Latvian Shipping Company posts its net loss of USD 25.18 million
The Latvian Shipping Company (“LSC”) and its subsidiaries (“LSC Group” or “Group”) unaudited financial result for 2016 realised a net loss of USD 25.18 million (2015: net loss USD 7.22 million). The result was mainly attributable to the steady erosion in the value of the LSC Group’s fleet throughout 2016 in the amount of USD 24.13 million. The balance of the net loss – USD 3.67 million – in USD report was influenced by changes in USD/EURO exchange rate.
Total revenue increased to USD 99.71 million (2015: USD 92.84 million) due to slightly higher earnings from existing time charters negotiated during the stronger shipping cycle in mid 2015. As a consequence of more vessels trading on the spot market, where revenue includes the purchase of bunkers, port expenses and commissions, in overall the net operational revenue increased by USD 2.7 million. The balance of the increase in revenue related to the increase in technical management services and rent from the Group’s real estate portfolio.
In June 2016 the Group reached agreement with “Crédit Agricole Corporate and Investment Bank” on the extension of the Medium Range tankers Latgale and Zemgale loan facility for a further period of two years in the amount of 33.2 million USD.
In December 2016 the Group reached agreement with a syndicate of three banks on main terms and conditions to re-finance the remaining outstanding balance under the existing USD 360 million loan facility which is due to mature in June 2017. The refinancing remains subject to final documentary agreement, however LSC expects to be able to repay the remaining USD 121 million by 30 June, 2022. As at the 31st December 2016, LSC Group was in compliance with all its financial covenants relating to all existing loan agreements.
As at the 31st December 2016 the total value of the Group’s assets was USD 355.49 million (31st December 2015 - USD 417.02 million), as already highlighted the decrease was predominantly due to depreciation and the revaluation of the fleet.
LSC’s fleet remains unchanged at sixteen vessels, with LSC Group subsidiary, LSC Shipmanagement Ltd, appointed to technically manage the LSC Group owned fleet as well as seven third party tankers thus bringing the number of vessels under technical management to twenty-three. In addition to generating additional revenue, this illustrates the confidence third party owners have in the competence and professionalism of LSC group employees. The provision of ship management services to third parties will continue be developed in 2017 and beyond.
The fleet’s operating profit for 2016 rose slightly to USD 53.73 million (2015: USD 52.40 million) due to higher time charter income from contracts signed at attractive rates throughout 2015.
Additional information is available in the attached unaudited shortened consolidated financial statement.