First Ship Lease Trust › newsroom › 20170428_180404_… · 28/04/2017 · 53.2. 36.0. 47.6. FY...

First Ship Lease TrustTenth Annual General Meeting

28 April 2017

2016: Year in review

Questions & Answers

Summary

Recent developments

Operational performance

2016: Key milestones

3

Successful renewal of bareboat contracts for Shannon Fisher & Solway Fisher

16.1 15.1 13.2 13.2

32.9

39.4 39.7 42.9

0

5

10

15

20

25

30

35

40

45

50

55

Net cash generated from operations Cash balance

1Q FY2016 2Q FY2016 3Q FY2016 4Q FY2016

Disposal of two panamaxcontainerships (Ever Radiant and Ever Respect)

24% increase in quarterly net profit & continued positive cash generation despite 3 dry dockings (*)

Over US$50 million of debt repaid over the past 12 months

US$

mill

ion

(*) Chemical tankers - FSL New York, FSL London and FSL Tokyo were dry-docked in 3Q FY2016

2016: Financial highlights

(US$ million) 4

Revenue Net cash generated from operations

Profit / (Loss) for the year Results from operating activities

98.1

106.6

93.490.0

106.1

FY 2016 FY 2015 FY 2014 FY 2013 FY 2012

57.662.8

53.2

36.0

47.6

FY 2016 FY 2015 FY 2014 FY 2013 FY 2012

(31.00)

14.15

4.05

(65.21)

(8.39)

FY 2016 FY 2015 FY 2014 FY 2013 FY 2012

(17.66)

23.35 16.80

(40.63)

19.28

FY 2016 FY 2015 FY 2014 FY 2013 FY 2012

2016: Gearing, Bank Debt and Value-to-Loan

5

Bank debt has been reduced from US$425 million in June 2013 to US$192 million as atMarch 2017

Bank debt by December 2017 will be further reduced to US$171 million by twoscheduled quarterly US$10.7 million repayments in June and September

Gearing ratio has improved from 57.6% in FY2012 to 47.3% in FY2016

VTL remains within Lender Covenant of 125% despite vessel valuations decliningconsiderably during 2016 and 2017 to date

Unit price performance(1)

6

Unit Price Performance Over The 3-Year Period

Previous 3 Years (27/04/2014 – 27/04/2017)

Open (SG cts) 10.3

High (SG cts) 19.3

Low (SG cts) 8.1

Close (SG cts) 10.3

Average Daily Traded Volume (Units)

706,652

Source: Bloomberg (27 April 2017)

0

0.05

0.1

0.15

0.2

0.25

Refinancing

Refinancing is a priority of the Trustee-Manager

Fleet now has an average age of 10 years

Raising finance is more straightforward on newer tonnage Repayment schedules often shorter on older vessels But fleet is well employed and producing solid cash flows

Efforts to reduce outstanding loan balance and ensure no covenant breach

Prepayment of US$8 million from sale of two panamax containershipsin January 2016

Prepayment of US$20 million under the Syndicated Loan Facility inMarch 2017

FSL Osaka pledged to lenders in March 2017

Discussions with potential lenders (new and current) are ongoing

7

Enhanced share issue mandate

On 13 March 2017, SGX announced that it would allow companies to seeka general mandate for an issue of pro-rata renounceable rights shares of upto 100% of share capital

This is up from 50% previously

The Enhanced Rights Issue Limit is in the interests of the Trust and itsunitholders

Allows the Trust to raise funds expediently for expansion activities orworking capital

Be more responsive to global developments in a volatile and uncertainindustry landscape

8


Questions & Answers

Summary

Recent developments


2016 vs 2015 BBCE revenue

10

1,44

2

2,58

0

103

5,78

7

3,58

1

7,29

7

7,37

4

1,18

3

910

5,84

8

5,84

8

6,68

5

6,68

5

6,68

5

3,11

2

1,85

2

3,15

0

1,25

9

1,32

3

1,30

4

1,54

8

1,64

3

1,64

3

1,64

3

3,62

3

3,69

1

2,77

4

5,26

3

5,62

1

5,91

4

5,92

8

552

894

377

377

6,68

5

6,68

5

6,68

5

2,41

1

2,58

1

3,25

5

1,26

3

1,26

3

877

1,20

2

1,64

3

1,64

3

1,64

3

151.2% 43.1%

2593.2%

-9.1% 57.0%

-19.0% -19.6%

-53.3%-1.8%

-93.6% -93.6%

0.0% 0.0% 0.0%

-22.5%

39.4%

3.3%

0.3%-4.5% -32.7% -22.4%

0.0% 0.0% 0.0%

(200)

800

1,800

2,800

3,800

4,800

5,800

6,800

7,800

FSL H

ambu

rg

FSL S

inga

pore

FSL O

saka

FSL H

ong

Kong

FSL S

hang

hai

TORM

Mar

gret

he

TORM

Mar

ie

FSL B

usan

FSL S

anto

s

Ever

Rad

iant

Ever

Res

pect

YM E

min

ence

YM E

lixir

YM E

nhan

cer

FSL N

ew Y

ork

FSL L

ondo

n

FSL T

okyo

Cum

bria

n Fi

sher

Clyd

e Fi

sher

Shan

non

Fish

er

Solw

ay F

ishe

r

Spec

ialit

y

Seni

ority

Supe

riorit

y

FY 2015 FY 2016

Total BBCE revenue from vessels :

FY 2016 : 72.849 millionFY 2015 : 80.527 million

Decrease of 9.5%

MR tanker Aframax tanker LR2 tanker Containership Chemical tanker Specialised product tankerFeeder

2016: Fleet deployment by revenue(1)

Note 1: BBCE revenue for the year ended 31 December 2016 11

Fixed-rate BBC42%

Time Charter25%

Pool/ RSA/ Spot17%

Floating BBC16%

2016 vs 2015 Operational performance and market trend

Source: Clarkson

Panamax Containership (YM Eminence, YM Elixir and YM Enhancer)

12

(34.5%)

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2012 2013 2014 2015 2016

1 Year TCE Rate (USD per day) Last 5 Years Average TCE Rate (USD per day)

31.8

20.8

11.8

10.9

10.1

9.5

8.3

0

5

10

15

20

25

30

35

Panamaxcontainership

LR2 Aframax MR Specialised tanker Chemical tanker Feeder containership

FY2015 FY2016

BBCE

–U

S$ m

illio

n Revenue decreased by 34.5% following the sale of two Evergreencontainer vessels in Feb 2016

(34.5%)

Source: Clarkson

LR2(TORM Margrethe and TORM Marie)

13

-

5,000

10,000

15,000

20,000

25,000

30,000

2012 2013 2014 2015 2016


31.8

14.7

20.8

11.8

10.9

10.1

9.5

8.3

0

5

10

15

20

25

30

35



FY2015 FY2016

BBCE

–U

S$ m

illio

n

(34.5%)

Revenue down by 19.3% due to softening rates in the LR2 market

(19.3%)


Source: Clarkson

Aframax(FSL Hongkong and FSL Shanghai)

14

31.8

14.7

9.4

20.8

11.8

10.9

1.5

0

5

10

15

20

25

30

35



FY2015 FY2016

BBCE

–U

S$ m

illio

n

(34.5%)

(19.3%)

+16.1%

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2012 2013 2014 2015 2016


Revenue increased by 16.1% as a result of timely securing of strong rates on time charter fixtures


Feeder containership

15

31.8

14.7

9.4

4.1

20.8

11.8

10.9

10.1

9.5

8.3

0

5

10

15

20

25

30

35



FY2015 FY2016

BBCE

–U

S$ m

illio

n

(34.5%)

(19.3%)

+16.1% +144.9%

Source: Clarkson

MR (FSL Hamburg, FSL Singapore and FSL Osaka)

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2012 2013 2014 2015 2016


Addition of FSL Osaka to the fleet and strong rates secured on time charter fixtures contributed to 144.9% increase in revenue


16


16

31.8

14.7

9.4

4.1

10.4

20.8

11.8

10.9

10.1

9.5

8.3

0

5

10

15

20

25

30

35



FY2015 FY2016

BBCE

–U

S$ m

illio

n

(34.5%)

(19.3%)

+16.1% +144.9% (8.0%)

Source: Clarkson

Specialised Product Tanker (Speciality, Seniority, Superiority, Cumbrian Fisher,

Clyde Fisher, Solway Fisher and Shannon Fisher)

-

5,000

10,000

15,000

20,000

25,000

2012 2013 2014 2015 2016


8% decrease in revenue due to renewal of bareboat contracts for Shannon Fisher and Solway Fisher at a lower daily rate


Source: Clarkson

17

Chemical Tanker (FSL New York, FSL London and FSL Tokyo)


31.8

14.7

9.4

4.1

10.4

8.1

20.8

11.8

10.9

10.1

9.5

8.3

0

5

10

15

20

25

30

35



FY2015 FY2016

BBCE

–U

S$ m

illio

n

(34.5%)

(19.3%)

+16.1% +144.9% (8.0%)+1.7%

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2012 2013 2014 2015 2016


Revenue increased by 1.7% despite dry-docking of three chemical tankers in Q3FY16


Source: Clarkson

Feeder Containership (FSL Busan and FSL Santos)

18


31.8

14.7

9.4

4.1

10.4

8.1

2.1

20.8

11.8

10.9

10.1

9.5

8.3

1.5

0

5

10

15

20

25

30

35



FY2015 FY2016

BBCE

–U

S$ m

illio

n

(34.5%)

(19.3%)

+16.1% +144.9% (8.0%)+1.7%

(30.6%)

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2012 2013 2014 2015 2016


Revenue declined by 30.6% amid continued slowdown in the container market


-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2012 2013 2014 2015 2016

USD

per

day

Comparison of 1 Year TCE Rates by Vessel Type

Panamax Containership

Aframax

LR2

MR

Specialised Tanker

Chemical Tanker

Feeder Containership

Source: Clarkson

19


31.8

14.7

9.4

4.1 10

.4

8.1 2.1

20.8

11.8

10.9

10.1

9.5

8.3

1.5

0

5

10

15

20

25

30

35



FY2015 FY2016

BBCE

–U

S$ m

illio

n

(34.5%)

(19.3%)

+16.1% +144.9% (8.0%)+1.7% (30.6%)


Industry Overview:

• Container market remains challenging

Between 2015 and 2016, panamaxrates fell by 58%, while feeder rates dropped by 23%

Softening rates in these sectors weighed on the Trust’s revenue

• Tanker markets under increased pressure

Rates in the aframax, LR2, MR and specialised tanker segments have decreased over the past year

Slight uptick in chemical tanker rates

Revenue backlog

Remaining contracted revenue stood at US$ 101m (1)

as at 31 December 2016

Note 1: Based on revenue from ten bareboat charters (excluding the TORM charters on variable rates) and from time charter contracts with Tesoro (FSL Hong Kong) and Trafigura (FSL Singapore, FSL Hamburg and FSL Shanghai)

20

26 22 22

13

18

0

5

10

15

20

25

30

35

40

45

50

2017 2018 2019 2020-2021

Bareboat Charter Time charter

US$

mill

ion


Questions & Answers

Summary

Recent developments


The start of 2017

Debt reduction through utilisation of available cash

Prepayment of US$20 million under the Syndicated Loan Facility to reduce outstanding loan balance

Pledging of FSL Osaka to lenders

The Trust remains within all Loan Covenants

Focus on securing good contract cover for the remaining five vessels that are expected to be redelivered in FY2017

Completed dry docking of two Aframax tankers in 2Q FY2017

This will impact the Trust’s profitability and cashflow generation in the period

Discussions are in progress with a number of Financial Institutions in respect of the refinancing of the Trust’s Syndicated Loan Facility

22

2017 2018 2019 2020 2021 2022 2023

23

Vessel portfolio

Vessels on fixed-rate bareboat charters

Market-rate bareboat charters

Fixed-rate time charters

Feeder containership pool with HANSE

Fixed-rate time charters / (RSA)

Chemical tanker pool with Nordic Tankers

MR pool with Hafnia

Vessels on fixed-rate bareboat charters

Vessel Year build Size (DWT)

Product TankersCumbrian Fisher 2004 12,921 Clyde Fisher 2005 12,984 Shannon Fisher 2006 5,421 Solway Fisher 2006 5,421 Speciality(1) 2006 4,426 Seniority(1) 2006 4,426 Superiority(1) 2007 4,426 TORM Margrethe 2006 109,672 TORM Marie 2006 109,672 FSL Hamburg 2005 47,496 FSL Singapore 2006 47,470 FSL Osaka 2007 45,998

Containerships (size in TEU)YM Eminence 2008 4,250 YM Elixir 2008 4,250 YM Enhancer 2008 4,250 FSL Busan 2003 1,221 FSL Santos 2003 1,221

Crude oil tankersFSL Hong Kong(2) 2007 115,000 FSL Shanghai 2007 115,000

Chemical tankersFSL New York 2006 19,970 FSL London 2006 19,996 FSL Tokyo 2006 20,938

Note: (1) Signed extension agreements for bareboat charter with James Fisher in April 2017 (2) Entered into Revenue Sharing Agreement (RSA) with Teekay with effect from April 2017

FY2017: Scheduled Redeliveries

In 2Q FY2016, the Trust successfully renegotiated a five year fixed-rate bareboat charter renewalfor Shannon Fisher and Solway Fisher at market adjusted bareboat rates

The Trust agreed to employ FSL Hong Kong in the Teekay Group RSA post dry-docking and havesigned extension agreements for the continuing bareboat charter for Speciality, Superiority andSeniority in April 2017

Five vessels (as above) are expected to be redelivered in FY2017 Charterer has the option of extending the time charters for FSL Shanghai, FSL Hamburg and FSL Singapore

three months prior to the end of the base period Discussions for the renewal of bareboat charters for Cumbrian Fisher and Clyde Fisher have commenced

24

Vessel Date

FSL Shanghai 3Q FY2017

FSL Hamburg 4Q FY2017

FSL Singapore 4Q FY2017

Cumbrian Fisher 4Q FY2017

Clyde Fisher 4Q FY2017


Questions & Answers

Summary

Recent developments


Summary

2016 performance was stable despite a smaller fleet and difficult operatingenvironment : Cash and cash equivalents increased by 48.8% Four quarters of positive cash generation in 2016

Steps were taken to consolidate the position of the Trust Successful renewal of five-year bareboat charter agreements (Shannon

Fisher and Solway Fisher) contributing to consistent revenue Entered 2017 with stronger balance sheet and lower gearing

Prospects for 2017 Refinancing remains the key priority Focus on securing good contract cover for the remaining five vessels

expected to be redelivered in FY2017

26


Questions & Answers

Summary

Recent developments


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