FSL Trust: Yet Another Steady Quarter

FSL Trust Management Pte. Ltd. (“FSLTM”), as trustee-manager of First Ship Lease Trust (“FSL Trust” or “the Trust”) announced today that the Trust reported a stable and positive performance for the second quarter ended 30 June 2016 (“2QFY16”).

2QFY16 revenue decreased slightly by 8% year-on-year to US$25.3 million, compared to the corresponding period in the previous year (“2QFY15”). The slight decline in revenue is mainly attributable to a reduced fleet following the disposal of two panamax containerships in February this year, as well as softening rates in some tanker markets. However, the decrease in total revenue was partially offset by higher revenue from MR tankers with the addition of FSL Osaka to the fleet, and improved performance of the three chemical tankers deployed in a pool.

Net cash generated from operations for 2QFY16 decreased by 11% year-on-year to US$15.1 million. Despite the challenging shipping market, the Trust was still able to achieve a net profit of US$5.5 million. These results represent another quarter of profitability and positive cash generation.

In 2QFY16, the Trust continued to strengthen its balance sheet and improve the gearing of the business, and has paid down US$54 million of debt over a 12 month period.

Commenting on the Trust’s performance, Alan Hatton, Chief Executive Officer of FSLTM said:

“The financial and operational performance of the Trust in 2QFY16 remains stable notwithstanding a smaller fleet. The Trust continued to build on its positive momentum recording a further consecutive quarter of profitability and cash generation. The Trust’s diverse and strong mix of secure long-term charters and managed market exposure in better performing sectors leaves the Trust well positioned despite the challenging shipping market.”

“Market conditions are likely to remain difficult in the near term, however, the Trust’s exposure to markets under pressure remains limited. Following the disposal of two vessels in February 2016, revenue from panamax container vessels fell by 37%. This was expected and the contracts signed in 2015 and the addition of FSL Osaka has replaced this revenue. There has been some downward pressure on spot rates, which has affected the Trust’s earnings in the LR2 market. The Trust successfully renewed the long-term bareboat agreements for the vessels Shannon Fisher and Solway Fisher in 2QFY16, and the bareboat charter income provides a consistent revenue base.”

"The Trust has made significant strides in our debt repayment efforts with over US$ 50 million of debt repaid over the last 12 months. FSL Trust continues to focus on optimising the operational and commercial performance of the fleet.”