Latvijas kuģniecība

LSC Investor Conference Webinar

Wed, 16 May 2012 12:00:00 +0200

Today, on May 10, JSC Latvian Shipping Company (NASDAQ OMX RIGA: LSC1R) organized its first Investor Conference Online Webinar for investors. During the webinar the Chairman of the management board of JSC Latvian Shipping Company Simon R.Blaydes analyzed the financial results of the year 2011, gave forecasts for the year 2012 and answered to the questions sent in by the investors.

The recorded Latvian Shipping Company webinar is available online: http://ej.uz/LSCieraksts and the presentation is available here: https://newsclient.omxgroup.com/cdsPublic/viewDisclosure.action?disclosureId=505804&messageId=620730.

Latvian Shipping Company thanks all participants, who joined the webinar!

Ilze Nagla
Public Relations Manager
JSC “Latvijas kuģniecība”
Tel.: 29267454, 67715914
E-mail: ilze.nagla@vnafta.lv

Latvian Shipping Company’s presentation on 2011 results

Wed, 16 May 2012 12:00:00 +0200

JSC Latvian Shipping Company (NASDAQ OMX RIGA: LSC1R) presentation for investor conference webinar scheduled on May 10, 2012 at 16:00 (EET) http://ej.uz/Latvijaskugnieciba.

Webinar will be hosted by the Chairman of the management board Simon R.Blaydes. The presentation will be in English.

During the webinar Simon R.Blaydes will inform about the JSC Latvian Shipping Company audited financial results of the year 2011 and inform about the future activities of the company.

Presenation is available here.

Ilze Nagla
Public Relations Manager
JSC “Latvijas kuģniecība”
Tel.: 29267454, 67715914
E-mail: ilze.nagla@vnafta.lv

LSC publishes audited financial statements for 2011

Sat, 28 Apr 2012 12:00:00 +0200

JSC Latvian Shipping Company (hereafter – LSC) (NASDAQ OMX RIGA: LSC1R) and its subsidiaries (hereafter – LSC Group or Group) have published audited financial statements for 2011. The net loss of LSC Group in 2011 was LVL 24 million (USD 48.24 million), which is three times less than in 2010.

In both 2011 and 2010 a considerable amount of the net losses relates to asset impairments, provisions for which are required to be made according to the International Financial Reporting Standards. The impairment provisions made in 2011 are as follows: (1) assets held for sale (3 older handy size vessels), in the amount of USD 12.56 million, (2) total fleet value adjustment, in the amount of USD 13.1 million, (3) value adjustment of investment in real estate properties in the amount of USD 1.2 million.

This result reflects the continuing difficult financial situation that ship-owners are experiencing with 2011 recording historically low market rates. The reasons for this are varied and complex but the main factors are less demand for oil products caused by the global economic downturn especially within the more developed western economies coupled with an increase in the number of new tankers. Prior to 2008 strong global economic growth stimulated demand for shipping and this encouraged the construction of new tankers. The consequence of this increase in vessel supply and current decrease in demand is lower earnings for ship-owners.

During 2011 the Group took delivery of two new build tankers, the “Latgale” and the “Zemgale” ordered in 2007 from “Hyundai Mipo Dockyard Co., Ltd” shipyard in Korea. In 2011 LSC sold two unbuilt liquefied petroleum gas carriers in order to finance the two new build product tankers as well as the 17 year old vessel “Indra” for scrap. Further, LSC has reclassified three of its oldest vessels as assets for sale in order to ensure sustainable financing for the remaining fleet.

In 2011 total net voyage result from shipping was USD 87.99 million (2010 – USD 88.31 million) and shows stabilization in income. The net voyage result is calculated by deducting voyage costs (bunkers, port and agent charges, etc.) from voyage income and shows the company’s income, irrespective of whether the fleet is employed in the spot or time charter market. Vessel operating profit was USD 15.11 million, a 19.1% improvement on the previous year (2010 – USD 12.69 million), however, the operating profit did not cover the fleet financing expenses (USD 20.73 million).

At December 31, 2011 the total value of the LSC Group assets was USD 651.92 million. The previous year the figure was USD 680.47 million. The decrease is mainly attributed to the impairment provisions as explained above. The total value of the LSC Group fleet has decreased from USD 570.50 million to USD 510 million and in addition to the impairment provisions also reflects depreciation. The total equity value of the Group at December 31, 2011 was USD 267.84 million (2010 – USD 313.92 million).

During 2011 significant litigation has continued in the UK Courts with regard to substantial losses suffered in previous years by LSC Group. A series of transactions concluded by the previous management were also challenged through the courts in Latvia regarding the dissipation of funds and other assets during 2010 and before.

Prospects for 2012

Given the very difficult financial environment the global shipping market remains very challenging. Ship-owners in all market segments are experiencing severe liquidity problems. LSC has also been exposed to these difficult conditions but has been cushioned from the worst effects with a majority of the fleet being employed on time charter thus ensuring a more predictable income stream.

However there are some signs for optimism for the product tanker market. The level of recent closures of uneconomic refineries in Western Europe and the USA is likely to increase demand for oil products which will need to be supplied by the more modern refineries that have been built, and will continue to be built, in the middle and far-east. Additionally, economic growth in emerging economies, for example South America and Africa, is also expected to increase demand for product tankers.

Lastly it is expected that due to the current economic environment, and with less banking finance available, that fewer product tankers will be built. This should help to improve the current in-balance between the number of product tankers and product movements.

About JSC “Latvijas kuģniecība”(Latvian Shipping Company)

In the medium-sized and handy tankers categories JSC „Latvijas kuģniecība” (NASDAQ OMX RIGA: LSC1R) is among the leading ship owners in the world, and in terms of transport volumes of petroleum products it is also in a leading position among similar companies in Northern Europe. It owns 20 modern ships, employing more than 700 professional and highly qualified seamen from Latvia. The total carrying capacity of the LK fleet is 957 974 DWT and the average age of the fleet is 5.5 years. All ships have received ISM (International Safety Management) certificates.

Public Joint Stock Company “Latvijas kuģniecība” Consolidated Financial Statements 31 December 2011

Public Joint Stock Company “Latvijas Kuģniecība” Consolidated Condensed Financial Statements 31 December 2011 (EUR)

Public Joint Stock Company “Latvijas Kuģniecība” Financial Statements 31 December 2011

Public Joint Stock Company “Latvijas Kuģniecība” Condensed Financial Statements 31 December 2011 (EUR)

Ilze Nagla
Public Relations Manager
JSC “Latvijas kuģniecība”
Tel.: 29267454, 67715914
E-mail: ilze.nagla@vnafta.lv

LSC publishes chartering rates of its ships for the first time

Fri, 23 Mar 2012 12:00:00 +0200

For the first time, JSC Latvian Shipping Company (NASDAQ OMX RIGA: LSC1R) (hereafter – LSC) has published the chartering rates achieved by the LSC fleet. The current management has succeeded in increasing charter rates in 2011 when compared with rates achieved in 2010 under the previous management.

Paul Thomas, member of the Management Board of LSC emphasizes that it is important for a public quoted company to be transparent and to provide interested parties, especially its investors, with all relevant company information. The management board believes this is good business practise and LSC will in future update this information on a quarterly basis.

In 2011, the medium size tankers (12 MR type tankers with carrying capacity of 52 thousand tons) achieved an average charter rate of USD 12 882 per day which is an 8.7% increase compared with 2010.

In turn the “handy” tankers (7 “handy” tankers with carrying capacity of 37 thousand tons each) achieved an average charter rate of USD 11 216 per day which is a 9.2 % increase on 2010.

LSC has performed favourably in comparison with its shipping peers throughout 2011 and during the most recent quarter published - Q4 2011.

The only tanker, for which the chartering rate has decreased within the last year, is the tanker “Riga” with carrying capacity of 68 thousand tons. It achieved USD 13,623 per day which is a 19% decrease on 2010. The decreased earnings on the Riga were a consequence of the vessel’s age (built in 2001) and also due to a lack of demand for such sized tankers in the current market. A similar tendency has also been reflected in the earnings of other shipping companies in this particular market sector due to less demand for long range product movements especially from eastern refineries to western economies.

Paul Thomas, member of the Management Board of LSC observes that in recent years there has been a decline in demand for petroleum products, especially in the more developed Western economies, as well as an increase in the number of product tankers as a consequence of over ordering during the boom years of shipping. This has resulted in negative earnings for ship-owners.

However the current management has succeeded in achieving an increase in chartering rates on a year to year basis. LSC has been able to improve earnings due to the shipping professionalism of members of the management board and all the dedicated professional staff of Latvian Shipping Company.

Paul Thomas, member of the Management Board of LSC stresses: “The new management board is ensuring the company follows a strict policy of corporate governance. There is no longer any manipulation of chartering rates and the services of dishonest brokers have completely stopped”. Currently there is significant legal action being held in the UK courts in order to recover losses of USD 135 million caused by fraudulent charter schemes prior to and including 2005. LSC hopes to regain this money as a result of these legal proceedings in the next few years.

Paul Thomas, member of the Management Board of LSC in the interview with Latvian Business daily Dienas business disclosed that in the short term the company will not be able to pay dividends as it has an unaudited consolidated loss of LVL 25 million in 2011.

Average LSC Fleet net TCE USD/per day

FLEET	Y 2010	FLEET	1Q 2011	2Q 2011	3Q 2011	4Q 2011	Y 2011
HS (7 vessels)	10 271	HS (7 vessels)	11 138	11 197	10 872	11 549	11 216
MR (10 vessels)	11 849	MR (12 vessels)	12 673	12 430	12 638	12 732	12 882
LR1 (1 vessel)	16 826	LR1 (1 vessel)	12 873	15 745	13 163	13 159	13 623

Explanations:

HS = handy size, 37 dwt

MR = medium range, 52 dwt

LR1 = long range, 68 dwt

net TCE = TIME CHARTER EQUIVALANT earnings after deduction of commissions payable by LSC to shipbrokers(s)/charterers, port costs, bunker costs and any other applicable voyage related costs. The above figures reflect combined earnings of fleet for both timecharters and spot market trading.

About JSC “Latvijas kuģniecība”

In the medium-sized and handy tankers category JSC „Latvijas kuģniecība” (NASDAQ OMX RIGA: LSC1R) is among the leading ship owners in the world, and in terms of transport volumes of petroleum products it is also in a leading position among similar companies in Northern Europe. It owns 20 modern ships, employing more than 700 professional and highly qualified seamen from Latvia. The total carrying capacity of the LK fleet is 957 974 DWT and the average age of the fleet does not exceed 5.5 years. All ships have received ISM (International Safety Management) certificates.

Ilze Nagla
Public Relations Manager
JSC “ Latvijas kuģniecība”
Tel.: 29267454, 67715914
E-mail: ilze.nagla@vnafta.lv

Latvian Shipping Company’s financial calendar for 2012

Thu, 22 Mar 2012 12:00:00 +0200

JSC Latvian Shipping Company (NASDAQ OMX RIGA: LSC1R) will publish its interim condensed financial reports in 2012 as follows:

For 3 months – between May 24 and May 31, 2012.
For 6 months – between August 24 and August 31, 2012.
For 9 months – between November 23 and November 30, 2012.
For 12 months – between February 21 and February 28, 2013.

Audited Annual report for 2012 will be published by April 30, 2013

About JSC Latvian Shipping Company

Ilze Nagla
Public Relations Manager
JSC “ Latvijas kuģniecība”
Tel.: 29267454, 67715914
E-mail: ilze.nagla@vnafta.lv

LSC net loss has decreased three times in 2011. Vessel operating profit increased by 21%

Wed, 29 Feb 2012 12:00:00 +0200

Latvian Shipping Company (hereafter – LSC) and its subsidiaries (hereafter – LSC Group or Group) unaudited net loss in 2011 was LVL 24.9 million (USD 49.70 million) which is three times less than in 2010 when LSC had net loss of LVL 78.4 million (USD 142.44 million).

Simon Blaydes, Chairman of the Management Board argues that situation of the LSC should be viewed in a wider context of global shipping industry: „Given the very difficult financial environment the global shipping market remains very challenging. Ship-owners in all market segments are experiencing severe liquidity problems. LSC has also been exposed to these difficult conditions but has been cushioned from the worst effects with a majority of the fleet being employed on time charter thus ensuring a more predictable income stream.”

In both 2011 and 2010 a considerable amount of the net losses relates to the impairments, provisions for which are required to be made according to the International Financial Reporting Standards. The impairment provisions made in 2011 are as follows: (1) assets held for sale (3 older handy size vessels), in the amount of USD12.56 million; (2) total fleet value adjustment, in the amount of USD15.08 million; (3) value adjustment of investment in real estate properties in the amount of USD1.29 million.

This result reflects the difficult financial situation that ship-owners continue to experience in 2011, yet again, recording historically low market rates. The reasons for this are varied and complex but the main factors are less demand for oil products caused by the global economic downturn especially within the more developed western economies coupled with an increase in the number of new tankers. Prior to 2008 strong global economic growth stimulated demand for shipping and this encouraged the construction of new tankers. The consequence of this increase in vessel supply and current decrease in demand is lower earnings for ship-owners.

Simon Blaydes, Chairman of the Management Board is cautiously optimistic about the future development of Latvian Shipping Company: „However there are some signs for optimism for the product tanker market. The level of recent closures of uneconomic refineries in Western Europe and the USA is likely to increase demand for oil products which will need to be supplied by the more modern refineries that have been built, and will continue to be built, in the middle and far-east. Additionally, economic growth in emerging economies, for example South America and Africa, is also expected to increase demand for product tankers.”

Blaydes indicates that according to the current economic environment, and with less banking finance available, that fewer product tankers will be built. This should help to improve the current in-balance between the number of product tankers and product movements.

At the end of 2011 the fleet under the commercial management of LSC Group consisted of 20 tankers. During 2011 the Group took delivery of two new build tankers, the “Latgale” and the “Zemgale” ordered in 2007 from “Hyundai Mipo Dockyard Co., Ltd” shipyard in Korea and sold the 17 year old vessel “Indra” for scrap. Further, LSC has reclassified three of its oldest vessels as assets for sale in order to ensure sustainable financing for the remaining fleet.

In 2011 total net voyage result from shipping was USD87.99 million (2010 - USD88.31 million) and shows stabilization in income. Vessel operating profit was USD 15.24 million, a 21% improvement on the previous year (2010 - USD12.69 million), however, the operating profit did not cover the fleet financing expenses (USD20.27 million).

At December 31, 2011 the total value of the LSC Group assets was USD650.30 million. The previous year the figure was USD680.47 million. The decrease is mainly attributed to the impairment provisions as explained above. The total value of the LSC Group fleet has decreased from USD570.50 million to USD508.05 million and in addition to the impairment provisions also reflects depreciation. The total equity value of the Group at December 31, 2011 was USD265.64 million (2010 - USD313.18 million).

LSC Group consolidated unaudited financial statements for 12 months 2011.

About JSC “Latvijas kuģniecība”(Latvian Shipping Company)

In the medium-sized and handy tankers categories JSC „Latvijas kuģniecība” (NASDAQ OMX RIGA: LSC1R) is among the leading ship owners in the world, and in terms of transport volumes of petroleum products it is also in a leading position among similar companies in Northern Europe. It owns 20 modern ships, employing more than 700 professional and highly qualified seamen from Latvia. The total carrying capacity of the LK fleet is 957 974 DWT and the average age of the fleet is 5.5 years. All ships have received ISM (International Safety Management) certificates.

Ilze Nagla
Public Relations Manager
JSC “Latvijas kuģniecība”
Tel.: 29267454, 67715914
E-mail: ilze.nagla@vnafta.lv

S.Boddy re-elected as the Chairman of the Supervisory Council of LSC

Wed, 11 Jan 2012 12:00:00 +0200

During a meeting of the Supervisory Council of JSC Latvijas kuģniecība (NASDAQ OMX RIGA: LSC1R) (LSC) Simon Boddy was repeatedly elected as the Chairman of the Supervisory Council and Mikhail Dvorak was elected as the Deputy Chairman of the Supervisory Council.

Out of the members of the company’s Supervisory Council that were elected by the extraordinary shareholders’ meeting that was held on December 7, 2011, Serguei Choutov and Ivars Girgensons were not in the composition of the previous Supervisory Council. Neither Ivars Girgensons, nor Serguei Choutov own JSC Latvijas kuģniecība shares.

Serguei Choutov graduated the Moscow State Institute of International Relations and obtained a doctor’s degree in economic science in 1998. He is a member of the Transport Academy of Russia. In the 1980s he worked as a manager in the companies Sovbunker and Soyuznefteexport, later he was a managing director at Navitank A.B., but since 2006 he is the Chairman of the Management Board of “Transgroup Ltd”.

Ivars Girgensons was nominated for work in the LK Supervisory Council by SSIA (State Social Insurance Agency). He is a lawyer at the corporate finance company “Confide”. His main area of specialization is civil law and commercial law. Previously he has managed “Creative Consultation Centre” Ltd, has worked for “Baltijas Ofiss” Ltd, “Akvašips” Ltd, has been a manager of a branch of JSC “SEB banka”

In accordance with the resolution adopted by the shareholders’ meeting, the company’s Supervisory Council will work without remuneration. The Supervisory Council is elected for a period of 5 years.

About JSC “Latvijas kuģniecība”

In the medium-sized and handy tankers categories JSC „Latvijas kuģniecība” (NASDAQ OMX RIGA: LSC1R) is among the leading ship owners in the world, and in terms of transport volumes of petroleum products it is also in a leading position among similar companies in Northern Europe. It owns 20 modern ships, employing more than 700 professional and highly qualified seamen from Latvia. The total carrying capacity of the LK fleet is nearly one million DWT and the average age of the fleet does not exceed 4 or 5 years. All ships have received ISM (International Safety Management) certificates.

Ilze Nagla
Public Relations Manager
JSC “Latvijas kuģniecība”
Tel.: 29267454, 67715914
E-mail: ilze.nagla@vnafta.lv

Video from JSC Latvian Shipping Company business update (08.12.2011)

Fri, 16 Dec 2011 12:00:00 +0200

Video of the presentation of JSC Latvian Shipping Company (NASDAQ OMX RIGA: LSC1R) that took place on December 8, 2011 is available here.

The development plans and future vision of JSC “Latvijas kuģniecība” (LK) are presented by the Chairman of the LK Management Board Simon Richard Blaydes and Management Board member Paul Thomas:
http://www.youtube.com/watch?v=Sy7NixSReLc

Additional information:
Ilze Nagla
Public Relations Manager
JSC “Latvijas kuģniecība”
Tel.: 29267454, 67715914
E-mail: ilze.nagla@vnafta.lv

JSC Latvian Shipping company business update. Part 2

Fri, 9 Dec 2011 12:00:00 +0200

On charter contracts, court case in London and vision of the future restructuring of the company

Simon Boddy, Member of the Supervisory Council of JSC Latvian Shipping Company (NASDAQ OMX RIGA: LSC1R) and Chairman of the Management Board of JSC Ventspils nafta (NASDAQ OMX RIGA: VNF1R) which owns 49.94% of Latvian Shipping company –speaking today on the vision of the VN group and the associated company LSC, indicated that in the case of Latvian Shipping Company (LSC) there is a mixture of assets – the company is in shipping business, but also owns large pieces of real estate, and is involved in court cases, one of which is expected to bring the company 135 million USD – a recovery asset. „In order to maximise the shareholder value – so, that investors know in what type of business they are investing - my vision would be – spilt LSC into a pure tanker company and a real estate company. And to do that – we would need to look for partners in the real estate business who would have money and development ideas, and be interested in managing such potentially great sites as the Preses nams building and Rīgas Līcis, which could be a world class health centre and SPA. We hope that the Latvian real estate market is back on the way up – maybe slowly but will steadily recover”, explained Boddy.

Boddy also commented on the London court case where the claimants are several single vessel companies in the LSC group –and the defendants are the corporate and individual alleged beneficiaries of the massive, fraudulent charter schemes. He emphasised that this is a solely LSC case and all recovered funds (plus expended costs) will go to LSC. The expected amount that the company will get back is 135 million USD which will put it in much better shape for the future. The timing of the recovery of assets cannot be predicted now.

Boddy also emphasized that such charter party schemes and all other improper practices have completely stopped under the new management. Also Chairman of the Management Board of LSC Simon Blaydes stressed that a detailed review of all contracts was undertaken by the company in 2011 with actions taken to change suppliers. This has led to the elimination of all middle parties between LSC and the end users.

Presentation about the LSC Business update.

Additional information:

Ilze Nagla

Public Relations Manager

JSC “ Latvijas kuģniecība”

Tel .: +371-29267454, +371-67715914

e-mail: ilze.nagla@vnafta.lv

JSC Latvian Shipping Company business update

Fri, 9 Dec 2011 12:00:00 +0200

JSC Latvian Shipping Company (NASDAQ OMX RIGA: LSC1R) revenues have declined substantially between 2009 (108.8 million LVL) and 2010 (58.8 million LVL) and into 2011 (9months – 35.9 million LVL), which is due to a deteriorating market over the past 2 years. Less demand for refined products in developed western economies has negatively impacted earnings for tanker owners. The "boom" years in the period 2004-2008 encouraged the construction of new tankers and as time charter rates decreased so did the value of tankers. Therefore Latvian Shipping Company (LSC) has, along with its peers, suffered due to the recent difficult economic conditions. However LSC is in a better financial position than many other ship-owners that have over-extended themselves in the boom years and have unsustainable debt obligations to their lending banks.

During 2009 LSC’s fleet decommissioned 7 ships and has over the same period re-focussed most of the business on the time charter market – away from the more volatile short term spot market. This has resulted in a significant reduction in revenue because daily rates have gone down, there are less ships and also less spot contracts, which allows LSC to be less exposed to the volatile and rising price of fuel.

Over the past 9 months LSC has made significant progress - the company has managed to maintain gross profit margin (9 M 2010 –14.4 million LVL; 9 M 2011 – 14.3 million LVL) with substantially fewer ships operating. Also there are now no middle men any longer taking any margin from the LSC.

Because LSC has fewer older ships it has managed to streamline many costs associated with managing the fleet which is demonstrated by the reduction in net income losses (pre-exceptionals) from 2010 (9 M 2010 – 13.8 million LVL) versus 2011 (9 M 2011 – 8.8 million LVL).

Significant additional admin expenses were experienced in 2010 versus 2011 in remunerating the Board – a cost that has been reduced significantly in 2011 by 5 million lats. In 2011 most of LSC admin expenses relate to legal expenses in relation to previous management’s actions.

A major highlight for Q3 2011 was the LVL 6.4 million impairment charge suffered by LSC. This is mainly due to the covenants of LSC’s bank lenders which have requested LSC to maintain a minimum cash balance. Due to LSC falling cash balances the lending banks have requested the company to sell 3 of the oldest K class vessels which LSC is currently actively pursuing. The impairment charge therefore arises due to an accounting rule which demands LSC recognise a valuation loss on assets that are now held for re-sale – not held on a long term trading basis. Therefore LSC is obliged to recognise such a non-cash loss in Q3 of 2011, a direct result of maintaining a minimum cash position with LSC’s lending banks.

Most recently LSC has taken delivery of 2 new ships in June and July this year which have been contracted out on long term contracts - 2011 was not an ideal time to be taking on new ships however these two ships were ordered back in 2007 by the previous management and significant deposits were paid at the inception and during their build. Therefore LSC was economically obliged to complete these purchases.

For LSC 2011 has been significant in contracting out most of its ships on long term contracts which made them much more predictable as revenue earners.

Additional information:

Ilze Nagla

Public Relations Manager

JSC “ Latvijas kuģniecība”

Tel .: +371-29267454, +371-67715914

e-mail: ilze.nagla@vnafta.lv