Annual report


2011 was a mixed year, with parts of the fleet generating very good income, whilst other parts of the fleet returned unsatisfactory income. Nevertheless, all segments showed an improvement in earnings compared to 2010, although as a whole, earnings were still not at a satisfactory level. Net financial items contributed negatively primarily due to non-realised losses for the securities portfolio, broadly in line with the equity market in general. The group reported a profit before tax of NOK 14.2 million, compared to a loss of NOK 0.7 million in 2010. The cash flow was NOK 36.1 million, compared to NOK 0.6 million in 2010. The reversal of deferred tax assets resulted in a tax cost for accounting purposes of NOK 36.7 million, which resulted in a loss after tax of NOK 22.5 million.

Given the year-end result, the board of directors does not propose a dividend for 2011.


The group’s activities are divided in two main segments; Ship-management and Ship-ownership. The latter segment can be divided into three sub-segments for the transportation of Liquefied Petroleum Gas (LPG), ammonia (NH3) and petrochemical gases:
• 12,000 cbm – 17,000 cbm ships (Semi-refrigerated / Ethylene)
• 60,000 cbm fully refrigerated LPG ships (LGC)
• 75,000 – 82,000 cbm fully refrigerated LPG ships (VLGC)

The company's headquarters are located in Stavanger, Norway, where the operation of all the ships are managed from the company's fully integrated shipping organisation.

The chartering of the Ethylene fleet is managed by Evergas Solvang Ethylene (ESE), a 50 / 50 joint venture (JV) company based in Copenhagen. The chartering of the LGC / VLGC fleet is managed by International Gas Carriers (IGC) in Oslo. In addition, the company has a crewing office in Manila, Philippines.

The improvement in market conditions that began in 2010 continued throughout 2011. The oversupply that has characterised the markets over the last two years, driven by strong fleet growth and softer demand, was reversed for most of the fleet in 2011.



3.1 Semi-refrigerated / ethylene carriers

This segment includes semi-refrigerated and ethylene carriers from 8,000 to 20,000 cbm. The group has seven ships in this segment, of which five are managed by ESE. Solvang’s ships in this segment achieved a significant improvement in average earnings for 2011, with earnings increasing 94% compared with 2010. The improvement for ethylene carriers began in the fourth quarter of 2010, which continued in 2011 primarily due to stable export volumes from the Middle East.

The “Clipper Harald” is on a time charter (TC) until October 2015, and the charterer has an option to extend the contract for an additional five year period.

The “Clipper Skagen” is on a TC until September 2013.

3.2 LGC

This segment is defined as fully refrigerated LPG ships of 60,000 cbm. The fleet consisted of seven ships until the “Clipper Posh” was sold for recycling in February 2011, which leaves a fleet consisting of six ships. These ships are marketed by IGC. Four of the ships are on shorter-term employment, while “Clipper Neptun” has entered into a 3+2 year TC and the “Clipper Mars” is on a TC until 2019.

The average earnings on TC basis showed an increase of 25% compared with 2010. Although earnings have shown an improvement compared with 2009 and 2010, they are still at an unsatisfactory level. The market has been variable with a positive underlying trend.

3.3 VLGC

This segment is defined as fully refrigerated LPG ships of 75,000 cbm and above. Solvang has two Panamax VLGC ships (75,000 cbm) and are marketed by IGC. The Panamax VLGC’s are purpose built for transporting LPG from the Atlantic Ocean and Gulf of Mexico to the west coast of Central America. As a result of these features, the Panamax VLGC’s have achieved better earnings than the LGC fleet in 2011. The “Clipper Victory” commenced a five year TC in August, while the “Clipper Sirius” is operating in the spot market.

The 82,000 cbm VLGC “Clipper Sun” is on a TC until September 2016.


(Figures in parentheses refer to 2010)

The group’s result after tax was NOK 22.5 million (NOK 13.8 million). Earnings per share was NOK -0.93 (NOK 0.57). The result for the parent company was NOK -22.1 million (NOK -92.5 million).

4.1 Financial items

The group reported net financial items of NOK -24.2 million (NOK 17.4 million). The corresponding figure for the parent company was NOK -10.3 million (NOK -96.9 million). The group’s securities portfolio generated a non-realised result of NOK -28 million (NOK 20.3 million).

4.2 Liquidity and financial strength

At year-end, the group had liquidity consisting of cash, listed shares and equity certificates totalling NOK 121 million (NOK 132.7 million). The securities portfolio had a market value of NOK 77.4 million (NOK 125.2 million). The corresponding figure for the parent company was NOK 57.5 million (NOK 55.9 million), of which the securities portfolio amounted to NOK 35.6 million (NOK 53.2 million). Total current assets at year-end was NOK 134.3 million (NOK 159.3 million), while current liabilities totalled NOK 16.4 million (NOK 82.6 million). Long-term liabilities and obligations totalled NOK 51.4 million (NOK 54.2 million). For the parent company, total assets at year-end amounted to NOK 155.2 million (NOK 169.9 million), while short-term liabilities totalled NOK 165.1 million (NOK 163.6 million). The parent company’s long-term liabilities and obligations totalled NOK 56.7 million (NOK 54.1 million). The group’s share of current assets and liabilities in ship owning companies totalled NOK 71.5 million and NOK 812.3 million respectively.

The group’s book equity totalled NOK 498.7 million (NOK 525.0 million) at the year-end.

4.3 Taxes

The group does not have any recognised deferred tax assets linked to temporary differences in the subsidiary, Clipper Shipping AS. The reason for the non-recognition of deferred tax assets is that the company is assessing whether or not to join the tonnage-tax regime with effect from 2012. The utilisation of tax positions is therefore associated with some uncertainty, and the group has therefore decided to reverse previously deferred tax assets associated with the subsidiary. This has led to an increase in tax costs for 2011 of NOK 16.3 million. See Note 8 of the consolidated accounts for a more detailed specification of tax costs.

All the company's current interests in ships are owned under normal taxation.

4.4 Financial risk

The group’s interests in ships that are owned through participation in general partnerships with shared liability, are primarily USD-based. Most of the revenues and the majority of expenses are in USD. Furthermore, the market value of the ships, and thus the greatest share of the assets, is priced in USD. The same applies to the financing of the ships. This entails that the real foreign currency exposure is limited in financial terms.

The group's entire fleet is fully financed by long-term financing at favourable terms compared with what can be achieved in the market today. The group has not entered into any contracts concerning financial derivatives or other financial instruments where there is any particular counterparty risk.

Most of the group’s liabilities consist of a share of the mortgage debt for ships that are owned through general partnerships. This is denominated in USD and priced at a floating LIBOR interest rate. In addition, mortgage debt in certain general partnerships is hedged through fixed interest rate contracts. The group has a satisfactory debt-equity ratio, and this, together with active management of the interest rate exposure, ensures that the risk associated with any change in interest rate levels is acceptable.

The group’s securities portfolio had a book value of NOK 77.4 million at the end of the year, compared with a cost price of NOK 96.9 million. The company is responsible for management of the portfolio. The investment activities are based on a relatively conservative strategy. The significant fall in the securities markets in the latter half of 2011 led to a negative value adjustment for the portfolio in 2011.

The group’s fleet is employed in a mix of long & short TC contracts as well as in the spot market. This is a result of a conscious strategy aimed at ensuring earnings and cash flow, while at the same time benefiting from upturns in the market. The development of the world economy makes future market prospects uncertain.

The group has five ships on TC contracts in excess of one year. The charterers are oil majors and major operators within the NH3 market. Credit risk is considered to be limited. The company sees the settlement risk for the business carried out in the spot market as satisfactory.

4.5 General

The year-end accounts are based on the assumption of a going concern. In the opinion of the Board of Directors, the accounts provide a true picture of the results for the year and the company’s position at the year-end.

The group’s interests in ships are owned through participation in general partnerships, with shared liability. In the opinion of the Board, current accounting principles do not provide adequate information on the company’s main operations. In Note 2 of the accounts, the income statement and balance sheet have been compiled according to the proportionate consolidation method in order to provide more detailed accounting information on the operations.

All of the group’s interests in ships are significant and they are recognised in accordance with IFRS based on the equity method of accounting.



5.1 Organisation

Both at sea and onshore, the company’s primary focus is to ensure continuity on the personnel side. The company strives to establish an interesting and attractive workplace that attracts competent employees, where appraisals and employee surveys are key measures. We believe that we have succeeded in this context and that we have a stable and highly –qualified workforce.

Of the company’s office staff, 37% are women and 63% are men. Women and men have equal opportunities to qualify for all types of jobs and positions, and they have equal opportunities for promotion. Working conditions are deemed to be good. Salaries reflect the individual’s qualifications, regardless of gender.

Solvang is an international company with employees from a number of countries and cultures in addition to Norway. This recruitment policy is important for the future development of the company, and we do not envisage any changes to this policy in the future. The company wants to attract competent employees, regardless of religion, gender, race or sexual orientation.

The company engages in research and development work to optimise the ships' operations and to reduce emissions.

5.2 Health

The group has 36 onshore employees and around 400 sailing personnel. Working conditions on shore and on the ships are considered to be good. Sick leave on board the ships are 0.64%. The group had no injuries that resulted in a lost time incident in 2011. This is an exceptionally good result, and can be attributes to a conscious attention on this area across the entire group.

Sick leave among the onshore employees was 3.64% in 2011. Of this percentage, 2.59% were on long-term sick leave and 0.8% were self-certified. There were no incidents resulting in personal injury at the office in 2011.

5.3 Board of Directors

The Board of Directors consists of one woman and two men. Work is currently under way to strengthen the board with further two people. There is a healthy and positive working relationship between the management and Board of Directors.

5.4 Compensation policy

By offering a complete range of jobs, salaries and other benefits, Solvang aims to be an attractive employer for skilled individuals in all relevant disciplines.

All of Solvang’s employees, including the Managing Director, are employed at a fixed salary with no fixed bonus or option elements. Salaries are adjusted once a year. The Managing Director’s salary is evaluated correspondingly by the Board once a year. The company has a pension scheme that covers around 66% of the employees’ salary with full entitlement based on 30 years of service and a retirement age of 67 for employees who started with the company before 31 December 2010. Persons who were employed after this date are offered a defined contribution scheme. In addition, the company has an ordinary insurance scheme covering disability, accidents and death.

The Board is remunerated by fixed directors’ fees that are determined annually by the General Meeting. Board members have no bonus or options agreements with the company.

5.5 External environment

The transport of LPG and petrochemical gases by sea entails little risk of emissions or leakage into the sea. Loading and unloading operations are conducted in closed systems, and strict quality and safety requirements reduce the risk of emissions to a minimum.

All transport at sea entails emissions to the air from the combustion of oil by the ships’ main and auxiliary engines. Our policy in this area is thus to reduce such emissions as much as practically possible. The group focuses primarily on reducing the consumption of bunkers and lubricants, and active measures have continued to have a positive impact on this area in 2011.

Measurements are carried out regularly using a number of systems. Fuel consumption measured against the distance travelled is one of the most important key figures. Wherever possible, we optimise our speed, in other words the speed that gives the lowest emissions and consumption given the contractual obligations we have towards our customers. These systematic analyses have generated excellent results in only a short timeframe. Our modern fleet is also significantly more environmentally friendly than older ships.

In 2010, the company was certified and approved in accordance with the ISO 14001 environmental standard, and will continue in its work to comply with the standard in future.

5.6 Safety

The company has strict quality and safety requirements, both on board the ships and within the onshore organisation. This is reflected in very good statistics for Loss Time Incident (LTI) injuries for the period 2008-2010, and with no injuries in 2011. This is further demonstrated in our good insurance statistics. In order to ensure that this positive development continues, the company invests significant resources in programmes for the continuous improvement of quality and safety on board and on land. We conduct regular and systematic inspections of our ships as part of this work. The same applies to several of our customers, which includes several major oil companies. There were a total of 224 inspections on our 16 ships in 2011. Of these inspections, 111 were conducted by Solvang, while our customers, port authorities and classification companies conducted a total of 113 inspections.

The company uses the “Best Management Practice” in waters as appropriate according to the situation.


Solvang attaches importance to good corporate governance. There is a good relationship between the owners, Board and management, and all three parties have a desire and a stated goal to comply with any significant requirements stipulated by the Corporate Governance Code.

6.1 General

Solvang shall conduct operations that are commercially sound and beneficial to the owners, employees, customers and suppliers. The operations shall be conducted in accordance with clear ethical guidelines and with a focus on the impact on the environment and society as a whole.

6.2 Operations

The operations are described in the company’s articles of association as being shipping, shipowning operations and real estate. The company is currently concentrating entirely on shipowning operations and shipping.

6.3 Company capital and dividends

Shipping is a cyclical industry that requires the company to be adequately capitalised with regard to equity and liquidity. This is reflected in the company’s balance sheet structure. The company aims to have a stable and predictable dividend policy. This means that the dividends shall reflect the profit for the year, but dividends have also been paid during years with less earnings. In recent years dividends have been based on striking a balance between these two considerations. It is proposed that no dividend be paid for 2011.

6.4 Equal treatment of shareholders and transactions with related parties

The Company has only one class of share, with the same voting right for all shares. Transactions with related parties take place in accordance with the guidelines set by the code.

The group’s main broker for sale and purchase is Inge Steensland AS. Parallel investments are also made with other companies within the Steensland Group. All transactions are carried out on market terms.

The Board of Directors has been granted a power of attorney by the General Meeting to increase the share capital by a maximum of 4 million shares. This power of attorney is valid for 18 months and has not yet been utilised.

In recent years, the Board has also had the power of attorney to purchase the company’s own shares up to a maximum of 10% of the company’s share capital. As of today, the company owns 319,978 treasury shares, approximately 1.3% of the share capital.

6.5 Free negotiability

The shares are freely negotiable, and Board approval is not required for the acquisition of shares.

6.6 General Meeting

The General Meeting is called and held in accordance with the company’s articles of association. The Auditor and Chairman of the Board attend the General Meeting. Ample time shall be allowed for holding the General Meeting and for discussion.

6.7 Nominating Committee

More than 70% of the share capital is represented by the company’s Board of Directors. It is therefore not deemed necessary to establish a separate nominating committee.

6.8 Board of Directors, composition and independence

The Board plays an important role as a link and as a control function between the shareholders and the company’s management. The board members are elected for a term of one year at a time. The General Meeting also elects the Chairman of the Board.

Some of the board members have shares in the company. These are shares that have been acquired at market price. The Board is remunerated through a fixed directors’ fee.

The Board’s composition reflects the ownership structure and the need for a broad range of expertise in shipping, finance, law and HSE. None of the Board Members are or have been employed by the company.

6.9 Work of the Board

The work of the Board and its meeting schedule is established once a year for the next 12-month period. The meetings include regular reporting and discussion in all relevant areas, including safety, quality, technical operations and finance. At least once a year, the company’s Auditor participates in a board meeting at which feedback is given on the company’s internal control, among other things.

6.10 Risk management and internal control

An important element in the company’s risk management and internal control is an open and systematic dialogue between the Board and the management. A detailed review of the company’s financial and operational position is carried out by the Board before presenting any quarterly report. In addition, the Board receives monthly reports concerning key figures in the income statement and balance sheet.

In general, there is a good dialogue between the Board and the management. No changes to the business plan or significant investments are made without prior discussion and approval by the Board.

6.11 Remuneration of the Board

The principles for remuneration of the Board and the management have remained unchanged for a long period of time. None of the Board’s members have any additional duties for the company. The Board has not been allocated options in the company.

6.12 Remuneration of executive management

The company’s senior executives are employed on a fixed salary. No options or fixed bonuses are linked to salary agreements. Details of the remuneration of the Board and senior executives are given in Note 9 to the consolidated accounts and Note 8 to the annual accounts for Solvang ASA. For several years, the company has had a programme for the sale of shares to employees, most recently in 2011. Each employee has had an opportunity to purchase shares worth up to a maximum of NOK 30,000 at a 20% discount.

6.13 Information and communication

The company attaches great importance to ensuring that all shareholders and the market in general receive accurate and detailed information simultaneously and at the right time. The reports are published and distributed relatively soon after the end of each quarter and year. From 2011, the company will only publish the annual report and quarterly reports on the Internet.

6.14 Corporate takeovers

As mentioned in Section 6.5, the company’s shares are freely negotiable. In the event of a bid for the company, the Board will strive to provide the company’s shareholders with accurate and timely information, as well as adequate time to evaluate the bid. If the situation so requires, the Board will seek an independent valuation to assess the value of the bid submitted.

6.15 Auditor

Each year, the Auditor presents a plan for the auditing work and reports the results of the audit that has been conducted. The Board summons the Auditor to board meetings at which significant accounting matters are to be discussed. This normally occurs once or twice a year. Information on the Auditor’s remuneration, broken down by auditing and other work, is presented in the company’s annual report and submitted to the General Meeting for approval.

One meeting is held each year between the Auditor and the Board without the presence of the management.


The year 2011 was a mixed year, where the upturn for the ethylene fleet from the fourth quarter of 2010, continued throughout 2011. The ethylene market is expected to remain satisfactory in 2012, but with some uncertainty linked to the anticipated fleet growth.

For the fully refrigerated ships, the market as a whole was unsatisfactory, whilst the second half of 2011 was significantly better than the first half. The year 2012 is expected to bring further positive developments, and earnings overall are expected to be higher than in 2011.


Solvang ASA posted a loss of KNOK -22,094.

The Board of Directors proposes the following allocation:
From the fund for valuation differences: KNOK 1
From other equity: KNOK 22,093

At the year-end, the parent company’s equity amounted to KNOK 579,181 (KNOK 600,420).


One VLGC ship of 84,000 cbm was contracted from Hyundai Heavy Industries in March 2012. The group will own a minimum of 20%. Other than this, no circumstances have arisen which are of significance to the balance sheet and income statement since the end of the financial year.


The Board of Directors and the management would like to thank all the employees, both at sea and on shore, for their fine efforts during a period when the shipping market for some of the fleet has remained weak, while expectations concerning quality and safety have remained unchanged. We would also like to thank our customers and suppliers for their good support and cooperation in 2011 and look forward to the same good cooperation in 2012.