Shipping activities yielded NOK 10.7 million in Q1 2013, where NOK 10.0 million came from the ship-owning companies (equity method), compared to NOK 11.2 million during the same period in 2012, where the ship-owning companies contributed with NOK 11.4 million. The result before tax for Q1 2013 was NOK 24.3 million compared to NOK 16.9 million during the same period in 2012. The securities portfolio contributed with NOK 13.5 million, where NOK 14.0 million comes from gain on sale of equity shares, less a small unrealized loss of NOK 0.5 million on market value adjustment. Same period in 2012 had a loss of NOK 31.5 million, mainly from unrealized loss on market value adjustment.


Introduction
The negative trend in the freight market in fourth quarter, coming mainly from maintenance in Qatar and increased internal LPG usage in Saudi Arabia, continued throughout the first quarter. Especially for the VLGC market, but also the ethylene market was affected. The market in the West remained tighter throughout first quarter with high export volume out of the U.S. The LGC fleet is securely employed on shorter and longer TC, with a continued positive trend in the rates.

On time charter basis Solvang's share of freight earnings for first quarter 2013 were NOK 43.9 mill compared to NOK 46.2 mill for same period in 2012, a reduction of 5%. The Baltic Index dropped from an average of around USD 45/ton in first quarter 2012 to an average of around USD 41/ton in first quarter 2013.

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 low throughout first quarter, mainly on reduction in volumes from Saudi Arabia on higher internal usage, as well as maintenance shutdown in Qatar. This resulted in several open VLGCs, which in turn put rates under pressure, and rates remained low until the end of April. At this time exports again increase from Middle East producers, which in turn strengthen the market rates. Increased export volumes from the US Gulf are expected to further contribute positively. The quarter ended with a Baltic Index average of USD 41/ton, the equivalent of mere USD 350K per month. The second quarter started just as low as first quarter, but has strengthened considerably towards the end of April and is expected to climb even further in May.

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, and has continued to stay stronger throughout first quarter. 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 through all of 2012. This trend has continued into the first quarter of 2013, but stabilized somewhat compared to the significant improvements from 2011 to 2012. Earnings are now 35% higher on time charter basis for first quarter 2013, compared with the average for first quarter 2012. The market has been tight with high ammonia activity from the Black Sea to the USA, but also from the Black Sea to Asia. Main reasons are the 30% reduction in gas exports from Trinidad, increasing the export demand from the Black Sea, as well as sanctions against Iran. 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
Towards the end of fourth quarter the market softened from lower export volumes as a consequence of maintenance shutdown on our COA customers' facilities in Saudi Arabia and Qatar. The depressed marked stayed low throughout the first quarter, as the start up from the maintenance shutdown was delayed longer than expected. Second quarter is showing signs of considerably more activity and higher export volumes from our COA customers, with a considerable earing improvement. 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 18.7 mill as per 31.03.2013. Solvang is responsible for the management of the portfolio, with a conservative investment strategy. The stock market was more or less flat during first quarter, and the security portfolio only had a minor negative market value adjustment of NOK -0.5 mill for end of first quarter 2013.

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 one scheduled classification docking in first quarter 2013. In 2013 there are 10 ships due for classification dockings.


Stavanger, 14 May 2013
The board of Solvang ASA