The result after quarter 2009 is an after tax profit of NOK 31,2 mill against a loss of NOK 147,1 mill in the same period 2008. Out of this, profit on the investment portfolio was NOK 27,8 mill against a loss of NOK 124,3 mill last year. The shipping activity gave a negative result of NOK 7,3 mill against a positive result of NOK 12.9 mill last year. Gains on sale of vessels was NOK 2.6 mill (NOK 0.9 mill).

 

In spite of the fact that the company has increased and modernised the fleet compared to the same period last year, a weak market is resulting in a not satisfactory result, which is also below last year. Rate of USD/NOK was 7.00 the 31.12.08 and 5,78 the 30.09.09.

 

For the semi-ref. ships in the 12,000 to 17,000 cbm segment earnings level was 41% lower than same period in 2008 measured in USD. The market was at an acceptable level during 1st and 2nd quarter due mainly to a good level of activity in petrochemical gases and ethylene out of MEG. During 3rd quarter the activity has dropped and the market has become weaker.

 

The increase in the world fleet the next 2 years together with reduced growth in cargo volumes in some markets, creates uncertainty for the ethylene and semiref markets for the rest of 2009 and 2010.

 

For the ships in the 60,000 cbm segment earnings level was 57 % lower than same period last year measured in USD. During the 1st quarter the market was satisfactory. Thereafter the market has been poor, in particular has the idle time increased, but also the rates are lower.

 

The company's two panmax VLGC ships of 75,000 cbm have traded in the spot market. Market development has been similar to that of the 60,000 cbm fleet, but at a slightly higher level. The company owns one vessel of 82,000 cbm "Clipper Sun" which is on TC until January 2010 at satisfactory rates.

 

The fully ref fleet is expected to deliver a weak result for the 4th quarter.

 

There is still a net growth in the world fleet for large fully ref LPG above 75.000 cbm and between 20.000 cbm and 40.000 cbm vessels. This put pressure on rates for all segments of fully ref LPG vessels. There is no order book in 60,000 cbm segment.

 

However, the majority of the VLGC order book will be delivered in the period up to April 2010. The reduced fleet growth should then, together with an anticipated growth in demand, open up for a firmer market in the 2nd half of 2010.

 

The company had 3 ships going through periodical surveys during this period, while the figure was 2 last year.

 

The company's fleet is fully financed with long term loans at terms entered into prior to the finance crisis. The vast majority of the long term debt is in USD at floating rate. This means that finance cost is positively influenced by the low, short term interest rates for USD.

 

Solvang owns between 19.5 % and 30% in the vessels we manage. Our role as manager is regulated in an agreement between Solvang ASA and each ship owning company. The company is receiving an annual fee according to these agreements. The agreements are on arms length and market terms. These agreements can be defined as between related parties. Further, the company has a long term financing at market terms with a related party.

 

The full report for the 3rd quarter 2009 is presented according to IAS 34 Interim Financial Reporting. The accounts do not include all information that is needed for full annual accounts and should be read together with the full accounts for 2008. The 3rd quarter accounts are not audited.

 

Present accounting principles do not, in the board's opinion, give full and extensive information about the company's main activity. Therefore the profit and loss account and the balance sheet, where the company's interest in shipping partnerships are included in the accounts according to the joint venture accounting method, are enclosed to the report.

 

Stavanger 4th  of November 2009
Board of Directors
Solvang ASA

 

The full report including figures is enclosed.