OREANDA-NEWS. November 10, 2010. In times of unstable and inconsistent global economy and economic crisis in Latvia, JSC Ventspils nafta (VN) as the parent company has gained net profit of 1.145 million lats in 2009. Due to JSC Latvijas Kugnieciba (LK) not providing their audited annual reports, VN is forced to publish their stand alone financial report for 2009 without LK data. Year 2010 has brought significant changes in the Supervisory Council and Management Board and also further developed business focused management.
In the course of 2010, the Management Board of JSC Ventspils nafta has faced continuous avoidance of the Management Board and Supervisory Council of the associated company JSC Latvijas kugnieciba to fulfill their legal obligations and convene a shareholders’ meeting, which is completely unacceptable for a public joint stock company that is included in regulated market. The actions of the Management Board and Supervisory Council of JSC Latvijas kugnieciba have resulted in JSC Latvijas kugnieciba not preparing the annual reports for 2009, thus hindering JSC Ventspils nafta to prepare the consolidated annual report of JSC Ventspils nafta for 2009 in due course. Also as a result of the aforementioned actions of the Management Board and Supervisory Council of JSC Latvijas kugnieciba, JSC Ventspils nafta cannot duly assess its investment into JSC Latvijas kugnieciba. Considering that JSC Ventspils nafta is concerned that the situation with the annual reports of JSC Latvijas kugnieciba for 2009 might go on, JSC Ventspils nafta has prepared this annual report for 2009 in accordance with the Law on Annual Accounts of the Republic of Latvia.

One of the unexpected circumstances for the management of JSC Ventspils nafta in 2010 is the out-of-court legal protection process initiated in October 2010 for LASCO Investment Ltd, which is one of the largest debtors of JSC Ventspils nafta and is entirely owed by JSC Latvijas kugnieciba. Taking into account real estate properties and shares of companies holding the real estate properties are pledged to secure repayment of the loan, JSC Ventspils nafta cannot evaluate the possibility of retrieving the debt at the moment because JSC Ventspils nafta has no information on terms and conditions of out-of-court legal protections process of LASCO Investment Ltd. The possibility of debt’s retrieving is related also to value of the real estate properties and shares of companies holding the real estate properties, which is affected by equitable conditions not controlled by JSC Ventspils nafta, for example, improvement of the macroeconomic situation in Latvia, inflow of investments into the Latvian real estate market and resumption of activities in the Latvian real estate market.

JSC Ventspils nafta continues working on ensuring high liquidity and low debt load, by accordingly continuing to implement a strategy that will minimise all risks while providing an adequate return to shareholders in the medium term. The new management of JSC Ventspils nafta has also worked on improvement of corporate governance at JSC Ventspils nafta, so that the company’s management would meet the common standards of international practice.