects and other relevant criteria. Each of the Selected Successful Delisting / Privatisation Transactions must be considered on its own commercial and fi nancial merits. 29

31 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS The level of premium (if any) an offeror would normally pay in any particular delisting / privatisation transaction depends on, inter alia, factors such as potential synergy that the offeror can gain by acquiring the target, the signifi cance of the cash reserves, the trading liquidity of the target company s shares, the presence of competing bids for the target company, prevailing market conditions and sentiments, attractiveness and profi le of the target company s business and assets, size of consideration and existing and desired level of control in the target company. Details of the Selected Successful Delisting / Privatisation Transactions in 2010 and 2011 in chronological order are as follows: Date of Offer Announcement Target Company / Business Trust Offer Price (SG$) Last Traded Price Premium of the Offer Price to: 1 mth VWAP 3 mth VWAP 6 mth VWAP July 23, 2010 RSH Limited % 41.7% 41.7% 32.4% September 21, 2010 Soilbuild Group Holdings Ltd % 15.6% 18.5% 12.5% November 30, 2010 Reyoung Pharmaceutical Holdings Limited % 20.5% 25.9% 30.9% December 3, 2010 Map Technology Holdings % 33.4% 18.1% 19.6% Limited March 5, 2011 Sinomem Technology Limited % 33.8% 34.6% 36.5% Average 27.4% 29.0% 27.8% 26.4% Median 28.4% 33.4% 25.9% 30.9% High 41.7% 41.7% 41.7% 36.5% Low 13.5% 15.6% 18.1% 12.5% July 30, 2010 Hyfl ux WaterTrust % 16.9% 20.9% 16.6% PST 2 US$ % 19% 21% 21% (Source: Joint Announcement and circular of each respective company in relation to the Selected Successful Delisting / Privatisation Transactions) Notes: (1) Although Hyfl ux Limited did not own more than 50% of Hyfl ux Water Trust ( HWT ) when the former made the delisting proposal to HWT, the delisting of HWT has been included as one of the Selected Successful Delisting / Privatisation Transactions as Hyfl ux Limited was the promoter of HWT and it is a delisting of a business trust similar to the proposed delisting of PST and HWT is a yield play like PST. (2) PST unit price is quoted in US$. We have segregated our analysis between those delisting / privatisation of companies from the delisting / privatisation of business trusts. As shares in the companies are held mainly for their capital growth potential, premiums offered in delisting / privatisation for companies would generally be higher than premiums for units in a business trust, which are held mainly for distribution yields. In relation to the Selected Successful Delisting / Privatisation Transactions of companies, we note that the premium implied in the Exit Offer Price for the 1-day, 1-month, 3-month and 6-month periods in which the Units were traded prior to the Joint Announcement Date is below the average and median but within the range of the relevant premiums for the Selected Successful Delisting / Privatisation Transactions. In relation to the Selected Successful Delisting / Privatisation Transactions of business trusts, the premium implied by the Exit Offer Price for PST for the 1-day, 1-month, 3-month and 6-month periods in which the Units were traded prior to the Joint Announcement Date is higher compared to that of HWT. We note that the delisting of HWT is the only delisting / privatisation transaction involving business trust from 2010 to 2011 and is hence more relevant. 30

32 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS The analysis above is based on data compiled from publicly available sources and serves only as an illustrative guide as to the level of premium/discount offered in Selected Successful Delisting / Privatisation Transactions of companies listed on the SGX-ST. 7.4 Comparison with valuation ratios of PST implied by the Exit Offer Price against listed entities broadly comparable to PST For the purpose of assessing the Exit Offer Price, we have compared the valuation ratios of PST implied by the Exit Offer Price with selected shipping trusts listed on the SGX-ST which we consider to be broadly comparable to PST (the Comparable Entities ). We, however, recognise that the Comparable Entities listed herewith are not exhaustive and to the best of our knowledge and belief and after discussion with the Trustee-Manager, there is no company listed on the SGX-ST which may be considered directly comparable to PST in terms of composition of business activities, scale of operations, geographical spread of activities, track record, fi nancial performance, future prospects, asset base, risk profi le and other relevant criteria. Accordingly, any comparisons made with respect to the Comparable Entities can only serve as an illustrative guide. We have only considered shipping trusts listed on SGX-ST as PST is also listed on SGX-ST and there are no similar companies or trusts with similar business model in Asia while those listed in the United States are very different in terms of scale and market sentiments. A brief description of the Comparable Entities is as set out below: Comparable Entity Rickmers Maritime ( RM ) First Ship Lease Trust ( FSLT ) Stock Exchange Singapore (listed in 2007) Singapore (listed in 2007) Description RM owns and operates containerships under long-term fi xed-rate charters to container liner shipping companies worldwide. RM has a portfolio of 16 containerships with a total capacity of 66,410 twenty-foot equivalent units. Rickmers Trust Management Pte. Ltd. serves as the manager of RM FSLT provides lease fi nancing on a long-term bareboat charter basis to the international shipping industry. As of March 31, 2011, it had a portfolio of 23 ocean-going vessels comprising 2 crude oil tankers, 3 chemical tankers, 9 product tankers, 7 containerships, and 2 dry bulk carriers. FSL Trust Management Pte. Ltd. serves as the trusteemanager of FSLT (Source: Capital IQ) In our evaluation, we have considered the following widely used valuation parameters: Valuation Parameter EV/EBITDA Description EV or Enterprise Value is the sum of a company s market capitalisation, minority interests, short-term and long-term debt less cash and cash equivalents. EBITDA stands for historical earnings before interest, tax, depreciation and amortisation expenses. The EV/EBITDA ratio compares the market value of a company s business to its pre-tax operating cashfl ow performance. The EV/EBITDA multiple is an earnings-based valuation methodology. However, unlike the P/E ratio, it does not take into account the capital structure of a company as well as its interest, taxation, depreciation and amortisation charges. 31

33 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS Valuation Parameter P/B Description P/B or price-to-book ratio is the ratio of the market capitalisation of a company relative to its book value. The P/B ratio is affected by differences in their respective accounting policies including their depreciation and asset valuation policies. The book value of a company provide an estimate of the value of a company assuming a hypothetical sale of all its assets and repayment of its liabilities and obligations, with the balance being available for distribution to its Unitholders. It is an asset-based valuation methodology and this approach is meaningful to the extent that it measures the value of each Unit that is backed by the assets of a company. For illustrative purposes only, the table below sets out the valuation ratios for the Comparable Entities: Comparable Entity Enterprise Value 1 (US$ million) Market Capitalisation 1 (US$ million) LTM EBITDA (US$ million) 2 Net Book Value 3 (US$ million) EV / EBITDA 2 P / B 3 RM x 0.3x FSLT x 0.4x Average 6.8x 0.4x PST x 0.9x PST (Based on Exit Offer Price) x 1.0x (Source: Company reports and Capital IQ) Notes: (1) The enterprise values of PST, RM and FSLT are based on their market capitalisations as at 29 September 2011, and consolidated net debts as at 30 September (2) The LTM EBITDA for PST, RM and FSLT is for the period from 1 October 2010 to 30 September (3) The net book values for PST, RM and FSLT are as at 30 September (4) Based on the Offer Price of US$0.43, shares outstanding as at 29 September 2011 and consolidated net debts as at 30 September ( 5) Both RM and FSLT are in loss-making positions for the fi nancial year ended Based on the above, we note the following: (i) (ii) The EV/EBITDA ratio of 11.2x implied by the Exit Offer Price is above the average EV/EBITDA ratio of the Comparable Entities of 6. 8x; The P/B ratio implied by the Exit Offer Price of 1.0x is above the average P/B ratio of the Comparable Entities of 0.4x. 32

34 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS 7.5 Valuation of the Vessels as Appraised by the Independent Valuer The Independent Valuer was commissioned to assess the market value of the existing vessels owned by PST and the 7 vessels that are currently under construction on both the charter-free and charter-attached basis. The market value is then applied to the vessels to arrive at the RNAV per share as disclosed in section 7.6 of this Letter. We have not made an independent valuation of the vessels owned by PST. We have, however, been furnished with the vessels valuation certifi cates issued by the Independent Valuer. With respect to the independent valuation, we are not experts and do not hold ourselves to be experts in the valuation of the vessels owned by PST but have relied upon the valuation conducted by the Independent Valuer. The valuation certifi cates prepared by the Independent Valuer are set out in Appendix IX of the Circular. As stated in the valuation certifi cates, the market valuation of each vessel on the charterfree basis was made assuming a sale between a willing seller and a willing buyer who can utilise the particular vessel s features, and also taking into consideration the vessel s age, size, characteristics. Wherever possible the Independent Valuer will follow its normal practice of comparison with recent prices achieved in the market for similar tonnage. It is understood that values of vessels can and do fl uctuate and are affected by numerous external factors such as, inter alia, the continuing global fi nancial crisis, tsunami etc over which the Independent Valuer has no control. We note that to arrive at the market valuation of each vessel on the charter-attached basis, the Independent Valuer has also considered the current contracted charter rates and charterer of each vessel. A comparison of the book values of PST s existing vessels, the delivered costs of the 7 vessels under construction and the charter-free and charter-attached market valuations of the existing vessels and the vessels under construction is set out below. Vessel Book Value 1 / Delivered Cost 2 (US$ 000) Charter- Free Valuation (US$ 000) Charter- Attached Valuation (US$ 000) Variance Between Book Value / Purchase Price with the Charter- Free Valuation (US$ 000) Charter- Attached Valuation (US$ 000) A B C D E Existing Vessels Kota Kado 43,389 27,000 37,558-16,389-5,831 Kota Kaya 43,447 27,000 37,558-16,447-5,889 Kota Anggerik 22,411 9,500 13,286-12,911-9,125 Kota Anggun 22,492 9,500 13,286-12,992-9,206 Kota Arif 22,518 9,500 13,286-13,018-9,232 Kota Azam 22,597 9,500 13,286-13,097-9,311 Kota Rajin 19,206 10,000 15,359-9,206-3,847 Kota Rancak 19,243 10,000 15,359-9,243-3,884 Kota Nabil 38,194 22,000 27,547-16,194-10,647 Kota Naga 38,487 22,000 27,723-16,487-10,764 CSAV Laja 62,385 38,000 44,158-24,385-18,227 CSAV Lauca 62,734 38,000 44,689-24,734-18,045 Shagang Hongfa 62,187 50,000 56,464-12,188-5,724 Shagang Hongchang 62,276 50,000 56,464-12,277-5,813 Total 541, , , , ,545 33

35 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS Vessel Book Value 1 / Delivered Cost 2 (US$ 000) Charter- Free Valuation (US$ 000) Charter- Attached Valuation (US$ 000) Variance Between Book Value / Purchase Price with the Charter- Free Valuation (US$ 000) Charter- Attached Valuation (US$ 000) A B C D E Vessels Under Construction Hull No. NB003-1 (Glovis Maestro) 31,400 26,500 27,534-4,900-3,866 Hull No. NB003-2 (Glovis Madrid) 31,400 26,500 27,534-4,900-3,866 Hull No. NB003-3 (Glovis Madonna) 31,400 26,500 27,534-4,900-3,866 Hull No. NB003-4 (Glovis Magellan) 31,400 26,500 27,716-4,900-3,684 Hull No. NB003-5 (Glovis Maine) 31,400 26,500 27,716-4,900-3,684 Hull No. MC2405 (Tong An Cheng) 31,200 26,000 26,279-5,200-4,921 Hull No. MC2406 (Hua An Cheng) 31,200 26,000 26,291-5,200-4,909 Total 219, , ,604-34,900-28,796 (Source: Column A is provided by the Trustee-Manager; columns B and C are provided by the Independent Valuer, and columns D and E are PwCCF analysis) Notes: (1) The book value of the vessels is as at 30 September (2) The delivered costs for the vessels under construction comprise of the committed construction costs and other capitalised costs. The approaches used by the Independent Valuer to determine the market value of the vessels on the charter-free and charter-attached basis are widely accepted methods for the purpose of valuing such vessels. We have also made reasonable enquiries and have exercised our professional judgement in reviewing the approaches used by the Independent Valuer in determining the market value of each vessel on the charter-free and charter-attached basis. We do not fi nd the approaches used by the Independent Valuer to be unreasonable. 7.6 Comparison of the Exit Offer Price against the NAV per Unit and RNAV per Unit of PST In our evaluation of the fi nancial terms of the Exit Offer, we have considered whether there are any factors which have not been otherwise disclosed in the announced fi nancial results of PST that are likely to materially impact the unaudited NAV as at 30 September As at the Latest Practicable Date, the Directors are not aware of any fact or circumstance that would materially change the NAV per Unit as at 30 September A major component of the balance sheet is the value of the vessels. The unaudited NAV as at 30 September 2011 (as announced on 19 October 2011) was stated in accordance with the accounting policies as disclosed in the 2010 Annual Report. The vessels are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the vessel. Depreciation is calculated over the depreciable amount, which is the cost of the vessel less its residual value. Depreciation is recognised in profi t or loss on a straight line basis over the estimated useful lives of the vessels. 34

36 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS However, PST s RNAV is arrived at after taking into consideration the charter-free and charterattached market values determined by the Independent Valuer as at 21 October 2011 and the amount refl ected as the Total liabilities in PST s fi nancial statements for the period ended 30 September The RNAV represents the minimum value attributable to the Unitholders assuming that the vessels can be sold at their respective charter-free and charter-attached valuations. The RNAV analysis is performed specifi cally for the purpose of evaluating the Delisting Proposal based on the current market value of the existing vessels and the vessels under construction. NAV as at Financial Year Ended 2009 NAV as at Financial Year Ended 2010 NAV as at 3 rd Quarter Ended Sep 2011 Charter- Free RNAV 1,2 Charter- Attached RNAV 1,2 NAV / RNAV (US$ million) NAV / RNAV per Unit (US$) Premium implied in Exit Offer Price over NAV / RNAV per Unit 6.7% 3.9% 0.7% 3,483.3% 160.6% (Source: PST Annual Reports and PwCCF analysis) Notes: (1) As at the Latest Practicable Date, PST has 7 vessels under construction at the delivered costs. The charter-free and charter-attached market valuations of these 7 vessels as determined by the Independent Valuers are below the delivered costs. The difference in value between the delivered costs and the charter-free / charter-attached valuations is included in the computation of the charter-free / charter-attached RNAVs respectively. (2) The charter-free and charter-attached RNAVs are computed based on the respective summation of the charter-free and charter-attached valuations of PST s existing vessels and the difference in value between the delivered costs and the charter-free / charter-attached valuations of the 7 vessels under construction. (3) The adjustments for the 7 vessels under construction to the charter-free and charter-attached RNAVs does not include any one-time costs to be incurred by PST in relation to the start-up of these vessels for their respective time-charter contracts and the fi nancing costs of these vessels. Based on the above, we note the following: (i) (ii) The Exit Offer Price implies a premium of approximately 6.7%, 3.9% and 0.7% over the NAV per Unit for the fi nancial year ended 2009 and 2010 and the third quarter ended 30 September 2011; and The Exit Offer Price implies a premium of approximately 3,483.3% and 160.6% over the RNAV per Unit implied by the charter-free and charter-attached market valuations respectively. 35

37 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS 7.7 Comparison of the LTM Distribution Yield We set out below the comparison of the LTM distribution yields of shipping trusts, selected REITs and other infrastructure trusts and companies listed on SGX-ST with the LTM distribution yield of PST as at 30 September Entity LTM Distribution Yield (%) Shipping Trusts First Ship Lease Trust 11.4% Rickmers Maritime 7.4% Average 9.4% REITs and Property Related Business Trusts Ascendas India Trust 6.5% Ascendas Real Estate Investment Trust 6.4% AIMS AMP CAP Industrial REIT 1.8%* Ascott Residence Trust 7.0% Cache Logistics Trust 8.1% Cambridge Industrial Trust 7.2% CapitaCommercial Trust 5.2% CapitaMall Trust 4.9% CapitaRetail China Trust 6.7% CDL Hospitality Trusts 5.1% First Real Estate Investment Trust 7.2% Fortune REIT 6.7% Fraser Centrepoint Trust 5.4% Frasers Commercial Trust 4.2% K-REIT Asia 5.2% Lippo-Mapletree Indonesia Retail Trust 8.0% Mapletree Logistics Trust 6.7% Parkway Life REIT 5.3% Saizen REIT 6.5%* Starhill Global Real Estate Investment Trust 6.5% Suntec REIT 6.4% Treasury China Trust 6.0% Average 6.2% Others SP Ausnet 8.9% CitySpring Infrastructure Trust 7.7% K-Green Trust 7.6% Average 8.1% PST 9.1% PST (Based on Exit Offer Price) 7.6% (Source: SGX-ST announcements and PwCCF analysis) Notes: * AIMS AMP CAP Industrial REIT and Saizen REIT have been excluded from the computation of the average distribution yield as they have performed poorly relative to other REITS. AIMS AMP CAP Industrial REIT has made losses for its fi nancial years ended March 2009 and 2010 although the REIT made a profi t for its fi nancial year ended March Saizen REIT has made losses for its fi nancial year ended June 2008, 2009, 2010 and

38 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS (1) The LTM distribution yield is computed based on the summation of the respective quarterly distributions in the LTM divided by the unit price as at the respective announcement date. (2) PST distribution yield of 7.6% is based on the LTM distribution and the Exit Offer Price of US$0.43 (3) PST announced a distribution per unit of US$ on 19 October 2011 which will be paid on or about 29 November PST s LTM distribution yield based on the Exit Offer Price and the LTM distributions up to 19 October 2011 is 7.3%. (4) Hutchison Port Holdings Trust, Mapletree Commercial Trust, Mapletree Industrial Trust, Perennial China Retail Trust and Sabana Shari ah Compliant Industrial Real Estate Investment Trust have been excluded from the list as these entities are listed for less than a year and hence have not made a full year of distributions. (5) We have excluded IndiaBulls Properties Investment Trust as it has not paid out any distributions since listing. Based on the above table, we note that PST s LTM distribution yield of 7.6% implied by the Exit Offer Price is: (i) Lower than the average of comparable shipping trusts and other trusts of 9.4% and 8.1% respectively; and (ii) Higher than the average of the REITs and property related business trusts of 6.2% A REIT and a business trust may not be directly comparable as their business profi les would differ for the following reasons: (i) (ii) (iii) REITs must distribute at least 90% of their income to enjoy tax transparency under the Income Tax Act while there is no such requirement for business trusts; REITs are subject to a cap on their gearing of 35% or, if they obtain, disclose and maintain a credit rating, up to 60%. Business trusts are not subject to any such gearing limit; and A non-property related business trust such as PST would face different business risks as it is exposed to a different asset class, as compared to a REIT. 7.8 Post Announcement Distribution Adjustment to the Exit Offer Price It is noted that if the settlement date of the Offer Units accepted pursuant to the Exit Offer falls after the Books Closure Date, the Exit Offer Price payable to the relevant accepting Unitholder shall be reduced by an amount which is equal to the Post-Announcement Distribution, as the Offeror will not have the benefi t of the Post-Announcement Distribution in respect of those Offer Units. 7.9 Other Considerations Industry Outlook The Trustee-Manager has set out in the Q3 Interim Results significant trends and competitive conditions of the industry in which PST operates in. Information on the trends and competitive conditions has been extracted in toto from Section 10 of the Q3 Interim Results and reproduced below : Currently, PST operates in the containership and dry bulk sectors. Charter rates for containerships have been weakening for the past few months, and are expected to fall further. For the panamax containership segment, brokers do not foresee any potential recovery in charter rates in the near future. As for idle containerships, the number has continued to rise steadily over the past few months. Alphaliner has reported that as at 10 October 2011, the idle fl eet has increased to 375,000 teu, representing 2.5% of the cellular containership fl eet, as compared to 75,000 teu four months ago. 37

39 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS The capesize dry bulk fl eet is expected to grow by 14%-15% in 2011, after taking into consideration expected scrapping and new vessel deliveries. At this growth rate, fl eet utilization is expected to remain low and this will put downward pressure on charter rates. PST will not be affected to the extent that our charterers are able to perform according to their charter obligations regardless of the market conditions. In addition, we would like to highlight the following key fi ndings from our market research up to the Latest Practicable Date: (i) (ii) According to Hamburg Shipbrokers Association, the average daily rate for a gearless standard 4, foot equivalent container unit ship on a two-year charter has declined by 53% from US$28,625 per day on 31 March 2011 to US$13,536 per day on 8 November 2011; The Journal of Commerce has also on 1 November 2011 indicated that the charter rates for container ships have declined signifi cantly as charterers cut back on hired tonnage amid falling freight rates, rising overcapacity and slowing cargo growth on key trade routes; and (iii) The Baltic Dry Index has declined by 49% from 3,480 on 9 November 2009 to 1,759 on 8 November 2011 while the Baltic Supramax Index decreased by 29% from 1,917 to 1,361 during the same period Implications of Compulsory Acquisition, Delisting and the Winding-up for Unitholders The full text describing the implications of the Compulsory Acquisiton, Delisting and the Winding-up for Unitholders is set out in Section 9 of the Circular. We recommend that the Independent Directors advise the Unitholders to read this section of the Circular carefully and in its entirety. Compulsory Acquisition Pursuant to Section 40A(1) of the Business Trusts Act, if the Offeror receives valid acceptances pursuant to the Exit Offer (or otherwise acquires Units at a price not exceeding the Exit Offer Price during the period when the Exit Offer is open for acceptance) for not less than 90% of the Units (other than those already held by the Offeror, its related corporations and their respective nominees as at the date of the Exit Offer), the Offeror would be entitled to exercise the right to compulsorily acquire, at the Exit Offer Price, all the Units of Unitholders who have not accepted the Exit Offer. We note that if entitled, the Offeror currently intends to exercise its right of compulsory acquisition under Section 40A(1) of the Business Trusts Act. In addition, Unitholders who have not accepted the Exit Offer have the right under and subject to Section 40A(4) of the Business Trusts Act to require the Offeror to acquire their Units in the event that the Offeror or its nominees acquire, pursuant to the Exit Offer, such number of Units which, together with the Units held by the Offeror, its related corporations and/or their respective nominees, comprise 90% or more of the total number of issued Units. Implications of Delisting for Unitholders Unitholders should note that shares or units of unlisted or delisted entities could be valued at a discount to the shares or units of comparable listed entities due to the lack of marketability. 38

40 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS In the event the Conditions to the Exit Offer are met but: (i) (ii) the Offeror is not entitled to acquire, pursuant to Section 40A(1) of the Business Trusts Act, all Units of Unitholders who have not accepted the Exit Offer; or Unitholders do not become entitled under Section 40A(4) of the Business Trusts Act to require the Offeror to acquire their Units at the Exit Offer Price, PST will nevertheless be delisted, and Unitholders who have not accepted the Exit Offer will hold delisted Units. In the event the Delisting takes place under such circumstances, it is likely to be diffi cult for Unitholders who have not accepted the Exit Offer to sell their Units in the absence of a public market for the Units. As an unlisted registered business trust, PST will no longer be obliged to comply with the listing requirements of the SGX-ST, in particular the continuing corporate disclosure requirements under the Listing Manual. For so long as PST remains a business trust registered under the Business Trusts Act, the Trustee-Manager will be required to comply with the provisions of the Business Trusts Act applicable to registered business trusts and the interests of Unitholders who do not accept the Exit Offer will be protected to the extent provided for under such provisions and the Trust Deed. Implications of Winding-up for Unitholders As set out in the Exit Offer Letter and Section 8 of the Letter to Unitholders, following the close of the Exit Offer, the Offeror intends to streamline the structure of the PST Group and this may entail the disposal of the shipping assets of PST to the Offeror Group, the redeployment of certain employees to other entities within the Offeror Group, and the winding-up of PST. Such winding-up and/or disposal is required to be conducted in accordance with the provisions of the Trust Deed and in accordance with the Business Trusts Act. The manner of liquidation (including the rights of Unitholders) in respect of the winding-up of PST is set out in paragraph 1.5 in Appendix III to the Circular. 8. CONCLUSION AND RECOMMENDATION In arriving at our opinion, we have taken into account a range of factors which we consider, based on available information, to be pertinent and have a signifi cant bearing on our assessment of the Exit Offer. Accordingly, it is important that our IFA Letter, in particular, all the considerations and information we have taken into account, be read in its entirety. The principal factors that we have taken into consideration in forming our opinion are as summarised below: (i) The rationale for the Delisting Proposal, details of which are set out in Section 7.1 of our IFA Letter; (ii) Since IPO, the Units have traded between a high of US$0.465 per Unit in October 2006 and July 2007 to a low of US$0.130 per Unit in December Thus, the Exit Offer Price represents a premium of approximately 230.8% over the lowest transacted price and a discount of approximately 7.5% over the highest transacted price; (iii) The Exit Offer Price represents a premium of 15%, 19%, 21%, 21% and 21% over the VWAP of the Units over the last traded price, 1-month period, 3-month period, 6-month period and 1-year period which the Units were traded prior to the Joint Announcement Date respectively; 39

41 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) In relation to the Selected Delisting / Privatisation Transactions, we note that the premium implied in the Exit Offer Price for the 1-day, 1-month, 3-month and 6-month periods in which the Units were traded prior to the Joint Announcement Date is below the average and median but within the range of the relevant premiums for the Selected Successful Delisting / Privatisation Transactions. We note that as shares in the companies are held mainly for their capital growth potential, premiums offered in delisting / privatisation for companies would generally be higher than premiums for units in a business trust, which are held mainly for distribution yields; In relation to the Selected Successful Delisting / Privatisation Transactions of business trusts, the premium implied by the Exit Offer Price for PST for the 1-day, 1-month, 3-month and 6-month periods in which the Units were traded prior to the Joint Announcement Date is higher compared to that of HWT. We note that the delisting of HWT is the only delisting / privatisation transaction involving business trust from 2010 to 2011 and is hence more relevant; The EV/EBITDA ratio of 11.2x implied by the Exit Offer Price is above the average EV/ EBITDA ratio of the Comparable Entities of 6. 8x; The P/B ratio implied by the Exit Offer Price of 1.0x is above the average P/B ratio of the Comparable Entities of 0.4x; The Exit Offer Price implies a premium of approximately 6.7 %, 3.9% and 0.7% over the NAV per Unit for the fi nancial year ended 2009 and 2010 and the third quarter ended 30 September 2011; The Exit Offer Price implies a premium of approximately 3,483.3% and 160.6% over the RNAV per Unit implied by the charter-free and charter-attached market valuations respectively; PST s LTM distribution yield of 7.6% implied by the Exit Offer Price is lower than the average of comparable shipping trusts and other trusts of 9.4% and 8.1% respectively and higher compared to the average of the REITs and property related business trusts of 6.2%; and The other considerations outlined in Section 7.9 of this Letter. Based on the above analysis including the qualifications made therein, we are of the opinion that, on balance, the financial terms of the Exit Offer are fair and reasonable and are not prejudicial to the interests of the Unitholders under current market conditions as at the Latest Practicable Date, and we advise the Independent Directors to recommend that Unitholders VOTE IN FAVOUR of the Delisting Resolution and ACCEPT THE EXIT OFFER in the event that the Delisting Resolution is passed and Unitholders are not prepared to hold Units in an unlisted registered business trust. Unitholders should note that unless the Delisting Resolution is approved by less than 75% or voted against by 10% or more of the total number of issued Units held by Unitholders present and voting, on a poll, either in person or by proxy at the EGM, the Delisting Resolution will be passed at the EGM. Alternatively, Unitholders may wish to sell their Units in the open market if they are able to obtain a price higher than the Exit Offer Price after deducting related expenses (such as brokerage and trading costs), or choose not to accept the Exit Offer. Unitholders who wish to retain all or part of their investment in the Units are advised to take into consideration the general economic conditions and the restrictions of holding Units in an unlisted company as highlighted in Section of our Letter, in the event that the Delisting Resolution is passed at the EGM. 40

42 APPENDIX I: LETTER FROM PwCCF TO THE INDEPENDENT DIRECTORS In rendering our opinion, we have not taken into consideration the specifi c investment objectives, fi nancial situation, tax position or particular needs and constraints of any individual Unitholder. As each Unitholder would have different objectives and profiles, we recommend that any individual Unitholder who may require specifi c advice in relation to his investment objectives or portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. Unitholders should note that trading of the Units is subject to, inter alia, the performance and prospects of PST, prevailing economic conditions, economic outlook and stock market conditions and sentiments. Accordingly, our advice on the Exit Offer does not and cannot take into account the future trading activities or patterns or price levels that may be established beyond the Latest Practicable Date. Our opinion letter is addressed to the Independent Directors for their benefi t in connection with and for the purpose of their consideration of the Exit Offer. The recommendation made by them to the Unitholders in relation to the Exit Offer remains the responsibility of the Independent Directors. Whilst a copy of this letter may be reproduced in the Circular, neither PST nor the Directors may reproduce, disseminate or quote this letter (or any part thereof) for any other purpose at any time and in any manner without the prior written consent of PwCCF in each specifi c case. This letter is governed by, and construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter. Yours truly For and on behalf of PricewaterhouseCoopers Corporate Finance Pte Ltd Kan Yut Keong Managing Director 41

43 APPENDIX II: ADDITIONAL INFORMATION ON PST 1. REGISTERED OFFICE The registered offi ce of PST is at 140 Cecil Street, #07-01 PIL Building, Singapore DIRECTORS OF THE TRUSTEE-MANAGER The names, addresses and designations of the Directors as at the Latest Practicable Date are set out below: Name Address Designation Benedict Kwek Gim Song 30 Mount Elizabeth Chairman, Independent #06-34 High Point and Non-Executive Singapore Director Eugene Ooi Chin Chai Christopher Adrian Jones Lim Ah Doo Esben Sofren Poulsson Kuan Kim Kin Teo Choo Wee 25 Jalan Insaf Thomson Rise Estate Singapore Cavenagh Road #03-03 Townhouse Apartments Singapore Linden Drive Raffl es Park Singapore Holland Green Singapore Hazel Park Terrace #07-02 Hazel Park Condominium Singapore A Lyndhurst Road Singapore UNITS 3.1 Units of PST. As at the Latest Practicable Date: Independent and Non- Executive Director Independent and Non- Executive Director Independent and Non- Executive Director Independent and Non- Executive Director Non-Independent and Non-Executive Director Non-Independent and Non-Executive Director PST only has one class of Units comprising 589,750,000 Units in respect of an aggregate Units in issue amount of US$237,033,347; from 31 December 2010 until the Latest Practicable Date, PST has not issued any Units; and PST has no outstanding instruments convertible into, rights to subscribe for, or options in respect of, the Units. 3.2 Rights of Unitholders in relation to Voting, Distributions and the Unit s. The rights of Unitholders in respect of voting, distributions and the Unit s are contained in the Trust Deed. The relevant provisions in the Trust Deed are set out in paragraphs 1.2, 1.3 and 1.4 of Appendix III. 3.3 Rights of Unitholders during Winding-Up. The relevant provisions in the Trust Deed relating to the rights of Unitholders in the event of a winding-up of PST are set out in paragraph 1.5 of Appendix III. 42

44 APPENDIX II: ADDITIONAL INFORMATION ON PST 4. SUMMARY OF FINANCIAL PERFORMANCE AND POSITION 4.1 Income Statement. A summary of the audited consolidated income statements of the PST Group for FY2008, FY2009 and FY2010 and the unaudited consolidated income statement of the PST Group for the nine months ended 30 September 2011 is set out below: FY2008 FY2009 FY2010 US$ 000 (Audited) US$ 000 (Audited) US$ 000 (Audited) Nine Months ended 30 September 2011 US$ 000 (Unaudited) Gross Revenue 44,637 61,957 61,277 46,949 Depreciation (12,393) (16,581) (16,581) (12,646) Management fees (1,775) (2,476) (2,449) (1,857) Fleet management expenses (1,312) (3,394) (4,009) (4,280) Trustee fees (67) (94) (92) (78) Other expenses (751) (672) (594) (572) Results from operating activities 28,339 38,740 37,552 27,516 Finance income Finance expense (10,315) (11,442) (10,484) (7,528) Net finance expense (9,967) (11,335) (10,449) (7,511) Profit before income tax 18,372 27,405 27,103 20,005 Income tax expense (37) (5) (13) (1) Profi t after income tax 18,335 27,400 27,090 20,004 Income available for distribution for the current year 18,498 27,074 26,520 19,538 Income to be distributed for the current year 16,134 21,319 19,032 13,847 43

45 APPENDIX II: ADDITIONAL INFORMATION ON PST 4.2 Distribution Statements and Distribution Per Unit. A summary of the audited distribution statements for FY2008, FY2009 and FY2010 and the unaudited distribution statement of the PST Group for the nine months ended 30 September 2011 is set out below: FY2008 FY2009 FY2010 US$ 000 (Audited) US$ 000 (Audited) US$ 000 (Audited) Nine Months ended 30 September 2011 US$ 000 (Unaudited) Income available for distribution at the beginning of the year 3,770 5,549 4,940 4,834 Profi t after income tax 18,335 27,400 27,090 20,004 Net tax adjustments 13,714 16,777 16,773 12,995 Repayment of borrowings (13,551) (17,103) (17,343) (13,461) Income available for distribution for the current year 18,498 27,074 26,520 19,538 Income to be retained (2, 364) (5,755) (7,488) (5,691) Income to be distributed for the current year 16,134 21,319 19,032 13,847 19,904 26,868 23,972 18,681 Income available for distribution at the end of the year 5,549 4,940 4,834 4,368 US Cents US Cents US Cents US Cents Distribution per Unit

46 APPENDIX II: ADDITIONAL INFORMATION ON PST 4.3 Statement of Financial Position. A summary of the audited statements of the fi nancial position of the PST Group for the end of FY2008, FY2009 and FY2010 and the unaudited statement of the fi nancial position of the PST Group as at 30 September 2011 is set out below: FY2008 FY2009 FY2010 US$ 000 (Audited) US$ 000 (Audited) US$ 000 (Audited) Nine Months ended 30 September 2011 US$ 000 (Unaudited) Non-current assets Vessels 462, , , ,566 Advances paid for vessels under construction 74,397 72,542 Subsidiaries 462, , , ,108 Current assets Inventories Other receivables ,806 Cash and cash equivalents 13,812 17,875 9,284 4,605 14,510 18,742 10,124 8,283 Total assets 476, , , ,391 Non-current liabilities Loans and borrowings 212, , , ,462 Financial derivatives 19,224 11,081 12,115 10, , , , ,983 Current liabilities Trade payables 603 Charter income received in advance 1,258 1,016 3,265 3,992 Other payables ,382 4,637 Loans and borrowings 17,082 17,322 71,481 59,887 Financial derivatives 1, ,201 1,151 Current income tax payable ,292 20,232 79,332 69,671 Total liabilities 253, , , ,654 Net assets attributable to Unitholders 223, , , ,737 Unitholders funds Units in issue 237, , , ,033 Hedging reserve (15,661) (6,957) (8,210) (6,566) Accumulated profi ts 2,155 7,627 15,579 21, , , , ,737 US$ US$ US$ US$ NAV per Unit (1) (1) The NAV per Unit as at 31 December 2008, 31 December 2009, 31 December 2010 and 30 September 2011 is computed based on 589,750,000 Units in issue as at such date. 45

47 APPENDIX II: ADDITIONAL INFORMATION ON PST 4.4 Earnings per Unit. The earnings per Unit for FY2008, FY2009, FY2010 and the nine months ended 30 September 2011 is set out below: FY2008 FY2009 FY2010 US Cents (Audited) US Cents (Audited) US Cents (Audited) Nine Months ended 30 September 2011 US Cents (Unaudited) Earnings per Unit (1) Basic Diluted (1) The calculation of basic earnings per Unit is based on weighted average number of Units during the year and profi t after income tax, being 589,750,000 Units for the year ended 31 December 2009 and 31 December 2010 and the nine months ended 30 September 2011 and 401,223,000 Units for the year ended 31 December Diluted earnings per Unit is the same as the basic earnings per Unit as there are no dilutive instruments in issue during FY2008, FY2009, FY2010 and the nine months ended 30 September NAV per Unit. Based on the latest published accounts of PST prior to the date of this Circular, being the Q3 Interim Results, the NAV per Unit as at 30 September 2011 is US$ Significant accounting policies. The signifi cant accounting policies of the PST Group are disclosed in Note 3 of the Notes to the audited consolidated fi nancial statements of the PST Group for FY2010, as reproduced in Appendix V to this Circular. 4.7 Changes in accounting policies. As at the Latest Practicable Date, there is no change in the accounting policies of the PST Group which will cause the fi nancial information disclosed in this Circular to be not comparable to a material extent. 4.8 Financial Statements. The summary fi nancial information set out above should be read together with the audited consolidated fi nancial statements of the PST Group for the relevant years together with the related notes thereto and the Q3 Interim Results. The audited consolidated fi nancial statements for the PST Group for the relevant years are set out in the PST Group s annual reports, copies of which are available for inspection at the registered offi ce of PST at 140 Cecil Street, #07-01 PIL Building, Singapore The audited consolidated fi nancial statements of the PST Group for FY2010 are reproduced in Appendix V to this Circular and the Q3 Interim Results are reproduced in Appendix VI to this Circular. 5. MATERIAL CHANGES 5.1 Financial Position. As at the Latest Practicable Date, there has been no known material changes in the fi nancial position of PST since 31 December 2010, being the date to which PST s last published audited accounts were made up, except as otherwise disclosed in the announcements by PST on 18 April 2011 in relation to the unaudited consolidated fi nancial statements of the PST Group for the three months ended 31 March 2011, on 20 July 2011 in relation to the unaudited consolidated fi nancial statements of the PST Group for the six months ended 30 June 2011 and on 19 October 2011 in relation to the Q3 Interim Results. 5.2 Change to NAV per Unit. As at the Latest Practicable Date, the Directors are not aware of any fact or circumstance that would materially change the NAV per Unit as at 30 September General. As at the Latest Practicable Date, there have been no material changes to the information previously published by the PST Group since the Joint Announcement Date. 46

48 APPENDIX II: ADDITIONAL INFORMATION ON PST 6. DISCLOSURE OF INTERESTS AND DEALINGS 6.1 Disclosure of Interests and Dealings of PST, the Trustee-Manager and the Directors As at the Latest Practicable Date, none of PST or its subsidiaries have any interest, direct or indirect, in the equity share capital of the Offeror or any Offeror Securities Neither PST nor its subsidiaries have dealt for value in the equity share capital of the Offeror or in the Offeror Securities during the period commencing three months prior to the Joint Announcement Date and ending on the Latest Practicable Date As at the Latest Practicable Date, none of the Directors are interested in the equity share capital of the Offeror or any Offeror Securities None of the Directors has dealt for value in the equity share capital of the Offeror or any Offeror Securities during the period commencing three months prior to the Joint Announcement Date and ending on the Latest Practicable Date As at the Latest Practicable Date, none of the Directors are interested in the Units or PST Securities None of the Directors has dealt for value in the Units or PST Securities during the period commencing three months prior to the Joint Announcement Date and ending on the Latest Practicable Date. References in this paragraph 6 to Directors being interested in shares or securities should be interpreted according to Section 164 of the Companies Act. 6.2 Disclosure of Interests and Dealings of PwCCF None of PwCCF, its related corporations or funds whose investments are managed by PwCCF or its related corporations on a discretionary basis, own or control any Units or PST Securities as at the Latest Practicable Date None of PwCCF, its related corporations or funds whose investments are managed by PwCCF or its related corporations on a discretionary basis has dealt for value in the Units or PST Securities during the period commencing three months prior to the Joint Announcement Date and ending on the Latest Practicable Date. 1 Mr Teo Choo Wee holds an interest in 5.71 per cent. of the ordinary shares of Y.C. Chang & Sons Private Limited ( YCCS ). As at the Latest Practicable Date, YCCS has a direct interest of 43.7 per cent. of the issued shares in the Offeror and a deemed interest of per cent. interest in the Units. The holdings of YCCS in the issued shares of the Offeror and the Units are d isclosed in paragraph 6.3 of this Appendix II. 47

49 APPENDIX II: ADDITIONAL INFORMATION ON PST 6.3 Disclosure of Interests of Substantial Unitholders As at the Latest Practicable Date, the interests of the substantial Unitholders in the Units as recorded in PST s Register of Substantial Unitholders are set out below: Direct Interest Deemed Interest No. of Units % No. of Units % 1. Pacifi c International Lines (Private) Limited 446,866, (also defi ned in this Circular as the Offeror ) 2. Teo Woon Tiong aka Y C Chang (1) 446,866, South Pacifi c International Holdings Limited (1) 446,866, Y.C. Chang & Sons (Private) Limited (1) 446,866, (1) Mr Teo Woon Tiong a.k.a. Chang Yun Chung (Mr Y C Chang) together with members of his family, control Y.C. Chang & Sons Private Limited ( YCCS ) and South Pacifi c International Holdings Limited ( SPIH ). YCCS and SPIH each holds a direct interest of 43.7 per cent. and 31.7 per cent. interest in the Offeror respectively. Accordingly, Mr Y C Chang, YCCS and SPIH are deemed to have an interest in the Units held by the Offeror. 7. MATERIAL CONTRACTS WITH INTERESTED PERSONS Save as disclosed in this paragraph 7, the annual reports of PST for FY2008, FY2009 and FY2010 and the announcements on SGX NET issued by the Trustee-Manager and other than those entered into in the ordinary course of business, neither PST nor any of its subsidiaries has entered into any material contracts with interested persons (as defi ned in the Note on Rule of the Code) during the period beginning three years before the Joint Announcement Date. On 21 July 2011, the Trustee-Manager (acting on behalf of PST) entered into a Ship Management Agreement with the Offeror (the Ship Management Agreement ), pursuant to which the Trustee- Manager appointed the Offeror as managers of two vessels, the SHAGANG HONGFA (Hull No. 2408) and SHAGANG HONGCHANG (Hull No. 2409) (the Vessels ). During the period of the Ship Management Agreement, the Offeror is required to carry out various management services in respect of the Vessels as agents for and on behalf of the Trustee-Manager, including the provision of crew, technical management services and accounting services, arranging insurance cover and the supply of provisions. The annual management fee payable by the Trustee-Manager to the Offeror is US$96,000 per annum per Vessel, to be mutually reviewed and revised every year. The Ship Management Agreement came into effect on 1 August 2011 and will continue for a minimum period of 12 months from the date of delivery of the second Vessel, and will continue thereafter unless three months notice of termination is given by both parties. The SHAGANG HONGFA was delivered on 5 September 2011 and the SHAGANG HONGCHANG was delivered on 20 September GENERAL DISCLOSURES 8.1 As at the Latest Practicable Date, there are no service contracts between any Director or proposed director with PST or any of its subsidiaries which have more than 12 months to run which the employing entity cannot, within the next 12 months, terminate without payment of compensation. 8.2 There were no service contracts entered into or amended between any of the Directors or proposed director with PST or any of its subsidiaries during the period between the start of the six months immediately preceding the Joint Announcement Date and the Latest Practicable Date. 8.3 As at the Latest Practicable Date, there are no payments or other benefi ts which will be made or given to any Director or any director of any corporation which is, by virtue of Section 6 of the Companies Act, deemed to be related to the Trustee-Manager, as compensation for loss of offi ce or otherwise in connection with the Exit Offer. 48

50 APPENDIX II: ADDITIONAL INFORMATION ON PST 8.4 As at the Latest Practicable Date, there are no agreements or arrangements made between any Director and any other person in connection with or which are conditional upon the outcome of the Exit Offer. 8.5 As at the Latest Practicable Date, none of the Directors has any material personal interest, whether direct or indirect, in any material contract entered into by the Offeror. 9. MATERIAL LITIGATION As at the Latest Practicable Date, the Directors are not aware of any litigation, claims or proceedings pending or threatened against PST or any of its subsidiaries or any facts likely to give rise to any litigation, claims or proceedings, which might materially affect the fi nancial position of the PST Group taken as a whole. 10. VALUATION REPORT 10.1 Team Shipbrokers has conducted a valuation of PST s vessels. Copies of Team Shipbroker s valuation reports are set out in Appendix IX of this Circular (collectively, the Valuation Reports ). The valuation was arrived on the basis of valuation as set out in each Valuation Report, which should be considered and read in conjunction with, and in the context of, the full text of each Valuation Report In view of the fact that PST is in the business of ship operations and on the assumptions that (i) PST s vessels, registered with the Singapore Registry of Ships, are sold at the amount of the valuation stated in the Valuation Reports, (ii) the transfer of such vessels are completed by Year of Assessment 2014, and (iii) the transfer of such vessels is not through fi nance lease arrangements which are treated as a sale, PST will not incur any potential tax liability on such sale. 49

51 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST 1. RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST The rights of Unitholders in respect of voting, distributions, the Unit s, and the winding-up of PST as extracted from the Trust Deed are set out in paragraphs 1.2, 1.3, 1.4 and 1.5 below. Defi nitions for the purposes of paragraphs 1.2, 1.3, 1.4 and 1.5, are set out in paragraph 1.1 below: 1.1 Definitions Auditors : An auditor of the Trust for the time being appointed by the Trustee-Manager in accordance with the Business Trusts Act Authorised Business : (i) The acquisition, disposition, ownership, management, operation, finance leasing, leasing and chartering of vessels and all activities, concerns, functions and matters reasonably incidental thereto, including without limitation, commissioning shipbuilders for the construction of a newbuilding or conversion of an existing vessel; (ii) (iii) ownership of subsidiaries, which are engaged in the acquisition, disposition, ownership, management, operation, finance leasing, leasing and chartering of vessels and all activities, concerns, functions and matters reasonably incidental thereto, including without limitation, commissioning shipbuilders for the construction of a newbuilding or conversion of an existing vessel; any business, undertaking or activity incidental to the operation of the businesses referred to in paragraphs (i) and (ii) of this defi nition Authorised Investments : (i) vessels; (ii) (iii) (iv) (v) listed or unlisted debt securities and listed or unlisted shares or stock of or issued by local or foreign companies or corporations; government securities (issued on behalf of the Singapore Government or governments of other countries) and securities issued by a supra-national agency or a Singapore statutory board; Cash and Cash Equivalent Items; fi nancial derivatives only for the purposes of (a) hedging existing positions in the Trust s portfolio where there is a strong correlation to the underlying assets, liabilities or undertakings, (b) effi cient portfolio management or (c) management of risks associated with any Authorised Business undertaken by the Trust, provided that such derivatives are not used to gear the overall portfolio of the Trust or intended to be borrowings of the Trust; and 50

52 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST (vi) any other investment not covered by paragraphs (i) to (v) of this defi nition but specifi ed as a permissible investment in any applicable guidelines issued by the MAS and selected by the Trustee-Manager for investment by the Trust incidental to or in connection with the carrying on of any Authorised Business Business Day : Any day (other than a Saturday, Sunday or gazetted public holiday) on which commercial banks are open for business in Singapore and the SGX-ST is open for trading Business Trusts Act : The Business Trusts Act, Chapter 31A of Singapore Cash Cash Equivalent Items Class : Any amount standing to the credit of any bank account of the Trust but does not include amounts represented by money market instruments : Includes, without limitation, deposits, short-term investment accounts and money market instruments as well as instruments and other investments of such high liquidity and safety that they are as good as cash : Any class of Units which may be designated as a class distinct from another class of Units Deed : The trust deed as from time to time altered, modifi ed or added to in accordance with the provisions therein contained and shall include any deed supplemental to the trust deed executed in accordance with the provisions contained in the trust deed, including the fi rst supplemental deed dated 25 February 2008 Depositor : (i) A direct account holder with the Depository; or (ii) a Depository Agent, but, for the avoidance of doubt, does not include a Sub-Account Holder, whose name is entered in the Depository Register in respect of Units held by him Depository Depository Agent : The Central Depository (Pte) Limited or any successor and assign thereof established by Singapore Exchange Limited as a depository company which operates a central depository system for the holding and transfer of book-entry securities : A member company of the SGX-ST, a trust company (registered under the Trust Companies Act, Chapter 336 of Singapore), a banking corporation or merchant bank (approved by the MAS under the Monetary Authority of Singapore Act, Chapter 186 of Singapore) or any other person or body approved by the Depository who or which: (i) performs services as a depository agent for holders of accounts maintained by a depository agent in accordance with the terms of a depository agent agreement entered into between the Depository and the depository agent; 51

53 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST (ii) (iii) deposits book-entry securities with the Depository on behalf of Sub-Account Holders; and establishes an account in its name with the Depository Depository Register : The electronic register of the Trust maintained by the Depository Depository Services Agreement Distributable Amount : The depository services agreement to be entered into between the Depository and the Trustee-Manager (as trustee-manager of the Trust) containing their agreement on the arrangements relating to the Units being deposited with the Depository in connection with the listing of the Trust on the SGX-ST, as the same may be amended from time to time : The amount determined in accordance with Clause of the Deed as reproduced below. Distribution Calculation : 31 December, 31 March, 30 June and 30 September in each year Date occurring after 1 January 2007 or such other date or dates as the Trustee-Manager may determine Distribution Date : A Business Day which is no later than 60 days after the Distribution Calculation Date for the relevant Distribution Period Distribution Entitlement : The entitlement to the Distributable Amount determined in accordance with Clause of the Deed as reproduced below. Distribution Period : (i) For the first Distribution Period, the period from and including the date of establishment of the Trust to and including 30 September 2006; (ii) (iii) for the last Distribution Period, the period from and including the day after the immediately preceding Distribution Calculation Date to and including the date of winding up of the Trust; and in all other circumstances, the period from and including the day after the immediately preceding Distribution Calculation Date to and including the next occurring Distribution Calculation Date Extraordinary : A resolution proposed and passed as such by a majority Resolution consisting of 75.0% or more of the total number of votes cast for and against such resolution at a meeting of Holders or (as the case may be) Depositors named in the Depository Register as at 48 hours before the time of such meeting as certifi ed by the Depository to the Trustee-Manager Holder : In relation to unlisted Units, means the registered holder for the time being of Units including persons so registered as Joint Holders, and, in relation to Listed Units, means the Depository, and the term Holder shall, in relation to Units which are listed on the SGX-ST and registered in the name of the Depository, mean, where the context requires, a Depositor provided that for the purposes of meetings of Holders held in accordance with paragraph 1.2 below, such Holder shall mean a Depositor as shown in the records of the Depository as at a time not later than 48 hours prior to the time of such a meeting of Holders, supplied by the Depository to the Trustee-Manager 52

54 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST Income Investment : All earnings resulting from the operation of the Trust/any Authorised Business undertaken by the Trust considered by the Trustee-Manager after consulting the Auditors to be in the nature of income in accordance with generally accepted accounting practices in Singapore : Any one of the assets forming for the time being a part of the Trust Property or, where appropriate, being considered for acquisition to form part of the Trust Property IRAS : The Inland Revenue Authority of Singapore Issue Price : The issue price of Units Joint Depositors Joint Holders Liabilities : Such persons for the time being entered in the Depository Register as joint Depositors in respect of a Unit : Such persons for the time being entered in the Register as joint Holders in respect of a Unit and, where the context requires, the term Joint Holders shall mean Joint Depositors : All the liabilities of the Trust (including liabilities accrued but not yet paid) and any provision which the Trustee-Manager decides in consultation with the Auditors should be taken into account in determining the liabilities of the Trust Licences : The licenses required for the conduct of the Authorised Business Listed : In relation to the Units or the Trust, means being listed, quoted and traded on the SGX-ST and/or any other Recognised Stock Exchange(s) and not having been suspended from such listing, quotation or trading for more than 60 consecutive calendar days or having not been de-listed permanently Listing Rules : The listing rules for the time being applicable to the listing of the Trust on the SGX-ST as the same may be modifi ed, amended, supplemented, revised or replaced from time to time MAS : Monetary Authority of Singapore Net Taxable Income Net Tax-Exempt Income : For any Distribution Period, the net income of the Trust for that period determined in accordance with the principles applicable under the Tax Act, less any amount for the period which is directly assessed to tax on the Trustee-Manager and in respect of which tax has been paid or is payable by the Trustee-Manager : For any Distribution Period, the net income of the Trust for that period that is exempt from Singapore income tax and determined in accordance with the principles applicable under the Tax Act Ordinary Resolution : A resolution proposed and passed as such by a majority being more than 50.0% of the total number of votes cast for and against such resolution at a meeting of Holders or (as the case may be) Depositors named in the Depository Register as at 48 hours before the time of such meeting as certifi ed by the Depository to the Trustee-Manager Recognised Stock Exchange : Any stock exchange of repute in any country in any part of the world 53

55 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST Record Date : The date or dates in each Distribution Period determined by the Trustee-Manager for the purpose of identifying the Holders or (as the case may be) the Depositors of record who are entitled to receive any Distribution Entitlement Register : The register of Holders Relevant Laws, : As applicable in the context, any or all of the Business Trusts Act, Regulations and the Securities and Futures Act, the Listing Rules, the Licences, Guidelines and all directions, guidelines or requirements imposed by any competent authority, as the same may be modifi ed, amended, supplemented, revised or replaced from time to time Securities Account : A securities account maintained by a Depositor with the Depository SGX-ST : Singapore Exchange Securities Trading Limited or any successor thereof Sub-Account Holder : A holder of an account maintained with a Depository Agent Tax : Any income tax, duty and any other taxes, duties, levies, imposts, deductions and charges and any interest, penalties or fi nes imposed in connection with any of them Tax Act : Income Tax Act, Chapter 134 of Singapore Trust : The business trust constituted by the Deed and known as the Pacifi c Shipping Trust (or its short form PST ) or by such other name as the Trustee-Manager may from time to time determine Trust Property : All the assets of the Trust, including all its Authorised Investments for the time being held or deemed to be held upon the trusts of the Deed Trustee Manager : PST Management Pte. Ltd. and its successors and assigns (as trustee-manager of the Trust under the Business Trusts Act) Unit : One undivided share in the Trust. Where the context so requires, the defi nition includes a Unit of a Class of Units 1.2 Rights in respect of voting The relevant provisions of the schedule to the Trust Deed are set out below: 1. General Meetings 1.1 Annual general meetings An Annual General Meeting shall be held once in every year, at such time (within a period of not more than 15 months after the holding of the last preceding Annual General Meeting) and place as may be determined by the Trustee-Manager. All other general meetings shall be called Extraordinary General Meetings. 1.2 Extraordinary general meetings The Trustee-Manager may whenever it thinks fi t, and shall on requisition in accordance with the Relevant Laws, Regulations and Guidelines, proceed with proper expedition to convene an Extraordinary General Meeting. 54

56 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST 2. Requisition and calling of general meetings Requisition of general meetings and calling of general meetings shall be in accordance with the Business Trusts Act and any other applicable laws, regulations and guidelines. 3. Notice of General Meeting 3.1 Subject to the Business Trusts Act and for so long as the Units are Listed, the Listing Rules as well, notice of every general meeting shall be given to the Holders in manner provided in this Deed. The period of notice shall not be inclusive of the day on which the notice is served or deemed to be served and of the day for which the notice is given. Where there is an inconsistency between the Business Trusts Act and the Listing Rules on the period of notice required, the period of notice required for the purposes of this Deed shall be the longer of the periods of notice prescribed by the Business Trusts Act and the Listing Rules. 3.2 The notice shall specify the place, day and hour of meeting and the terms of the resolutions to be proposed. The accidental omission to give notice to or the non-receipt of notice by any of the Holders shall not invalidate the proceedings at any meeting. 3.3 Notwithstanding the preceding sub-paragraphs of this Paragraph 3.2 but subject to the Relevant Laws, Regulations and Guidelines, any notice or other document required to be served upon or sent to all the Holders or (as the case may be) the Depositors for the time being shall be deemed to have been duly served or sent if published in any one leading English-language daily newspaper in Singapore and/or any one leading Chinese-language daily newspaper in Singapore. Any notice or document so served or sent shall be deemed to have been so served or sent on the date of such publication and, if the publication in the two newspapers does not appear on the same day, on the date of the later publication. 4. Proceedings at meetings 4.1 Chairman of meetings The chairman or deputy chairman of the board of directors of the Trustee-Manager or if the chairman or deputy chairman is not present or there is no chairman or deputy chairman present, a person nominated in writing by the Trustee-Manager shall preside as chairman at a general meeting. If the chairman or deputy chairman is not present within fi fteen minutes after the time appointed for holding the general meeting, or in the case where there is no chairman or deputy chairman present and there is no person nominated in writing by the Trustee-Manager or such nominated person is not present, the Holders present shall choose one of their number to be chairman at the general meeting. 4.2 Quorum No business other than the appointment of a chairman shall be transacted at any general meeting unless the quorum is present at the commencement of business. The quorum shall be not less than two Holders present in person or by proxy of one-tenth in value of all the Units for the time being in issue. Provided that (i) a proxy representing more than one Holder shall only count as one Holder for the purpose of determining the quorum; and (ii) where a Holder is represented by more than one proxy such proxies shall count as only one Holder for the purpose of determining the quorum. 4.3 Adjournment of meetings If within half an hour from the time appointed for a meeting (or such longer interval as the Chairman may think fi t to allow) a quorum is not present, the general meeting, if convened on the requisition of Holders, shall be dissolved. In any other case it shall stand adjourned to such day and time being not less than 15 days thereafter and to such place as shall be determined for the purpose by the Chairman. 55

57 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST 4.4 Voting Notice of the adjourned meeting shall be given in the same manner as for an original meeting. Such notice shall state that the Holders present at the adjourned meeting whatever their number and the value of the Units held by them will form a quorum thereat. At any such adjourned meeting the Holders present in person or by proxy thereat shall be a quorum The Chairman may with the consent of any meeting at which a quorum is present and shall if so directed by the meeting adjourn the meeting from time to time and from place to place but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded (i) by the Chairman; (ii) by fi ve or more Holders having the right to vote at the meeting; or (iii) by Holder(s) representing not less than 10% of the total voting rights of all the Holders having the right to vote at the meeting Unless a poll is so demanded a declaration by the Chairman that a resolution has been carried or carried unanimously or by a particular majority or lost shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution If a poll is duly demanded it shall be taken in such manner (including the use of ballot or voting papers or tickets) as the Chairman may direct and the result of the poll shall be deemed to be the resolution of the general meeting at which the poll was demanded. The Chairman may (and if so directed by the meeting shall) appoint scrutineers and may adjourn the meeting to some place and time fi xed by him for the purpose of declaring the result of the poll A poll demanded on the election of a Chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time and place as the Chairman directs. A demand for a poll may be withdrawn at any time The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll has been demanded. 4.5 Votes of Holders or (as the case may be) Depositors Subject to the Business Trusts Act, each Unit shall confer the right to poll at any meeting to one vote, and one vote only On a show of hands every Holder who (being an individual) is present in person or by proxy or (being a corporation) is present by one of its offi cers as its proxy shall have one vote On a poll every Holder who is present in person or by proxy shall have one vote for every Unit of which he is the Holder. On a poll votes may be given either personally or by proxy. A person entitled to more than one vote need not use all his votes or cast them the same way. 56

58 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST In the case of Joint Holders the vote of the senior who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the vote of the other Joint Holders and for this purpose seniority shall be determined by the order in which the names stand in the Register, the fi rst being the senior Where in Singapore or elsewhere a receiver or other person (by whatever name called) has been appointed by any court claiming jurisdiction in that behalf to exercise powers with respect to the property or affairs of any Holder on the ground (however formulated) of mental disorder, the Trustee-Manager may in its absolute discretion, upon or subject to production of such evidence of the appointment as the Trustee-Manager may require, permit such receiver or other person on behalf of such Holder to vote in person or by proxy at any meeting or to exercise any other right conferred by holding of Units in relation to meetings No Holder shall, unless the Trustee-Manager otherwise determines, be entitled in respect of Units held by him to vote at a meeting either personally or by proxy or to exercise any other right conferred by Holding of Units in relation to meetings if any call or other sum presently payable by him to the Trust in respect of such Units remains unpaid For the purposes of determining the number of Units held in respect of Units registered in the name of the Depository and the number of votes which a particular Holder may cast in respect of such Units, the Trustee-Manager shall be entitled and bound to accept as accurate the number of Units credited into the Securities Account(s) of the relevant depositor as shown in the records of the Depository as at a time not earlier than 48 hours prior to the time of the relevant meeting, supplied by the Depository to the Trustee-Manager, and to accept as the maximum number of votes which in aggregate that depositor and his proxy(ies) (if any) are able to cast on a poll a number which is the number of Units credited into the Securities Account(s) of the relevant depositor, as shown in the aforementioned records of the Depository, whether that number is greater or smaller than that specifi ed by the depositor or in the instrument of proxy. The Trustee-Manager shall not under any circumstances be responsible for, or liable to any person as a result of it, acting upon or relying on the aforementioned records of the Depository. 5. P roxies 5.1 An instrument of proxy may be in the usual common form or in any other form which the Trustee-Manager shall approve. 5.2 The instrument appointing a proxy shall be in writing, under the hand of the appointor or of his attorney duly authorised in writing or if the appointor is a corporation either under the common seal or under the hand of an offi cer or attorney so authorised. 5.3 The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or a notarially certifi ed copy of such power or authority shall be deposited at such place as the Trustee-Manager may in the notice convening the meeting direct or if no such place is appointed then at the registered offi ce of the Trustee-Manager not less than 48 hours before the time appointed for holding the meeting or adjourned meeting (or in the case of a poll before the time appointed for the taking of the poll) at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the expiration of 12 months from the date named in it as the date of its execution. A person appointed to act as a proxy need not be a Holder. 57

59 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST 5.4 The instrument appointing a proxy to vote at a meeting of the Holders shall be deemed to confer authority to demand or join in demanding a poll. A demand by a person as proxy for a Holder shall, for the purpose of Paragraph 4.4, be deemed to be the same as a demand by the Holder. 5.5 A Holder may appoint not more than two proxies to attend and vote at the same meeting, Provided that if the Holder is a Depositor, the Trustee-Manager shall be entitled and bound: to reject any instrument of proxy lodged if the Depositor is not shown to have any Units entered against his name in the Depository Register as at 48 hours before the time of the relevant meeting as certifi ed by the Depository to the Trust; and to accept as the maximum number of votes which in aggregate the proxy or proxies appointed by the Depositor is or are able to cast on a poll a number which is the number of Units entered against the name of that Depositor in the Depository Register as at 48 hours before the time of the relevant meeting as certifi ed by the Depository to the Trust, whether that number is greater or smaller than the number specifi ed in any instrument of proxy executed by or on behalf of that Depositor. 5.6 In any case where a form of proxy appoints more than one proxy, the proportion of the holding of Units concerned to be represented by each proxy shall be specifi ed in the form of proxy. 5.7 A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed or the transfer of the Units in respect of which the proxy is given Provided That no intimation in writing of such death, insanity, revocation or transfer shall have been received at the place appointed for the deposit of proxies or if no such place is appointed at the registered offi ce of the Trustee-Manager before the commencement of the meeting or adjourned meeting at which the proxy is used. 6. Minutes of proceedings 6.1 The Trustee-Manager shall comply with all provisions of Relevant Laws, Regulations and Guidelines in relation to records of proceedings of meetings. 6.2 Minutes of all resolutions and proceedings at every meeting shall be made and duly entered in books to be from time to time provided for that purpose by the Trustee-Manager and any such minute as aforesaid if purporting to be signed by the Chairman of the meeting shall be conclusive evidence of the matters therein stated and until the contrary is proved, every such meeting in respect of the proceedings of which minutes have been made shall be deemed to have been duly held and convened and all resolutions passed thereat to have been duly passed. 7. Resolutions 7.1 A resolution in writing signed by or on behalf of all the Holders for the time being entitled to receive notice of any meeting of Holders shall be as valid and effectual as an Extraordinary Resolution passed at a meeting of those Holders duly called and constituted. Such resolution may be contained in one document or in several documents in the like form each signed by or on behalf of one or more of the Holders concerned. 58

60 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST 7.2 An Extraordinary Resolution or an Ordinary Resolution, as the case may be, shall be binding on all Holders whether or not present at the relevant meeting and each of the Holders and the Trustee-Manager shall, subject to the provision relating to indemnity in this Deed, be bound to give effect thereto accordingly. 8. Corporate representatives 8.1 A corporation, being a Holder, may by resolution of its directors or other governing body authorise such person as it thinks fi t to act as its representative at any meeting of Holders and the person so authorised shall upon production of a copy of such resolution certifi ed by a director of the corporation to be a true copy, be entitled to exercise the powers on behalf of the corporation so represented as the corporation could exercise in person if it were an individual. 1.3 Rights in respect of distributions The relevant provisions in Clause 10 of the Trust Deed, which set out the Unitholder s rights in respect of distributions, are set out below: 10. DISTRIBUTIONS 10.1 Distribution of Income Subject to the Relevant Laws, Regulations and Guidelines and this Clause 10, the Trustee- Manager shall make regular distributions of all (or such lower percentage as the Trustee- Manager may determine) Net Tax-Exempt Income to Holders at quarterly or such other intervals as the Trustee-Manager shall decide in its absolute discretion, and the Trustee- Manager may distribute all (or such lower percentage as the Trustee-Manager may determine) Net Taxable Income at such time as the Trustee-Manager may in its absolute discretion deem fi t Trustee-Manager to Collect The Trustee-Manager must collect and receive all moneys, rights and property paid or receivable in respect of the Trust Determination of Income and Reserves The Trustee-Manager (acting after consulting the Auditors) is to determine whether any item is income in nature or capital in nature and the extent to which reserves or provisions need to be made. If the Trustee-Manager determines any item to be capital it may apply it to any item in the balance sheet of the Trust including, without limitation, Holders funds and Investments. This Clause 10.3 applies to distributions and to books of account Frequency of Distribution of Income The Trustee-Manager will endeavour to ensure that for each Financial Year: there is at least one Distribution Period; and the last Distribution Period ends on the last day of the Financial Year. For each Distribution Period the Trustee-Manager will calculate, and will distribute, each Holder s Distribution Entitlement, in accordance with the provisions of this Clause

61 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST 10.5 Distribution Entitlement Distributable Amount for any Distribution Period is to be determined in accordance with the following formula: DA = NTI + E + C - R Where: DA is the Distributable Amount; NTI is the Net Taxable Income which the Trustee-Manager determines is to be distributed for that Distribution Period; E is the amount of Net Tax-Exempt Income which the Trustee-Manager determines is to be distributed for that Distribution Period; C is any additional amount (including capital), which may be a negative amount, which the Trustee-Manager has determined is to be distributed or, if thought fi t by the Trustee-Manager, to be transferred to or from an undistributed income reserve account; and R is the scheduled prepayment of principal under the debt facilities taken out by the Trust, from time to time, for that Distribution Period Each Holder s Distribution Entitlement for any Distribution Period is to be determined in accordance with the following formula: DA where: x UH UI DA is the Distributable Amount; UH is the number of Units held by the Holder or (as the case may be) the Depositor at the close of business on the Record Date for the relevant Distribution Period adjusted to the extent he is entitled to participate in the Distributable Amount; and UI is the number of Units in issue at the close of business on the Record Date for the relevant Distribution Period adjusted to the extent the Holder or (as the case may be) the Depositor is entitled to participate in the Distributable Amount Distribution of Entitlement The Trustee-Manager must, in respect of each Distribution Period, pay to each Holder or (as the case may be) each Depositor his Distribution Entitlement on or before the Distribution Date for the Distribution Period For the purpose of identifying the persons who are entitled to the Distribution Entitlement for a Distribution Period, the persons who are Holders or (as the case may be) Depositors on the Record Date for that Distribution Period have an absolute, vested and indefeasible interest in the Income of that Distribution Period. 60

62 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST The Trustee-Manager must deduct from each Holder s or (as the case may be) each Depositor s Distribution Entitlement all amounts which: (i) (ii) (iii) (iv) (v) are necessary to avoid distributing a fraction of a cent; the Trustee-Manager determines not to be practical to distribute on a Distribution Date; equal any amount of Tax which has been paid or which the Trustee-Manager determines is or may be payable by it in respect of the portion of the income of the Trust attributable to such Holder or (as the case may be) such Depositor, or the amount of the distribution otherwise distributable to such Holder or (as the case may be) such Depositor; are required to be deducted by law or this Deed; or are payable by the Holder or (as the case may be) the Depositor to the Trustee-Manager No distribution or other moneys payable on or in respect of a Unit shall bear interest as against the Trust. Any moneys payable to Unitholders which remain unclaimed after a period of 12 months shall be accumulated in special account (the Unclaimed Moneys Account ) from which the Trustee-Manager may, from time to time, make payments to Unitholders claiming any such moneys. Subject to the winding-up provisions in the Trust Deed, the Trustee-Manager, may, at its discretion and if practicable, cause such sums which represents moneys remaining in the Unclaimed Moneys Account for fi ve years after the date of payment of such moneys into the Unclaimed Moneys Account and interest, if any, earned thereon to be paid into the Courts of Singapore after deducting from such sums all fees, costs and expenses incurred in relation to such payment into the Courts of Singapore. If the said moneys are insuffi cient to meet all such fees, costs and expenses, the Trustee- Manager shall be entitled to have recourse to the Trust Property Holder Notification Each Holder or (as the case may be) each Depositor must, as and when required by the Trustee-Manager, provide such information as to his place of residence for taxation purposes as the Trustee-Manager may from time to time determine Composition of Distribution Following the end of each Financial Year, the Trustee-Manager must notify each Holder or (as the case may be) each Depositor of: the extent to which a distribution under this Clause 10 is composed of, and the types of, income and capital; and any amounts deducted under Clauses (iii) and (iv) Categories and Sources of Income For any category or source of income the Trustee-Manager may keep separate accounts and allocate the income from any category or source to any Holder or (as the case may be) any Depositor The Trustee-Manager may cause the distribution of any amount recorded in an account or record kept pursuant to Clause before the distribution of any other amount. 61

63 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST Distribution Reinvestment Arrangements The Trustee-Manager may advise Holders or (as the case may be) Depositors, from time to time, in writing that Holders or (as the case may be) Depositors may on terms specifi ed in the notice participate in an arrangement under which Holders or (as the case may be) Depositors may request that all or a proportion of specifi ed distributions due to them be applied to the issue of further Units on such terms and Issue Price as the Trustee- Manager may determine, subject to Clause 6.1. The Units so issued shall be deemed to be purchased by such Holders or (as the case may be) such Depositors. The Trustee- Manager shall be entitled to amend the terms of any such distribution reinvestment arrangements from time to time by notice in writing to Holders Capitalisation of Undistributed Distributable Amount Prior to the Listing Date, the Trustee-Manager, with the agreement of all Holders, may elect not to distribute in accordance with Clause 10.4 and in lieu of such distribution capitalise the undistributed Distributable Amount. 1.4 Rights in respect of the Unit s The relevant provisions in Clauses 3 and 6 of the Trust Deed, which set out the Unitholders rights in respect of the the Unit s, are set out below: 3. PROVISIONS AS TO UNITS, HOLDERS AND STATEMENT OF HOLDINGS 3.3 Sub-division and Consolidation of Units The Trustee-Manager may at any time and on prior written notice (such notice period shall be determined by the Trustee-Manager in its absolute discretion) to each Holder (or (as the case may be) to each Depositor by the Trustee-Manager delivering such notice in writing to the Depository for onward delivery to the Depositors), determine that each Unit shall be sub-divided into two or more Units or consolidated with one or more other Units and the Holders or (as the case may be) the Depositors shall be bound accordingly. The Register shall be altered accordingly to refl ect the new number of Units held by each Holder as a result of such sub-division or consolidation and the Trustee-Manager shall cause the Depository to alter the Depository Register accordingly in respect of each relevant Depositor s Securities Account to refl ect the new number of Units held by such Depositor as a result of such sub-division or consolidation. 3.5 Rights attached to Units The rights attached to the Units issued upon special conditions shall be clearly defi ned in this Deed. Without prejudice to any special right previously conferred on the Holders of any existing Units or Class of Units but subject to the Relevant Laws, Regulations and Guidelines and this Deed, any Units may be issued by the Trustee-Manager and any such Units may be issued with such preferred, deferred, or other special rights or such restrictions, whether in regard to distributions, voting or otherwise as the Trustee-Manager may determine. 3.6 Variation of Rights If at any time different Classes of Units are issued, the rights attached to any Class (unless otherwise provided by the terms of issue of the Units of that Class) may, subject to the provisions of the Relevant Laws, Regulations and Guidelines, whether or not the Trust is being wound up, be varied or abrogated with the sanction of an Extraordinary Resolution passed at a separate meeting of Holders or (as the case may be) Depositors named in the Depository Register in respect of Units of that Class and to every such Extraordinary Resolution the provisions of this Deed relating to meetings of Holders or (as the case may be) Depositors shall 62

64 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST mutatis mutandis apply; but so that the necessary quorum shall be two persons at least holding or representing by proxy or by attorney one-third of the issued Units of the Class and that any Holder or (as the case may be) Depositor named in the Depository Register in respect of Units of that Class present in person or by proxy or by attorney may demand a poll Provided always that where the necessary majority for such an Extraordinary Resolution is not obtained at the meeting, consent in writing if obtained from the Holders or (as the case may be) Depositors of threefourths of the issued Units of the Class concerned, within two months of the meeting shall be as valid and effectual as an Extraordinary Resolution, carried at the meeting The rights conferred upon the Holders of the Units of any Class issued with preferred or other rights shall, unless otherwise expressly provided by the terms of issue of the Units of that Class or by this Deed as are in force at the time of such issue, be deemed to be varied by the creation or issue of further shares ranking equally therewith. 6. ISSUE OF UNITS 6.1 Issue of Units Notwithstanding anything to the contrary in this Deed, no Units may be issued without prior approval of the Holders in general meeting by passing an Ordinary Resolution in accordance with the Business Trusts Act but subject thereto and to other requirements of the Relevant Laws, Regulations and Guidelines, the Trustee- Manager may issue new Units or grant options over or otherwise dispose of the same to such persons and on such terms and conditions as the Trustee-Manager may deem fi t Provided That the Trustee-Manager shall not be bound to accept an application in respect of an initial issue of Units so as to give rise to a holding of fewer than 1,000 Units (or such other number of Units as may be determined by the Trustee-Manager). No fractions of a Unit shall be issued (whether on an initial issue of Units or a rights issue, an issue of new Units otherwise than by a rights issue or any issue pursuant to a reinvestment of distribution arrangement) and in issuing such number of Units as correspond to the relevant subscription proceeds, the Trustee-Manager shall in respect of each Holder s entitlement to Units truncate but not round off to the nearest whole Unit and any balance arising from such truncation shall be retained as part of the Trust Property. Issues of Units shall only be made on a Business Day unless and to the extent that the Trustee-Manager otherwise prescribes The Trustee-Manager may by deed supplemental hereto issue Classes of Units under such terms and conditions as may be contained therein The Trust may be listed on the SGX-ST pursuant to Clause 8 and if so listed shall be traded on the SGX-ST and settled through the Depository. Units already in issue may be transferred or otherwise dealt with through Securities Accounts into which Units are credited in accordance with Clause If the Trust is listed on the SGX-ST then the Trustee-Manager shall not thereafter issue any further Units in numbers exceeding the limit, if any, prescribed at the time in the Listing Rules, except where such Units are issued in such circumstances as prescribed by the Listing Rules or otherwise as required or permitted by the SGX- ST and the Trustee-Manager shall issue Units at the price prescribed by the Listing Rules from time to time. 63

65 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST 6.2 Units Issued to Persons Resident Outside Singapore If a Unit is to be issued to a person resident outside Singapore, the Trustee-Manager shall be entitled to charge for its own account an additional amount to the Issue Price thereof which is equal to the excess of the expenses actually incurred by the Trustee-Manager over the amount of expenses which would have been incurred if such person had been resident in Singapore. In relation to any rights issue, the Trustee-Manager may in its absolute discretion elect not to extend an offer of Units under the rights issue to those Holders or (as the case may be) Depositors, whose addresses are outside Singapore. In such event, the rights or entitlements to the Units of such Holders or Depositors will be offered for sale by the Trustee-Manager as the nominee and authorised agent of each such relevant Holder or Depositor in such manner and at such price, as the Trustee- Manager may determine. Where necessary, the Trustee-Manager shall have the discretion to impose such other terms and conditions in connection with the sale. The proceeds of any such sale, if successful, will be paid to the relevant Holders or Depositors whose rights and entitlements have been thus sold, provided that where such proceeds payable to the relevant Holders or (as the case may be) Depositors are less than US$10.00, the Trustee- Manager shall be entitled to retain such proceeds as part of the Trust Property. 6.3 Non-payment of Issue Price Where payment of the Issue Price payable in respect of any Unit agreed to be issued by the Trustee-Manager has not been received before the seventh Business Day after the date on which the Unit was agreed to be issued (or such other date as the Trustee- Manager may agree) the agreement to issue such Unit may, in the absolute discretion of the Trustee-Manager, at that time or any time thereafter be cancelled by the Trustee- Manager by giving notice to that effect to the applicant and such Unit shall thereupon be deemed never to have been issued or agreed to be issued and the applicant therefor shall have no right or claim in respect thereof against the Trustee-Manager, Provided That: no previous valuations of the Trust shall be re-opened or invalidated as a result of the cancellation of such Units; and the Trustee-Manager shall be entitled to charge the applicant (and retain for its own account) a cancellation fee of such amount as it may from time to time determine to represent the administrative costs involved in processing the application for such Units from such applicant. 6.4 Updating of Securities Account For so long as the Trust is Listed, the Trustee-Manager shall cause the Depository to effect the book entry of Units issued to a Depositor into such Depositor s Securities Account no later than the tenth Business Day after the date on which those Units are agreed to be issued by the Trustee-Manager. 6.5 Statement of Dealings The Trustee-Manager shall maintain monthly statements of all issues of Units and of the terms on which the same are issued and of any Investments which it determines to direct to be purchased for account of the Trust, and also a statement of any Investments which, in accordance with the powers hereinafter contained, it determines to direct to be sold for account of the Trust, and any other information which may be necessary so that the Trustee-Manager may be in a position to ascertain at any moment the Net Asset Value of the Trust Property. The Trustee-Manager shall be entitled to refuse to issue a Unit if at any time it is of the opinion that the provisions of this Clause 6 in regard to the issue of Units are being infringed. 64

66 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST 6.6 Suspension of Issue The Trustee-Manager may, subject to the Listing Rules, suspend the issue of Units during any of the following events: any period when the SGX-ST or any other relevant Recognised Stock Exchange is closed (otherwise than for public holidays) or during which dealings are restricted or suspended; the existence of any state of affairs which, in the opinion of the Trustee-Manager, might seriously prejudice the interests of the Holders as a whole or of the Trust Property; when, for any reason, the prices of Investments cannot be promptly and accurately ascertained; any period when remittance of money which will or may be involved in the realisation of Investments or in the payment for Investments cannot, in the opinion of the Trustee-Manager, be carried out at normal rates of exchange; in relation to any general meeting of the Holders, the period 48 hours before such general meeting or any adjournment thereof; any period where the issuance of Units is suspended pursuant to any order or direction issued by the MAS; or when the business operations of the Trustee-Manager in relation to the operation of the Trust are substantially interrupted or closed as a result of, or arising from, pestilence, widespread communicable and infectious diseases, acts of war, terrorism, insurrection, revolution, civil unrest, riots, strikes or acts of God. Such suspension shall take effect forthwith upon the declaration in writing thereof by the Trustee-Manager and shall terminate on the day following the fi rst Business Day on which the condition giving rise to the suspension shall have ceased to exist and no other conditions under which suspension is authorised under this Clause 6.6 exists upon the declaration in writing thereof by the Trustee-Manager. In the event of any suspension while the Trust is listed, the Trustee-Manager shall ensure that immediate announcement of such suspension is made through the SGX-ST. 1.5 Rights in respect of the winding-up of PST The relevant provisions of Clause 23 of the Trust Deed, which set out the Unitholders rights in respect of the winding-up of PST, are set out below: 23. WINDING UP OF THE TRUST 23.1 Winding Up The duration of the Trust constituted by this Deed is of indefi nite duration but may, without prejudice to the provisions of the Business Trusts Act, the Trust may be wound up by the Trustee-Manager in the event that any law shall be passed which renders it illegal or, in the opinion of the Trustee-Manager, impracticable or inadvisable to continue the Trust and approval for the winding up has been given by Holders by way of an Ordinary Resolution duly passed by the Holders or (as the case may be) the Depositors at a meeting thereof convened by the Trustee-Manager in accordance with this Deed. 65

67 APPENDIX III: RIGHTS OF UNITHOLDERS IN RESPECT OF VOTING, DISTRIBUTIONS, THE UNITS, AND THE WINDING-UP OF PST 23.2 Manner of Liquidation In the event that the Trust is to be wound up, the Trustee-Manager shall, subject to authorisations or directions (if any) given to it by the Holders or (as the case may be) the Depositors, pursuant to their powers contained in the Schedule, proceed as follows: the Trustee-Manager shall sell all Investments then remaining in its hands as part of the Trust Property and shall repay any borrowing effected by the Trust under Clause 9.8 (together with any interest accrued but remaining unpaid) for the time being outstanding and all other debts and Liabilities in respect of the Trust before applying the balance to the Holders. All secured creditors will be repaid before unsecured creditors (including the holders of any debentures issued by the Trustee- Manager, as trustee-manager of the Trust). Secured creditors will be repaid in the order of priority of their respective rights of security. On a winding up, the Trustee- Manager may retain from any distribution to be made to Holders an amount equal to any contingent liability to the IRAS under any indemnity given to the IRAS. Such sale by the Trustee-Manager shall be carried out and completed in such manner and within such period after the commencement of winding up of the Trust as soon as practicable. Any amount payable in respect of fees, costs and expenses charged by the Depository under the Depository Services Agreement shall be ranked together with amounts payable to other unsecured creditors (including the holders of any debentures issued by the Trustee-Manager, as trustee-manager of the Trust) and the Depository will rank equally with all other unsecured creditors (including the holders of any debentures issued by the Trustee-Manager, as trustee-manager of the Trust) in respect of any claim against the Trust under any indemnity given to the Depository. On a winding up, the Trustee-Manager may retain from any distribution to be made to Holders or (as the case may be) the Depositors an amount equal to any contingent liability to the Depository under such indemnity or in respect of such fees, costs and expenses due to the Depository. Such sale by the Trustee-Manager shall be carried out and completed as soon as practicable; the Trustee-Manager shall from time to time distribute to the Holders and the Depository on behalf of the Depositors in proportion to their respective interests in the Trust Property all net cash proceeds derived from the realisation of the Trust Property and available for the purposes of such distribution Provided That the Trustee-Manager shall not be bound (except in the case of the fi nal distribution) to distribute any of the moneys for the time being in its hands the amount of which is insuffi cient to pay in respect of each undivided share in the Trust Property the amount of the actual Issue Price of Units specifi ed for the initial public offering of the Trust and Provided Also That the Trustee-Manager shall be entitled to retain out of any moneys in its hands as part of the Trust Property under the provisions of this Clause 23 full provision for all fees, costs, charges, expenses, claims and demands incurred, made or apprehended by the Trustee-Manager in connection with or arising out of the liquidation of this Trust and out of the moneys so retained to be indemnifi ed and saved harmless against any such costs, charges, expenses, claims and demands. Every such distribution shall be made to the Holders and the Depository on behalf of the Depositors in accordance with the provisions of Clause Any unclaimed proceeds or other cash held by the Trustee-Manager under the provisions of this Clause 23 shall be paid to the Offi cial Receiver to be placed to the credit of the Business Trusts Liquidation Account in accordance with the Business Trusts Act subject to the right of the Trustee-Manager to deduct therefrom any expenses it may incur in making such payment; the Trustee-Manager may not distribute any Investment to any Holder or Depositor in specie; and the Trustee-Manager may postpone the realisation of any Investment for so long as it thinks fi t and it shall be liable for any loss or damage attributable to such postponement. 66

68 APPENDIX IV: GENERAL INFORMATION 1. GENERAL 1.1 There is no restriction in the Trust Deed on the right to transfer any Units, which has the effect of requiring the Unitholders, before transferring them, to offer them for purchase to other Unitholders or to any person. 1.2 DBS Bank and the Registrar have each given and have not withdrawn their written consent to the issue of this Circular with the inclusion of their names and all references to themselves, in the form and context in which they appear in this Circular. 1.3 PwCCF has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of its letter dated 28 November 2011 to the Independent Directors as set out in Appendix I and its letter dated 19 October 2011 in relation to the Q3 Interim Results as set out in Appendix VII and the inclusion of its name and all references to itself and the said letters in the form and context in which they appear in this Circular. 1.4 KPMG has given and has not withdrawn its written consent to the inclusion of its letter dated 19 October 2011 in relation to the Q3 Interim Results as set out in Appendix VIII in the form and context in which it appears in this Circular. 1.5 Team Shipbrokers has given and has not withdrawn its written consent to the inclusion of its valuation reports dated 21 October 2011 as set out in Appendix IX in the form and context in which it appears in this Circular. 2. DOCUMENTS AVAILABLE FOR INSPECTION 2.1 Copies of the following documents will be available for inspection at the registered offi ce of PST at 140 Cecil Street, #07-01 PIL Building, Singapore , during normal business hours, from the date of despatch of this Circular until the Closing Date: the Trust Deed; the Joint Announcement; the annual reports of PST for FY2008, FY2009 and FY2010; the Q3 Interim Results; the Delisting Proposal; letter from PwCCF dated 28 November 2011 to the Independent Directors set out in Appendix I to this Circular; letter from PwCCF dated 19 October 2011 in relation to the Q3 Interim Results as set out in Appendix VII to this Circular; letter from KPMG dated 19 October 2011 in relation to the Q3 Interim Results as set out in Appendix VIII to this Circular; the Valuation Reports; and the letters of consent referred to in paragraph 1 above. 67

69 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report INDEPENDENT AUDITORS REPORT UNITHOLDERS OF PACIFIC SHIPPING TRUST REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of Pacific Shipping Trust (the Trust) and its subsidiaries (the Group), which comprise the statements of financial position of the Group and the Trust as at 31 December 2010, the consolidated income statement and consolidated statement of comprehensive income, consolidated statement of changes in unitholders funds and consolidated statement of cash flows of the Group and statement of changes in unitholders funds of the Trust for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 41 to 72. Trustee-Manager s responsibilities for the financial statements The Trustee-Manager is responsible for the preparation and fair presentation of these financial statements that give a true and fair view in accordance with the provisions of the Business Trusts Act, Chapter 31A of Singapore (the Act) and Singapore Financial Reporting Standards, and for such devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets that are part of the trust property of the registered business trust are safeguarded against loss from unauthorised use or disposition; and transactions by the trustee-manager entered into on behalf of or purported to be entered into on behalf of the registered business trust are properly authorised and that they are recorded as necessary to permit the preparation of true and fair accounts and to maintain accountability of assets. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Trust s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Trustee-Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes in unitholders funds of the Trust are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and the Trust as at 31 December 2010 and the results, changes in unitholders funds and cash flows of the Group and changes in unitholders funds of the Trust for the year ended on that date. 68

70 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 INDEPENDENT AUDITORS REPORT UNITHOLDERS OF PACIFIC SHIPPING TRUST REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In our opinion, the accounting and other records required by the Act to be kept by the Trust have been properly kept in accordance with the provisions of the Act. KPMG LLP Public Accountants and Certified Public Accountants Singapore 7 March

71 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report STATEMENTS OF FINANCIAL POSITION As at 31 December 2010 Group Trust Note US$ 000 US$ 000 US$ 000 US$ 000 Non-current assets Vessels 4 429, , , ,848 Advances paid for vessels under construction 5 74,397 74,397 Subsidiaries 6 503, , , ,848 Current assets Inventories Other receivables Cash and cash equivalents 8 9,284 17,875 9,284 17,875 10,124 18,742 10,124 18,742 Total assets 513, , , ,590 Non-current liabilities Loans and borrowings 9 177, , , ,574 Financial derivatives 22 12,115 11,081 12,115 11, , , , ,655 Current liabilities Charter income received in advance 3,265 1,016 3,265 1,016 Other payables 10 3, , Loans and borrowings 9 71,481 17,322 71,481 17,322 Financial derivatives 22 1, , Current income tax payable ,332 20,232 79,327 20,227 Total liabilities 269, , , ,882 Net assets attributable to unitholders 244, , , ,708 The accompanying notes form an integral part of these financial statements. 70

72 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 STATEMENTS OF FINANCIAL POSITION (CONT D) As at 31 December 2010 Group Trust Note US$ 000 US$ 000 US$ 000 US$ 000 Unitholders funds Units in issue , , , ,033 Hedging reserve 12 (8,210) (6,957) (8,210) (6,957) Accumulated profits 15,579 7,627 15,584 7, , , , ,708 US$ US$ US$ US$ Net asset value per unit The accompanying notes form an integral part of these financial statements. 71

73 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report CONSOLIDATED INCOME STATEMENT Year ended 31 December 2010 Group Note US$ 000 US$ 000 Gross revenue 14 61,277 61,957 Depreciation 4 (16,581) (16,581) Management fees (2,449) (2,476) Fleet management expenses (4,009) (3,394) Trustee fees (92) (94) Other expenses 15 (594) (672) Results from operating activities 37,552 38,740 Finance income Finance expense (10,484) (11,442) Net finance expense 16 (10,449) (11,335) Profit before income tax 27,103 27,405 Income tax expense 17 (13) (5) Profit after income tax 27,090 27,400 Income available for distribution for the current year 18 26,520 27,074 Income to be distributed for the current year 18 19,032 21,319 Earnings per unit (US cents) 19 Basic Diluted The accompanying notes form an integral part of these financial statements. 72

74 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 December 2010 Group US$ 000 US$ 000 Profit after income tax 27,090 27,400 Other comprehensive income Effective portion of changes in fair value of cash flow hedges (1,253) 8,704 Other comprehensive income for the year, net of income tax (1,253) 8,704 Total comprehensive income for the year 25,837 36,104 The accompanying notes form an integral part of these financial statements. 73

75 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report STATEMENTS OF CHANGES IN UNITHOLDERS FUNDS Year ended 31 December 2010 Units in Hedging Accumulated issue reserve profits Total Note US$ 000 US$ 000 US$ 000 US$ 000 Group At 1 January ,033 (15,661) 2, ,527 Total comprehensive income for the year Profit after income tax 27,400 27,400 Other comprehensive income 8,704 8,704 Total comprehensive income for the year 8,704 27,400 36,104 Distributions to unitholders 18 (21,928) (21,928) At 31 December ,033 (6,957) 7, ,703 At 1 January ,033 (6,957) 7, ,703 Total comprehensive income for the year Profit after income tax 27,090 27,090 Other comprehensive income (1,253) (1,253) Total comprehensive income for the year (1,253) 27,090 25,837 Distributions to unitholders 18 (19,138) (19,138) At 31 December ,033 (8,210) 15, ,402 The accompanying notes form an integral part of these financial statements. 74

76 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 STATEMENTS OF CHANGES IN UNITHOLDERS FUNDS (CONT D) Year ended 31 December 2010 Units in Hedging Accumulated issue reserve profits Total US$ 000 US$ 000 US$ 000 US$ 000 Trust At 1 January ,033 (15,661) 2, ,532 Total comprehensive income for the year Profit after income tax 27,400 27,400 Other comprehensive income 8,704 8,704 Total comprehensive income for the year 8,704 27,400 36,104 Distributions to unitholders (21,928) (21,928) At 31 December ,033 (6,957) 7, ,708 At 1 January ,033 (6,957) 7, ,708 Total comprehensive income for the year Profit after income tax 27,090 27,090 Other comprehensive income (1,253) (1,253) Total comprehensive income for the year (1,253) 27,090 25,837 Distributions to unitholders (19,138) (19,138) At 31 December ,033 (8,210) 15, ,407 The accompanying notes form an integral part of these financial statements. 75

77 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report CONSOLIDATED STATEMENT OF CASH FLOWS Year ended 31 December 2010 Group Note US$ 000 US$ 000 Cash flows from operating activities Profit before income tax 27,103 27,405 Adjustments for: Amortisation of debt issuance cost Depreciation 4 16,581 16,581 Interest expense 10,463 11,421 Interest income (35) (107) Operating income before working capital changes 54,133 55,321 Changes in working capital: Inventories (65) 102 Other receivables 90 (284) Trade and other payables 443 (462) Charter income received in advance 2,249 (242) Cash generated from operations 56,850 54,435 Income tax paid (13) (40) Net cash from operating activities 56,837 54,395 Cash flows from investing activities Advances paid for vessels under construction (72,480) Interest received Net cash (used in)/from investing activities (72,443) 120 Cash flows from financing activities Distributions to unitholders (19,138) (21,928) Interest expense paid (10,463) (11,421) Payment of transaction costs related to loans and borrowings (41) Proceeds from unsecured loans from holding company 54,000 Repayment of interest-bearing loans (17,343) (17,103) Net cash from/(used in) financing activities 7,015 (50,452) Net (decrease)/increase in cash and cash equivalents (8,591) 4,063 Cash and cash equivalents at beginning of the year 17,875 13,812 Cash and cash equivalents at end of the year 8 9,284 17,875 The accompanying notes form an integral part of these financial statements. 76

78 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2010 These notes form an integral part of the financial statements. The financial statements were authorised for issue by PST Management Pte. Ltd. (the Trustee-Manager) on 7 March DOMICILE AND ACTIVITIES Pacific Shipping Trust (the Trust) is a Singapore-domiciled business trust established pursuant to the Trust Deed dated 25 April 2006, and supplemented by the First Supplemental Deed dated 25 February 2008 (the Trust Deed) with PST Management Pte. Ltd.. The Trust Deed is governed by the laws of the Republic of Singapore. The Trustee-Manager is under a duty to take into custody and hold the assets of the Trust in trust for the unitholders. The Trust was formally admitted to the Official List of the Singapore Exchange Securities Trading Limited (SGX-ST) on 26 May The principal activity of the Group is to invest in vessels which are chartered out to vessel operators. The consolidated financial statements relate to the Trust and its subsidiaries (together referred to as the Group). The immediate and ultimate holding company during the financial year for the Group and the Trustee-Manager is Pacific International Lines (Private) Limited, which is incorporated in the Republic of Singapore. The Trust has entered into several service agreements in relation to management of the Trust and its chartering operations. The fee structures of these services are as follows: Management fees Pursuant to the Trust Deed, the Trustee-Manager is entitled to receive a management fee of 4.0% per annum of the value of the Charter Income (being the income derived from the charter of vessels by the Trust as stipulated in the Trust Deed) in the relevant calendar year. Any change in the structure of the management fee must be approved by an extraordinary resolution passed at a meeting of unitholders duly convened and held in accordance with the provisions of the Trust Deed. The management fee payable to the Trustee-Manager is payable in the form of cash and/or units (as the Trustee-Manager may elect, such election to be irrevocable). Where the management fee is paid in cash, the amount is paid monthly, in arrears. Where the management fee is paid in the form of units, the amount is paid quarterly, in arrears. Trustee fees Pursuant to the Trust Deed, the Trustee-Manager is entitled to receive a trustee fee of 0.02% per annum of the value of the Trust Property (being all the assets of the Trust, as stipulated in the Trust Deed) (subject to a minimum fee of US$10,000 in each calendar quarter). The trustee fee is payable out of the trust property of the Trust in cash on a quarterly basis. Each quarterly payment shall be determined based on the value of the trust property as at the last day of the immediate preceding quarter and as reflected in the quarterly financial statements of the Group for that quarter. The Trustee-Manager is also entitled to reimbursement of expenses incurred in the performance of its duties under the Trust Deed. Any change in the structure of the trustee fee must be approved by an extraordinary resolution passed at a meeting of unitholders duly convened and held in accordance with the provisions of the Trust Deed. 77

79 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December DOMICILE AND ACTIVITIES (CONT D) Other fees Pursuant to the Trust Deed, the Trustee-Manager is also entitled to the following: discretion) of the acquisition price of vessels acquired directly or indirectly by the Trust, pro-rated if applicable, to the proportion of the Trust s interest. The acquisition fee is payable in the form of cash and/or units (as the Trustee-Manager may elect, such election to be irrevocable and made before the payment of the acquisition fee). of the sale price of vessels disposed, pro-rated if applicable, to the proportion of the Trust s interest. The disposal fee is payable in cash. Any increase in the acquisition fee or disposal fee above the permitted limit or any change in the structure of such fees shall be approved by an extraordinary resolution passed at a meeting of unitholders duly convened and held in accordance with the provisions of the Trust Deed. 2 BASIS OF PREPARATION 2.1 Statement of compliance The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRSs). 2.2 Basis of measurement The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below. 2.3 Functional and presentation currency The financial statements are presented in United States (US) dollars, which is the Trust s functional currency. All financial information presented in US dollars has been rounded to the nearest thousand, unless otherwise stated. 2.4 Use of estimates and judgements The preparation of financial statements in conformity with FRSs requires the Trustee-Manager to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. 78

80 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December BASIS OF PREPARATION (CONT D) 2.4 Use of estimates and judgements (cont d) Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following note: 3 SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by Group entities. 3.1 Consolidation Subsidiaries Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Accounting for subsidiaries by the Trust Investments in subsidiaries are stated in the Trust s statement of financial position at cost less accumulated impairment losses. 3.2 Foreign currency transactions Transactions in foreign currencies are translated to the functional currency of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss. 79

81 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.3 Vessels Vessels are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the vessel. Depreciation is calculated over the depreciable amount, which is the cost of the vessel less its residual value. Depreciation is recognised in profit or loss on a straight line basis over the estimated useful lives of the vessels, estimated at 30 years. Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date. 3.4 Inventories Inventories are measured at the lower of cost and net realisable value. Cost is calculated using the weighted average formula and includes all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated selling expenses. 3.5 Financial instruments Non-derivative financial instruments Non-derivative financial instruments comprise other receivables, cash and cash equivalents, loans and borrowings, charter income received in advance and other payables. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial assets are measured at amortised cost using the effective interest method, less any allowance for impairment losses, while non-derivative financial liabilities are measured at amortised cost. A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group s obligations specified in the contract expire or are discharged or cancelled. Cash and cash equivalents comprise cash balances and bank deposits. 80

82 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.5 Financial instruments (cont d) Derivative financial instruments and hedging activities The Group holds interest rate swaps to fix its cash flows in relation to interest expense. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss. On initial designation of the hedge, the Group formally documents the relationship between the hedging instruments and hedged items, including the risk management objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, of whether the hedging instruments are expected to be highly effective in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to the hedged risk, and whether the actual results of each hedge are within a range of 80%-125%. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that could ultimately affect reported net income. Derivatives are recognised initially at fair value and attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below. Cash flow hedges When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. When the hedged item is a non-financial asset, the amount accumulated in equity is included in the carrying amount of the asset when the asset is recognised. In other cases, the amount accumulated in equity is reclassified to profit or loss in the same period that the hedged item affects profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the balance in equity is reclassified in profit or loss. Impairment of financial assets A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting period to determine whether there is any objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that one or more loss events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. All impairment losses are recognised in profit or loss. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. 81

83 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.6 Impairment non-financial assets The carrying amounts of the Group s non-financial assets, except for inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amounts are estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in profit or loss. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 3.7 Unitholders funds Units in issue are classified as equity. Unit issue costs represent expenses incurred in connection with the issue of units. All such expenses are deducted directly from unitholders funds. 3.8 Revenue recognition Charter income Charter income receivable under operating leases is recognised in profit or loss on a straight-line basis over the period of the respective lease terms. 3.9 Expenses Fleet management expenses Fleet management expenses consist of crew related expenses, insurance, lubricant expenses and other operating expenses related to the time-chartered vessels. Fleet management expenses are recognised on an accrual basis. 82

84 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.9 Expenses (cont d) Management fees and trustee fees The management and trustee fees paid/payable to the Trustee-Manager are recognised on an accrual basis Finance income and expense Finance income comprises interest income on funds invested and gains on interest rate swaps that are recognised in profit or loss. Interest income is recognised as it accrues, using the effective interest method. Finance expense comprises interest expense on borrowings and losses on interest rate swaps that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method Income tax Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: neither accounting nor taxable profit or loss; not reverse in the foreseeable future; and Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. 83

85 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.11 Income tax (cont d) The charter income derived by the Trust from the charter agreements would qualify for tax exemption under the Maritime Financing Incentive (MFI), with effect from 26 May 2006 for a period of 10 years subject to a review of performance at the end of the 5th year. The distributions made out of the tax-exempt income less allowable expenses will also be exempt from Singapore income tax in the hands of the unitholders. The Trust is subject to tax on its non-tax exempt income such as interest income at the prevailing corporate tax rate, after adjusting for allowable expenses. The distributions made out of the non-tax exempt income less allowable expenses and tax will also be exempt from Singapore income tax in the hands of the unitholders Segment reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components. All operating segments operating results are reviewed regularly by the management of the Trustee-Manager to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. 4 VESSELS Group and Trust US$ 000 Cost At 1 January ,620 Additions At 31 December ,620 Additions At 31 December ,620 Accumulated depreciation At 1 January ,191 Charge for the year 16,581 At 31 December ,772 Charge for the year 16,581 At 31 December ,353 Carrying amount At 1 January ,429 At 31 December ,848 At 31 December ,267 84

86 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December VESSELS (CONT D) Residual value of vessels The residual value is reviewed at each reporting date, with any change in estimate accounted for as a change in estimate prospectively. The residual value of each vessel is estimated based on the average of 10-year historical average scrap metal prices multiplied by the light weight tonne of the vessels. Any significant changes in the residual value of the Group s vessels in future periods can affect the depreciation expense. Impairment assessment of vessels Impairment loss is recognised when events and circumstances indicate that the vessel may be impaired and the carrying amounts of the vessels exceed the recoverable amounts. The recoverable amount for each vessel is determined based on the value-in-use calculation. The value-in-use calculation uses cash flow projections based on the contractual cash flows over the period of the base lease term and projected residual value, discounted at rates which reflect the specific risks relating to the vessels. The Group has determined that the recoverable amounts are higher than their carrying amount and does not consider its vessels to be impaired. 5 ADVANCES PAID FOR VESSELS UNDER CONSTRUCTION On 25 June 2010, the Trust entered into two ship sales contracts for the acquisition of two new 180,000 DWT Capesize Bulk Carriers for a total consideration of US$123,200,000. At the same time, the Trust has entered into 10-year time charter agreements for these vessels with a third party, commencing on delivery of the respective vessels. On 8 October 2010, the Trust entered into two ship building contracts for the construction and acquisition of two new 24,000 DWT Multi-Purpose vessels for a total consideration of US$60,000,000. At the same time, the Trust entered into 10-year time charter agreements for these vessels with a third party. Under the agreements, the charter period is for an initial period of 58 months commencing upon delivery of each vessel, with an option to renew by the charterer for an additional period of 62 months. On 25 November 2010, the Trust entered into five ship building contracts for the construction and acquisition of five new 57,000 DWT Supramax Bulk Carriers for a total consideration of US$150,000,000. At the same time, the Trust entered into 8 and 10-year time charter agreements for these vessels with a third party, commencing upon delivery of each vessel. 85

87 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December SUBSIDIARIES Trust US$ 000 US$ 000 Equity investments, at cost * * * Denotes cost of investment less than US$1,000 Detail of the subsidiaries are as follows: Name of subsidiaries Country of incorporation Effective equity held by the Trust % % PSTM Alpha Pte. Ltd. Singapore PSTM Beta Pte. Ltd. Singapore The Trust acquired the subsidiaries on 3 March The subsidiaries, PSTM Alpha Pte. Ltd. and PSTM Beta Pte. Ltd., were not required to be audited as they had remained dormant since they were acquired. 7 OTHER RECEIVABLES Group and Trust US$ 000 US$ 000 Amount due from holding company (non-trade) 247 Interest receivable 2 5 GST receivable Other receivables 4 Loans and receivables Prepayments Amount due from holding company was unsecured, interest-free and repayable on demand. There is no allowance for doubtful debts as the outstanding balance is not past due. 86

88 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December CASH AND CASH EQUIVALENTS Group and Trust US$ 000 US$ 000 Cash at bank 4,474 1,661 Fixed deposits with financial institutions 4,810 16,214 9,284 17,875 The weighted average effective interest rate relating to cash and cash equivalents at the balance sheet date for the Group and the Trust is 0.27% (2009: 0.23%) per annum. Interest rates reprice at intervals of two weeks to three months. 9 LOANS AND BORROWINGS Group and Trust US$ 000 US$ 000 Non-current Secured bank loans 178, ,692 Less: Unamortised debt issuance cost (97) (118) 177, ,574 Current liabilities Secured bank loans 17,656 17,343 Less: Unamortised debt issuance cost (21) (21) 17,635 17,322 Unsecured loans from holding company 54,000 Less: Unamortised debt issuance cost (154) 53,846 71,481 17,322 Total 249, ,896 As security for the banking facilities granted to the Trust, the Trust has granted in favour of the financial institutions extending the loans and interest rate swap facilities, the following: (i) (ii) (iii) a first priority mortgage over each vessel; a first priority assignment of the Trust s rights, title, interest and insurance to and for each vessel, including insurances for hull and machinery, protection and indemnity and war risks; and a first priority assignment of the Trust s rights, title and interest in and to the charter agreements, and the charter income of each vessel. 87

89 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December LOANS AND BORROWINGS (CONT D) (iv) (v) (vi) (vii) a second/third priority mortgage on certain vessels; a second/third priority assignment of insurances on certain vessels; a second/third priority assignment of charter income on certain vessels; and a second/third priority assignment of charter agreement on certain vessels. The net book value of vessels pledged as security for the bank loans is US$429,267,000 (2009: US$445,848,000). Unsecured loans from holding company bear interest rates ranging from 1.96% to 2.97% (2009: Nil%) and are repayable within the next twelve months. Terms and debt repayment schedule Terms and conditions of outstanding bank loans are as follows: Nominal Year of Face Carrying interest rate maturity value amount % US$ 000 US$ 000 Group and Trust 2010 US$ floating rate loans to , , US$ floating rate loans to , ,896 Repayment of the term loans were made on a monthly basis. Effective interest rates The weighted average effective interest rate of the US dollar floating rate loans is 1.25% (2009: 1.22%) per annum at the balance sheet date. Interest rates reprice monthly. The Trustee-Manager entered into interest rate swaps to swap the floating interest rates on the US dollar loans for a weighted average effective fixed interest rate of 5.01% (2009: 5.05%) per annum which will mature over the next 1 to 5 years. 88

90 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December OTHER PAYABLES Group Trust US$ 000 US$ 000 US$ 000 US$ 000 Amounts due to the Trustee-Manager: - trade 2, , non-trade Other payables Accrued expenses Interest expense due to holding company , , Amounts due to the Trustee-Manager are unsecured, interest-free and repayable on demand. 11 UNITS IN ISSUE Group and Trust Number of Number of units units Fully paid units: At 1 January and 31 December 589, ,750 Each unit in the Trust represents an undivided interest in the Trust. The rights and interests of unitholders are contained in the Trust Deed and include the right to: Trust less any liabilities, in accordance with their proportionate interests in the Trust; The restrictions on a unitholder include the following: the Trustee-Manager to do or omit doing anything which may result in: 89

91 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December UNITS IN ISSUE (CONT D) A unitholder s liability is limited to the amount paid or payable for any units in the Trust. The provisions of the Trust Deed provide that no unitholders will be personally liable to indemnify the Trustee-Manager or any creditor of the Trustee-Manager in the event the liabilities of the Trust exceed its assets. Capital management The Trustee-Manager s policy is, wherever possible, to achieve an efficient capital structure by evaluating and sourcing for appropriate forms of financing for the Group. The Trustee-Manager s objectives in relation to capital management are to: hedging strategies. The Board of the Trustee-Manager reviews the Group s capital structure regularly with a view to achieve an efficient capital structure for the Group. The Group s debt to adjusted capital ratio at the end of the reporting date was as follows: US$ 000 US$ 000 Total liabilities 269, ,887 Less: cash and cash equivalents 9,284 17,875 Net debt 260, ,012 Total equity 244, ,703 Less: amounts accumulated in equity relating to cash flow hedges (8,210) (6,957) Adjusted capital 252, ,660 Debt to adjusted capital ratio at 31 December There were no changes in the Group s approach to capital management during the year. The Group is not subject to externally imposed capital requirements. 90

92 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December HEDGING RESERVE The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments until they are derecognised or impaired. 13 NET ASSET VALUE PER UNIT Net asset value per unit is based on: Group Trust Note US$ 000 US$ 000 US$ 000 US$ 000 Net assets attributable to unitholders 244, , , ,708 Number of Number of Number of Number of units units units units Total units in issue , , , , GROSS REVENUE Gross revenue relates to charter hire income and other income. 15 OTHER EXPENSES Included in other expenses are the following items Group US$ 000 US$ 000 Non-audit fees paid to: - auditors of the Group

93 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December NET FINANCE EXPENSE Group US$ 000 US$ 000 Interest income: - bank deposits Finance income Interest expense: - bank loans (2,631) (3,008) - interest rate swaps (7,832) (8,413) Amortisation of debt issuance cost (21) (21) Finance expense (10,484) (11,442) Net finance expense (10,449) (11,335) 17 INCOME TAX EXPENSE Group US$ 000 US$ 000 Income tax expense Current tax 3 1 Underprovision in respect of prior years Reconciliation of effective tax rate Profit before income tax 27,103 27,405 Income tax using the Singapore tax rate of 17% (2009: 17%) 4,607 4,659 Tax exempt income (7,456) (7,510) Non-deductible items 2,852 2,852 Underprovision in respect of prior years

94 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December INCOME AVAILABLE FOR DISTRIBUTION FOR THE CURRENT YEAR Group US$ 000 US$ 000 Income available for distribution at the beginning of the year 4,940 5,549 Profit after income tax 27,090 27,400 Net tax adjustments (Note A) 16,773 16,777 Repayment of borrowings (17,343) (17,103) Income available for distribution for the current year 26,520 27,074 Income from previous periods retained for working capital purposes 8,179 2,424 Income to be retained for working capital purposes (15,667) (8,179) Income to be distributed for the current year 19,032 21,319 23,972 26,868 Distributions to unitholders: For the period from 1/10/2008 to 31/12/ Distribution of 0.93 cents per unit (tax-exempt income) (5,485) For the period from 1/1/2009 to 31/3/ Distribution of 0.98 cents per unit (tax-exempt income) (5,779) For the period from 1/4/2009 to 30/6/ Distribution of 0.99 cents per unit (tax-exempt income) (5,839) For the period from 1/7/2009 to 30/9/ Distribution of cents per unit (tax-exempt income) (4,825) For the period from 1/10/2009 to 31/12/ Distribution of cents per unit (tax-exempt income) (4,877) For the period from 1/1/2010 to 31/3/ Distribution of cents per unit (tax-exempt income) (4,677) For the period from 1/4/2010 to 30/6/ Distribution of cents per unit (tax-exempt income) (4,677) For the period from 1/7/2010 to 30/9/ Distribution of cents per unit (tax-exempt income) (4,907) (19,138) (21,928) Income available for distribution at the end of the year 4,834 4,940 On 19 January 2011, the Trust declared a tax-exempt distribution of cents per unit for the period from 1 October 2010 to 31 December For the corresponding period from 1 October 2009 to 31 December 2009, the Trust declared a tax-exempt distribution of cents per unit. Group Note A US$ 000 US$ 000 Net tax adjustments comprise: Non-tax deductible/(chargeable) items: - Depreciation 16,581 16,581 - Others Net tax adjustments 16,773 16,777 93

95 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December EARNINGS PER UNIT The calculation of basic earnings per unit is based on weighted average number of units during the year and profit after income tax. Group US$ 000 US$ 000 Profit after income tax 27,090 27,400 Number of Number of units units Weighted average number of units outstanding during the year 589, ,750 Diluted earnings per unit is the same as the basic earnings per unit as there are no dilutive instruments in issue during the year. 20 SEGMENT REPORTING Segment information is presented based on the information reviewed by the management of the Trustee-Manager for performance assessment and resource allocation. For the purpose of the assessment of segment performance, the management of the Trustee-Manager focused on its charter income derived from vessels. This forms the basis of identifying the operating segments of the Group under FRS 108 Operating Segments. Charter income derived from vessels are similar in terms of economic characteristics and nature of services. The management of the Trustee- Manager are of the view that the Group only has one reportable segment charter income. This forms the basis of identifying the operating segments of the Group under FRS 108 Operating Segments. Accordingly, no operating segment information has been prepared as the Group only has one reportable segment. No geographical segment information has been prepared as all the vessels of the Group s operations are located in Singapore. Major customers Group US$ 000 US$ 000 Singapore Bareboat charterhire revenue 42,961 42,961 Chile Time charterhire revenue 18,254 18,939 Other income Total time charterhire revenue 18,316 18,996 61,277 61,957 94

96 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December DETERMINATION OF FAIR VALUES A number of the Group s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. Derivatives The fair value of interest rate swaps is based on quotes provided by banks. These quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take into account of the credit risk of the Group entity and counterparty when appropriate. Other financial assets and liabilities The carrying amounts of other financial assets and liabilities with a maturity or repricing of less than one year (including other receivables, cash and cash equivalents, charter income received in advance and trade and other payables) are assumed to approximate their fair values because of the short period to maturity. The fair value of the loans and borrowings approximate its carrying value because they are floating rate loans which reprice monthly. 22 FINANCIAL RISK MANAGEMENT Overview The Group has exposure to the following risks from its use of financial instruments: This note presents information about the Group s exposure to each of the above risks, the Group s objectives, policies and processes for measuring and managing risk, and the Group s management of capital. Further quantitative disclosures are included throughout these financial statements. Risk management framework Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The Trustee-Manager continually monitors the Group s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group s activities. The Audit Committee oversees how the Trustee-Manager monitors compliance with the Group s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. 95

97 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December FINANCIAL RISK MANAGEMENT (CONT D) Credit risk Credit risk is the risk of potential financial loss resulting from the failure of a customer or a counterparty to settle its financial and contractual obligations to the Group as and when they fall due. Cash and fixed deposits are placed with banks and financial institutions which are regulated. Investments and transactions involving derivative financial instruments are allowed only with regulated financial institutions. At the balance sheet date, 10 out of 12 vessels are chartered to a single customer, Pacific International Lines (Private) Limited (PIL). The ability of the Group to continue its operations and service its financing obligations depend largely on PIL s ability to make payments as they fall due under the charter agreements. The Trustee-Manager has assessed the concentration risk and considered it to be low as the Trustee-Manager is confident of PIL s positive intention and ability to continue with the charter agreements with the Trust. Other than the above, there is no significant concentration of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the balance sheet. A robust approach is applied to evaluate the credit risk of future potential charterers. Both internal and external independent sources are relied upon to make the evaluation. Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Trustee-Manager monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group s operations and to mitigate the effects of fluctuations in cash flows. Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters or financial counterparty failures. 96

98 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December FINANCIAL RISK MANAGEMENT (CONT D) Liquidity risk (cont d) The following are the expected contractual undiscounted cash inflows/(outflows) of financial liabilities, including interest payments: Cash flows Carrying Contractual Within Within More than amount cash flows 1 year 1 to 5 years 5 years US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 Group 2010 Non-derivative financial liabilities Floating interest rate loans 249,420 (261,490) (75,173) (83,482) (102,835) Other payables 3,382 (3,382) (3,382) 252,802 (264,872) (78,555) (83,482) (102,835) Derivative financial liabilities Interest rate swaps 13,316 (13,851) (6,712) (7,126) (13) 266,118 (278,723) (85,267) (90,608) (102,848) 2009 Non-derivative financial liabilities Floating interest rate loans 212,896 (226,078) (19,897) (81,964) (124,217) Other payables 910 (910) (910) 213,806 (226,988) (20,807) (81,964) (124,217) Derivative financial liabilities Interest rate swaps 12,062 (12,403) (7,163) (5,200) (40) 225,868 (239,391) (27,970) (87,164) (124,257) 97

99 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December FINANCIAL RISK MANAGEMENT (CONT D) Liquidity risk (cont d) Cash flows Carrying Contractual Within Within More than amount cash flows 1 year 1 to 5 years 5 years US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 Trust 2010 Non-derivative financial liabilities Floating interest rate loans 249,420 (261,490) (75,173) (83,482) (102,835) Other payables 3,377 (3,377) (3,377) 252,797 (264,867) (78,550) (83,482) (102,835) Derivative financial liabilities Interest rate swaps 13,316 (13,851) (6,712) (7,126) (13) 266,113 (278,718) (85,262) (90,608) (102,848) 2009 Non-derivative financial liabilities Floating interest rate loans 212,896 (226,078) (19,897) (81,964) (124,217) Other payables 905 (905) (905) 213,801 (226,983) (20,802) (81,964) (124,217) Derivative financial liabilities Interest rate swaps 12,062 (12,403) (7,163) (5,200) (40) 225,863 (239,386) (27,965) (87,164) (124,257) Market risk Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Group s income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. 98

100 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December FINANCIAL RISK MANAGEMENT (CONT D) Interest rate risk The Group s exposure to changes in interest rates relate primarily to interest-earning financial assets and interest-bearing liabilities. Interest rate risk is managed by the Trustee-Manager on an ongoing basis with the primary objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates. Interest rate swaps, denominated in US dollar, have been entered into to achieve this purpose. The swaps mature over the next 1 to 5 years. At 31 December 2010, the Group has interest rate swaps with a notional contract amount of US$195,692,000 (2009: US$213,035,000). The Group fixes its cash flows in relation to interest expense via the use of interest rate swaps. The cumulative fair value loss of interest rate swaps at 31 December 2010 is US$13,316,000 (2009: US$12,062,000). At the reporting date, the interest rate profile of the interest-bearing financial instrument was: Group and Trust Carrying amount US$ 000 US$ 000 Variable rate instruments Loans and borrowings (249,420) (212,891) Sensitivity analysis For floating rate loans and the interest rate swaps accounted for as a cash flow hedge, a change of 50 basis points (bps) in interest rate at the reporting date would increase/(decrease) unitholders funds and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. Group and Trust Profit/(loss) Unitholders due to funds due to 50bps 50bps increase increase US$ 000 US$ Floating rate bank loans (1,247) Interest rate swaps 978 3,260 (269) 3, Floating rate bank loans (1,065) Interest rate swaps 1,065 3,082 3,082 A decrease of 50bps in interest rate at the reporting date would have an equal but opposite effect to the amounts shown above, on the basis that all other variables remain constant. 99

101 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 PACIFIC SHIPPING TRUST Annual Report NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December FINANCIAL RISK MANAGEMENT (CONT D) Foreign currency risk The Group is exposed to foreign currency risk on operating expenses that are denominated in a currency other than the functional currency of the Group. The currency giving rise to this risk is primarily the Singapore dollar. The Group s and Trust s exposures to the Singapore dollar are as follows: Group Trust US$ 000 US$ 000 US$ 000 US$ 000 Other receivables Cash and cash equivalents Other payables (309) (237) (15) (22) No sensitivity analysis is disclosed as the Group and the Trust has no significant exposure to foreign currency risk. Fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: (i.e., as prices) or indirectly (i.e., derived from prices); Level 1 Level 2 Level 3 Total US$ 000 US$ 000 US$ 000 US$ 000 Group and Trust 31 December 2010 Derivatives financial liabilities 13,316 13, December 2009 Derivatives financial liabilities 12,062 12,

102 APPENDIX V: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER PACIFIC SHIPPING TRUST Annual Report 2010 NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December COMMITMENTS Non-cancellable operating lease rentals are receivable as follows: Group and Trust US$ 000 US$ 000 Within 1 year 67,543 61,862 After 1 year but within 5 years 358, ,268 After 5 years 304,525 23, , ,042 The vessels are chartered out at pre-determined rates for the next 1 to 10 years (2009: 2 to 6 years). At 31 December 2010, the Trust entered into contracts to purchase vessels for $260,720, RELATED PARTIES For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common significant influence. Related parties may be individuals or other entities. The Trustee-Manager is a wholly-owned subsidiary of PIL. In the normal course of the operations of the Group, management fees and trustee fees have been paid or are payable to the Trustee-Manager. During the financial year, other than those disclosed elsewhere in the financial statements, there were the following significant related party transactions which were carried out in the normal course of business: Group and Trust US$ 000 US$ 000 Charterhire income received/receivable from holding company 42,961 42,961 Debt issuance cost paid/payable to holding company 154 Interest on loan payable to holding company 85 Reimbursement of third party fleet management cost to holding company 3,825 3,116 Ship management fees paid/payable to holding company Acquisition fees payable to Trustee-Manager 1,832 Management fees paid/payable to the Trustee-Manager 2,449 2,476 Trustee fees paid/payable to the Trustee-Manager

103 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 (A business trust constituted on 25 April 2006 under the laws of the Republic of Singapore) Managed by PST Management Pte. Ltd. PACIFIC SHIPPING TRUST Financial Statements Announcement For The Third Quarter Ended 30 September 2011 Pacific Shipping Trust (PST) is a business trust established in Singapore and constituted by the Trust Deed dated 25 April 2006 as amended and restated, with PST Management Pte Ltd ( PSTM ) as its Trustee-Manager. Units of PST were listed on the Singapore Exchange Securities Trading Limited on 26 May As at 30 September 2011, PST owned twelve container vessels and two capesize bulk carriers. The vessels were bareboat and time chartered to Pacific International Lines (Private) Limited (PIL), Compania Sud Americana de Vapores S.A. (CSAV) and Jiangsu Shagang Group Co., Ltd., for remaining tenures of approximately 2 to 10 years. In addition, PST has 7 vessels under construction, namely two multi-purpose vessels and five supramax bulk carriers, which are expected to be delivered between 3Q 2012 to 2Q On 4 October 2011, Pacific International Lines (Private) Limited (the Offeror ) and PSTM jointly announced (the Joint Announcement ) that the Offeror had presented to the board of directors of PSTM a formal proposal (the Delisting Proposal ) to seek voluntary delisting of PST from the Official List of the Singapore Exchange Securities Trading Limited (the SGX-ST ) under Rules 1307 and 1309 of the listing manual of the SGX-ST (the Listing Manual ). Under the Delisting Proposal, a cash offer (the Exit Offer ) has been made for all the issued units of PST, other than those held, directly or indirectly, by the Offeror as at the date of the Exit Offer ( Offer Units ) at an exit price of US$0.43 cash per unit. In relation to the Exit Offer, the Board of Directors will be issuing a circular ( Circular to Unitholders ) to provide unitholders with the advice of the independent financial advisor to the independent directors and the recommendations of the independent directors with regard to the Exit Offer. Under the terms of the Exit Offer, the Offer Units will be acquired with the right of the Offeror to receive any dividends or other distributions that may be announced, declared, paid or made thereon by PST on or after 4 October Since the settlement date of the Offer Units accepted pursuant to the Exit Offer is expected to fall after the Books Closure Date for the Q3 Distribution, if the Exit Offer proceeds, the Exit Offer Price of US$0.43 in cash for each Offer Unit payable to the relevant accepting Unitholder will be reduced by an amount which is equal to the Q3 Distribution. Unitholders and investors are advised to refer to the Circular to Unitholders to be issued by PST in due course. In accordance with Rule 25 of the Singapore Code on Take-overs and Mergers, PricewaterhouseCoopers Corporate Finance Pte Ltd (the IFA ), who is the independent financial advisor to the independent directors of PSTM in connection with the Delisting, have considered whether the unaudited figures of PST and its subsidiaries for the nine months ended 30 September 2011 have been made by the directors of PSTM after due and careful enquiry. A copy of the report by the IFA, as well as the review report referred to in section 3 below, are attached and will be included in the Circular to Unitholders. The IFA and KPMG LLP have given and have not withdrawn their consent to the publication of such reports together with this announcement. The financial results 102

104 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 for the nine months ended 30 September 2011 of PST and its subsidiaries have been reported on in accordance with the Singapore Code on Take-overs and Mergers. Summary of PST s results: Group Group 3 months ended 30 Sep Inc/ 9 months ended 30 Sep Inc/ (Dec) (Dec) US$ 000 US$ 000 % US$ 000 US$ 000 % Gross revenue 16,403 15, ,949 45,939 2 Income available for distribution 6,175 7,038 (12) 19,538 20,079 (3) Distributable income 4,305 4,907 (12) 13,847 14,261 (3) Distribution per unit (DPU) (cents) (12) (3) Annualised DPU (cents) (3) (3) Annualised distribution yield (%) 2 7.3% 7.5% 7.2% 7.5% 1 Annualised DPU for FY 2010 is based on actual distribution 2 Based on closing price of US$0.43 as at 19 October 2011 The distribution policy of PST is subject to review by the Board and may be adjusted from time to time depending on commercial considerations and prevailing market conditions. 103

105 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September (a) Consolidated Income Statement for the Third Quarter Ended 30 September 2011 Group Group 3 months ended 30 Sep Inc/ 9 months ended 30 Sep Inc/ Notes (Dec) (Dec) US$ 000 US$ 000 % US$ 000 US$ 000 % Gross revenue (a) 16,403 15, ,949 45,939 2 Depreciation (4,355) (4,145) 5 (12,646) (12,435) 2 Management fees (b) (636) (625) 2 (1,857) (1,852) - Fleet management expenses (c) (2,224) (871) 155 (4,280) (2,743) 56 Trustee fees (26) (22) 18 (78) (69) 13 Other expenses (274) (134) 104 (572) (397) 44 Results from operating activities 8,888 9,821 (10) 27,516 28,443 (3) Finance income 1(a)(i) (35) Finance expense 1(a)(i) (2,613) (2,620) - (7,528) (7,940) (5) Net finance expense (2,607) (2,614) - (7,511) (7,914) (5) Profit before tax 6,281 7,207 (13) 20,005 20,529 (3) Income tax expense (d) - (1) 100 (1) (12) (92) Profit after tax 6,281 7,206 (13) 20,004 20,517 (3) Consolidated Statement of Comprehensive Income for the Third Quarter Ended 30 September 2011 Group Group 3 months ended 30 Sep Inc/ 9 months ended 30 Sep Inc/ Notes (Dec) (Dec) US$ 000 US$ 000 % US$ 000 US$ 000 % Profit after tax 6,281 7,206 (13) 20,004 20,517 (3) Other comprehensive income Effective portion of changes in fair value of cash flow hedges (e) 420 (1,458) NM 1,644 (4,685) NM Total comprehensive income for the period 6,701 5, ,648 15, NM: Not Meaningful Page 1 of

106 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September (a)(i) Finance income and expense Group 3 months ended 30 Sep Inc/ Notes (Dec) (Dec) US$ 000 US$ 000 % US$ 000 US$ 000 % Group 9 months ended 30 Sep Inc/ Interest income: - Bank deposits (35) Finance income (35) Interest expense: - bank loans (740) (675) 10 (1,935) (1,995) (3) - interest rate swaps (f) (1,795) (1,940) (7) (5,432) (5,929) (8) Amortisation of debt issuance cost (78) (5) NM (161) (16) NM Finance expense (2,613) (2,620) - (7,528) (7,940) (5) Net finance expense (2,607) (2,614) - (7,511) (7,914) (5) NM: Not Meaningful Explanatory notes: (a) Gross revenue consists of bareboat and time charter income from the vessels in the portfolio. (b) Under the current Trust Deed, PSTM is allowed to charge 4% on the charterhire of each vessel as its management fee. However, PSTM has, on a voluntary basis, reduced its management fees for Shagang Hongfa and Shagang Hongchang from 4% to 2% of the vessel s charterhire. (c) Fleet management expenses comprise mainly of crew related expenses, insurance, lubricant expenses and other operating expenses related to the four time chartered vessels. For this quarter, the fleet management expenses also include one-time operating expenses in relation to the start-up of the two new capesize bulk carriers, namely Shagang Hongfa and Shagang Hongchang, which were delivered in September (d) This relates to tax expense on the taxable interest income on bank deposits. The charter income derived from the charter party of the vessels would qualify for tax exemption under the Maritime Financing Incentive (MFI), with effect from 26 May 2006 for a period of 10 years. (e) This relates to unrealised (losses)/gains arising from changes in the fair value of interest rate swaps. These interest rate swaps were used to fix the interest rate exposures of the Group arising from its variable interest rate loans. (f) This relates to the net realised interest expense arising from the settlement of the fixed and floating portions of interest rate swaps. Page 2 of

107 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September (a)(ii) Consolidated Distribution Statement for the Third Quarter Ended 30 September 2011 Group Group 3 months ended 30 Sep Inc/ 9 months ended 30 Sep Inc/ Notes (Dec) (Dec) US$ 000 US$ 000 % US$ 000 US$ 000 % Profit after tax 6,281 7,206 (13) 20,004 20,517 (3) Add: Non-tax deductible items (a) 4,564 4, ,995 12,550 4 Less: Repayment of borrowings (4,670) (4,338) 8 (13,461) (12,988) 4 Income available for distribution 6,175 7,038 (12) 19,538 20,079 (3) Less: Income to be retained (1,870) (2,131) (12) (5,691) (5,818) (2) Income to be distributed 4,305 4,907 (12) 13,847 14,261 (3) Tax-exempt distribution 4,305 4,907 (12) 13,847 14,261 (3) Income to be distributed 4,305 4,907 (12) 13,847 14,261 (3) Explanatory notes: (a) Non-tax deductible items comprise mainly depreciation, trustee fee, foreign currency loss/gain and non-tax deductible expenses that are capital in nature. Page 3 of

108 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September (b)(i) Statement of Financial Position, together with a comparative statement as at the end of the immediately preceding financial year Group Trust 30 Sep Dec Sep Dec 10 Note US$ 000 US$ 000 US$ 000 US$ 000 ASSETS Non-current assets Vessels 541, , , ,267 Advances paid for vessels under construction 72,542 74,397 72,542 74,397 Investment in subsidiaries - - -* -* Prepayments (iii) , , , ,664 Current assets Inventories (i) Trade and other receivables (ii) 1, , Prepayments (iii) Cash and cash equivalents 4,605 9,284 4,605 9,284 7,557 10,124 7,557 10,124 Total assets 622, , , ,788 LIABILITIES Non-current liabilities Loans and borrowings 1(b)(ii) 290, , , ,939 Financial derivatives (iv) 10,521 12,115 10,521 12, , , , ,054 Current liabilities Charter income received in advance (v) 3,992 3,265 3,992 3,265 Other payables (vi) 4,637 3,382 4,632 3,377 Loans and borrowings 1(b)(ii) 59,887 71,481 59,887 71,481 Financial derivatives (iv) 1,151 1,201 1,151 1,201 Current income tax payable ,671 79,332 69,666 79,327 Total liabilities 370, , , ,381 NET ASSETS 251, , , ,407 UNITHOLDERS FUND Units in issue 237, , , ,033 Hedging reserve (vii) (6,566) (8,210) (6,566) (8,210) Accumulated profits 21,270 15,579 21,275 15,584 Total unitholders funds 251, , , ,407 Page 4 of

109 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September 2011 Explanatory notes: (i) (ii) (iii) (iv) (v) (vi) (vii) Inventories comprise unused lubricant on board the time chartered vessels. Trade and other receivables comprise mainly of advance billing of charter-hire and bunker cost. Prepayments comprise of upfront fees on bank loans for vessels under construction and vessels insurance. This relates to the fair value of interest rate swaps transacted to manage the cash flow variability arising from the interest payment on the bank loans. Charter income is payable in advance according to the charter party of the vessels. Other payables comprise of acquisition fees payable to the Trustee-Manager, other creditors and accruals. Hedging reserve relates to the effective portion of the change in fair value of the interest rate swaps which were entered to hedge the cash flow variability arising from the interest payment on the bank loans. * Denotes cost of investment less than US$1,000 1(b)(ii) In relation to the aggregate amount of the group s borrowings and debt securities Note Group As at As at 30 Sep Dec 10 US$ 000 US$ 000 Amount repayable after one year Secured bank loans 290, ,036 Less: Unamortised debt issuance cost (500) (97) 1(b)(i) 290, ,939 Amount repayable in one year or less, or on demand Secured bank loans 23,996 17,656 Less: Unamortised debt issuance cost (94) (21) 23,902 17,635 Unsecured loans from majority unitholder 36,000 54,000 Less: Unamortised debt issuance cost (15) (154) Total 35,985 53,846 1(b)(i) 59,887 71,481 Grand Total 350, ,420 Details of any collaterals: The Trust has granted in favour of the financial institutions extending the loans and interest rate swap facilities, the following: (i) (ii) (iii) (iv) a first priority mortgage over each vessel; a first priority assignment of the Trust s rights, title, interest and insurance to and for each vessel, including insurances for hull and machinery, protection and indemnity and war risks; a first priority assignment of the Trust s rights, title and interest in and to the charter agreements and the charter income of each vessel; a second/third priority mortgage on certain vessels; Page 5 of

110 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September (b)(ii) In relation to the aggregate amount of the group s borrowings and debt securities (Cont d) (v) (vi) (vii) a second/third priority assignment of insurances on certain vessels; a second/third priority assignment of charter income on certain vessels; a second/third priority assignment of charter agreement on certain vessels; and (viii) property rights, title and interests on certain advances paid for vessels under construction. Explanatory notes: (a) PST has total drawn secured bank loan of US$314 million as at 30 September 2011 (31 Dec 2010: US$196 million). Repayments of the bank loans were made on a monthly basis except for pre-delivery loans obtained from banks to finance the multi-purpose vessels and supramax bulk carriers. The bank loans bear interest at floating rates. PST has entered into interest rate swaps to fix the floating interest rates on certain of its secured bank loans at a weighted average rate of 4.99% (2010: 5.01%) per annum. These interest rate swaps are secured via priority mortgage on certain vessels, and assignment of insurances, charter income and charter agreements for certain vessels. (b) PST has obtained pre-delivery financing from its majority unitholder, Pacific International Lines (Private) Limited for the advances paid on the two multi-purpose vessels and five supramax bulk carriers totalling US$69 million, partial repayments were paid via drawdown of pre-delivery loans from banks. Page 6 of

111 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September (c) A Consolidated Statement of Cash Flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. Group Group 3 months ended 30 Sep 9 months ended 30 Sep US$ 000 US$ 000 US$ 000 US$ 000 Operating activities Profit before tax 6,281 7,207 20,005 20,529 Adjustments for: Amortisation of debt issuance cost Depreciation 4,355 4,145 12,646 12,435 Interest expense 2,535 2,615 7,367 7,924 Interest income (6) (6) (17) (26) Operating profit before working capital changes 13,243 13,966 40,162 40,878 Changes in working capital: Inventories (551) (7) (424) (40) Trade and other receivables (1, 600) 118 (623) 243 Prepayments (176) (53) (942) (62) Charter income received in advance 844 (228) 727 (346) Other payables (354) 466 (692) 627 Cash generated from operations 11,406 14,262 38,208 41,300 Income tax paid (12) Net cash from operating activities 11,406 14,262 38,208 41,288 Investing activities Advances paid for vessels under construction (105,091) (14,784) (120,869) (14,784) Payment for asset enhancement on container vessels - - (273) - Interest income received Net cash used in investing activities (105,084) (14,780) (121,123) (14,757) Financing activities Distributions paid to unitholders (4,771) (4,677) (14,313) (14,231) Interest expense paid (2,535) (2,615) (7,367) (7,924) Payment of transaction costs related to loans and borrowings (499) - (1,350) - Proceeds from interest bearing loans 99, ,727 - Proceeds of unsecured loans from majority unitholder ,000 - Repayment of interest-bearing bank loans (4,670) (4,338) (13,461) (12,988) Repayment of unsecured loans to majority unitholder - - (33,000) - Net cash from/(used in) financing activities 87,252 (11,630) 78,236 (35,143) Net decrease in cash and cash equivalents (6,426) (12,148) (4,679) (8,612) Cash and cash equivalents at beginning of the period 11,031 21,411 9,284 17,875 Cash and cash equivalents at the end of the period 4,605 9,263 4,605 9,263 Page 7 of

112 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September (d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii)changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year Group Units in Hedging Accumulated issue reserve (1) profits Total US$ 000 US$ 000 US$ 000 US$ As at 1 January 237,033 (8,210) 15, ,402 Total comprehensive income for the period - 1,545 6,937 8,482 Distributions to unitholders - - (4,771) (4,771) As at 31 March 237,033 (6,665) 17, ,113 Total comprehensive income for the period - (321) 6,786 6,465 Distributions to unitholders - - (4,771) (4,771) As at 30 June 237,033 (6,986) 19, ,807 Total comprehensive income for the period ,281 6,701 Distributions to unitholders - - (4,771) (4,771) As at 30 September 237,033 (6,566) 21, , As at 1 January 237,033 (6,957) 7, ,703 Total comprehensive income for the period - (797) 6,675 5,878 Distributions to unitholders - - (4,877) (4,877) As at 31 March 237,033 (7,754) 9, ,704 Total comprehensive income for the period - (2,430) 6,636 4,206 Distributions to unitholders - - (4,677) (4,677) As at 30 June 237,033 (10,184) 11, ,233 Total comprehensive income for the period - (1,458) 7,206 5,748 Distributions to unitholders - - (4,677) (4,677) As at 30 September 237,033 (11,642) 13, ,304 Page 8 of

113 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September (d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii)changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year (cont d) Trust Units in Hedging Accumulated issue reserve (1) profits Total US$ 000 US$ 000 US$ 000 US$ As at 1 January 237,033 (8,210) 15, ,407 Total comprehensive income for the period - 1,545 6,937 8,482 Distributions to unitholders - - (4,771) (4,771) As at 31 March 237,033 (6,665) 17, ,118 Total comprehensive income for the period - (321) 6,786 6,465 Distributions to unitholders - - (4,771) (4,771) As at 30 June 237,033 (6,986) 19, ,812 Total comprehensive income for the period ,281 6,701 Distributions to unitholders - - (4,771) (4,771) As at 30 September 237,033 (6,566) 21, , As at 1 January 237,033 (6,957) 7, ,708 Total comprehensive income for the period - (797) 6,675 5,878 Distributions to unitholders - - (4,877) (4,877) As at 31 March 237,033 (7,754) 9, ,709 Total comprehensive income for the period - (2,430) 6,636 4,206 Distributions to unitholders - - (4,677) (4,677) As at 30 June 237,033 (10,184) 11, ,238 Total comprehensive income for the period - (1,458) 7,206 5,748 Distributions to unitholders - - (4,677) (4,677) As at 30 September 237,033 (11,642) 13, ,309 (1) Hedging reserve relates to the effective portion of the changes in fair value of the interest rate swaps which were entered to hedge the interest rate risk of the bank loans. Page 9 of

114 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September (d)(ii) Details of any changes in the company's units Trust 9 months ended 30 Sep Units ( 000) Units ( 000) At the beginning and end of the period 589, ,750 1(d)(iii) Total number of issued units excluding treasury units as at the end of the financial period Group and Trust As at 30 Sep Dec 2010 Units ( 000) Units ( 000) Number of units issued 589, ,750 1(d)(iv) A statement showing all sales, transfer, disposal, cancellation and/or use of treasury units as at the end of the current financial period reported on Not applicable. 2 Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice The figures for the nine-month and three-month period ended 30 September 2011 have been extracted from the Interim Financial Information which have been reviewed by the auditors in accordance with the Singapore Standard on Review Engagement 2410 Review of Financial Information Performed by the Independent Auditor of the Entity. 3 Where the figures have been audited, or reviewed, the auditors report (including any qualifications or emphasis of matter) Please refer to attached auditors review report. 4 Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied The accounting policies and methods of computation adopted are consistent with those applied in the audited financial statements for the financial year ended 31 December If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change There has been no change in the accounting policies and methods of computation adopted by PST Group. Page 10 of

115 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September Earnings per unit (EPU) and distribution per unit (DPU) of the group for the financial period, after deducting any provision for preference dividends Group Group 3 months ended 30 Sep 9 months ended 30 Sep Weighted average number of units as at end of period ( 000) 589, , , ,750 Earnings per unit for the period based on the weighted average number of units in issue - basic and diluted (US cents) Distribution per unit for the period (US cents) - tax-exempt income Net asset value (NAV) (for the issuer and group) per unit based on total number of units issued excluding treasury units of the issuer at the end of the financial period Group Trust As at As at 30 Sep Dec Sep Dec 10 US$ US$ US$ US$ Net asset value per unit Review of the performance of the group Gross revenue for three-month ended 30 September 2011 (Q3FY11) was US$16.40 million compared to the corresponding period in 2010 (Q3FY10) of US$15.62 million. The increase was mainly due to delivery of the two new capesize bulk carriers on 5 th and 20 th September 2011 respectively. The increase is partially offset by lower contracted time charter rates from the 2 CSAV vessels wef third and fourth quarter in Fleet management expenses comprise mainly of crew related expenses, insurance, lubricant expenses and other operating expenses related to the four time chartered vessels. For this quarter, the fleet management expenses also include one-time operating expenses in relation to the start-up of the two new capesize bulk carriers, namely Shagang Hongfa and Shagang Hongchang which were delivered in September Other expenses comprise mainly of professional fees, regulatory fees, insurance, commitment fees and other administrative expenses. The increase from US$0.13 million in Q3FY10 to US$0.27 million in Q3FY11 was mainly due to commitment fees paid to banks in relation to the new vessels acquired in Page 11 of

116 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September Review of the performance of the group (cont d) The carrying value of the vessels increased mainly due to the delivery of the two capesize bulk carriers in September 2011, partially offset by depreciation charge totalling US$12.65 million during the period under review. Trade and other receivables increased mainly due to (i) charter billed in advance, (ii) bunker cost in relation to the two new capesize bulk carriers. Prepayments increased mainly due to upfront fees on bank facilities paid during the year. The upfront fees will be re-classed to loans and borrowings when the loan is drawn down. Decrease in cash and cash equivalent was mainly due to payment for the two new capesize bulk carriers delivered in September Total loans and borrowings increased by US$ million from US$ million as at 31 December 2010 to US$ million, due to loans drawn down to finance the capesize bulk carriers delivered in September 2011 and pre-delivery loans drawn-down to partially finance the payment of the multi-purpose vessels and supramax bulk carriers. Total liabilities on financial derivatives decreased from US$13.32 million as at 31 December 2010 to US$11.67 million mainly due to the volatility in the USD interest rate environment. This resulted in a net mark-to-market gain of US$1.64 million, which is taken into the hedging reserve in the period under review. 9 Where a forecast, or a prospect statement, has been previously disclosed to unitholders, any variance between it and the actual results No forecast statement for financial year 2011 has been disclosed. 10 Commentary on the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. Currently, PST operates in the containership and dry bulk sectors. Charter rates for containerships have been weakening for the past few months, and are expected to fall further. For the panamax containership segment, brokers do not foresee any potential recovery in charter rates in the near future. 1 As for idle containerships, the number has continued to rise steadily over the past few months. Alphaliner has reported that as at 10 October 2011, the idle fleet has increased to 375,000 teu, representing 2.5% of the cellular containership fleet, as compared to 75,000 teu four months ago. 2 The capesize dry bulk fleet is expected to grow by 14%-15% in 2011, after taking into consideration expected scrapping and new vessel deliveries. At this growth rate, fleet utilization is expected to remain low and this will put downward pressure on charter rates. 3 PST will not be affected to the extent that our charterers are able to perform according to their charter obligations regardless of the market conditions. 1 Lloyd s List, Alphaliner, Volume 2011 Issue 42, Lloyd s List, Page 12 of

117 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September Distribution (a) Current Financial Period Reported On (1) Name of distribution Tax-Exempt (3) Distribution type Cash Distribution per unit (US cents) 0.73 (b) Corresponding period of the immediately preceding financial period (2) Name of distribution Tax-Exempt (3) Distribution type Cash Distribution per unit (US cents) Note: (1) Distribution for the period from 1 July 2011 to 30 September (2) Distribution for the period from 1 July 2010 to 30 September (3) These distributions are made out of PST s Net Tax-Exempt Income. All unitholders are exempt from Singapore income tax on the distributions made by PST out of its Net Tax-Exempt Income regardless of whether they are corporate unitholders or individuals. (c) Date payable: 29 November 2011 (d) Books Closure Date: The Transfer Books and Register of Unitholders of Pacific Shipping Trust (PST) will be closed on 5 p.m. on 28 October 2011 for the purposes of determining unitholder s entitlement to the distribution of profits. Unitholders whose Securities Accounts with The Central Depository (Pte) Limited (CDP) are credited with shares at 5.00 p.m. on 28 October 2011 will be entitled to the Distribution to be paid on 29 November If no distribution has been declared (recommended), a statement to that effect Not applicable. Page 13 of

118 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September General mandate from unitholders for Interested Person Transactions ( IPT ) as required under Rule 920(1)(a)(ii). Name of Interested Person Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under unitholders mandate pursuant to Rule 920) Aggregate value of all interested person transactions conducted under unitholders mandate pursuant to Rule 920 (excluding transactions less than S$100,000) 30 Sep Sep Sep Sep 10 US$ 000 US$ 000 US$ 000 US$ 000 Pacific International Lines (Private) Limited - Charterhire income 32,132 32, Ship Management Service Interest on loan PST Management Pte. Ltd. - Management fees 1,857 1, Trustee fees Acquisition fees 1, Page 14 of

119 APPENDIX VI: UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE PST GROUP FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 PACIFIC SHIPPING TRUST Financial Statements Announcement for Third Quarter Ended 30 September Negative assurance confirmation on interim financial results under SGX Listing Rule 705(5) of the Listing Manual and Directors Confirmation The board of directors of PST Management Pte. Ltd. (in its capacity as the Trustee-Manager of Pacific Shipping Trust) do hereby confirm that, to the best of their knowledge, nothing material has come to their attention which may render the interim financial results for the third quarter ended 30 September 2011 to be false or misleading, in any material respect. The board of directors of PST Management Pte. Ltd. (in its capacity as the Trustee-Manager of Pacific Shipping Trust), including any director who may have delegated detailed supervision of this announcement, have taken all reasonable care to ensure that the facts stated and opinions expressed in this announcement are fair and accurate and that no material facts have been omitted from this announcement, and they jointly and severally accept responsibility accordingly. This release may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, changes in operating expenses, trust expenses and governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on current view of management on future events. Any discrepancies in the tables included in this announcement between the listed amounts and total thereof are due to rounding. ON BEHALF OF THE DIRECTORS Benedict Kwek Gim Song Chairman Lim Sim Keat Chief Executive Officer BY ORDER OF THE BOARD OF PST MANAGEMENT PTE. LTD. AS TRUSTEE-MANAGER OF PACIFIC SHIPPING TRUST Lim Ka Bee Company Secretary 19 October 2011 Page 15 of

120 APPENDIX VII: LETTER FROM PwCCF IN RELATION TO THE Q3 INTERIM RESULTS 119

121 APPENDIX VIII: LETTER FROM KPMG IN RELATION TO THE Q3 INTERIM RESULTS 120

122 APPENDIX VIII: LETTER FROM KPMG IN RELATION TO THE Q3 INTERIM RESULTS 121

123 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 122

124 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 123

125 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 124

126 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 125

127 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 126

128 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 127

129 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 128

130 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 129

131 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 130

132 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 131

133 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 132

134 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 133

135 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 134

136 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 135

137 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 136

138 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 137

139 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 138

140 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 139

141 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 140

142 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 141

143 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 142

144 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 143

145 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 144

146 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 145

147 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 146

148 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 147

149 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 148

150 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 149

151 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 150

152 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 151

153 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 152

154 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 153

155 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 154

156 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 155

157 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 156

158 APPENDIX IX: VALUATION REPORTS FROM TEAM SHIPBROKERS 157