First Ship Lease Trust announced today the financial results for FSL Trust for the third quarter ended 30 September 2010 (3Q FY10).

For the quarter, FSL Trust will distribute US$5.7 million ($7.4 million) or US0.95¢ per unit to its unitholders.

The distribution per unit (DPU) for 3Q FY10 of US0.95¢, unchanged from 2Q FY10, represents an annualised tax-exempt yield of 10.3%1. The distribution will be paid on 26 November 2010 to all unitholders on record as at 1 November 2010.

Revenue for 3Q FY10 declined 4.9% year-on-year (y-o-y) to US$23.4 million compared to US$24.6 million in 3Q FY09. The 3Q FY10 revenue includes freight revenue of US$2.5 million earned by the vessels FSL Hamburg and FSL Singapore deployed in the product tanker spot market during the period.

This mitigated the loss of bareboat charter lease rentals of US$3.8 million for the quarter due to the premature termination of bareboat leases for FSL Hamburg and FSL Singapore.

Depreciation expense on the vessels in 3Q FY10 was US$14.2 million, which is 7.2% lower than the US$15.3 million in 3Q FY09. The lower depreciation expense was attributed mainly to (i) a revision in the basis of estimation of the residual values of the two re-delivered vessels FSL Hamburg and FSL Singapore, and (ii) a revision in depreciation policy for the two vessels in which the estimated useful life of the two vessels was extended from 7 years to 25 years. These revisions do not affect the other 21 vessels owned by the Trust.

The Trust incurred a total of US$2.1 million in voyage expenses and vessel operating expenses in 3Q FY10. These expenses were attributed to the operations of the vessels FSL Hamburg and FSL Singapore deployed in the product tanker spot market. The Trust did not incur these expenses previously as they were borne by the charterers under the bareboat charters.

The Trust generated net cash from operations (before loan amortization) of US$14.1 million in 3Q FY10, which is 20.1% lower compared with US$17.6 million in 3Q FY09. After deducting the loan amortisation of US$8.0 million and cash retention of US$0.4 million, the net amount available for distribution was US$5.7 million or US0.95¢ per unit.

FSL Trust’s vessel portfolio presently comprises 23 vessels of different types comprising containerships, chemical tankers, product tankers, crude oil tankers and dry bulk carriers.

Of these, 21 vessels are chartered on a long-term bareboat charter basis to seven reputable international shipping companies. As at 30 September 2010, the leases of the 21 vessels have an aggregate remaining contracted revenue of US$618.8 million and an average remaining lease term of 7.4 years. The remaining 2 vessels, both 47,000 dwt product tankers, are presently deployed in the product tanker spot market.