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Solvang : 1st Quarter report 2014

Shipping activities yielded NOK 15.7 million in Q1 2014, where NOK 14.7
million came from the ship-owning companies (equity method), compared to NOK
10.7 million during the same period in 2013, where the ship-owning companies
contributed with NOK 10 million. The result before tax for Q1 2014 was NOK
16.9 million compared to NOK 24.3 million in Q1 2013, which included NOK 14
million in gain on sale of equity shares. The increased earnings from the
shipping activities come from significantly higher income in the VLGC
segment, as well as a strong LGC market.
The first quarter turned out to be a volatile and exciting quarter for the LPG
vessels, delivering an all-time high rate in the VLGC segment, which in late
April approached a doubling of the previous record from 2008. The quarter
opened on a downward trend, as the cold weather in the U.S. led to increased
internal consumption and reduced exports of LPG. Towards the end of February
the market tightened significantly due to higher volumes from the Middle
East, port congestion in India that tied up more ships, as well as stronger
U.S. exports in line with the increasing volumes seen throughout 2013. This
situation was further reinforced and rates continued to climb during March
and April on lack of available ships. The LGC fleet also benefits from the
strong VLGC market, and there is considerable interest for the few LGC's that
may be open later in the year.

In the ethylene segment, low export volumes from the Middle East continued in
2014, but the Solvang fleet, which is now released from contractual
obligations in the Middle East, could take considerable advantage of the
arbitrage opportunities arising from low volumes from the Middle East. In
this case in the form of several ethylene cargoes from Europe to Asia, where
our 17,000 cbm vessels have been very well suited, but positioning costs
reduced earnings below satisfactory level.

Solvang's share of revenues on time charter basis was NOK 53.2 million in Q1
2014, up by NOK 9.3 million from the same period in 2013, mainly due to
better rates for the VLGC and LGC segments, partially offset by lower income
from ethylene.

The Baltic Index for VLGC, which started the quarter on a downward trend, but
picked up considerably towards the end of the quarter, reached an average
level of USD 57/ton, up from USD 41/ton in Q1 2013.

Contract coverage for the fully refrigerated VLGC and LGC ships is 98% for
2014, with only one ship becoming available towards the end of 2014. Ethylene
tonnage operates mainly in the spot market.

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, and took delivery of two 84k cbm VLGC in
June and December 2013. Both ships are on timecharter, the first until
December 2016, while the ship delivered in December 2013 is on timecharter
until December 2018.

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
fell slightly in the first quarter based on lower U.S. exports due to cold
weather and higher internal consumption. But by the end of February, exports
increased significantly and resulted in a new Baltic Index rate record at USD
88.75/ton, and further into April it reached USD 137.5/ton, equivalent to USD
3.79 million on timecharter basis. The average freight rate for the Baltic
Index for Q1 was USD 57/ton, equivalent to USD 950,000 per month on
timecharter basis, up from USD 41/ton in the same period in 2013, equivalent
to just USD 350,000 per month on timecharter basis.

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 throughout 2013 and
further into Q1 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 seems to be making another
positive boost in rates as a result of the strong VLGC market and exports out
of the U.S. to Asia through the Panama Canal. Furthermore, the continued
strong LGC market comes from a shift in the ammonia market from short to long
haul trade routes, where the size of LGCs provides economic benefits to
charterers. The high ammonia activity has been from the Black Sea to the
U.S., but also from the Black Sea to Asia. Main reasons are a considerable
reduction in ammonia exports from Trinidad that increases the export demand
from the Black Sea, and the loss of volume from Iran. 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 ethylene segment, which partially came to a standstill in Q3 2013, and
where Q4 was characterized by very low export volumes out of Saudi Arabia,
mainly due to production problems, continued with the same low volumes in Q1
2014. This low volume of exports from the Middle East created a shortage of
product in Asia and opened for ethylene exports from Europe to Asia.
Solvang's ethylene fleet was well positioned to utilize this opportunity
since the fleet is free from contractual obligations in the Middle East.
However, the first quarter is still characterized by the repositioning out of
the Middle East, resulting in lower than satisfactory earnings. Prospects
within this segment are uncertain with high and growing order book.

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

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

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 has completed one scheduled classification docking in the
first quarter of 2014. For 2014 there are a total of two scheduled
classification dockings.

Stavanger, 15 May 2014

The board of Solvang ASA

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

1Q report 2014


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Solvang via Globenewswire


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