Shipping activities yielded NOK 27.1 million in Q4 2014, where NOK 26.2 million came from the ship-owning companies (equity method), compared to NOK 5.4 million during the same period in 2013, where the ship-owning companies contributed with NOK 7.5 million. The full year 2014 yielded NOK 101.4 mill, where NOK 93.4 mill came from the ship-owning companies, compared to the result for 2013 of NOK 46.2 mill, where the ship-owning companies contributed NOK 47.9 mill.

The result before tax for 2014 was NOK 108.4 million compared to NOK 63.8 million in 2013. The increased earnings from the shipping activities comes from substantially higher earnings in the LPG segment, where the VLGCs are the main contributor, but also the LGCs benefit from the strong VLGC market with further improvements in earning. The Board propose a dividend of NOK 1.0 per share. The company has a positive view of the market and expect a similar strong result for 2015. Existing program for new-builds are fully financed.

From the record strong level in the LPG market at the beginning of the third quarter, a gradual declining trend started and continued throughout the fourth quarter. The fourth quarter started around USD 100 / ton, the equivalent of USD 2.55 million on time charter basis per month, and ended at USD 63 / ton, the equivalent of USD 1.63 million on time charter basis. Even though this represents a significant drop compared to levels seen earlier in 2014, it is historically a very high level in the VLGC market. Main reasons for the high level were continued strong export activity from the Middle East and USA, together with arbitrage opportunities from West to East, tying up several ships on long haul voyages. This arbitrage closed temporary in December as a consequence of price equilibrium between west and east. A price equilibrium directly linked to the drop in oil price. By year-end the price difference was yet again wide enough for the arbitrage and freight market to start climbing.

In the ethylene segment the fourth quarter continued the positive trend from second and third quarter, with high export activity from the Middle East. However, the Solvang fleet experienced a somewhat slower December with several ships in ballast back from discharge in Far East Asia.  

Solvang's share of revenues on time charter basis was NOK 73.6 million in Q4 2014, up by NOK 27.7 million from the same period in 2013, mainly due to better rates for the VLGC and LGC segments. For the full year 2014, Solvang's share of freight earnings was NOK 245.6 million, compared to NOK 183.7 million in 2013, representing an increase of 33.7%. The increase comes from better rates and delivery of two new-builds in the VLGC segment.

The Baltic Index for VLGC has been on a falling trend throughout the fourth quarter, but historically on a very high level. The average level was USD 86 / ton, up from USD 61 / ton in Q4 2013. For 2014 the average was USD 93.3 / ton, up from the average in 2013 of USD 59 / ton. For 2014, with relevant bunker prices, the average of USD 93.3 / ton is the equivalent of USD 2.23 million per month on timecharter basis.

Contract coverage for the fully refrigerated VLGC and LGC ships is 94% for 2015, with one ship becoming available in June 2015 and one of the LGC new-builds are currently without employment. Ethylene tonnage operates mainly in the spot market and on consecutive voyage contracts.

VLGC 82k-84k cbm
The Solvang Group has one 82k cbm VLGC ship, which is on time charter until August 2016 on an index based hire, and took delivery of two 84k cbm VLGC in 2013. Both ships are on timecharter, the first until December 2016, on an index based hire, while the ship delivered in December 2013 is on timecharter until December 2018 at a fixed rate.

The LPG export volume out of the Arabian Gulf is a central driver for this market, together with the increasing export out of U.S. As mentioned, rates were on a steady decline from mid Q3 and throughout the year, but the annual average of USD 93.3 / ton, the equivalent of USD 2.23 million on time charter per month, was more than 123% higher compared to 2013, which was considered to be an ok year for the VLGC segment. 2014 will go down in history as the strongest VLGC market ever. The order book within VLGC segment is at a historically high level for deliveries in late 2015 and further into 2016.

Panamax VLGC 75k cbm
The Solvang group has two Panamax VLGCs, both on timecharter, until September and December 2016 respectively. Both vessels operate in the market in the West, which has been consistently stronger than the East in 2013 and 2014. This is mainly due to fewer available ships and high repositioning costs deterring speculative positioning of ships from East to West. The Panamax VLGCs have a favorable position in the market as there are only four such ships in the world, and these Panamax VLGCs have successfully utilized this unique position and differentiated positively with significantly higher freight rates compared to the VLGC market and the West in general.

LGC 60k cbm
The LGC segment has stabilized at a good level, and even though it has to some degree a covariance with the VLGC market, it doesn't have the same volatility. The LGC market benefit from the strong VGLC market and the exports out of the U.S. to Asia going through the Panama Canal. The segment has as such a positive outlook. Solvang has ordered three 60k cbm LGC vessels with delivery in the first, second and third quarters of 2015.

Ethylene 12-17k cbm
The positive upturn in the ethylene market from the second and third quarter, continued into the fourth quarter, particularly from the ethylene export out of Ruwais in Abu Dhabi, and from some spot cargoes. The market slowed down somewhat in December with some uncertainties related to export as a consequence of the drop in oil prices and closing of arbitrage opportunities on ethylene between regions. Prospects within this segment are however uncertain with high order book for ethylene in particular, but the increasing potential for ethane export from USA mitigate some of the concerns.

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

General
There have been no incidents with a particular impact on the financial accounts during the period. The company has sold off a part in "Clipper Mars", a 2008 built LGC ship, where the new share is 15%. The sale gave a net negative earnings effect of NOK 2.4 million in the fourth quarter. The reason for the divestiture comes from the exercising of a purchase option by one of the co-owners. "Clipper Skagen" a 15k cbm semi ref vessel built in 1989 was sold and delivered to new owners in October. Solvang had a 20% share in the vessel. The sale gave a net positive earnings effect of NOK 1.1 million.

Transactions with related parties follow the guidelines set within the code. The Group's principal broker for sale & purchase is Inge Steensland AS. There are also parallel investments made with companies controlled by the Steensland family. All transactions comply with market terms.

The Solvang Group had no scheduled classification docking in the fourth quarter of 2014. The group has no scheduled classification dockings in 2015.