Latvian Shipping Company: The lowest point in the shipping industry is gone through

Latvian Shipping Company: The lowest point in the shipping industry is gone
through 

Although the first half of 2010 was one of the most complicated in history of
AS “Latvijas kuģniecība” (JSC “Latvian Shipping Company”), the Group has
managed to take advantage of the possibilities provided by the crisis and
substantially improve age structure of the group's fleet, by selling the
“Kherson” tankers, the average age of which exceeded twenty years and which
were financially unprofitable. Thus already this year the Group will sell out
the older ships and its fleet will consist of only modern and competitive
tankers with an average age of 6 years that is considerably lower than the
average ratio in the world.  The strategy chosen by JSC “Latvian Shipping
Company” is justified by although moderate yet stable rise of the charter rates
in the segment of the new tankers. Considering that during the reporting period
the ship charter rates were historically low JSC “Latvian Shipping Company”
losses during the first six month of 2010 reached USD 25.2 million. This result
complies with the cautiously drawn up budget plan. 

In comparison with the first 3 months of 2010 improvement of the Group's
financial results during the 2nd quarter is conspicuous, as the total result of
the shipping area during 6 months of 2010 was positive and reached USD 3.7
million. The Group's total income from shipping (net voyage result) during the
first half of the year reached USD 43.9 million, but income unrelated to core
operation amounted to USD 1.4 million. The financial result of JSC “Latvian
Shipping Company” Group during the first half of the year was mainly worsened
by losses caused due to the substantial rise of the USD exchange rate against
LVL. 

Financial results of JSC “Latvian Shipping Company” allow concluding that most
probably the lowest point of the Group's financial operation has been overcome
and there is basis for a cautious optimism that during the next reporting
periods along with improvement of the charter markets financial results of JSC
“Latvian Shipping Company” shipping operations could reach higher
profitability. 

During the first half of 2010 JSC “Latvian Shipping Company” has implemented a
well-considered chartering strategy - during the critically low charter rate
period fixing the rates for short-term rent, but along with the market
recovery, returning in the time-charter market and fixing the charter rates for
a longer period, thus minimizing the losses. 

JSC „Latvian Shipping Company” through its subsidiary „Latmar Holdings
Corporation” has made investments in related area. 

The JSC “Latvian Shipping Company” subsidiary SIA LASCO Investment spent the
reporting period in implementing the developed strategy for adding value to the
real estate projects - a development concept for the exclusive property located
at 3 Balasta dambis, Riga, in cooperation with the real estate consulting
company „Cushman&Wakefield” and architect Larry Oltmanns. 

A substantial progress has been reached in the legal procedure of the companies
of JSC “Latvian Shipping Company” Group (Antonio Gramsci Shipping Corporation
etc.) claiming recovery of losses in amount of LVL 100 million that is being
reviewed in the Supreme Court of Justice Queen's Bench Division Commercial
court in London. The Court of Appeal has refused to bring an action upon the
respondents' claim. Thus, in the nearest future a decision favourable to the
claimant will be taken, where exact amount of the losses to collect shall be
set out. 

About Latvian Shipping Company:

In handy or medium-sized tankers category JSC “Latvian Shipping Company” is
among the leading tanker owners in the world, it is also in a leading position
among similar companies in Northern Europe when it comes to oil shipments. JSC
“Latvian Shipping Company” owns 21 modern up-to-standard tankers with
well-trained and experienced crews. In total, the commercial fleet of JSC
„Latvian Shipping Company” consists of 23 tankers, as JSC “Latvian Shipping
Company” operates two tankers that belong to other ship owners. Shortly the
fleet of JSC „Latvian Shipping Company” will be increased by four new
medium-sized vessels. 


Additional information:
Ģirts Apsītis
Adviser of the Chairman of the Management Board
Latvian Shipping Company
Phone: +371 67020126
E-mail : ir@lscgroup.lv