Audited results of joint stock company Ventspils nafta confirm substantial profit in 2008

Despite challenging global economic conditions, the public joint stock company
Ventspils nafta has delivered successful financial results in 2008.
Furthermore, the company has earned material profit through the successful sale
of some assets, thereby implementing its core holding function - efficient
management of investments. 

According to the audited annual report of JSC Ventspils nafta for 2008,
consolidated net turnover of JSC Ventspils nafta was 63.1 million lats in 2008,
with the Group's consolidated profit after tax constituting 29.7 million lats.
However, profit of the Group parent company of JSC Ventspils nafta in 2008 was
more than 40 million lats according to audited results, due to the sale of
assets outside the transit business area. Consolidated profit of JSC Ventspils
nafta Group in 2008 exceeded the 2007 results ( 5.3 million lats) by almost six
times and  the Group's consolidated net turnover is 3.1 million lats larger
than planned for in the 2008 budget . 

Preparation of audited reports of JSC Ventspils nafta for 2008 required extra
time due to the substantial sale transactions that took place at the end of
2008, which positioned JSC Ventspils nafta to focus on its core historical
business, the transit business in 2009. According to recommendations given by
auditors and experts, as well as the latest changes and requirements of the
International Financial Reporting Standards, a comprehensive and in-depth
approach was necessary to draw up consolidated report of JSC Ventspils nafta
for 2008 in order to provide a scrupulous reflection of those assets that were
sold, in annual reports, in full compliance with Latvian and international
standards. 

This detailed and accurate approach to the audit of annual reports has fully
justified itself, as the audited consolidated net profit of JSC Ventspils nafta
Group has grown by 8.9 million lats as compared with the amount of unaudited
profit published in February 2009 , in accordance with requirements of laws and
regulations. Also consolidated net turnover of JSC Ventspils nafta Group has
changed by 15.4 million lats as against the unaudited result, to reflect
turnover of investment sectors concluded (sold) by JSC Ventspils nafta in
another position and demonstrating the financial results from activity of
exactly the retained transit area companies in key figures of the report in the
course of the audit. 

 “Due to global and national economic turmoil, 2008 presented numerous
challenges and complicated issues for JSC Ventspils nafta Group. This led to an
immediate assessment and reevaluation of the company's future plans to allow
for a rapid response and to deliver  maximum efficiency and effectiveness -
resulting in sustainable and optimal future plans,” emphasized the Chairperson
of the Management Board for JSC Ventspils nafta,  Olga Pētersone. “However, the
first six months of 2009 have proved that this will be a tough year for many
companies and only the most competitive will survive,” 

As a result of a comprehensive risk analysis, the Supervisory Council for JSC
Ventspils nafta approved the sale of JSC Ventspils nafta assets in several
operating areas in December 2008, to enable a clear focus on the development of
transit industry assets as opposed to a broader diversification strategy
previously pursued by  the JSC Ventspils nafta Group. Success was achieved by
optimizing, reorganizing and focusing the core business of JSC Ventspils nafta
Group at the start of 2009 , into the key transit areas - transportation,
storage, transshipment of crude oil and petroleum products (subsidiaries
Ventspils nafta termināls Ltd and LatRosTrans Ltd) as well as the international
shipping business (associated company JSC Latvian Shipping Company). 

This decision was made after recommendations made by local and international
experts to ensure adequate return on investments for all shareholders in JSC
Ventspils nafta, despite the conditions of global economic turmoil. This
strategy enabled JSC Ventspils nafta to focus on one core area, focusing on the
growth and improvement of its assets. This process was helped by the
involvement and experience of the international shareholder - oil and gas
transport and trade conglomerate, the Vitol Group. 

The JSC Ventspils nafta subsidiary Ventspils nafta termināls Ltd maintained
stable cargo volume level in the reporting period by transshipping in total
more than 11.6 million tons of crude oil and petroleum products. Events in the
global economy, the difficult global oil market in the last months of the
reporting period and the international competition in the transit area have had
and will continue to have a significant impact on the operating results of
Ventspils nafta termināls Ltd, which were also affected for several months in
the reporting period a by the repair works of the main petroleum products
pipeline Polotsk-Ventspils in the territory of Belarus, which resulted in a
reduced diesel fuel flow to Ventspils. 

Ventspils nafta termināls Ltd continued its active modernization plan in 2008,
by optimizing company's operational processes and procedures, increasing
workforce efficiency and introducing higher requirements in terms of
environment protection,. This helped the company to perform in tough economic
conditions and strengthened its position in international market. The aim of
modernization is to position  Ventspils nafta termināls Ltd as the major crude
oil and petroleum products transshipment complex in the Baltic region Much of
the learning has come from the Vitol Group and the work done to improve its
terminals in Rotterdam and Amsterdam. The most significant contribution that
Ventspils nafta termināls Ltd made towards improving its environmental
performance was the launch of a new, modern wastewater treatment plant that is
unique in the Baltic region. 

Compared with previous forecasts of JSC Ventspils nafta, in the reporting
period, external circumstances substantially affected another Group's company
LatRosTrans Ltd, which is working in the sensitive transit area. Oil
transportation in the direction of Lithuania via the pipeline owned by
LatRosTrans Ltd has still not started due to both the geopolitical situation,
and technical reasons These include repair works at the pipeline sections in
the territory of Belarus and the corresponding decrease in its capacity, which
influenced transportation volumes of petroleum products in direction of
Ventspils. 

In line with the approved schedule, LatRosTrans Ltd continued the renovation
and repair works of the petroleum products pipeline in the reporting period.
LatRosTrans Ltd has continued to help eliminate the significant loss of
petroleum products resulting from illegal activities, through the hiring of a
security company, regular pipeline inspection  ,collaborating with the police
and allocating considerable resources to manage the environmental impact, as
well as informing and involving other state authorities in dealing with this
issue. 

In the reporting period, the JSC Ventspils nafta associated company JSC Latvian
Shipping Company has been continuing to pursue its strategic goal - increasing
the Group's value and retaining its position among the top ten medium range
tanker owners in the world. JSC  Latvian Shipping Company Group delivered a net
profit of 58.7 million US dollars in the reporting period. In comparison with
the 2007 results this is 8.3 million US dollars or 12% lower, reflecting
general unfavorable shipping market trends in the reporting period, especially
towards the end. 

In the tough circumstances of global financial and economic turmoil, JSC
Ventspils nafta is taking the appropriate actions to reduce risk and ensure
profit, by careful, focused and purposeful management of assets as well as
careful planning, to achieve the goals set by shareholders. 

According to 2009 budget forecasts for JSC Ventspils nafta Group, consolidated
net turnover this year is expected to be not less than 60 million lats and net
profit in excess of  2 million lats. 





JSC Ventspils nafta
For further information -
Gundega Vārpa,
Public Relations and Advertising Manager, 
tel.: +371 67229182;
e-mail: gundega.varpa@vnafta.lv
www.vnafta.lv
www.vnt.lv
www.latrostrans.lv