On  May  30,  2003  JSC  Latvian  Shipping  Company  (LSC) shareholders

approved  LSC  Group's  Strategic  Plan for 2003-2010. According to the

Plan  the  Group  will  aim  at  joining  the world's top six owners of

handy-size product tankers, retaining its leading position in the North

European market and increasing return on shareholders' equity.

"The  main  target  set  by  LSC  Group's  Strategic Plan, developed in

cooperation   with   the   world's  leading  shipping  consultants,  is

development  and renewal of LSC tanker fleet, which generates the major

part  of  the  Group's  net  voyage  result. LSC activity in the tanker

market  is  considered  to  be  more  stable  than  in  the rest of the

segments," acknowledged Imants Vikmanis, LSC President.

For  the  year ended December 31, 2002 LSC Tanker Fleet reported vessel

operating profit of USD 21.8 million. In terms of the size of its fleet

LSC is one of the world's largest owners of handy-size product tankers.

At  the  beginning  of  2003 LSC Group's fleet consisted of 52 vessels,

including  36 product tankers of the average age of 18 years, 13 reefer

vessels  of  the  average age of 16 years, 2 five-year-old LPG carriers

and1 Ro-Ro/general cargo vessel.

"Ageing  fleet  is the main reason to consider current prospects of LSC

vessels  employment as unfavourable. Besides, the company's performance

may be affected by the anticipated EU restrictions on the employment of

single  hull  tankers due to Prestige tanker accident and oil pollution

at the Spanish coast", believes Ģirts Rungainis, Deputy Chairman of LSC

Supervisory Council.

To  achieve  the  targets set by LSC Group's Strategic Plan substantial

investments  are  required  in  the  renewal  and  restructuring of the

company's  fleet.  One of the prerequisites of LSC's stable development

and  competitiveness  in  the  long-term perspective is foundation of a

joint venture together with an attendant reorganisation of the existing

company.

LSC  Group's  Strategic Plan for 2003-2010 provides for the development

of the company's activity in three main stages:

The  first  stage  - foundation of the joint venture, which will be 50%

owned  by  LSC.  It  is envisaged that LSC would have a majority on the

Board  of  the  new  joint venture company. The joint venture's capital

expenditures  for  fleet  renewal  will be financed as following: 30% -

equity, 70% - bank loans. The fleet renewal programme for the following

seven  years  provides  for acquisition of at least ten newly built and

two second-hand handy-size product tankers.

The  second  stage - disposal of all refrigerators till the end of 2005

with the best possible economical effect. It is also planned to dispose

of  the oldest and single-hull handy-size product tankers, which do not

comply  with  EU  requirements. Besides, economically sound sale of two

LPG  carriers  and  the  remaining  Ro-Ro  vessel  will  be considered.

Proceeds from the disposal of the above vessels will be invested in the

renewal of the most profitable sector - tanker fleet.

The  third  stage  -  within  the next two years all the activities not

related  to the company's core business, will be terminated, as well as

purposeful   optimisation   of  the  administration  expenses  will  be

implemented.  It  is  also  planned  to dispose of all LSC property not

involved  in  its  main  type  of  activity,  as  well  as  to move the

administration  office  to  the  premises  in  Elizabetes  str.  1  and

Andrejostas str. 4a till the end of 2003.

On  May  30,  2003 LSC shareholders also approved the Group's Financial

Statements for the year ended 31 December 2002, released members of LSC

Management  Board from responsibility for 2002, as well as approved LSC

Budget and Business Plan for 2003.

The  2002  was  a  year  of  considerable changes in the history of JSC

Latvian  Shipping  Company.  The  privatisation  process of the Group's

parent  company  JSC  Latvian Shipping Company was completed during the

year, which brought more than 81% of LSC shares into private ownership.

Structural  changes  and  fleet  revaluation  were  made to improve the

company's performance and cost effectiveness.

LSC  Group  reported  losses  of  USD  54.4  million for the year ended

December 31, 2002. Independent professional valuers' estimates revealed

significant  difference between certain vessels' market value and their

book  value.  The  difference  was  especially  notable for the two LPG

vessels  and  three  Panamax  product tankers purchased within the last

five  years  at  relatively  high  prices.  The Group's result was also

considerably  affected  by  the  settlement  of  a  legal  dispute with

Stocznia Gdanska Shipyard.