03.06.2011The Solvang ASA result as per 2nd quarter 2011 is a loss before taxes of NOK 19.1 mill against a profit of NOK 14.5 million as per 2nd quarter 2010. Out of this, loss on the investment portfolio was NOK 9 million against a profit of NOK 13.6 million the same period last year. The shipping activity gave a negative result of NOK 8,4 million against a profit of NOK 6.5 million per 2nd quarter last year.
On timecharter basis, freight earnings increased from NOK 58.2 mill during 1st half 2010 to NOK 82.9 mill for the same period this year, an increase of 42.5%. A low USD/NOK exchange rate has negative impact on the results.
The ethylene market continued the positive developments from late 2010, which has resulted in high fleet utilisation. The expected increase in rates for the fully-ref segment has taken longer than anticipated, but the development has been positive since this year and especially since July. The Baltic Index has increased from an average of $42/ton in June, to $55/ton in July and reached $69.50/ton in mid-August.
The positive development in this market has continued in Q2 and we expect a firm market for the balance of the year. However, the order book being delivered during 2012 to 2014 will increase the supply of tonnage and there is some concern for the market in the longer term.
Solvang ASA has sold 49% of its stake in Clipper Victory with a profit in excess of book value of NOK 6.0 mill. Solvang now owns 15.3% of the vessel.
Clipper Victory is fixed on a 5 year timecharter starting August 2011 on favourable terms.
Solvang ASA has signed a contract with Hyundai Heavy Industries, Korea, for the construction of a 84.000 cbm LPG carrier. The vessel is scheduled for delivery in Q3 2013. Solvang will be managing owner with 15.3% ownership.
As previously reported we do not expect a substantial net increase in the world fleet during 2012-13. So far this year 3 VLGC newbuilding orders have been placed bringing the orderbook to 14 VLGCs and new orders placed now will only be delivered towards the beginning of 2014. LPG export volumes out of the Arabian Gulf is an important driver for this market and export volumes have continued to increase which has resulted in a tighter market since June.
The current fleet is now owned under general taxation rules. A transfer to the shipping taxation scheme is being evaluated on an ongoing basis.
There have been no incidents with a particular impact on the accounts in the period.
In an improving, but still demanding market, the company maintains its focus on cost control while upholding the attractive, long-term financing of the company's fleet.
The company carried out no ordinary classification docking.
Stavanger, 23rd August 2011
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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