FIRST SHIP LEASE TRUST UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE FIRST QUARTER ENDED 31 MARCH 2012

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1 First Ship Lease Trust ( FSL Trust ) is a provider of leasing services on a bareboat charter basis to the international shipping industry. FSL Trust was constituted under a deed of trust dated 19 March 2007 entered with FSL Trust Management Pte. Ltd. as its trustee-manager and was listed on the Singapore Exchange Securities Trading Limited ( SGX ) on 27 March As at 31 March 2012, FSL Trust has a modern, high quality and diverse portfolio of 25 vessels consisting of seven containerships, 11 product tankers, three chemical tankers, two crude oil tankers and two dry bulk carriers. Twenty vessels are employed on long-term bareboat leases and have a dollar-weighted average remaining lease period of approximately six years (excluding extension periods and early buy-out options). The remaining five vessels (two product tankers and three chemical tankers) are currently trading in the spot market. One of the product tankers will enter a 3-year time charter contract in 2Q The combined portfolio of vessels has a dollar-weighted average age of approximately six and a half years. Summary of FSL Trust Consolidated Results 1Q Q 2011 Inc/(Dec) US$ 000 US$ 000 % Revenue 26,081 23, Loss for the quarter (4,168) (1,995) N.M. Net cash generated from operations 9,844 11,539 (14.7) Net Distributable Amount 654 5,687 (88.5) Amount to be distributed 654 5,687 (88.5) Distribution Per Unit ( DPU ) (US Cents) For the period (89.5) Annualised (89.5) Page 1 of 16

2 1(a)(i) Consolidated Income Statements Group Note 1Q Q 2011 Inc/ (Dec) US$'000 US$'000 % Revenue 26,081 23, Depreciation expense on vessels (14,499) (14,296) 1.4 Voyage expenses (3,520) (2,981) 18.1 Vessel operating expenses (1,773) (1,162) 52.6 Management fees (874) (833) 4.9 Trustee fees (41) (42) (2.4) Other trust expenses (1,560) (735) N.M. Finance income Finance expenses (a) (8,019) (5,826) 37.6 Loss before income tax (4,175) (1,993) N.M. Income tax write-back/(expense) (b) 7 (2) N.M. Loss for the quarter (4,168) (1,995) N.M. Notes: (a) The finance expenses for 1Q 2012 includes exchange gain of US$0.3 million (1Q 2011: US$0.5 million) arising from the partial repayment of inter-company US$-denominated loans previously extended to certain subsidiaries. (b) This relates to tax write-back/(expense) on the taxable interest income on bank deposits. 1(a)(ii) Statements of Comprehensive Income Group 1Q Q 2011 US$'000 US$'000 Loss for the quarter (4,168) (1,995) Other comprehensive income: Translation differences relating to financial statements of foreign subsidiaries 647 1,202 Exchange differences on monetary items forming part of net investment in foreign subsidiaries 355 1,183 Effective portion of changes in fair value of cash flow hedges (1,837) (1,443) Net change in fair value of cash flow hedges transferred to income statement 3,341 3,667 Other comprehensive income for the quarter, net of tax 2,506 4,609 Total comprehensive income for the quarter (1,662) 2,614 Page 2 of 16

3 1(a)(iii) Distribution Statements Group Note 1Q Q 2011 US$ 000 US$ 000 Loss for the quarter (4,168) (1,995) Add: Non-cash adjustments (a) 14,012 13,534 Net cash generated from operations 9,844 11,539 Less: Repayment of secured bank loans (11,000) (8,000) Income available for distribution (1,156) 3,539 Add: Utilisation of cash retained from previous periods 1,810 2,148 Net distributable amount (b) 654 5,687 Amount available for distribution 654 5,687 Comprising:(i) Tax-exempt distribution 617 5,659 (ii) Tax-exempt (one-tier) distribution Amount to be distributed 654 5,687 Units at the end of the quarter ( 000) 654, ,665 Distribution per unit (US Cents) Notes: (a) (b) Non-cash adjustments include depreciation expenses, translation exchange differences and amortisation of certain debt upfront fees and initial direct costs. Initial direct costs are transaction expenses incurred in the origination of new leases. These costs are capitalised and amortised into earnings in proportion to the recognition of lease income. Total net cash generated for the quarter amounted to US$9.8 million. The net distributable amount of US$0.7 million is derived after deducting loan repayment of US$11.0 million and utilising cash retained from prior periods. Page 3 of 16

4 1(b)(i) Statements of Financial Position 31 Mar Dec 2011 Group Trust Group Trust US$ 000 US$ 000 US$ 000 US$ 000 Non-current assets Vessels 771, ,696 - Subsidiaries - 601, ,828 Derivative assets , , , ,254 Current assets Inventories 1, Derivative assets Trade and other receivables 1,407 64,136 3,677 83,030 Cash and cash equivalents 31,933 28,214 32,304 28,877 34,983 92,494 37, ,221 Total assets 806, , , ,475 Equity attributable to unitholders of FSL Trust Units in issue 525, , , ,412 Reserves (202,750) (311,920) (200,433) (304,168) Total equity 322, , , ,244 Non-current liabilities Secured bank loans 418, , , ,780 Derivative liabilities 7,777 7,777 8,781 8, , , , ,561 Current liabilities Trade and other payables 6,216 3,423 5,840 3,122 Lease income received in advance - - 1,486 - Derivative liabilities 7,634 7,634 8,548 8,548 Secured bank loan 44,000 44,000 44,000 44,000 Current tax payable ,852 55,059 59,875 55,670 Total liabilities 483, , , ,231 Total equity and liabilities 806, , , ,475 Page 4 of 16

5 1(b)(ii) Aggregate Amount of Group s Borrowings and Debt Securities 31 Mar Dec 2011 US$ 000 US$ 000 Secured bank loans Amount repayable within one year 44,000 44,000 Amount repayable after one year 424, ,558 Less: Unamortised debt upfront fees (6,358) (6,778) 462, ,780 The Trustee-Manager, on behalf of FSL Trust, has secured a 6-year amortising term loan facility ( credit facility ) with an outstanding loan balance of US$468.6 million as at 31 March The interest margin of the credit facility: Security value to loan ratio Margin over US$ 3-month Libor >125% to 140% 3.0% >140% to 180% 2.8% >180% 2.6% As at 31 March 2012, the applicable margin over US$ 3-month Libor was 3.0% as the security value to loan ratio was 130%. The security value to loan ratio will be assessed semiannually. The credit facility is secured on the following: (i) a first priority mortgage over the Group s vessels in the portfolio; (ii) a first priority assignment of the Group s rights, title, interest in the insurances to and for each vessel, including insurance for hull and machinery, protection and indemnity and war risks; and (iii) a first priority assignment of the Group s rights, title and interest in and to the bareboat charter agreement and the charter income of each vessel. FSL Trust has hedged its interest rate risk through a combination of interest rate swaps and/or natural hedges to fix the interest rates. The fixed interest rates range from 1.65% per annum to 5.24% per annum. Page 5 of 16

6 1(c) Consolidated Cash Flow Statements Group 1Q Q 2011 US$ 000 US$ 000 Operating activities: Loss before income tax (4,175) (1,993) Adjustments for: Depreciation expense on vessels 14,499 14,296 Amortisation of debt upfront fees and initial direct costs Interest income (30) (30) Interest expense 7,906 5,940 Unrealised exchange differences (286) (584) 18,423 18,100 Changes in working capital: Trade and other receivables 2, Inventories (501) (779) Trade and other payables (485) 1,097 Lease income received in advance (1,486) (2,129) Cash generated from operations 18,288 17,114 Refund of income tax 8 - Cash flows from operating activities 18,296 17,114 Investing activities: Interest received Costs incurred for dry-docking - (13) Cash flows from investing activities Financing activities: Distribution to unitholders (655) (5,688) Repayment of secured bank loans (11,000) (8,000) Interest paid (7,040) (6,076) Cash flows from financing activities (18,695) (19,764) Net decrease in cash and cash equivalents (371) (2,627) Cash and cash equivalents at beginning of period 32,304 53,046 Cash and cash equivalents at end of period 31,933 50,419 Comprising:- Cash at Bank 8,719 13,938 Short-term deposits 23,214 36,481 31,933 50,419 Page 6 of 16

7 1(d)(i) Statements of Changes in Unitholders Funds Units in Issue Hedging Reserve Foreign Currency Translation Reserve Accumulated Losses Total Equity US$ 000 US$ 000 US$ 000 US$ 000 US$ Group At 1 January ,412 (16,213) (2,943) (181,277) 324,979 Total comprehensive income for the quarter - 1,504 1,002 (4,168) (1,662) Contribution by and distribution to unitholders: Distribution to unitholders (655) (655) At 31 March ,412 (14,709) (1,941) (186,100) 322,662 Units in Issue Hedging Reserve Foreign Currency Translation Reserve Accumulated Losses Total Equity US$ 000 US$ 000 US$ 000 US$ 000 US$ Group At 1 January ,273 (25,997) (943) (140,885) 342,448 Total comprehensive income for the quarter - 2,224 2,385 (1,995) 2,614 Contribution by and distribution to unitholders: Distribution to unitholders (5,688) (5,688) At 31 March ,273 (23,773) 1,442 (148,568) 339,374 Page 7 of 16

8 1(d)(i) Statements of Changes in Unitholders Funds (cont d) Units in Issue Hedging Reserve Accumulated Losses Total Equity US$ 000 US$ 000 US$ 000 US$ Trust At 1 January ,412 (16,213) (287,955) 221,244 Total comprehensive income for the quarter - 1,504 (8,601) (7,097) Contribution by and distribution to unitholders: Distribution to unitholders - - (655) (655) At 31 March ,412 (14,709) (297,211) 213,492 Units in Issue Hedging Reserve Accumulated Losses Total Equity US$ 000 US$ 000 US$ 000 US$ Trust At 1 January ,273 (25,997) (236,469) 247,807 Total comprehensive income for the quarter - 2,224 (6,625) (4,401) Contribution by and distribution to unitholders: Distribution to unitholders - - (5,688) (5,688) At 31 March ,273 (23,773) (248,782) 237,718 Page 8 of 16

9 1(d)(ii)(iii) Details of any changes in Units 1Q 2012 Units FY 2011 Units At the beginning of the period 654,665, ,665,077 Units issued during the period - 56,000,000 At the end of the period 654,665, ,665,077 1(d)(iv) Sales, Transfers, Disposal, Cancellation and/or use of Treasury Units Not applicable. 2. Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice The figures have been extracted from the Interim Financial Information which has been reviewed by the auditors in accordance with the Singapore Standard on Review Engagements 2410 Review of Interim 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) The Auditors review report dated 24 April 2012 on the interim financial report of FSL Trust and its subsidiaries for the quarter ended 31 March 2012 is enclosed in the Appendix. 4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited financial statements have been applied Except for the change in the method of computation as disclosed in paragraph 5, FSL Trust has applied the same accounting policies and methods of computation in the preparation of the financial statements for the current reporting period compared with the audited financial statements for the 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 Following the lease payment default by the lessees of three chemical tankers, Pertiwi, Pujawati and Prita Dewi in February 2012, FSL Trust requested for redelivery of these vessels and has arranged for these vessels to be deployed in a pool arrangement. With the pre-mature termination of the bareboat charter operating lease arrangement, the expected useful life of each of the three vessels has been revised from 12 years to 25 years and the basis of estimating the respective residual values has also changed. The changes in the expected useful life and residual value of the vessels constitute a change in estimates. The effects of the change have been applied from January 2012 prospectively as the payment default was assessed to be an adjusting post-balance sheet event for the year ended 31 December The change reduces depreciation expense for the current quarter by US$977,000 for the three vessels. Page 9 of 16

10 6. Earnings per Unit ( EPU ) and Distribution per Unit ( DPU ) for the financial period Group 1Q Q 2011 Basic and diluted earnings per unit is based on: Loss for the quarter (US$ 000) (4,168) (1,995) Weighted average number of issued units (basic and diluted) ( 000) 654, ,665 Basic and diluted earnings per unit based on weighted average number of units in issue (US Cents) (0.64) (0.33) Number of issued units at end of quarter ( 000) 654, ,665 Distribution per unit (US Cents) Net Asset Value ( NAV ) per Unit based on units at the end of the period Note: (a) 31 Mar Dec 2011 Note Group Trust Group Trust Net asset value per unit (US$) (a) Net asset value per unit was calculated based on the applicable number of units issued as at the end of the respective period/year. 8. Review of Performance Consolidated Income Statements Group 1Q Q 2011 Inc/ (Dec) US$'000 US$'000 % Revenue 26,081 23, Depreciation expense on vessels (14,499) (14,296) 1.4 Voyage expenses (3,520) (2,981) 18.1 Vessel operating expenses (1,773) (1,162) 52.6 Management fees (874) (833) 4.9 Trustee fees (41) (42) (2.4) Other trust expenses (1,560) (735) N.M. Finance income Finance expenses (8,019) (5,826) 37.6 Loss before income tax (4,175) (1,993) N.M. Income tax write-back/(expense) 7 (2) N.M. Loss for the quarter (4,168) (1,995) N.M. FSL Trust incurred a loss of US$4.168 million in 1Q 2012 due primarily to: Loss of bareboat charter rentals arising from the payment default by wholly-owned subsidiaries of PT Berlian Laju Tanker Tbk ( BLT ) from February 2012 for three chemical tankers; One-time expense for taking over these vessels and redeploying them in the spot market; and Higher interest expenses. Page 10 of 16

11 8. Review of Performance (cont d) Re-delivery of three chemical tankers In February 2012, the lessees of three chemical tankers, Pertiwi, Pujawati and Prita Dewi, defaulted on their lease payments under their respective lease agreements. The lessees are wholly-owned subsidiaries of BLT. Following the payment default, Pertiwi, Pujawati and Prita Dewi were promptly re-delivered to FSL Trust in March 2012 and were renamed FSL New York, FSL London and FSL Tokyo, respectively. The financial impact in 1Q 2012 arising from the re-delivery of the vessels is summarised below: US$ million Loss of bareboat charter lease rentals (2.359) Expenses (non-recurring) relating to the taking-over of the technical management of the vessels upon re-delivery (0.750) (3.109) Upon re-delivery, Copenhagen-based Nordic Tankers Management A/S was appointed to manage these vessels commercially. These vessels are expected to enter the Nordic Siva pool in 2Q Trading performance of three chemical tankers The three chemical tankers, FSL New York, FSL London and FSL Tokyo have been trading in the spot market since their re-deliveries. 1Q 2012 US$ million Freight income Voyage expenses (0.626) Time charter equivalent revenue (0.329) Less: Crew cost, vessel maintenance and others (0.577) Bareboat charter equivalent loss (0.906) For vessels trading in the spot market, freight income can only be recognised upon completion of the voyage and/or cargo discharge. Of the three vessels, only one vessel has completed its voyage and discharged its cargo in March Recognition of freight income for the other two vessels will be deferred to 2Q 2012 as their respective charters were completed only in mid-april Irrespective of the way revenue is accounted for, voyage and vessel operating expenses for all three vessels were recognised as and when incurred. As a result, the chemical tankers incurred a bareboat charter equivalent loss of US$0.906 million in this quarter. Page 11 of 16

12 8. Review of Performance (cont d) Trading performance of two product tankers 1Q Q 2011 US$ million US$ million Freight income Voyage expenses (2.894) (2.981) Time charter equivalent revenue Less: Crew cost, vessel maintenance and others (1.271) (1.237) Bareboat charter equivalent revenue/(loss) (1.142) FSL Hamburg and FSL Singapore which are trading in the product tanker spot market generated a bareboat charter equivalent revenue of US$0.380 million for 1Q 2012 as compared to a bareboat charter equivalent loss of US$1.142 million. In March 2012, FSL Trust reached an agreement to charter FSL Singapore to Petròleo Brasileiro S.A. ( Petrobras ) on a three-year time charter contract 1. The time charter is expected to commence in 2Q 2012 with a gross daily time charter rate of US$14,000. 1Q 2012 vs 1Q 2011 Revenue rose 9.3% (+US$2.2 million) to US$26.1 million compared to 1Q The net increase was contributed by the full quarter lease revenue from the two vessels leased to TORM A/S ( TORM ) which were acquired in June 2011, and higher freight income from the vessels trading in the spot market, offset by loss of bareboat charter revenue from the three chemical tankers leased to BLT (see page 11). Excluding voyage and vessel operating expenses of US$5.3 million, operating expenditure increased by 6.7% (+US$1.1 million) to US$17.0 million. The higher expenditure was due mainly to vessel related expenses (non-recurring) of US$0.8 million arising from the re-delivery of the three chemical tankers to FSL Trust. Voyage and vessel operating expenses increased 27.8% (+US$1.2 million) to US$5.3 million as incremental bunkers, port charges, crew and related vessel operating costs were incurred for the three chemical tankers which started trading in the spot market from March Finance expenses (excluding exchange gains of US$0.3 million (1Q 2011: US$0.5 million)) increased 30.3% (+US$1.9 million) to US$8.3 million mainly due to higher interest margin on outstanding indebtedness under the new credit facility secured in December 2011 (1Q 2012: 3.0% per annum; 1Q 2011: 1.7% per annum). 1 Subject to physical inspection of the vessel Page 12 of 16

13 8. Review of Performance (cont d) Distribution Statements Note: (a) Group Note 1Q Q 2011 US$ 000 US$ 000 Loss for the quarter (4,168) (1,995) Add: Non-cash adjustments (a) 14,012 13,534 Net cash generated from operations 9,844 11,539 Less: Repayment of secured bank loans (11,000) (8,000) Income available for distribution (1,156) 3,539 Add: Utilisation of cash retained from previous periods 1,810 2,148 Net distributable amount 654 5,687 Amount available for distribution 654 5,687 Comprising:(i) Tax-exempt distribution 617 5,659 (ii) Tax-exempt (one-tier) distribution Amount to be distributed 654 5,687 Units at the end of the quarter ( 000) 654, ,665 Distribution per unit (US Cents) Non-cash adjustments include depreciation expenses, translation exchange differences and amortisation of certain debt upfront fees and initial direct costs. FSL Trust will distribute US$0.7 million or a DPU of US0.10 for the current quarter under review. The distributions will be paid from the US$9.8 million cash generated in the quarter and cash retained from previous quarters (US$1.8 million) after settling the quarterly loan repayment of US$11.0 million. Distribution Reinvestment Scheme For the quarter ended 31 March 2012, the Board has determined that the Distribution Reinvestment Scheme will not apply to the distribution declared for this quarter. 9. Variance from Prospect Statement Not applicable. 10. Outlook and Prospects The fixed-rate contract for a 3-year time charter with Petrobras for FSL Singapore commencing in 2Q 2012 will bring further stability to FSL Trust s cash flows. The longterm bareboat charters will continue to provide a stable revenue base while vessels trading on spot expose FSL Trust to upturn opportunities. Even as the entire shipping industry is going through an extraordinary down cycle, the Trustee-Manager has undertaken to improve returns to unitholders, conserve capital and strengthen the balance sheet to ensure a sustainable future for FSL Trust and all stakeholders. With regard to the two product tankers leased to TORM, the charter terms have been renegotiated to realign with market rates, subject to the approval of TORM s other stakeholders. If the approvals are obtained, revenue contribution from these two product tankers is expected to be reduced as current market rates are lower than the contracted lease rates (see paragraph 11 on Subsequent Event ). Page 13 of 16

14 11. Subsequent Event Renegotiation of charter terms for TORM product tankers In early April 2012, FSL Trust renegotiated charter terms for the two product tankers leased to TORM. The proposed terms are as follows: i) Realigns charter rates to variable rates that TORM achieves in the market. FSL Trust has the option to terminate the charters in the event that actual rates achieved by TORM for these vessels underperform the market benchmark by a pre-agreed margin, tested semi-annually; ii) Cancels early-buyout, purchase and lease extension options in the original bareboat agreements; and iii) Receives equity stake in TORM. The above terms are still subject to boards, lenders and shareholders approvals of TORM s respective stakeholders. Whilst the renegotiated terms are still pending various approvals, the recoverable amount of these vessels as at 31 March 2012 was assessed for impairment on the basis that the contractual cash flows over the period of the base lease term were no longer relevant. Based on the assessment, no impairment loss needs to be recognised for the quarter ended 31 March 2012 as the recoverable amount exceeds the carrying amount of these vessels. 12. Distribution (a) (b) Current financial period Any distributions declared for the : Yes current financial period Amount : US$654,665 Distribution Period : 1 January 2012 to 31 March 2012 Distribution Type : Cash, Tax-exempt Distribution Distribution Rate : US0.10 cents per unit Par Value of units : Not applicable Tax Rate : Distributions received by either Singapore tax resident unitholders or non-singapore tax resident unitholders are exempt from Singapore income tax and also not subject to Singapore withholding tax. The unitholders are not entitled to tax credits of any taxes paid by the Trustee-Manager of FSL Trust. Corresponding Period of the Immediate Preceding Financial Period Any distributions declared for the : Yes previous corresponding period Amount : US$5,687,318 Distribution Period : 1 January 2011 to 31 March 2011 Distribution Type : Cash, Tax-exempt Distribution Distribution Rate : US0.95 cents per unit Par Value of units : Not applicable Page 14 of 16

15 Tax Rate : Distributions received by either Singapore tax resident unitholders or non-singapore tax resident unitholders are exempt from Singapore income tax and also not subject to Singapore withholding tax. The unitholders are not entitled to tax credits of any taxes paid by the Trustee-Manager of FSL Trust. (c) Payment Date : 31 May 2012 (d) Books closure date : The Transfer Books and Register of Unitholders of FSL Trust will be closed at 5.00 p.m. on 4 May 2012 for the purposes of determining each unitholder s entitlement to the Distribution of US0.10 cents. Unitholders whose securities accounts with The Central Depository (Pte) Limited ( CDP ) are credited with units at 5.00 p.m. on 4 May 2012 will be entitled to the Distribution to be paid on 31 May (e) Currency election procedures : Unitholders whose units are held directly through CDP will receive their distribution in the Singapore dollar equivalent of the US0.10 cents declared. Unitholders who wish to elect to receive the distribution in US dollars can do so by submitting a Currency Election Notice by 5.00 p.m. on 16 May If no distribution has been declared/recommended, a statement to that effect Not applicable. 14. If the Group has obtained a general mandate from unitholders for Interested Party Transaction ( IPT ), the aggregate value of such transactions as required under Rule 920(1)(a)(ii). If no IPT mandate has been obtained, a statement to that effect FSL Trust does not have any unitholders mandate for IPT. Page 15 of 16

16 15. Confirmation by the Board pursuant to Rule 705(5) of the Listing Manual To the best of our knowledge, nothing has come to the attention of the board of directors which may render the interim financial results of the Group for the quarter ended 31 March 2012 to be false or misleading in any material aspect. This announcement 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 other companies, 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 forwardlooking statements, which are based on current view of management on future events. BY ORDER OF THE BOARD FSL TRUST MANAGEMENT PTE. LTD. (COMPANY REGISTRATION NO R) AS TRUSTEE-MANAGER OF FIRST SHIP LEASE TRUST Rebecca Cheng Pei Jiuan Company Secretary 24 April 2012 Page 16 of 16

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