An independent auditor has completed the audit of financial report of year 2019 of AS “Rīgas kuģu būvētava”.

In 2019 a total net turnover of AS "Rīgas kuģu būvētava" was EUR 277 376, but the gross loss were in the amount of EUR 1 647 116.

AS “Rīgas kuģu būvētava” informs that a net loss of AS “Rīgas kuģu būvētava” in the report period was in the amount of EUR 823 990.

In 2019 the net turnover has decreased by EUR 3 750 348 in comparison to year 2018, where decrease is related to the fact that in 2019 AS Rīgas kuģu būvētava (Company) terminated provision of the shipbuilding service, as well as the rapid decrease of the volume of the provided ship repair works.

In the result of the evaluation of the possibilities of the Company, as well as taking into account that the debt obligations of the Company continued increasing in 2019, the Company repeatedly applied to the court asking to initiate the legal protection proceedings (LPP), in the result of which, on 16 August 2019 Riga City Vidzeme District Court approved the Plan of LPP measures of the Company by defining the implementation term of the Company LPP equal to two years starting from 16 August 2019. The plan of measures of the LPP as prepared and submitted to the court by the Company allows maintaining of the current profile of operations, in particular, ship repair, at the same time developing also new types of business activity in order to use the infrastructure of the Company as efficiently as possible.

According to the approved plan of measures of the LPP, in 2019 the Company paid of the debt of wages to its former and current employees and has also fully paid the tax debt to the state budget. Also starting from the second month of the LPP, the Company started covering its financial liabilities whose terms of repayment or performance had set in prior to the start of the LPP. According to the approved LPP plan, the term of satisfaction of liabilities to secured creditors is six months and to unsecured creditors twenty four months as from the moment of approval of the plan of measures of the LPP.

At the end of 2019 the total assets of the Company decreased by EUR 14.5 mill. or approximately 43% compared to the beginning of the year and this is mainly related to the alienation of one floating dock and the adjustment for the above referred decrease of the value of shareholding. In 2019 the Company liabilities decreased considerably by 48% reaching the amount of EUR 7 660 647 at the end of the year due to repayment of loans, settlements of payables to suppliers and contractors and tax debts. Also the equity decreased by approximately 40% and amounted to EUR 11 243 925 as on 31 December 2019.

Following the end of the fiscal year, in March 2020 restrictions related to the spread of the Corona virus have been imposed both in the Republic of Latvia and other countries, deterring the economic development on the national and global scale, and this has had direct, major and negative impact on the economic operations of the Company in 2020. For the purpose of restricting the spread of Covid–19 cases, many precaution and safety measures were imposed, moreover, similar precautionary and safety measures were also provided in other countries resulting in the Company receiving refusals of performance of previously booked ship repairs from ship owners companies Also the delivery of materials and spares needed for performing the repairs and involvement of foreign experts was difficult, resulting in the Company not obtaining the previously scheduled revenue.

The above described situation has not only affected the further business operations of the Company, but also the implementation of the LPP, resulting in preparation of the amendments to the Plan of Measures of the LPP by the Company in April 2020. On 15 May 2020 Riga City Vidzeme District Court approved the amendments to the plan of measures of the LPP of the Company by setting the term of implementation of the LPP of the Company four years as from 16 August 2019. The Company attests that the amendments to the plan of measures of the LPP prepared by it and approved by the court will allow maintaining the current profile of operations and indicate that the financial liabilities to secured creditors will be satisfied within sixteen months, to unsecured creditors within forty eight months as from the moment of approval of the plan of measures of the LPP. The further operation of the Company depends on the ability of the Company to implement the legal protection plan and to settle liabilities to its creditors within the defined terms by complying with all the conditions of the plan.

The implementation of the plan of measures of the LPP has been successful since the approval of the LPP plan until now, i.e. for more than a year. During this time period the Company has been carrying out its core operations by resuming the provision of the ship repair services to its customers and continuing the lease of its movable properties and real estate, as well as by performing the measures related to the annual survey of the berths and floating docks, repairs of berths and floating docks, the tidying works of its leased territory and improvement of the infrastructure owned by it. The Company management has implemented major measures for attaining its goals, in particular, attraction of new customers, efficient use of the labour and material resources, improvement of work efficiency. In comparison to 2019 the net turnover of the Company during 2020 up to preparation of annual report is by 168% higher than in 2019.

The Company is assured that it will be able to restore the Company operations, secure its stability and even improve its competitiveness. However, although the Company has clear perspective of restoring its operations, it is also known that the time will be needed for optimising its staffing, restoring the flow of the current assets, diversifying production and attracting investment.

The Management Board of AS “Rīgas kuģu būvētava” proposes to cover the net loss of 2019 from undistributed profit of the next years.

Find hereby enclosed the audited Financial Report of year 2019, auditor’s report and Corporative Governance Report on 2019.

The Board of Directors of AS „Rīgas kuģu būvētava”