Unaudited Profit of JSC Ventspils Nafta’s Jumps Seven Times
OREANDA-NEWS. February 28, 2008. According to the unaudited consolidated report of JSC Ventspils nafta concern of 2007, consolidated net profit of joint stock company Ventspils nafta concern has reached LVL 49.5 million in 2007, and it has increased for more than seven times in comparison with 2006. In accordance with unaudited data, net turnover of JSC Ventspils nafta concern has exceeded LVL 81 million in 2007, which is LVL 11.7 million more than in 2006.
“The year 2007 can be specially characterized by continuation of the positive changes related to involvement by the co-owner of JSC Ventspils nafta – international oil and gas transport consortium Vitol Group – into management and development of the concern since public auction of the state-owned shares of JSC Ventspils nafta organized by Latvian government in autumn 2006,” the Chairperson of the Management Board of JSC Ventspils nafta Olga Pзtersone points out. O.Pзtersone states that the last year for the concern of JSC Ventspils nafta has turned into a year of changes oriented to future where directions of development of JSC Ventspils nafta are defined, presence of high professionals of international level are ensured at the management bodies of JSC Ventspils nafta, and the transit field of the concern has obtained a new spirit.
The financially economic results of JSC Ventspils nafta Concern during the reporting period were influenced especially favourably by the activities in the transit field of the concern when a new co-owner joined, as well as by the positive activities of the associated company JSC Latvian Shipping Company, as well as the stable indices of other companies of the concern corresponding to budget forecasts.
In April 2007, Euromin Holdings (Cyprus) Limited, which is a company of Vitol Group, announced about increasing its influence at JSC Ventspils nafta to 47.89% thereby becoming the major and strategic investor of JSC Ventspils nafta. Corresponding to the operating strategy previously publicly declared, the major shareholder of JSC Ventspils nafta engaged actively in management and development of the transit field of the concern – respectively the most significant events of JSC Ventspils nafta in 2007 are related to development in this field.
On February 21, 2007, the Competition Council of the Republic of Latvia resolved that there are no obstacles for Euromin Holdings (Cyprus) Limited and JSC Ventspils nafta to obtain determinant influence at the JSC Ventspils nafta subsidiary – crude oil and petroleum product transshipment company Ventspils nafta terminals Ltd. Taking into account the aforementioned resolution, Euromin Holdings (Cyprus) Limited purchased 49% of Ventspils nafta terminals Ltd shares. After conclusion of this transaction, JSC Ventspils nafta continued to retain majority influence at the terminal. As a result of strategic cooperation between the major crude oil and petroleum products transshipment terminal in the Baltic region and the globally influential oil and gas sector company Vitol, a significant joint company has formed in the scale of the whole region.
The transaction between JSC Ventspils nafta and Euromin Holdings (Cyprus) Limited provides that 90 million USA dollars are paid for 49% of Ventspils nafta terminals Ltd shares. Vitol Group on their part also guarantees delivery of cargos to the terminal or financial compensation if the terminal load is not ensured in the necessary amount, as well as fixed annual payments irrespective of the specific transshipment indices. That means that stable activity of Ventspils nafta terminals Ltd is ensured, income flow and workplaces are guaranteed in long term, thereby enabling the company to implement its development and modernization plans. In accordance with the agreement between Vitol and JSC Ventspils nafta on financing the transaction, the payment will be implemented within maximum ten years, relating this transaction with Vitol undertaking to guarantee amount of cargos at Ventspils nafta terminals Ltd and to retain the role of significant investor at JSC Ventspils nafta holding company.
Ventspils Nafta Terminals Ltd has ensured 48.3 % of the total amount of cargoes handled in the port of Ventspils in 2007. During the reporting period, operating results of Ventspils Nafta Terminals Ltd have more than doubled since activity of the new co-owner with the handling amount exceeding 10 million tons again for the first time since 2003. The transshipment amount of Ventspils nafta terminals Ltd increased by 133.3% last year as against the year 2006, reaching 13.3 million tons of crude oil and petroleum products transported to the terminal by railway, sea and diesel pipeline.
“LatRosTrans” Ltd, a transit company of JSC “Ventspils nafta” concern and owner and operator of crude oil and petroleum products in the territory of Latvia, operated under influence of pressure of negative external circumstances related to Russian oil pipage interruption to the Lithuanian Maюeiнi oil-processing plant. Oil pipage in the direction of Lithuania was partially ensured by LatRosTrans Ltd. Tension in the relations of Russia and Lithuania, unfortunately affecting also activity of LatRosTrans Ltd and JSC Ventspils nafta concern in the global transit system, started already in 2006 when the shares of Lithuanian company Maюeiнu nafta were sold to a Polish oil company Orlen. As a result, business resources of LatRosTrans Ltd have focused only on petroleum product pipage due to objective reasons with the total amount reaching 6.5 million tons in 2007. At the same time LatRosTrans Ltd is focused on reducing economic activity expenses, ensuring balanced position between income and expenditure without real money damage
In 2007, LatRosTrans Ltd put NPS Skrudaliena commercial registration point of petroleum product into operation, thereby ensuring automatic and more precise control of petroleum product flow in the pipeline. The total investments of LatRosTrans Ltd in formation of the mentioned object and in provision of maintenance have reached more than 6 million USA dollars. LatRosTrans Ltd has operated actively on elimination of supernormative loss of petroleum products resulting from unlawful activities, by hiring a security company on their own resources, inspecting the pipeline regularly, collaborating with the police, allocating considerable resources in recovery of the environment, as well as informing and trying to involve also other state authorities in dealing with this issue. No supernormative loss of petroleum products were established at LatRosTrans Ltd in 2007, affirming effectiveness of the measures implemented by the company.
During the reporting period, JSC Ventspils nafta subsidiary JSC Preses nams, which is the largest printing concern in Latvia and Baltic States, continued implementation of large-scale organizational and functional changes by planning to locate a printing complex in new production plants outside the central part of Riga. JSC Preses nams has defined specific terms as to when construction work of the new production units – print shops for journals, newspapers and books – will be finished. It is planned that the modernized book production plant of the JSC Preses nams printing complex located at Jвтsili, Silakrogs at the Ropaюi civil parish will start working already in summer 2008, but the new production plant for newspapers and journals in the territory of the technology park of the Riga International Airport – in the end of 2008.
In 2007, JSC Preses nams put intense work into introduction of the latest technical and technological solutions meeting the present-day requirements for execution of customer orders, therefore offering its customers the utmost advantageous services, allowing to both increase production efficiency and decrease costs. Complete introduction of new technologies and operation of equipment in the new printing plants is planned in 2008.
The positive operating results achieved by JSC Latvian Shipping Company, the associated company of JSC Ventspils nafta, during the reporting period attests the company’s ability to compete successfully in the global navigation markets in line with the objectives set by its shareholders. By active work on modernizing the company’s fleet and increasing competitiveness, JSC Latvian Shipping Company has received already 11 new constructions of tankers from Croatian and Korean shipyards 3.Maj and Hyundai Mipo Dockyard Co., Ltd. (HMD) since July 7, 2006. Execution of the mentioned tanker fleet restoration program is planned to be finished in 2008, and 14 new tankers meeting the requirements of navigation safety field of European Union and international conventions will be added to the fleet of JSC Latvian Shipping Company within the framework of this program. Thereby the concern will obtain a wider geographic coverage of the fleet, which is reckoned an essential preference along with the company’s considerable experience.
In 2008, JSC „Ventspils nafta” and its subsidiaries are determined to continue implementation of the growth and development plans, by continuing as before, to operate in order to reach goals established by the shareholders, as well as to ensure increase in concern value.
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