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Financials
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Financials
- What were FSL Trust's most recent financial results?
- How often does FSL Trust release its financial results?
- How does FSL Trust depreciate the vessels it owns?
- How is the residual value further depreciated when a lessee extends the lease term upon expiry of the base lease term?
- What is residual value and how is it determined for each vessel?
- Is the residual value also the scrap value?
- What is the typical useful life of a vessel?
- How does earnings per unit impact distribution per unit (DPU)?
- Why do we see declining profits each quarter?
- How much revenue has FSL Trust secured on long-term contracts?
- What were FSL Trust's most recent financial results?
- FSL Trust reports its financial results quarterly via the SGXNET and on its website. For a complete listing of the company's financial results, please click here.
- How often does FSL Trust release its financial results?
- FSL Trust releases its financial results on a quarterly basis.
- How does FSL Trust depreciate the vessels it owns?
- The 23 vessels employed on long-term bareboat leases are depreciated on a straight-line basis at rates which are calculated to write-down their cost to their estimated residual values at the end of the base lease term. For example, if the cost of a vessel is $100 million and it is leased to a lessee with a base lease term of 10 years, and assuming the projected residual value is $45 million at the end of the lease term, the depreciation charge per annum will be $5.5 million ($100 million less $45 million over 10 years). More info on our vessels' lease terms can be found here.
The 2 vessels (FSL Hamburg and FSL Singapore) deployed in the product tanker spot market are depreciated on a straight-line basis at rates which are calculated to write-down their cost to their estimated residual values at the end of their economic useful life of 25 years.
- The 23 vessels employed on long-term bareboat leases are depreciated on a straight-line basis at rates which are calculated to write-down their cost to their estimated residual values at the end of the base lease term. For example, if the cost of a vessel is $100 million and it is leased to a lessee with a base lease term of 10 years, and assuming the projected residual value is $45 million at the end of the lease term, the depreciation charge per annum will be $5.5 million ($100 million less $45 million over 10 years). More info on our vessels' lease terms can be found here.
- How is the residual value further depreciated when a lessee extends the lease term upon expiry of the base lease term?
- The remaining residual value is depreciated over the term of the extended lease to the new residual value.
- What is residual value and how is it determined for each vessel?
- The residual value of each vessel is estimated based on a regression analysis of the average historical data for standard vessels obtained from an independent maritime database, and for non-standard vessels obtained from specialised brokers. Factors such as asset price, quality and fungibility are also taken into consideration to determine the acceptable level of residual value. The residual value is reviewed at each reporting date, with any change in estimate accounted for as a change in estimate prospectively.
- Is the residual value also the scrap value?
- Residual value is the projected fair market value of a vessel at the end of the base lease term. This is different from scrap value which is the amount a vessel's parts (mostly steel) can fetch when it is scrapped usually at the end of its useful life. As FSL Trust's vessels are relatively young, they will continue to have substantial value and remaining useful life at lease maturity.
- What is the typical useful life of a vessel?
- The useful life of a vessel is typically between 25 and 30 years.
- How does earnings per unit impact distribution per unit (DPU)?
- There is no direct correlation between profit trends and distributions since DPU is determined based on FSL Trust's operating cash flows and not on accounting profits.
Business trusts can pay out to unitholders distributions which are higher than net profit (unlike regular listed companies). In fact, it is technically possible for a business trust to declare a distribution per unit that is higher than earnings per unit (which includes non-cash items like depreciation).
- There is no direct correlation between profit trends and distributions since DPU is determined based on FSL Trust's operating cash flows and not on accounting profits.
- Why do we see declining profits each quarter?
- As new vessels post-IPO are acquired and fully financed by debt, the net profit of FSL Trust will fall as the periodic interest expense and depreciation expense relating to the acquired vessels exceed the lease rentals received. The profitability of FSL Trust will stabilise once the long-term capital structure of 1:1 debt to equity is achieved.
- How much revenue has FSL Trust secured on long-term contracts?
- The remaining contracted revenue can be found here.
TopImportant Notes:
These FAQs 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.