Shipping activities yielded NOK 38.4 mill during 2011 compared to a loss of NOK 18.1 mill during 2010. The result from the ship-owning companies (equity method) was NOK 40.1mill, including a gain of NOK 3.7 mill from divestment of ownership. The result before tax was NOK 14.2 mill compared to a loss of NOK 0.7 mill for 2010. The securities portfolio contributed negatively with a non-realised loss of NOK 32.6 mill compared with a non-realised gain of NOK 15.7 mill last year.

Introduction
The development in the LPG market continues to be positive, but on a general basis the results from shipping activities are still not satisfactory.

As previously reported, the LPG market in 2011 has seen a significant improvement compared to 2010, with further positive development in October and November, but with the market rate for VLGC dropping significantly in December. The outlook remains positive and the drop is expected to be temporary. On time charter basis freight earnings for 2011 were NOK 168.0 mill compared to NOK 131.6 mill for 2010, an increase of 28%. Furthermore, the Baltic Index has increased from an average of USD 35/ton for 2010 to an average of USD 55/ton in 2011, and with a Q4 average of USD 68/ton. A continued low USD/NOK exchange rate together with high bunker prices had negative impact on the results.

The ethylene market remained strong which resulted in high fleet utilisation.  The increase in rates for this segment has been driven by export growth from the Arabian Gulf since Q4 2010.  

VLGC 82k cbm
The company have one 82k cbm VLGC ship, which is on time charter until August 2016 with market based hire.

LPG export volumes out of the Arabian Gulf is a central driver for this market and export volumes have remained high since last summer, which caused spot rates to more than double from USD 600k pcm to over USD 1.4 mill pcm on time charter basis. However, December saw the Baltic index drop from very high levels to below USD 300k pcm. Main causes are mild winter, delays, maintenance shutdown and ship positioning. The outlook for this segment is still strong and is expected to recover to satisfactory levels.

Panamax VLGC 75k cbm
The company have one Panamax VLGC on long term time charter and one in the spot market. As a result of the stronger VLGC market, freight rates for Panamax VLGC's have strengthened accordingly. The VLGC operating in the spot market was not open during the drop in December, and as such the 4th quarter result is not directly affected by the drop in freight rates.    

LGC 60k cbm
As previously reported the market for ships in the LGC segment has improved compared to recent years and is 25% higher on time charter basis during Q4 2011 compared to Q4 2010. However, the level during 2011 remains unsatisfactory, but the trend continues to be positive and further improvements are expected in 2012. 

Ethylene 12-17k cbm
For the ethylene ships, freight rates have remained strong, driven by high volumes under export contracts from the Arabian Gulf and a busy spot market in general. Activity levels in the market have subdued somewhat in Q4, but freight rates remained healthy and 2011 was a strong year for the Ethylene vessels. Developments in Q1 2012 have been negative with maintenance shutdowns, as well as further sanctions against Iran affecting the spot market, which is normally the balancing factor towards variations in the other freight contracts.

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

The company carried out no ordinary classification docking in 2011, but will have three scheduled classification dockings in 2012.

The full report including figures is attached. 

Stavanger, 28th February 2012
The board of Solvang ASA