On, November, 29 JSC Ventspils nafta (VN) has issued an unaudited financial
report for nine months of 2010. The financial results of VN associated company
JSC Latvijas Kuģniecība (LK) in the 9 months of 2010 is not available for VN as
of the date of preparing this these financial statements, therefore the result
from investment in the associate for the 9 months of 2010 is presented on the
basis of the published unaudited financial statements of LK for the first
half-year period of 2010. The consolidated turnover of VN in the first 9 months
of 2010 reached LVL 40.1 million and net profit reached LVL 3.3 million before
non controlling interest. However due to the losses reported by LK for the
first months of 2010 the result attributable to the equity holders of the
parent company is a loss of LVL 6 hundred thousand. Despite this the Ventspils
nafta group achieved a net increase in cash resources of LVL 10 million.

In the reporting period, the Management Board has succeeded in substantially
reducing the administrative cost on the holding company. Administrative
expenses in the holding company have decreased from LVL 1.67 million in the
first 9 months of 2009 to LVL 0.9 million in the corresponding period of 2010.

After the end of this accounting period, LK convened an extraordinary
shareholders' meeting on October 8, 2010 included in the agenda was the
election of a new Supervisory Council. The planned extraordinary shareholders'
meeting was not held and was postponed to December 17, 2010. In the course of
the third quarter of 2010, the management of VN has had growing concerns over
LK using its financial resources uneconomically and selling assets to third
parties, thus causing substantial losses to LK. In order to limit the potential
losses of VN as much as possible in relation to investment into LK shares, VN
has pursued a claim in court against SAGEWOOD TRADING INC, NILARDA HOLDINGS
LIMITED and LK for the annulment of transactions in the shares of “NAFTA
INVEST” Ltd and the annulment of the respective resolutions of the Management
Board and Supervisory Council of LK. Also the law office “Liepa, Skopiņa
/BORENIUS” has been authorized to initiate proceedings against members of the
Management Board and Supervisory Council of LK for recovery of losses. The
management of VN has also turned to law enforcement bodies, asking them to
evaluate the actions taken by officials of LK in relation to the recently
concluded transactions and management of LK.

After the end of this accounting period, a general shareholders' meeting of VN
was held on November 11, 2010. In this meeting, the annual report of VN for
2009 which had been prepared in accordance with the Law on Annual Accounts of
the Republic of Latvia was approved, the profit of 2009 was transferred to
other reserves, the auditing company “Ernst & Young Baltic” Ltd was elected for
audit of the annual reports for 2010, and an audit committee of 3 people was
elected.

Ventspils nafta

Zane Bojāre
JSC „Ventspils nafta” PR Manager
E-mail: [email protected]
Phone.: 67821691; 29706733