Shipping activities yielded NOK 11.3 million in Q3 2013, where NOK 12.3 million came from the ship-owning companies (equity method), compared to NOK 21 million during the same period in 2012, where the ship-owning companies contributed with NOK 20.6 million. The result before tax for Q3 2013 was NOK 11.7 million compared to NOK 29.2 million during the same period in 2012. Reduced earnings comes from lower income in the ethylene segment of NOK 10.8 million, and gains on market value adjustment of the securities portfolio in Q3 2012.

On time charter basis Solvang's share of freight earnings for third quarter 2013 were NOK 50 million, down NOK 5million from same period in 2012, where improved freight earnings for VLGC and LGC segment were offset by the drop in ethylene segment. The Baltic Index, which climbed considerably in second quarter, remained stabile at about USD 75/ton for third quarter 2013, up from an average of USD 71/ton in third quarter 2012.  

Contract coverage for the fully refrigerated vessels, VLGC and LGC, are 100% for 2013. For 2014 contract coverage is as of now 92%, with only three ships coming available during second half of 2014.

Ethylene tonnage operates partly in the spot market and partly in servicing contract of affreightment volumes.

VLGC 82k-84k cbm
The Solvang Group has one 82k cbm VLGC ship, which is on time charter until August 2016 on market based hire. In June the group took delivery of one 84K cbm VLGC, which is on timecharter to September 2014. The group has one additional 84k cbm VLGCs ordered at HHI Korea with delivery in December 2013.

The LPG export volume out of the Arabian Gulf is a central driver for this market, along with the increasing export out of USA. Second quarter had a

significant improvement in export volumes, mainly on increased volumes from Saudi Arabia, as well as start-up after maintenance shutdown in Qatar. This resulted in tight market balance, pushing the rates higher and has stayed high throughout third quarter.  The quarter ended with a Baltic Index average of USD 75/ton, the equivalent of USD 1.57 million per month in timecharter. In fourth quarter the rates have dropped somewhat on lower spot volumes out of the Arabian Gulf, but are still relatively strong at a little over USD 60/ton, the equivalent of USD 1.1 million in monthly timecharter.  

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 all of 2012 and 2013, mainly on less available ships and high repositioning costs stopping movement of ships from East to West.
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
The positive trend in the LGC segment has stabilized somewhat compared to the considerable increase from 2011 to 2013. Earnings are now 8% higher on time charter basis for third quarter 2013, compared with the average for third 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 2014. Solvang ordered two 60k cbm LGC vessels in June with delivery in first and second quarter 2015.   

Ethylene 12-17k cbm
The ethylene segment came to a standstill in third quarter with low export volumes from Saudi Arabia, mainly coming from production issues, but also with effect from low activity in the spot market during the entire summer. The activity has picked up somewhat in fourth quarter, but is still far below the level from same period in 2012.

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 12.9 mill as per 30.09.2013. Solvang is responsible for the management of the portfolio, with a conservative investment strategy. The security portfolio had a minor positive market value adjustment of NOK 0.2 million for end of third 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 two scheduled classification dockings in third quarter 2013. In 2013 there are 10 ships due for classification dockings.