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Extracts from the review of annual prospectuses-reports for the year 2003 filed by the
Official and Current List companies
At the meeting held on 30 June 2004 the Board of the National Stock Exchange (NSEL)
considered a report of the Listing Department on the analysis of annual prospectuses-reports of the
Official and Current List companies for the year 2003.
The analysis of 2003 annual prospectuses-reports was conducted following the Rules of the
Securities Commission of 30 May 2002 (No. 21) on Periodic Disclosure of Information on Issuers
and their Securities (further referred to as the LSC Rules), which came into effect on 1 July 2002.
A total of 42 annual prospectuses-reports for 2003 filed by the listed companies on the
Official and Current Lists were placed under review, including those of 8 Official List companies,
30 Current List companies, and 4 Current List banks.
Of 42 annual prospectuses-reports under review, 19 were prepared by the issuers
themselves. That makes up 45 percent of all prospectuses-reports.
The remaining 23 prospectuses-reports were drawn up by financial brokerage firms or bank
departments/divisions (Baltijos Vertybiniai Popieriai UAB, Finasta AB, Jusu Tarpininkas UAB,
Suprema UAB, Technologiju Valdymo Centras UAB, Securities Accounting and Custody Division
of bank Hansabankas AB and Business Operations and Securities Accounting Department of
Vilniaus Bankas AB). The financial brokerage firm Finasta AB prepared the largest number of
prospectuses-reports for the year 2003 (13 prospectuses-reports or 31 percent of the reports of all
listed companies).
Comments on the annual prospectuses-reports for 2003
The evaluation of the drawing up of annual prospectuses-reports and the nature of
shortcomings observed allow us to make a general conclusion that information disclosure in annual
prospectuses-reports has been improving year by year. This year the major faults may be classified
into accidental errors and incomplete disclosure of information, which seems to be a recurrent
shortcoming of this type of disclosure.
Every year the number of instances of failure to disclose required items of information or
attach the required annexes to the annual prospectuses-reports has been decreasing. We are pleased
to maintain that this year only two companies failed to submit a full audit report, (only audit
statements were attached), while the majority of companies which submitted only the audit
statement last year, this year provided audit reports as well.
Information disclosure concerning management participation in the activities of other
companies or capital has also improved, but the requirement to disclose payments to individual
members of the managing bodies is sometimes ignored (only total sums of such payments or
average amounts per person are disclosed). Generally, information only on current management
members is provided, while the LSC Rules require to disclose information about previous members
of the Supervisory Board and the Board, the head of the administration, and the chief financier as
well.
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Certain inaccuracies occurred in calculating the key ratios characterising the company’s
performance. A good aid for key ratio calculation would be the Stock Exchange’s publication
“Corporate Finance Analysis. Ratio Calculation Methodology”, which provides guidance on
profitability, solvency, operational efficiency and market value ratios and their calculation.
Inaccuracies in descriptions of securities trading on the Stock Exchange can be eliminated
by making use of the information on the Stock Exchange’s web page
(www.nse.lt/Securities/Information on Disclosure) updated every year for that purpose.
Horizontal indicator analysis of listed issuers
Horizontal indicator analysis of the companies is the process of comparing the selected
items of the balance sheet and income statement of the previous financial year with the same items
in the reporting year in absolute figures and percentage like. This analysis allows assessment of
changes of the selected items (in our case – sales or services and net profit or loss) over time.
Summing the data up, we may conclude that in 2003 performance results of 26 companies
out of 43, i.e. of more than a half, compared with those in 2003 show a positive trend (net profit
was increasing or losses decreasing) and performance results of 17 issuers reveal a negative trend
(net profit was decreasing or losses increasing). In total, in 2003, 38 listed companies worked at a
profit.
Changes in sales (services) reflect an even better ratio: the turnover of 33 companies
augmented while that of 10 went down.
Preparations for conducting accounting and drawing up financial reports in
accordance with the International Financial Reporting Standards (IFRS)
Under the provisions of Article 3(3) (Requirements for General Accounting Management)
of the new wording of the Law on Accounting of the Republic of Lithuania of 6 November 2001
(No. IX-574), “business entities, the securities of which are traded on regulated markets, shall
conduct their accounting in accordance with the International Accounting Standards” (this
provision will become effective as from 1 January 2005).
Pursuant to the new wording of Article 15(5) (Requirements for General Accounting
Management) of the Law on Financial Statements of the Republic of Lithuania of 6 November
2001 (No. IX-575), “companies, the securities of which are traded on regulated markets, shall
conduct their accounting and draw up financial statements in accordance with the International
Accounting Standards”. Article 29 of the Law provides that this provision will also become
effective as from 1 January 2005.
The International Accounting Standards and Explanations to them, approved by the
International Accounting Standards Board, are now referred to as the International Financial
Reporting Standards.
In total, the number of listed companies that submitted their financial statements drawn up
in accordance with the IFRS has increased from 14 last year to 20 this year (excluding banks).
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Audited financial statements have been drawn up in accordance with the IFRS by all 8
companies listed on the Official List (Ekranas AB, Lietuvos Telekomas AB, Pieno Zvaigzdes AB,
Rokiskio Suris AB, Snaige AB, Utenos Trikotazas AB, Vilniaus Baldai AB, and Vilniaus Vingis
AB), all four Current List banks (bank NORD/LB Lietuva AB, bank Snoras AB, Siauliu Bankas
AB, and Ukio Bankas AB) and Mazeikiu Nafta AB (follows the US Generally Accepted
Accounting Principles).
Besides those mentioned, this year financial statements have been drawn up in accordance
with the IFRS by Alytaus Tekstile AB, Anyksciu Vynas AB, Dvarcioniu Keramika AB, Klaipedos
Baldai AB, Klaipedos Nafta AB, Lietuvos Energija AB, Lifosa AB, Lietuvos Juru Laivininkyste
AB, Rytu Skirstomieji Tinklai AB, Sanitas AB, Zemaitijos Pienas AB.
Lietuvos Telekomas AB, Rokiskio Suris AB, and Mazeikiu Nafta AB have been applying
the IFRS (Mazeikiu Nafta AB – US GAAP) not only to their annual but also quarterly consolidated
financial statements.
Disclosure of financial information to the Stock Exchange
The year 2004 will be remembered at the Stock Exchange as the first year, in which the
listed companies started sending their financial statements in English. The NSEL was collecting the
English version of the statements for the year 2003 with a view to placing them in the Stock
Exchange website in the very near future. A need for such a measure was prompted by deep interest
in the growing securities market of Lithuania and the companies listed on the Stock Exchange
shown by the investors in 2003 and the anticipated demand for such information in the future.
In total, 29 listed companies (66 percent of all issuers) have submitted their financial
statements for the year 2003 in English: in most cases these are audit reports and annual reports.
Lietuvos Telekomas AB is the only company which has submitted a complete annual prospectusreport 2003 in English.
Simona Backiene, tel. (8 5) 272 17 05
Saulius Malinauskas, tel. (8 5) 272 14 06
NSEL Listing Department
Annual prospectuses-reports for the year 2003 may be accessed at:
NSEL Listing Department (7 Konstitucijos Ave., Vilnius, tel. (8 5) 272 17 05, (8 5) 272 14
42),
Lithuanian Securities Commission, library (23 Konstitucijos Ave., Vilnius, tel. (8 5) 271 49
45), and
Website of the Lithuanian Securities Commission at www.vpk.lt
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