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Gross revenue in Q2 FY2010 from the 12 vessels chartered on long-term basis remained stable at US$15.1 million, recording a profit after tax of US$6.6 million. This was consistent compared to the corresponding period. For the six months of 2010, gross revenue was US$30.3 million and profit after tax totalled US$13.3 million. Going forward, PST’s contracted revenue in late 2011 would be higher as the 10-year time charter to Shagang for the two 180,000 DWT Capesize Bulk Carriers becomes effective. Distribution per unit (“DPU”) of 0.793 US cents in Q2 FY2010 was approximately 20% lower than in Q2 FY2009 due to additional cash retention which started in the third quarter of 2009, of which 30% of distributable income was retained as compared to 10% previously. This policy in preserving cash has enabled PST to acquire two new 180,000 DWT Capesize Bulk Carriers as announced on June 28, 2010. The balance sheet remains strong as all vessels have been financed on a long-term basis. The strong position is also due to the fact that the terms in PST’s loans do not have loan-to-value ratios on the vessels and top-up provisions. Based on unit price of US$0.29 as at July 21, 2010 Closing Price New Acquisition • Two new 180,000 DWT Capesize Bulk Carriers at US$61.6 million per vessel • Vessels to be built at a reputable yard, Hyundai Heavy Industries Co., Ltd., Korea, with deliveries scheduled for September 2011 • Combined with 10-year time charter at US$27,000 per vessel per day with Shagang Mr Teo Choo Wee, Acting CEO of PSTM attributes PST’s stable performance to its conservative financing structure: “With our stable financial situation and cash retention policy, we have delivered on our plans to capture accretive opportunities with the acquisition of two new 180,000 DWT Capesize Bulk Carriers. These new acquisitions mark a major milestone for PST to diversify into a new asset class and enlarge our base of charterers.” The new charterer, Shagang is a well established name in the steel industry and prides itself as China’s largest private enterprise. The 10-year time charter will add additional contracted revenue of approximately US$194 million for the duration of the charters. As a result, it will further enhance the stability and income diversification of the Trust. With this latest development, PST’s fleet portfolio will increase from 12 to 14 vessels, comprising 12 container vessels and 2 capesize bulk carriers. It now adds Shagang to its list of well-established charterers, namely, Pacific International Lines (Private) Limited (“PIL”) and Compania Sud Americana de Vapores S.A. (“CSAV”). With long-term charters for its 14 vessels, PST’s total contracted revenue will be close to US$500 million over the next 10 years. Outlook The recovery for container freight rates has continued well into Q2 FY2010. This has led to further reactivation of the global idle tonnage. As a result, the idle capacity has dropped further to 274,000 TEU, representing 2.0%()2 of the total global fleet, the lowest level of idling since November 2008. In recent months, we have also witnessed an escalation in asset prices for container vessels, both in the secondhand resale as well as newbuilding orders. With the improving freight rates and asset prices, coupled with the recovery and growth in global trade, the charter rates for container vessels have recovered likewise. This trend should continue for the rest of the year and hence, we remain cautiously optimistic for the outlook of the container market. As for the dry bulk sector, although cyclical in nature, it is expected that the demand for Chinese imports of iron ore and coal should support shipping demand for capesize bulk carriers. This trend should be sustained as end-users seek to better manage their raw material supply requirements, and to have better control of their logistics chain by locking in long-term charters for their shipping needs. Said Mr Teo: “PST is built on a sustainable business model of predictable income and cashflow stream generated by quality vessels on long-term charters to reputable customers. We will strive to pursue our strategy of delivering value accretive growth to unitholders and explore further opportunities for meaningful acquisitions.” The Books Closure Date is July 29, 2010 and payment to Unitholders of 0.793 US cents per Unit distribution will be made on or about August 27, 2010. About Pacific Shipping Trust Pacific Shipping Trust is the first business trust listed on the SGX-ST. It provides structured financing solutions to established shipping companies, thereby generating visible and stable cashflow stream through long-term charters. By acquiring vessels and leasing them to reputable charterers on long-term bareboat or time charters, PST seeks to generate a steady stream of high-yielding income for its Unitholders. The trustee-manager of PST is PST Management Pte. Ltd., a wholly-owned subsidiary of Pacific International Lines (Private) Limited, one of the largest private shipowner and operator in South East Asia. PST Management Pte. Ltd. press release. |