Ventspils Nafta                                            20.05.2005. 



Profit of AS  “Ventspils Nafta” in 2004 – LVL19,2 Million



The consolidated annual report of a/s Ventspils nafta for the year ended 

31 December 2004 prepared in accordance with applicable laws of the Republic of 

Latvia and generally accepted accounting policies, shows that the net turnover of 

a/s Ventspils nafta Group for the reporting period reached LVL 55.95 million, with 

profit after taxes amounting to LVL 13.86 million. Pursuant to the consolidated annual 

report for the year ended 31 December 2004 presented in accordance with International 

Financial Reporting Standards, the net turnover of a/s Ventspils nafta Group for the 

reporting period reached LVL 55.95 million, with profit after taxes amounting to 

LVL 19.21 million.



The consolidated annual report of a/s Ventspils nafta for the year ended 31 December 2004 

was audited by the auditing company Ernst&Young Baltic, however, the auditing process has 

not yet been fully completed right now, as in accordance with applicable laws a/s Ventspils 

nafta has to obtain from a/s Latvijas kuģniecība, an associated entity to a/s Ventspils 

nafta, the consolidated annual report for 2004 approved by the shareholders’ meeting of 

a/s Latvijas kuģniecība. According to Ernst&Young Baltic, based on the earlier performed 

auditing process, no any substantial changes would be envisaged in the annual reports of 

a/s Ventspils nafta for the year ended 31 December 2004.



The consolidated annual report of a/s Ventspils nafta for the year ended 31 December 2004 

comprises reclassification and revaluation of the investment in a/s Latvijas kuģniecība, 

an associated entity to a/s Ventspils nafta. The revaluation has been performed, based on 

the activity plan and the budget of a/s Ventspils nafta for the reporting period approved 

by the shareholders’ meeting of a/s Ventspils nafta in 2004, which defined the necessity 

of reclassification of a/s Ventspils nafta investment in a/s Latvijas kuģniecība (49.94%). 

Initially, the investment of a/s Ventspils nafta was stated as a current asset, but 

starting from 2004, it has been reclassified to non-current investments, based on the 

actual situation. 



The profit difference shown in the annual reports prepared in accordance with both the 

accounting standards of the Republic of Latvia and International Financial Reporting 

Standards is explained by some distinctions between these standards as well as is relevant 

to the reclassification of a/s Latvijas kuģniecība stated in the balance sheet. To enable 

a/s Ventspils nafta to submit the annual report to respective state’s institutions it 

shall be prepared in accordance with Latvian standards; and International Standards shall 

be applied when submitting the annual report to Rīga Stock Exchange. 

 

Ernst&Young Baltic points out that after the revaluation of the investment in a/s Latvijas 

kuģniecība has been included into the consolidated annual report of a/s Ventspils nafta 

for the year ended 31 December 2004, according to Article 29 of the Republic of Latvia Law 

on Financial Statements of Companies, the profit of a/s Ventspils nafta for 2004 cannot be 

distributed in dividends, but instead should be transferred to restricted reserves. 



The year 2004 for the joint stock company Ventspils nafta was the starting point for 

efficient operating under the new and properly arranged management system of the Group. It 

is the result of improvement of a/s Ventspils nafta management system commenced in 2003 in 

line with the basic principles of a multi-branch group of companies, encompassing the 

segregation of the holding companies’ functions and dividing all the entities belonging to 

a/s Ventspils nafta Group by their respective business segments.



“The financial results of a/s Ventspils nafta for the year 2004 evidence that the Group 

has succeeded in reaching its aims: the financial and economic results of a/s Ventspils 

nafta Group for the reporting period reach and, in some aspects, even exceed the forecasted 

amounts”, says Olga Pētersone, Chairperson of the Board of a/s Ventspils nafta.



In 2004, a/s Ventspils nafta Group continued operating in the areas of crude oil and 

petroleum products transit, printing, publishing and real estate management. 



In 2004, SIA Ventspils nafta termināls demonstrated stability of operations, regardless of 

impairment of rights and opportunities of SIA Ventspils nafta termināls to freely compete 

at the transit market and accept oil transported via pipelines due to external circumstances 

beyond the company’s control. In 2004, all cargoes totalling 8.4 million tons were delivered 

only by railway. Compared to 2002, when oil was transported in Ventspils direction also via 

pipelines, the amount of cargoes delivered by railway to the terminal in 2004 increased by 

1.8 million tons or 28%. The volume of motor gasoline transhipped by SIA Ventspils nafta 

termināls for the reporting period increased essentially – by 0.7 million tons, compared 

to 2003, and even by 1.2 million tons, compared to 2002.



During the reporting period, SIA LatRosTrans, the operator and owner of oil and petroleum 

products pipelines in Latvia, recorded a substantial growth of the volumes of transported 

gas oil. In 2004, 5.7 million tons of gas oil were transported via the main pipeline of 

SIA LatRosTrans to the Ventspils port, thus exceeding the result of 2003 by 1.1 million 

tons. With the view of future increase of gas oil transportation volumes, SIA LatRosTrans 

in 2004 implemented a stage of modernisation of the main pipeline by constructing a 10 km 

long looping.     



During the reporting period, SIA LatRosTrans continued active operations aimed at elimination 

of excess physical losses of oil products in the result of unauthorised actions by informing 

and involving governmental bodies for the purpose of solving this issue. According to the 

belief expressed by the management of SIA LatRosTrans and a/s Ventspils nafta, in 2004 the 

court instances decided in favour of SIA LatRosTrans and its claim regarding tax surcharges 

for the aforementioned physical losses was met. Based on the court decisions, SIA LatRosTrans 

will be refunded taxes unreasonably charged for 2001, 2002 and 2003.



In 2004, the manifold range of printing services offered by a/s Preses nams, as well as the 

expedient geographic disposition of the market enabled the company to maintain and strengthen 

its position in the segment of printing of books, periodicals and packaging both in the 

domestic and international market. According to data of the Latvian Printing Association, 

a/s Preses nams has been the major printing enterprise in Latvia and in the Baltic States 

over the last years. During the reporting period income from printing services amount to 

98.5% of a/s Preses nams’s turnover, including 68% of services rendered to Latvian customers 

and 32% representing exports.



A/s Latvijas kuģniecība, an associated entity to a/s Ventspils nafta, succeeded in benefiting 

from the favourable market situation during the reporting period and derived profit in the 

amount of LVL 38.5 million after taxes due to circumstances beyond the management’s control. 

A major portion of income of a/s Latvijas kuģniecība Group comprises reversal of impairment 

of a/s Latvijas kuģniecība fleet of vessels stated in prior years, thus increasing the profit 

for the previous year by LVL 23 million. 



Risk diversification policy exercised by a/s Ventspils nafta over a past few years has 

resulted in a number of liquid financial investments in several real estate objects in Riga 

(villa Maikapara nams, Preses nams building, the office building at Palasta Street in the 

Old town of Riga), Jūrmala (former health resort Rīgas līcis), Ventspils and other regions 

(conference and recreation centre Lejastiezumi near the Usmas lake). The favourable 

developments in the real estate market characterised by ongoing price rise over the previous 

years and the reporting period have resulted in continuous growth of the market value of 

the real estate owned by a/s Ventspils nafta, thus ensuring a/s Ventspils nafta a stable 

return on investment, and hence, an additional income reserve.



“The successful financial results of a/s Ventspils nafta Group reached after the year-end, 

for the first quarter of the year 2005, unequivocally demonstrate stability and profitability 

of a/s Ventspils nafta”, emphasizes O.Pētersone.



A/s Ventspils nafta

For detailed information please contact –

Gundega Vārpa,

tel. 371-7229793; 

e-mail: gundega.varpa@vnafta.lv