Latvian Shipping Company fleet during the 9 months of the year performed with profit

Considering the cautious recovery of the global shipping markets and the
optimised expenses for vessel operational activities the fleet of JSC „Latvijas
kuģniecība” (Latvian Shipping Company) during the 9 months of 2010 was able to
show positive trends and the result from vessel operation during the said
period has reached almost USD 8 million. In the same time due to the
complicated situation in sectors that are not related to the basic business
field, especially in the real estate segment, the total result still is
negative. Due to mentioned reasons, the total losses of the JSC „Latvian
Shipping Company” Group during the reporting period reached USD 28.2 million. 

Since the beginning of the year liabilities have decreased by USD 46 million or
8% and constitute 51% of the Group's assets. Assets of the JSC „Latvian
Shipping Company” Group as on 30 September 2010 amounted to USD 1000.4 million. 

The Latvian Shipping Company is a public stock company with shares on Official
list of the stock exchange NASDAQ OMX Rīga. During the nine months of 2010 the
share price has not actually changed as at the beginning of the year it was LVL
0.40, and at the end of the period it was LVL 0.42, although in the middle of
the period when the market situation improved the price per share reached even
LVL 0.52.  All in all the Latvian Shipping Company's shares were among the most
actively traded ones during the reporting period - 1826 transactions involving
3.52 million shares worth LVL 1.48 million were conducted, representing 42% of
all share transactions on the NASDAQ OMX Rīga Official list during the
reporting period.  On September 30, 2010, capitalisation of Latvian Shipping
Company shares at NASDAQ OMX Rīga was at a level of LVL 84 million. 

At the end of the third quarter (Q3) the fleet under commercial management of
the JSC „Latvian Shipping Company” consisted of 22 tankers, 20 of which are
possessed by the JSC „Latvian Shipping Company” Group, but two vessels belong
to other ship owners. 

Pursuant to the resolution passed at the beginning of 2010 about sale of six
Kherson tankers, already the fifth tanker of this type (“Estere”) was sold
during the Q3. As a result of the JSC „Latvian Shipping Company” fleet updating
programme the average age of the JSC „Latvian Shipping Company” Group's fleet
has reduced from 17.5 years in 2005 to five years at the end of the reporting
period. 
 
During the course of Q3 2010 tankers of the JSC „Latvian Shipping Company”
fleet were mainly employed in time charter, as these charter rates remained
comparatively higher if comparing to voyage rates. The tanker time charter
rates during the Q3 2010 levelled out both in the Handy and MR tanker sector
giving hope to cautious market recovery. 

Even though the result from vessel operation during the 9 months was positive
and reached USD 8 million, the net voyage result of JSC „Latvian Shipping
Company” Group's vessels during the nine months of 2010 substantially fell
behind the last year's result and reached USD 65.8 million, thus cumulatively
as from the beginning of the year showing the comparatively negative situation
in the shipping markets. Reduction of operational costs was the most important
step in order to improve the fleet operation. In order to continue
consideration of the future possibilities to reduce operational costs we will
evaluate scenarios for outsourcing of the vessel technical management services. 

In order to ensure qualitative management of the JSC „Latvian Shipping Company”
Group a new member of the Management Board - Mr. Edvīns Bērziņš was elected,
but Mr. Raivis Veckāgans voluntarily left the Management Board after the
reporting period. 

Stagnation in the Latvian real estate market has been the main reason for
application of out-of-court legal protection process to the JSC „Latvian
Shipping Company” Group's companies „LASCO Investment” Ltd and „LASCO
nekustamie īpašumi” Ltd.  On 7 October 2010 the court approved out-of-court
legal protection process of „LASCO Investment” Ltd on the term of two years,
but on 1 October the court confirmed out-of-court legal protection process of 
„LASCO nekustamie īpašumi” Ltd for one year. 

With the judgement of the Riga District Court of October 12, 2010, the claim of
the liquidator of “Banka Baltija” against the Bank of Latvia and Ministry of
Finance has been partly satisfied and from the Bank of Latvia 59.9 million lats
recovered. Such a judgement of the first instance court is favourable to JSC
„Latvian Shipping Company” as the claim of JSC „Latvian Shipping Company”
against “Banka Baltija” is 14.4  million lats. 

JSC „Latvian Shipping Company” will continue honest and focused actions in
order ensure rights and interests of all the shareholders. JSC „Latvian
Shipping Company” is doing all its best and dependent on the company in order
to complete the JSC „Latvian Shipping Company” Group's audited financial
statements for 2009 and to submit it for approval to the shareholders. 



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