2005.07.15, Valmieras stikla šķiedra, RIG

JSC Valmieras stikla šķiedra                     July 15, 2005       



Influence of the investment project on the performance of the JSC 

in case of governmental support



As already announced, the Evaluation Commission for Promotable 

Investment Projects at the Ministry of Economic Affairs reviewed and 

supported JSC's Valmieras stikla šķiedra application for award of 

the status of a promotable investment project.



Being awarded the status of a promotable investment project would 

secure income tax relief for the JSC for a period of 10 year after 

implementation of the investment project.



According to the law on corporate income tax, a tax relief about 40% 

of the total investment sum may be awarded if investment does not 

exceed 10 million lats and are realised in a maximum of three years. 

The expected investment of JSC Valmieras stikla šķiedra amounts to 

LVL 24,3 mill. and ist to be realised within the coming two years.



We have informed that it is the target of this investment project 

to continue abolishing obsolete, little efficient production methods 

and equipment, thereby modernising the company and securing an 

increase of productivity and production capacities, in order to 

better satisfy our customers' needs. Quality will be improved for 

several product groups of high added value - chopped strands, textured 

yarns, yarns, fabrics, nettings, and glass fibre mats. The new plant 

is planned as environmentally friendly and conforming to the 

requirements of the European Union.



As new and modern technologies will be applied, high qualified staff 

of all levels will be required for glass fibre production and textile 

processing. On the whole, the new plant will comprise 200 work places.



The project of the new plant is to some extent a guarantee that the 

JSC Valmieras stikla šķiedra will exist in the future in this form - 

as a niche player in the global market with room for more than 900 

people to work. Without developing further, we would soon be forced 

to specialise and to switch to manufacturing standard products, 

which would secure work for not more than a couple of hundreds of 

workers.



Referring to an announcement by news agency LETA form July 13, 

we confirm that, if JSC Valmieras stikla šķiedra does not receive 

governmental support for a tax relief and therefore the project is 

not realised, then the copmpany's profit will decrease, starting from 

2006, and it is to be expected that the company will sustain financial 

losses from 2008, if it wishes to maintain 930 work places.



The anticipated corporate income tax relief amounts to 5,9 million 

lats. JSC Valmieras stikla šķiedra might use up this relief in the 

course of ten years.







JSC Valmieras stikla šķiedra

Assistant to the Board

Lauma Kugrēna

Phone +371 42 02222, +371 6441429

Fax +371 42 81216

laumak@vss.lv