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Solvang : Solvang : 4t quarter report 2012

                  Solvang : Solvang : 4t quarter report 2012

Shipping activities yielded NOK 19.8 mill in Q4 2012, where NOK 19.4 mill came
from the ship-owning companies (equity method), compared to NOK 14 mill during
the same period in 2011, where the ship-owning companies contributed with  NOK 
14.9 mill. The full year 2012 yielded NOK 59.7 mill, where NOK 57.6 mill  came 
from the ship-owning companies,  compared to the result  for 2011 of NOK  38.4 
mill, where the ship-owning  companies contributed NOK  36.4 mill. The  result 
before tax for 2012 was NOK 64.1 mill compared to NOK 14.2 mill for 2011.  The 
securities portfolio contributed with NOK 0.8 mill, compared to a loss of  NOK 
32.6 mill for 2011. The Board propose a dividend of NOK 0.5 per share.

Introduction
The positive trend  in the freight  market from the  second and third  quarter 
with high LPG export volume from the Middle East to Asia came to a stop in the
fourth quarter,  mainly on  maintenance in  Qatar and  increased internal  LPG 
usage in Saudi Arabia. The market in the West remained tight with high  export 
volume out of  the U.S., along  with delays  in West Africa  further tying  up 
already employed tonnage. The Ethylene  market remained strong throughout  the 
year and showed a significant improvement  in volumes and rates in the  second 
half of 2012 compared to the first  half. Main reason was high export  volumes 
from contract customers in the Middle East.

On time charter basis Solvang's share  of freight earnings for fourth  quarter 
2012 were NOK 52.1 mill compared to NOK 50.9 mill for same period in 2011,  an 
increase of 0.2%. For the full year  2012 the freight earnings were NOK  196.9 
mill, compared to NOK  174.1 mill in  2011. The Baltic  Index dropped from  an 
average of around USD 68/ton  in fourth quarter 2011  to an average of  around 
USD 44/ton in fourth quarter  2012. The average rate /  ton for the full  year 
2012 were USD 56/ton, compared to USD 55/ton for 2011.

A continued low  USD/NOK exchange rate  together with high  bunker prices  had 
negative impact on the results.

VLGC 82k-84k cbm
The Solvang Group has one  82k cbm VLGC ship, which  is on time charter  until 
August 2016 on a market based hire. The group has two additional 84k cbm VLGCs
ordered at HHI Korea with delivery in the third and fourth quarter of 2013.

The LPG export volume  out of the  Arabian Gulf is a  central driver for  this 
market, and export volumes remained high until the latter part of September on
high freight volumes  from Saudi Arabia,  with the addition  of strong  export 
growth from  Qatar, UAE  and Kuwait.  However, towards  the end  of the  third 
quarter there was  a significant reduction  in volumes from  Saudi Arabia  and 
Kuwait, as well as maintenance shutdown  from Qatar. This resulted in  several 
open VLGCs, which in turn put rates  under pressure. The quarter ended with  a 
Baltic Index of USD 56/ton, the equivalent of USD 800K per month, which is  in 
line with 2011. The downward pressure continued throughout the fourth  quarter 
and into the first quarter 2013, mainly from the maintenance stop in Qatar.

Panamax VLGC 75k cbm
The Solvang group has two Panamax VLGCs, one on long-term timecharter, and one
on a short timecharter. Both vessels operate in the market in the West,  which 
has been consistently stronger than the East in 2012. In addition, the Panamax
VLGCs have  successfully utilized  the Panamax  size, and  have been  able  to 
differentiate with higher rates compared to the VLGC market in general.

LGC 60k cbm
As previously reported,  the market for  ships in  the LGC segment  has had  a 
positive trend over  the recent  years. Earnings are  now 40%  higher on  time 
charter basis for 2012  compared with the average  for 2011. Particularly  the 
market in the West has  been tight with high  ammonia activity from the  Black 
Sea to the  USA, where one  of the main  reasons is the  30% reduction in  gas 
exports from Trinidad. As a consequence more long haul ammonia shipments  have 
been available for the LGC segment, and the segment is now very tight in terms
of supply and demand. The segment has as such a positive outlook for 2013.

Ethylene 12-17k cbm
After a  weak first  half of  2012 with  production problems  and  maintenance 
shutdown at facilities  of our  COA customers,  as well  as sanctions  against 
Iran, the third and fourth quarter  has picked up considerably. The  increased 
activity comes from higher export volumes  from our COA customers, as well  as 
an improvement  in  the  spot  market,  where  other  ethylene-exporters  have 
increased production to compensate for lost  volumes from Iran. The full  year 
2012 was  somewhat  lower than  in  2011, but  still  more positive  than  the 
indications given in the beginning of 2012. In the longer term, there is  some 
concern over the high newbuilding order book within the ethylene segment.

Financial Risk
The  Solvang  group's   investments  in   ships,  which   are  owned   through 
participation in ship owning companies with joint responsibility, are all  USD 
based, and the group's revenue is all USD based. The group's risk in  currency 
exposure is as such limited.

The Solvang group's security portfolio  has a book value  of NOK 74.2 mill  as 
per 31.12.2012. Solvang is  responsible for the  management of the  portfolio, 
with  a   conservative  investment   strategy.  The   stock  market   improved 
considerably throughout the third  and fourth quarter, and  led to a  positive 
value adjustment for end of 2012.

General
There have  been  no incidents  with  a  particular impact  on  the  financial 
accounts during the period.

Transactions with related parties are as per the guidelines set within the
code. The Group's principal broker for sale & purchase is Inge Steensland AS.
There are also parallel investments done with other companies within
Steensland group. All transactions are done at market terms.

The Solvang Group has completed three scheduled classification dockings in
2012. In 2013 there are 10 ships due for classification dockings.

Stavanger, 27 February 2013
The board of Solvang ASA


This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
4Q report 2012

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Source: Solvang via Thomson Reuters ONE
HUG#1681628
 
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