First Ship Lease Trust : Financial Statements And Related Announcement - First Quarter Results

FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE FIRST QUARTER 2020

First Ship Lease Trust ("FSL Trust" or the "Trust") is a Singapore-based business trust which owns a diversified fleet of well-maintained, oceangoing vessels across different segments.

As at 31 March 2020, the vessel portfolio comprised 15 operating vessels, including containerships and a variety of tankers, and 2 tanker newbuildings under construction. Of the 15 operating vessels, 10 vessels are leased to international shipping companies on fixed-rate period bareboat charters, whilst 5 vessels are employed on short-term time charters or in pools. The 2 tanker newbuildings under construction are expected to be delivered to FSL Trust in late 2020 and early 2021, respectively.

The combined portfolio of vessels (excluding the 2 newbuildings under construction) had a dollar- weighted average age of approximately 13 years and a dollar-weighted average remaining lease period of approximately 1 year (excluding extension periods and early buy-out options).

References to the term "Group" mean FSL Trust and its subsidiaries on a consolidated basis.

Summary of FSL Trust Consolidated Results

				Inc/
		1Q 2020	1Q 2019	(Dec)
		US$'000	US$'000	%
Revenue	18,412	19,090	(3.6)
Adjusted EBITDA 1	12,553	11,472	9.4
Profit for the quarter	6,680	3,009	122.0
Net distributable amount	26,521	-	100.0
Amount to be distributed	26,521	-	100.0
Distribution per unit ("DPU") (US Cents)	1.50	-	100.0
Average number of vessels		16.4	19.0	(14.7)

1 Excluding gains/losses from the disposal of vessels and vessel impairments

Page 1 of 17

FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

1(a)(i) Consolidated Income Statements

	Note
Revenue
Depreciation expense on vessels	(a)
Gain on disposal of vessels	(b)
Impairment on vessels	(c)
Voyage expenses
Vessel operating expenses
Management fees
Trustee fees
Other Trust expenses
Results from operating activities
Finance income
Finance expenses
Profit before tax
Income tax write-back
Profit for the quarter

Note:

(a) Including amortization of dry-docking costs.

Group

		Inc/
1Q 2020	1Q 2019	(Dec)
US$'000	US$'000	%
18,412	19,090	(3.6)
(5,454)	(6,304)	(13.5)
2,679	-	100.0
(2,034)	-	100.0
(297)	(517)	(42.6)
(4,646)	(5,412)	(14.2)
(553)	(545)	1.5
(14)	(13)	7.7
(349)	(1,131)	(69.1)
7,744	5,168	49.8
164	-	100.0
(1,238)	(2,159)	(42.7)
6,670	3,009	121.7
10	-	100.0
6,680	3,009	122.0

1. This relates to the sale of the two product tankers (FSL Piraeus and FSL Perth) in January 2020 and one crude oil tanker (FSL Shanghai) in March 2020.
2. This relates to the impairment recognised on one product tanker (FSL Osaka) in 1Q 2020. (refer to paragraph 8(b)(ii)).

1(a)(ii) Statements of Comprehensive Income

	Group
	1Q 2020	1Q 2019
	US$'000	US$'000
Profit for the quarter	6,680	3,009
Total comprehensive income, net of tax	6,680	3,009

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

1(a)(iii) Distribution Statements

	Note	1Q 2020	1Q 2019
		US$'000	US$'000
Profit for the quarter		6,680	3,009
Add: Non-cash adjustments	(a)	4,526	5,985
Net cash generated from operations		11,206	8,994
Less: Repayment of secured bank loans		(6,838)	(5,740)
Prepayment of secured bank loans	(b)		-
Income available for distribution		4,368	3,254
Add: Utilisation of cash retained from previous periods	(c)	22,153	-
Less: Cash retained in the current period		-	(3,254)
Net distributable amount	(d)	26,521	-
Amount available for distribution		26,521	-
Comprising:(i) Tax-exempt distribution		26,347	-
(ii) Tax-exempt(one-tier) distribution		174	-
Amount to be distributed		26,521	-
Units at end of quarter ('000)		1,768,058	637,457
Distribution per unit (US Cents)		1.50	-

Notes:

1. Non-cashadjustments

Depreciation expense on vessels 1 Impairment on vessels

Gain on disposal of vessels Amortisation of initial direct costs 2

Group

1Q 2020	1Q 2019
US$'000	US$'000
5,164	5,978
2,034	-
(2,679)	-
7	7
4,526	5,985

1. In 1Q 2020, US$15.7 million of the cash proceeds from the sale of two product tankers and one crude oil tanker were used to prepay the secured bank loan. However, as the US$15.7 million was generated from the sale of the vessels instead of operations, it has not been included in this statement.
2. The amount of distribution is not limited to the amount of net distributable amount as distributions can also be made from proceeds arising from the sale of any vessel.
3. A distribution was approved by the Board of Directors for this quarter. This comprises of the income available for distribution in Q1 2020 and the cash proceeds from the disposal of vessels.
   For the period ended 31 March 2020, the Board of Directors has determined that the Distribution Reinvestment Scheme will not apply to the distribution declared for this quarter.

1. Excluding amortization of dry-docking costs.
2. Excluding amortization of deferred arrangement fees.

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

1(b)(i) Statements of Financial Position

		31 Mar 2020	31 Dec 2019
		Group	Trust	Group	Trust
	Note	US$'000	US$'000	US$'000	US$'000
Non-current assets
Vessels	(c)	156,557	-	180,702	-
Subsidiaries		-	31,847	-	31,847
		156,557	31,847	180,702	31,847
Current assets
Trade and other receivables		9,978	67,223	13,181	97,262
Cash and cash equivalents	(a)	67,150	32,555	42,436	29,063
Non-current assets classified
as held-for-sale	(c)	-	-	38,877	-
		77,128	99,778	94,494	126,325
Total assets		233,685	131,625	275,196	158,172
Equity attributable to
unitholders of FSL Trust
Units in issue		561,332	561,332	561,332	561,332
Reserves		(378,292)	(429,952)	(358,451)	(403,410)
Total equity		183,040	131,380	202,881	157,922
Non-current liabilities
Secured bank loans	(b)	28,015	-	34,517	-
Current liabilities
Trade and other payables		2,700	245	2,215	211
Secured bank loans	(b)	19,930	-	35,544	-
Income tax payable		-	-	39	39
		22,630	245	37,798	250
Total liabilities		50,645	245	72,315	250
Total equity and liabilities		233,685	131,625	275,196	158,172

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

1(b)(i) Statements of Financial Position (cont'd)

Note:

1. Cash and cash equivalents comprise:

	31 Mar 2020	31 Dec 2019
	Group	Trust	Group	Trust
	US$'000	US$'000	US$'000	US$'000
Cash at Bank	41,979	7,384	16,190	2,817
Fixed deposits with financial
institutions	25,171	25,171	26,246	26,246
Cash and cash equivalents	67,150	32,555	42,436	29,063
Less: Restricted cash^	(500)	-	(500)	-
Cash and cash equivalents in the
Consolidated Statement of Cash
Flows	66,650	32,555	41,936	29,063

• The restricted cash is the minimum cash balance maintained with a lender in accordance to the respective loan facility agreement.
  Fixed deposits with financial institutions mature on varying periods, substantially between 3 to 6 months. Interest rates ranging from 1.10% to 2.20% per annum.

1. Aggregate Amount of the Group's Borrowings and Debt Securities

	31 Mar 2020	31 Dec 2019
	US$'000	US$'000
Secured bank loans
Repayable within one year
Secured bank loans	20,257	36,120
Less: Unamortised debt transaction costs	(327)	(576)
	19,930	35,544
Repayable after one year
Secured bank loans	28,130	34,757
Less: Unamortised debt transaction costs	(115)	(240)
	28,015	34,517

In FY 2018, the Trustee-Manager, on behalf of FSL Trust, has through its subsidiaries secured the following term loan facilities:

1. US$50 million facility agreement with Hellenic Bank Public Company Limited;
2. US$40 million facility agreement with Chailease International Financial Services Co., Ltd.; and
3. US$18 million facility agreement with Amsterdam Trade Bank N.V.

The weighted average interest margin over LIBOR of the three loans is 4.012%.

The aggregate outstanding balance of the loan facilities as at 31 March 2020 was US$48.4 million.

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

1. Aggregate Amount of the Group's Borrowings and Debt Securities (cont'd)
   As at 31 March 2020, the Group is in compliance with the terms of the loan agreements. The term loan facilities are secured on the following:
2. 1. a first priority mortgage over the Group's vessels;
   2. 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;
   3. a first priority assignment of the Group's rights, title and interest in and to the charter agreements and the charter income of each vessel; and
   4. pledge of the shares of all the vessel-owning subsidiaries.
3. Vessels
   Vessels comprise:

	31 Mar 2020		31 Dec 2019
	Group	Trust		Group	Trust
	US$'000	US$'000		US$'000	US$'000
Vessels
Operating Vessels	129,367		-	158,597	-
Vessels under construction	27,190		-	22,105	-
	156,557		-	180,702	-

Plan approval is completed and works have been proceeding as scheduled. Keel laying for Hull no. 944 and Hull no. 945 were completed in March 2020 and April 2020 respectively.

As at 31 December 2019, the Group reclassified two product tankers to non-current assets classified as held-for-sale. The Group recorded an impairment on these vessels amounting to US$5.0 million in aggregate in the income statement for the financial year ended 31 December 2019.

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

(c)	Consolidated Statement of Cash Flows
		Note
		Group
			1Q 2020		1Q 2019
			US$'000		US$'000
Operating activities:
Profit before tax		6,670		3,009
Adjustments for:
	Depreciation expense on vessels		5,454		6,304
	Impairment on vessels		2,034		-
	Amortisation of debt transaction costs		374		304
	Amortisation of initial direct costs		54		54
	Interest income		(164)		-
	Interest expense		882		1,849
	Gain on disposal of vessels		(2,679)		-
			12,625		11,520
Changes in working capital:
	Trade and other receivables		3,298		210
	Inventories		-		(227)
	Trade and other payables		656		174
	Lease income received in advance		-		(1,688)
Cash generated from operating activities		16,579		9,989
Income tax paid		(29)		-
Cash flows generated from operating activities		16,550		9,989
Investing activities:
Vessels initial direct costs		-		(102)
Costs incurred for the vessels under construction	(a)	(5,085)		(10,416)
Costs incurred for vessel equipment		(1,034)		(147)
Interest received		69		-
Net proceeds on disposal of vessels		64,278		-
Cash flows generated from/(used in) investing
activities		58,228		(10,665)
Financing activities:
Loan from Sponsor		-		10,000
Distribution to unitholders		(26,521)		-
Repayment of secured bank loans		(6,838)		(5,740)
Prepayment of secured bank loans		(15,652)		-
Interest paid		(1,053)		(1,866)
Cash flows (used in)/generated from financing
activities		(50,064)		2,394
Net increase in cash and cash equivalents		24,714		1,718
Cash and cash equivalents at beginning of period		41,936		13,381
Cash and cash equivalents at end of period		66,650		15,099
Comprising:-
	Cash at Bank		41,479		15,099
	Short-term deposits		25,171		-
			66,650		15,099

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

1(c) Consolidated Statement of Cash Flows (cont'd)

Note:

1. Update of the use of proceeds from the Preferential Offering
   Up to 31 March 2020, the Trust had utilised part of the net proceeds of US$31.00 million from the Preferential Offering as follows:

Use of proceeds	1Q 2020	Total
	US$'000	US$'000
Full repayment of the amounts outstanding under the
Bridging Loan(ii)	-	10,220(i)
Second instalment of 10% of the consideration for
New Vessels (hull N944)	-	4,880
Second instalment of 10% of the consideration for
New Vessels (hull N945)	-	4,880
Third instalment of 10% of the consideration for New
Vessels (hull N944)	4,880	4,880
Total	4,880	24,860

Note:

1. The Bridging Loan was applied towards the first instalments of the aggregate consideration for the New Vessels (hulls N944 and N945).
2. As of 3 June 2019 upon the completion of the Preferential Offering and pursuant to the set-off arrangement between the Group with FSL Holdings Pte. Ltd., the Sponsor, the amount outstanding under the bridging loan of US$10.00 million and the related outstanding accrued interest of US$0.22 million were set-off against the subscription monies for New and excess Units.

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT

FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

1(d)(i) Statements of Changes in Unitholders' Funds

		Option	Foreign
		premium on	Currency	Accumulated
	Units in	convertible	Translation	Profit/	Total
	Issue	bonds	Reserve	(Losses)	Equity
	US$'000	US$'000	US$'000	US$'000	US$'000
2020
Group
At 1 January 2020	561,332	-	(6,725)	(351,726)	202,881
Total comprehensive income for
the quarter	-	-	-	6,680	6,680
Contribution by and distribution
to unitholders:
Distribution to unitholders	-	-	-	(26,521)	(26,521)
At 31 March 2020	561,332	-	(6,725)	(371,567)	183,040
		Option	Foreign
		premium on	Currency	Accumulated
	Units in	convertible	Translation	Profit/	Total
	Issue	bonds	Reserve	(Losses)	Equity
	US$'000	US$'000	US$'000	US$'000	US$'000
2019
Group
At 1 January 2019	523,284	560	(6,725)	(361,857)	155,262
Total comprehensive income for
the quarter	-	-	-	3,009	3,009
At 31 March 2019	523,284	560	(6,725)	(352,848)	158,271

2020 Trust

At 1 January 2020

Total comprehensive loss for the quarter Contribution by and distribution to unitholders:

Distribution to unitholders At 31 March 2020

2019 Trust

At 1 January 2019

Total comprehensive loss for the quarter At 31 March 2019

	Option
	premium on
Units in	convertible	Accumulated	Total
Issue	bonds	Losses	Equity
US$'000	US$'000	US$'000	US$'000
561,332	-	(403,410)	157,922
-	-	(21)	(21)
-	-	(26,521)	(26,521)
561,332	-	(429,952)	131,380
	Option
	premium on
Units in	convertible	Accumulated	Total
Issue	bonds	Losses	Equity
US$'000	US$'000	US$'000	US$'000
523,284	560	(407,600)	116,244
-	-	(545)	(545)
523,284	560	(408,145)	115,699

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

1(d)(ii) and 1(d)(iii) Details of any changes in Units and Total number of issued units

		1Q 2020	FY 2019
	Note	Units	Units
At the beginning of the period		1,768,057,636	637,456,577
Preferential Offering	(1)	-	956,184,865
Conversion of Bonds	(2)	-	174,416,194
At the end of the period		1,768,057,636	1,768,057,636

There are no treasury shares and no subsidiary holdings as at 31 March 2020 and as at 31 March 2019.

1. Preferential Offering

At the Extraordinary General Meeting of the Trust held on 22 April 2019, Unitholders voted in favour of the Trust's proposed preferential offering. Pursuant to the Preferential Offering, an aggregate of 956,184,865 New Units have been issued by FSL Trust on 7 June 2019.

1. Convertible Bonds

On 21 May 2018, the Trust issued US$7,250,000 in principal amount of Convertible Bonds due in 2020 which were convertible by holders into units of the Trust at any time during the Term at conversion price of US$0.05687 per unit.

With effect from 7 June 2019, being the date of issue of the New Units pursuant to the Preferential Offering, the Conversion Price was adjusted to S$0.05644.

The Subscriber, on 15 July 2019, exercised its right to convert all of the Bonds in accordance with the terms and conditions of the Bond Subscription Agreement. Therefore, the Bonds were converted into 174,416,194 New Units at the Adjusted Conversion Price of S$0.05644 (equivalent to approximately US$0.04157 based on an exchange rate of S$1 to US$0.7365 on 15 July 2019) for each New Unit.

Following the issue of 956,184,865 New Units in June under the Preferential Offering, and the issue of 174,416,194 New Units in July following the conversion of the Bond, the total number of issued units in FSL Trust has increased from 637,456,577 Units to 1,768,057,636 Units.

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

1(d)(iv)	Sales, transfers, cancellation and/or use of treasury units
Nil.
1(d)(v)	Sales, transfers, cancellation and/or use of subsidiary holdings
Nil.

1. Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice
   The figures have not been audited or reviewed by the auditors.
2. Where the figures have been audited, or reviewed, the auditors' report (including any qualifications or emphasis of matter)
   Not applicable.
3. Whether the same accounting policies and methods of computation as in the issuer's most recently audited financial statements have been applied
   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 2019, except for the adoption of the new or revised International Financial Reporting Standards ("IFRS") applicable for the financial period beginning 1 January 2020.
4. 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
   FSL Trust has adopted all the new or revised IFRS that are effective for the financial period beginning 1 January 2020 and are relevant to its operations. The adoption of these IFRS does not have significant financial impact on the Group's financial position or results.

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

6. Earnings per unit ("EPU") and Distribution per unit ("DPU") for the current financial period reported on and the corresponding period of the immediately preceding financial year

	Group
	1Q 2020		1Q 2019
Basic and diluted earnings per unit is based on:
Weighted average number of issued units (basic)
('000)	1,768,058		637,457
Basic earnings per unit based on weighted average
number of units in issue (US Cents)	0.38		0.47
Weighted average number of issued units (diluted)
('000) (a)	1,768,058		764,940
Diluted earnings per unit based on weighted average
number of units in issue (US Cents) (b)	0.38		0.42
Number of issued units at end of quarter ('000)
	1,768,058		637,457
Distribution per unit (US Cents)	1.50		-

Note:

1. For the purpose of calculating the diluted EPU, the weighted average number of units in issue is adjusted to take into account the dilutive effect arising from full conversion of convertible bonds to units for 1Q 2019.
2. For the purpose of calculating the diluted EPU, interest expenses on the convertible bond of US$0.24 million was added back to the net profit for 1Q 2019.

As at 31 March 2020, the Trust do not have any outstanding instrument with potentially dilutive effect.

7. Net Asset Value ("NAV") per unit based on units at the end of the current financial period reported on and immediately preceding financial year

		31	Mar 2020	31	Dec 2019
	Note	Group		Trust	Group		Trust
Net asset value per
unit (US$)	(a)	0.10		0.07	0.11		0.09

Note:

1. Net asset value (based on book value) per unit was calculated based on the applicable number of units issued as at the end of the respective period/year.

Page 12 of 17

FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

8. Review of Performance

The breakdown of the revenue and the net result from operations is as follows: 1Q 2020 vs 1Q 2019

		Group
			Inc/
	1Q 2020	1Q 2019	(Dec)
	US$'000	US$'000	%
Revenue	18,412	19,090	(3.6)
Voyage expenses	(297)	(517)	(42.6)
Vessel operating expenses	(4,646)	(5,412)	(14.2)
Management fees	(553)	(545)	1.5
Trustee fees	(14)	(13)	7.7
Other Trust expenses 1	(349)	(1,131)	(69.1)
Adjusted EBITDA 2	12,553	11,472	9.4
Depreciation expense on vessels	(5,454)	(6,304)	(13.5)
Impairment on vessels	(2,034)	-	100.0
Gain on disposal of vessels	2,679	-	100.0
Results from operating activities (EBIT)	7,744	5,168	49.8
Finance income	164	-	100.0
Finance expenses	(1,238)	(2,159)	(42.7)
Profit before tax (EBT)	6,670	3,009	121.7
Income tax write-back	10	-	100.0
Profit for the quarter	6,680	3,009	122.0

1. Adjusted EBITDA
   Bareboat charter
   Bareboat charter rentals generated adjusted EBITDA of US$6.3 million in the quarter under review.

Time charter

1. Chemical tankers

The two chemical tankers, FSL New York and FSL London have been employed on time charter from 12 June 2018 and 19 June 2018 respectively after exiting the spot market. These vessels generated adjusted EBITDA of US$0.9 million in the quarter under review.

1. Included in the other Trust expenses are vessel inspection fees, valuation fees, insurance, directors fees, professional fees, take over costs, printing, investor relations and others.
2. Excluding gains/losses from the disposal of vessels and vessel impairments

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

8. Review of Performance (cont'd) Pool/Revenue Sharing Agreement ('RSA')

1. 1. Product tankers
      FSL Osaka entered an MR pool managed by Hafnia Management ('Hafnia Pool') in November 2015. In the quarter under review, the vessel generated net pool revenue of US$1.7 million. After deducting vessel operating expenses, the vessel generated adjusted EBITDA of US$1.0 million.
      FSL Singapore entered an MR pool managed by Hafnia Management ('Hafnia Pool') on 23 April 2018. In the quarter under review, the vessel generated net pool revenue of US$1.6 million. After deducting vessel operating expenses, the vessel generated adjusted EBITDA of US$1.0 million.
      FSL Piraeus and FSL Perth entered Sigma Tanker Pool managed by Heidmar Inc. ('Sigma Tanker Pool') on 21 August 2018 and 25 August 2018 respectively. In the quarter under review, these vessels together generated net pool revenue of US$1.3 million. After deducting vessel operating expenses, the vessels generated adjusted EBITDA of US$0.8 million. FSL Piraeus and FSL Perth were ultimately sold on 23 January 2020 and 17 January 2020 respectively.
   2. Crude oil tankers
      FSL Hong Kong and FSL Shanghai are employed on a RSA (Revenue Sharing Agreement) from 14 April 2017 and 12 September 2017 respectively. In the quarter under review, these vessels together generated net pool revenue of US$5.0 million. After deducting vessel operating expenses, the vessels generated adjusted EBITDA of US$2.8 million. FSL Shanghai was ultimately sold on 30 March 2020.
2. Other operating expenses
3. 1. Depreciation expense on vessels
      Depreciation expense on vessels decreased by 13.6% (US$0.8 million) due to lower depreciation expenses arising from the disposal of two product tankers and one crude oil tanker in January 2020 and March 2020 respectively;
   2. Impairment on vessels
      Upon re-assessment of the recoverable amount, it was assessed that the carrying amount of FSL Osaka had exceeded the recoverable amount and an impairment of US$2.03 million for the vessel was recognized.

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

8. Review of Performance (cont'd)

1. Results from operating activities
   On an overall basis, FSL Trust generated an operating profit of US$7.7 million in this quarter, compared to US$5.2 million over the same period last year.
2. Finance expenses
   Finance expenses in 1Q 2020, including an exchange gain of US$18,000 (1Q 2019: exchange loss of US$6,000), decreased by 42.7% (US$0.9 million) mainly due to the lower outstanding indebtedness and non-incurrence of bond interest, offset with amortisation of debt transaction costs

For 1Q 2020, FSL Trust achieved net profits of US$6.7 million.

1. Variance from Prospect Statement Not applicable.
2. Outlook and Prospects
   The COVID-19 pandemic and its impact on the world economy and global trade will be a significant factor in the performance of the shipping industry in 2020. FSL Trust is carefully monitoring the developments and the potential effects of the pandemic on its business, operations and financial performance. Whilst we cannot entirely exclude adverse effects of the pandemic on the Trust, the strong financial position and contracted revenue of the Trust as well as the improved freight rates for tankers provide a certain level of downside protection. We expect that the Trust will be able to meet all its obligations and we remain cautiously optimistic for the overall performance of the Trust for 2020.

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

11. Distribution

(a)	Current financial period
	Any distributions declared for	:	Yes
	the current financial period
	Amount	:	US$26,520,865
	Distribution Period	: 1 January 2020 to 31 March 2020
	Distribution Type	:	Cash, Tax-exempt Distribution
	Distribution Rate	: US1.50 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 are also not
			subject to Singapore withholding tax. The
			unitholders are not entitled to tax credits
			for any taxes paid by the Trustee-Manager
			of FSL Trust.

(b)	Corresponding Period of the Immediate Preceding Financial Period
	Any distributions declared for	:	No
	the previous corresponding
	period
(c)	Payment Date		12 June 2020
(d)	Books closure date	:	The Transfer Books and Register of
			Unitholders of FSL Trust will be closed at
			5.00 p.m. on 13 May 2020 for the purposes
			of	determining	each	unitholder's
			entitlement to the Distribution of US1.50
			cents	per unit.	Unitholders whose
			securities accounts with The Central
			Depository (Pte) Limited ("CDP") are
			credited with units at 5.00 p.m. on 13 May
			2020 will be entitled to the Distribution to
			be paid on 12 June 2020.
(e)	Currency election procedures	: Unitholders whose units are held directly
			through CDP will receive their distribution
			in the Singapore dollar equivalent of the

US1.50 cents per unit 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 29 May 2020.

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FIRST SHIP LEASE TRUST

UNAUDITED FINANCIAL STATEMENTS AND DISTRIBUTION ANNOUNCEMENT FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2020

1. If no distribution has been declared/recommended, a statement to that effect and the reason(s) for the decision
   Not applicable.
2. 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.
3. 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 2020 to be false or misleading in any material aspect.
4. The Trustee-Manager, FSL Trust Management Pte. Ltd., has procured undertakings required under Rule 720(1), from all its directors and executive officers.

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 forward- looking 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. 200702265R)

AS TRUSTEE-MANAGER OF FIRST SHIP LEASE TRUST

Markus Wenker

Chief Financial Officer

4 May 2020

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