First Ship Lease Trustfsltrust.listedcompany.com/newsroom/20070719aiii_2007H1...First Ship Lease...
Transcript of First Ship Lease Trustfsltrust.listedcompany.com/newsroom/20070719aiii_2007H1...First Ship Lease...
First Ship Lease Trust
Presentation of Inaugural Results– for period 19 March 2007 to 30 June 2007
19 July 2007
2
Certain statements in this presentation concerning our future growth prospects are forward-looking
statements, which involve a number of risks, and uncertainties that could cause actual results to differ
materially from those in such forward-looking statements. The risks and uncertainties relating to these
statements include, but are not limited to, risks and uncertainties regarding our earnings, our ability
to manage concentration and lessee credit risks, our ability to lease out or dispose vessels, ability to
implement our investment strategy, dependence on credit facilities and new equity from capital markets
to execute our investment strategy, insufficient insurance to cover losses from inherent operational
risks in the industry, lower lease rates from older vessels, dependence on key personnel, FSL’s
controlling stake in the FSL Trust, short operating history, lack of historical financial history for the
Trust, risk of government requisitions during periods of emergency or war, possibility of pirate or
terrorist attacks, competition in the industry, political instability where the vessels are flagged or
operate, cyclicality of the industry and fluctuations in vessel values.
First Ship Lease Trust may, from time to time, make additional written and oral forward-looking
statements, including our reports to shareholders. The company does not undertake to update any
forward-looking statement that may be made from time to time by or on behalf of the Trust
Section I
Results Highlights
4
Highlights
Revenue of US$12.7 million3.8% higher than IPO projection of US$12.2 million
DPU of 2.30 US cents2.2% higher than IPO projection of 2.25 US cents
Three product tankers acquired for the portfolio in June 2007
Additional 0.17 US cents in DPU for FY07
Additional 0.30 US cents in DPU for FY08
47% of targeted DPU increase in FY08 is booked
Revenue of US$12.7 million3.8% higher than IPO projection of US$12.2 million
DPU of 2.30 US cents2.2% higher than IPO projection of 2.25 US cents
Three product tankers acquired for the portfolio in June 2007
Additional 0.17 US cents in DPU for FY07
Additional 0.30 US cents in DPU for FY08
47% of targeted DPU increase in FY08 is booked
Section II
About FSL Trust
6
FSL Trust’s management team
Philip Clausius
Chief Executive Officer
Previously with Schoeller Holdings (co-founded FSL)
15 years of financial and operational experience in the shipping industry
Chief Executive Officer
Previously with Schoeller Holdings (co-founded FSL)
15 years of financial and operational experience in the shipping industry
Cheong Chee Tham
Chief Financial Officer
Previously with SIA group (joined FSL in October 2005)
More than 16 years experience in accounting, leasing and asset financing
Chief Financial Officer
Previously with SIA group (joined FSL in October 2005)
More than 16 years experience in accounting, leasing and asset financing
Kwa Lay San
Chief Risk Officer
Previously with DBS Bank (joined FSL in May 2006)
Over 10 years of experience in banking and ship financing
Chief Risk Officer
Previously with DBS Bank (joined FSL in May 2006)
Over 10 years of experience in banking and ship financing
RonaldDal Bello
Senior Vice President and Head of Sales, West of Suez, based in Zurich
Previously with GE Commercial Finance (joined FSL in April 2006)
16 years of experience in ship financing and shipping industry
Senior Vice President and Head of Sales, West of Suez, based in Zurich
Previously with GE Commercial Finance (joined FSL in April 2006)
16 years of experience in ship financing and shipping industry
7
Introduction to FSL Trust
FSL Trust is …FSL Trust is … FSL Trust is not …FSL Trust is not …
Leasing Company
Origination & Structuring Risk management
Capital management
1 2
3
ShippingCompany
Operating risk Shipping cycle risk
Regulatory risk
1 2
3
Long-term stable lease income with minimum lease term of 7 years
No exposure to operating costs
No exposure to technical / vessel downtime
Responsible for operating costs and is directly exposed to escalation of such costs
Exposure to technical / vessel downtime risk
Bareboat charter modelBareboat charter model Time charter modelTime charter model
8
Structure at IPO
- IPO on the SGX in March 2007 to raise US$ 333.2 million in Primary proceeds
- Initial lease portfolio of 13 vessels
- No debt at IPO; committed credit facility of US$250 million available for growing assets
- Sponsor shareholders include Schoeller Holdings Ltd, HSH Nordbank AG and HVB AG
- Strong Trust board, including eminent independent directors: Mr Wong Meng Meng, Mr Phang Thim Fatt and Mr Michael Montesano III
UNITHOLDERS(1): Public 68%Sponsor 32%
SPONSOR
FSL TRUST TRUSTEE-MANAGER
Special Purpose Companies (SPCs)
VESSELS
LESSEES
1 Public and Sponsor shareholding, post exercise of greenshoe, is 69.87% and 30.13% respectively
9
An attractive business model
Focus
Focus on accretive asset growth
Robust risk management
practices
Attractive and stable distribution
yield of initial portfolio
Strong Sponsor
commitment
Lease portfolio diversified across sub-sectors and
customers
No Singapore tax on
distributions to Unitholders
10
Our growth strategy
Drive rapidgrowth in the
portfolioFocus
on long-termbareboatcharters
Maintainconservative
financialstructure
Maintain disciplined approach to portfolio and
risk management
Maintainhigh quality
and modernasset
portfolio
Section III
Acquisition of James Fisher Vessels
12
Business update: 3 product tankers acquired on 1 June 2007
Vessel acquisitions announced
Acquisition of three product tankers for a sale and leaseback to James Fisher & Sons Plc (“James Fisher”)
New ships (2 vessels were delivered in 2006 and one in 2007); advanced technical design
Bahamas flagged; generally deployed in the British Isles with oil majors
Total consideration of US$45 million
James Fisher has option to sell and leaseback a fourth sister vessel by 30 June 2008
Acquisition of three product tankers for a sale and leaseback to James Fisher & Sons Plc (“James Fisher”)
New ships (2 vessels were delivered in 2006 and one in 2007); advanced technical design
Bahamas flagged; generally deployed in the British Isles with oil majors
Total consideration of US$45 million
James Fisher has option to sell and leaseback a fourth sister vessel by 30 June 2008
With long term
charters in place
Minimum base lease term of 10 years
James Fisher has lease extension options and purchase options
Accretive to DPU
Minimum base lease term of 10 years
James Fisher has lease extension options and purchase options
Accretive to DPU
Financing plan
Financed by drawdown on existing credit facility
Interest rate swapped to fixed on drawdown
Financed by drawdown on existing credit facility
Interest rate swapped to fixed on drawdown
13
Chemical tanker28%
Product tanker23%
Dry bulk carrier14%
Container ship35%
Chemical tanker31%
Product tanker15%
Dry bulk carrier16%
Container ship38%
James Fisher15%
Schoeller Holdings
13%
Berlian Laju Tanker31%
Siba Ships16%
Evergreen Marine25%
James Fisher23%Schoeller
Holdings12%
Berlian Laju Tanker28%
Siba Ships14%
Evergreen Marine23%
Original revenue breakdown by lessee
Positive impact on lease portfolio
Original revenue breakdown by lessee New revenue breakdown by lessee (+3 vessels)New revenue breakdown by lessee (+3 vessels)
Original revenue breakdown by vessel typeOriginal revenue breakdown by vessel type New revenue breakdown by vessel type (+3 vessels)New revenue breakdown by vessel type (+3 vessels)
14
Chemicaltanker29%
Producttanker28%
Dry bulkcarrier15%
Containership28%
JamesFisher28%Schoeller
Holdings10%
Berlian LajuTanker29%
Siba Ships15%
EvergreenMarine18%
Original net book value breakdown by lessee
Positive impact on lease portfolio
Original net book value breakdown by lessee New net book value breakdown by lessee
(+3 vessels)New net book value breakdown by lessee
(+3 vessels)
Original net book value breakdown by vessel typeOriginal net book value breakdown by vessel typeNew net book value breakdown by vessel type
(+3 vessels)New net book value breakdown by vessel type
(+3 vessels)
Chemicaltanker32%
Producttanker21%
Dry bulkcarrier16%
Containership31%
JamesFisher21%
SchoellerHoldings
11%
Berlian LajuTanker32%
Siba Ships16%
EvergreenMarine20%
Section IV
Results for Period Ended 30 June 2007
16
Summary of Results
Revenue (US$’000)Revenue (US$’000) Net Profit after tax (US$’000)Net Profit after tax (US$’000)
46412,208
12,672
Projection Actual
2,310 2,307
Projection Actual
17
Summary of Results
DPU for Period ended 30 Jun 07 (US Cents)(normalised on a quarterly basis)
DPU for Period ended 30 Jun 07 (US Cents)(normalised on a quarterly basis) DPU Projection for Q3 & Q4 07 (US Cents)1DPU Projection for Q3 & Q4 07 (US Cents)1
2.192.13 0.06
Projection Actual
2.22 2.22
Q3 07 Q4 07
1 includes additional contribution of 0.075 US cents per quarter from new James Fisher vessels and gains from cross-currency swaps at IPO and assuming no new acquisitions during Q3 and Q4 2007
18
DPU Target Achieved
2.237 2.237
2.343 2.343
Q1 08 Q2 08 Q3 08 Q4 08
5% growthtarget
4.2% growth achieved
10% growth target
4.2% growth achieved
Quarterly benchmark
DPU2
Achieved DPU1
1 DPU of 2.22 US cents achieved following the acquisition of three new vessels from James Fisher and gains from cross-currency swaps at IPO, and assuming no acquisitions in Q3 and Q4 2007.2 Quarterly benchmark DPU of 2.13 US cents as indicated in the IPO Prospectus.
19
Financial Results for the Period Ended 30 June 2007
Consolidated Income StatementConsolidated Income Statement
Increase/Actual Projection (Decrease)
US$’000 US$’000 %
Revenue 12,672 12,208 3.8Depreciation -9,161 -8,854 3.5Management fees -507 -488 3.9Trustee fees -25 -25 -Other expenses -276 -316 -12.7Finance income 98 67 46.3Finance expense -472 -269 75.5Net profit before tax 2,329 2,323 0.3Income tax expense -22 -13 69.2Net profit after tax 2,307 2,310 -0.1
Group19 March 2007 to
30-Jun-07
20
Financial Results for the Period Ended 30 June 2007
Consolidated Cash Flow StatementConsolidated Cash Flow Statement
Actual19 March 2007 to 30
June 2007US$'000
Cash flows from operating activities:Net profit before tax 2,329
Adjustments for: Vessel depreciation 9,161 Amortisation of upfront fees and initial direct costs 77Operating profit before working capital changes 11,567Working capital changes 276Unrealised exchange differences, net -
Cash flows from operations 11,843
Income tax paid (3)Net cash provided by operating activities 11,840
Net cash used in investing activities (516,879)
Net cash from financing activities 522,356
Net increase in cash and cash equivalents 17,317Cash and cash equivalents at end of period 17,317
21
Financial Results for the Period Ended 30 June 2007
Consolidated Balance SheetConsolidated Balance Sheet
Group Trust
US$’000 US$’000
ASSETS
Non-current assets 508,409 504,759
Current assets 18,826 16,555
Total assets 527,235 521,314
LIABILITIES
Non-current liability 43,857 43,857
Current liabilities 3,191 880
Total liabilities 47,048 44,737
Net assets 480,187 476,577
UNITHOLDERS’ FUNDS 480,187 476,577
Actual
30-Jun-07
Section V
Conclusion
23
Looking ahead: leverage our strengths to continue executing our strategy
Focus
Strong support from the Sponsor and its substantial
shareholders
No conflict of interest with
potential lessees
Well positioned in the growing non tax-driven
ship leasing market
Competitive capital structure and cost of capital
Flexibility in structuring
transactions
Extensive shippingexpertise and wide Industry contacts
Q & A
Section VI
Appendix
26
Dividend growth and subordination
1 Annualised yield based on closing price of US$0.98 per unit on Wednesday, 18 July 2007.2 Revised target DPU for FY 2007 following acquisition of three vessels in June 2007 and gains from cross-currency swaps.3 Net Distributable Amount less any Retained Distributable Amount and excluding non-recurring income and related costs, as at the end of relevant quarter per unit then in issue.4 Quarterly benchmark DPU of 2.13 US cents as indicated in the IPO Prospectus.
Distribution thresholds
and subordination
2.237
2.343 2.343
2.450 2.450
2.2202 2.22022.237
1.9
2.0
2.1
2.2
2.3
2.4
2.5
Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
Targ
eted
min
imum
DAU
3
(US
cen
ts)
Quarterly benchmark
DPU4
5% growth
10% growth
15% growth
9.13%1
yield
9.56%1
yield
10.00%1
yield
9.06%1
yield
27
Incentive fee structure that aligns Trustee-Manager’s and Unitholders’ interests
Growth in DAU1 Sponsor Incentive Fee % DAU received by Unitholders
0% 100.00%
98.85%2
95.31%3
94.12%4
10% of excess over 15%
10% of excess between 15% - 30% 20% of excess over 30%
10% of excess between 15% - 30%20% of excess between 30% - 60%
25% of excess over 60%
% DAU received by
T-M
0%-15% 0.00%
1.15%2
4.69%3
5.88%4
15%- 30%
60%+
30-60%
1 from 2007 quarterly benchmark DPU of 2.130 US cents2 Based on 30% DAU growth3 Based on 60% DAU growth4 Based on 70% DAU growth