The shipping activities yielded NOK 11.0 mill during Q2 2011 compared to NOK 1.0 mill during the same period in 2010. The result before tax was NOK 0.6 mill compared to a loss of NOK 14.1 mill during the same period in 2010. The securities portfolio contributed with a non-realised loss of NOK 10.7 mill compared with a non-realised loss of NOK 13.9 mill last year.

Introduction
The development in the result from the shipping activities continues to be positive, but on a generally basis is still not satisfactory.

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.

Semiref/ethylene
For the ethylene ships in the 12k cbm to 17k cbm segments, freight rates were 137% higher than the same period last year, measured in USD. The positive development is a result of increased volumes under our contracts for ethylene exports from the Arabian Gulf, as well as a generally tighter market driven by increased demand.

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.

LGC
For ships in the 60 000 cbm segment, the freight level during 1st half 2011 was 28% higher compared to the same period last year. As previously reported the market has improved since the trough in 2010, but the market is still volatile and remains at unsatisfactory levels.

Panamax VLGC
Freight levels for the company's two 75 000 cbm Panamax VLGC ships are still not satisfactory and freight earnings were marginally lower during 1st half  2011 compared to the same period last year when the vessels outperformed the VLGC market.

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.

VLGC
The company has one 82 000 cbm VLGC ship, which is on time-charter until August 2011.

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.

Taxes
As previously reported Solvang ASA received notice of an amendment to its tax assessment for 2008, due to the organisation of individual interests in ships within the shipping taxation scheme. The subsidiary has received a revised tax assessment outside the scope of the shipping taxation scheme. The revised taxation assessment does not procure any payable taxes and the outstanding tax benefit is reduced by NOK 58,4 mill. The impact on the profit and loss account as a result of the revised tax assessment is incorporated in the annual accounts for 2010.

The current fleet is now owned under general taxation rules. A transfer to the shipping taxation scheme is being evaluated on an ongoing basis. 

General

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
The board of Solvang ASA