JSC  "Olainfarm" is informing that an audit of the company's activities

in  year  2003  is  finished  and  annual report of 2003 is ready to be

submitted to the annual shareholders meeting which will be held on July

30th 2004.

The  condensed  Annual  report for 2003 available here: - 

03Q4E_short.pdf  (147.37  KB)   The  full Annual report of 2003 will be

submitted to the Riga Stock Exchange shortly.



In  year  2003  "Olainfarm" has successfully continued to implement the

change of development policy. Gradually enforcing the plan the turnover

of  the  company  has increased by 38% reaching the planned turnover of

7,36  million  lats.  Comparing  to  year 2002 the amount of export has

increased  by  30%  and reached 5,7 million lats.  Mentioned growth has

been  achieved mainly by increasing amount of sales in USA and European

countries.



Divisions of the sale of products by countries is the following:

Russia - 30%

Latvia - 25%

Ukraine - 15%

Belarus - 7%

Poland - 7%

Kazakhstan - 5%

Lithuania - 3%

Uzbekistan - 2%

Germany - 4%

USA - 1%



Even  though amount of sales of the company has grown considerably year

2003  has  been  finished  with losses in amount of 348888 Lats.  Owing

that almost 80% of the company's products were exported to 29 countries

of  the  world,  the  results  of  company's  activities were very much

affected  by  fluctuant  foreign  exchange which was the main reason of

appearance  of losses. Because of changes in conjunction of realization

markets  it  was  necessary  to  form  additional  agglomerate  of  the

products.  Besides, Latvia has joined European Union and a necessity to

achieve  accordance  of the company to GMP requirements as from May 1st

2004   has   appeared,  a  notable  investments  have  been  placed  in

modernization of production plants.

In  order  to  remove  possible  negative  effect  of fluctuant foreign

exchange in the future already in 2004 contract with most of the buyers

of  products  have  been  transferred to accounts in EUR. The losses of

year  2003 are planned to be covered by attracting extra financing from

possible investors.

Production  arrangement  in  accordance  with  requirements of GMP will

allow  the  company  to begin sale of products on the new markets where

the  request  for our products has been noticed long ago but because of

lack  of  certificate the sale of products was not possible there. Thus

already  now  there are contracts with companies from Bulgaria, Estonia

and Poland, an active work is carried out to domesticate the markets of

Arabian countries as well as French African countries.

It should be mentioned that considering the growing requirements to the

producers  of  medicines  the  most  modern equipment was purchased but

reconstruction  of  premises  was  made  not  only  in  accordance with

European  requirements  but  also  according to much more stringent USA

(FDA)  standards.  Besides, the production velocity of the company will

increase  three times after the reconstruction, which not only increase

ratability,  but will also allow the company to enforce the projects of

contractual manufacturing with foreign partners which until now was not

possible  because  of  lack  of capacity. Already there is a noticeable

interest  in  managing  several  contractual  productions and there are

offers from Netherlands, Belgium, Sweden, as well as from German and UK

companies.

During the year 2004 the Company is planning to achieve the turnover of

8,4  million  lats.  Execution  of  this plan will allow increasing the

turnover  for  15%  in  comparison  to  year 2003. The results of first

half-year confirm complete compliance to the approved plans.

The  work  on  up building the profile on most compete able products of

the company is run permanently. Thus during year 2003 the following new

medicines and new forms of existing products have been registered:

·           Group   of   antiinfectives   drugs   (Remantadine  powder,

Riboverine),

·          Respiratory  system  group (Fenkarol powder and 50 mg forms,

Ambroksol, Cirtol)

·         Nervous system drugs group (Adaptol 500mg form, Neiromidin in

ampoules, Klonazepam).



The  work  on  receipt of state orders has been successful. Thus during

years  2003  -  2004  the company has won several contests on supply of

oncological  and tuberculosis treatment to Latvia, Uzbekistan, Ukraine,

Estonia,  Lithuania and Belarus. Besides that the work has been started

on  supply  of  tuberculosis  treatment  for  the needs of World Health

Organization (WHO).

The company is planning to start preparatory work for reconstruction in

accordance  with  GMP  standards  of  experimental plant and production

plant  of  chemical  products.  Reconstruction of mentioned circuits is

planned during year 2005 in order to comply with the newest regulations

of European Union concerning manufacture of chemical products.

Nevertheless one of the priorities of JSC "Olainfarm" is arrangement of

tax  questions. Unfortunately, because of joining to European Union and

additional  stringent  rules  applied  to  producers of medicines which

required  notable  investments,  until now it was not possible to cover

tax debts appearing from previous periods. Law "On state budget of year

2004" presupposes a possibility for JSC "Olainfarm" to prolong the term

of  repayment  of debt. The company is hoping that Government this time

will  support  the  company  and prolong the terms of repayment of debt

which  will allow covering the sum of debt gradually in accordance with

approved  schedule. At present moment the question is being coordinated

in appropriate institutions of Republic of Latvia and European Union in

accordance with the procedure.

Notwithstanding it should be noticed that JSC "Olainfarm" is not only a

big  tax debtor, but also one of the biggest tax payers in Latvia. Each

month  the  company  is covering flowing tax payments in amount of more

then  100  000  lats.  In year 2004 the company is planning to make tax

payments  in amount of 1,3 mln. lats including approximately 720 000 of

social tax payment.

All   said   above  evidences  that  the  company  owns  all  necessary

prerequisites for stable and dynamic development in the future.



For further information:

V.Žuka-Ņikuļina

Ph.:7013871