Emitents | Latvijas kuģniecība, AS (48510000VYR04HZGC213) |
Veids | Finanšu pārskati |
Valoda | EN |
Statuss | Publicēts |
Versija | |
Datums | 2010-12-07 17:31:37 |
Versijas komentārs | |
Teksts |
In 2009 JSC “Latvijas kuģniecība” Group was forced to make large financial impairments Despite the very tense economic situation in shipping markets
and the global economy, JSC “Latvijas kuģniecība” (Latvian Shipping
Company - LSC) Group managed to maintain stable positions during
the reporting period among the world’s leading operators of medium
sized tanker ships. In terms of delivery volumes, it remains one of
the leaders among analogous companies in Northern Europe.
In the same time according to the LSC audited financial
statements 2009 due to reasons beyond the Group’s control it was
forced to make substantial impairments for the non-shipping related
real estate segment in relation to the several real estate object
purchase deal that was concluded two years ago with the Latvian
Shipping Company shareholder JSC “Ventspils nafta” (VN), who for
over a year has not responded to the LSC requests and appeals to
restructure the said deal pursuant to the current tendencies and
actual prices in the real estate market. Thus the deliberate
unwillingness of VN to consider the actual market situation affects
not only the financial result of its subsidiary company Latvian
Shipping Company, but will substantially concern the result of the
VN itself.
The global recession inevitably affected financial performance
of Latvian Shipping Company, but its negative impact on the LSC
financial result is to be assessed as neutral. The actual reason of
the LSC financial result of 2009 is the impairments related to the
Group’s real estate segment, as the impairment of non-financial
assets in the amount of US $ 88.8 million was made in accordance
with International Financial Reporting Standards (IFRS). The
impairment made consists of the decrease of the shipping fleet
value in amount of US $ 6.2 million because of the unfavourable
trends in the shipping markets and the absolutely largest part is
made by evaluation of the real estate assets, decreasing their
value by US $ 82.6 million. Thus in 2009 LSC suffered net loss in
the amount of US $ 90.3 million. The difference between the Group’s
audited and unaudited financial statements can be explained by
making of the said accruals. Without the impairments made, the
financial result of LSC was satisfactory in the dramatic market
situation as it was this year. The financial stability of the
company is acknowledged by the positive cash flow, as the amount of
cash and cash equivalents at the end of the year reached US $ 75.1
million in comparison with US $ 36.7 million in prior year.
At the end of 2009, LSC had a fleet of 28 tankers (2 of them
chartered from other ship owners). Older ships were sold off in
order to increase the fleet’s competitiveness in the international
market for shipping. Two gas tankers were among the ships to be
sold during the reporting period.
The global recession during the reporting period inevitably
led to a drop in voyage income – by 22% or US $ 55.9 million during
the reporting period in comparison to 2008. Low shipping rates and
a slowdown in the global shipping business have had a fundamental
influence on the gross profit – down by US $ 41.6 million in the
reporting period than in the prior year. The value of LSC equity at
the end of the reporting period was US $ 454.8 million, or 47% of
all assets. The total value of the company’s assets at the end of
2009 was US $ 964.4 million.
During the reporting period, the company optimised
administrative costs and operating costs for ships, including
reduction of the remuneration for the management board and
supervisory board by 34%. The company’s overall liabilities have
declined substantially by US $ 98.4 million or 16% since the
beginning of 2009, and the liabilities at this time are equal to
53% of the group’s assets.
Unfortunately we have to point out that the necessity to make
accruals for investments in the real estate field is directly
related with the LSC largest shareholder’s JSC “Ventspils nafta”
unwillingness to find a solution to the situation caused by itself,
when it at the end of 2008 initiated conclusion of a real estate
object purchase deal with the LSC subsidiary company “LASCO
Investment” (LI) at prices that protractedly did not comply with
the actual situation in the real estate market. Upon receipt of the
largest part of the payment from the LSC subsidiary company LI, JSC
„Ventspils nafta” paid dividends to its shareholders in amount of
LVL 50 million, the largest part of which was transferred to a
Cyprus company “Euromin Holdings (Cyprus) Limited”, who publicly is
called the company of the “Vitol” Group. In fact, by withdrawing
money from the LSC subsidiary company, VN shareholders received
dividends thus disregarding possibilities of other LSC shareholders
to gain profit from their investment in LSC.
LSC has already repeatedly informed its investors and
supervisors of the securities market about endeavours to reduce the
potential losses, trying to commence constructive and business-like
negotiations with VN about restructuring of the real estate deal,
with the aim to ensure solvency and operation in the long-term of
the LSC subsidiary company, as well as considering interests of all
LSC and VN shareholders. The irresponsible avoidance of VN to find
a suitable solution for the situation for both involved parties is
the reason why drawing up of the audited financial statements for
2009 was delayed.
Due to deliberate inactivity of VN, ignoring the fact that
only the money received from LI allowed payment of dividends to VN
shareholders, LI was forced to apply to court for out-of-court
legal protection process that was approved on 7 October 2010 on the
term of 2 years.
Latvian Shipping Company has done everything possible to
optimise the LSC Group’s operation and improve its financial
performance, but its financial result of 2009 to the highest degree
is to be regarded as the consequence of the JSC “Ventspils nafta”
activities. VN has actually kept from its shareholders the fact
that by payment of dividends on the LSC account and refusing to
restructure the real estate deal it will later have to record
substantial losses.
All the shares of Latvian Shipping Company are publicly traded
on the Official list of the NASDAQ OMX Riga exchange. Negative
macroeconomic trends in Baltic securities markets led to a drop in
the price of Latvian Shipping Company shares from LVL 0.66 at the
beginning of the year to LVL 0.40 at the end of the year, even
though in mid-year, when the mood of the market improved a bit, the
price rose to LVL 0.69. On December 31, 2009, the capitalisation of
Latvian Shipping Company shares at the NASDAQ OMX Riga exchange was
LVL 80 million in comparison with carrying amount of equity LVL 222
million. The Group’s Management opinion is that such a
difference can be explained with low liquidity in the Latvian
securities market. Although Latvian Shipping Company shares
draw many investors' attention with 2,591 transactions
at the exchange during the year involving 3.96 million shares worth
LVL 1.91 million, these liquidity indicators do not show the
real value of shares in Latvian Shipping Company as less than 100
transactions involved more than two-thirds of the total number and
value of shares that were traded.
Unfavourable external factors remain in place also after the
end of reporting period, including substantially lower shipping
rates and the fragile situation in global financial markets. The
Group will continue its programme of change to satisfy shareholder
goals even under these complicated circumstances. The focus will be
on commercial and financial risk management, increases in the
effectiveness of company staff, and further reductions in
costs.
Additional information:
Ģirts Apsītis
Adviser of the Chairman of the Management Board
Latvian Shipping Company
Phone: +371 67020126
E-mail: ir@lscgroup.lv
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