Untitled - Indėlių ir investicijų draudimas

1. OUTLINE OF THE ACTIVITIES IN THE YEAR 2003
The State Undertaking “Insurance of Deposits and Investments” (hereinafter refer red to as “The Undertaking”), in
accordance with the provisions of the Law of Republic of Lithuania on Insurance of Deposits and Liabilities to Investors, insures
deposits with banks and credit unions and liabilities to investors of banks, financial broker undertakings and investment funds or
management undertakings of investment companies with variable capital. Following these provisions, the Under taking carries out
administering two funds: Deposit Insurance Fund and Liabilities to Investors Insurance Fund. The Deposit Insurance Fund may be
used by banks and credit unions (hereinafter referred to as “Credit institutions”) for compensation of deposits and liabilities to
investors and Liabilities to Investors Insurance Fund may be used by financial broker undertakings and investment funds or
management undertakings of investment companies with variable capital (hereinafter refer red to as “Financial Broker
undertakings”) for compensation of their liabilities to investors.
In the early 2003, the clients of the Undertaking, i.e. Insurers were 64 credit institutions and 21 Financial Broker
undertakings. In 2003, the new kind of the insured - investment funds and management under takings of investment companies
with variable capital – became clients of the Undertaking. On 31 December 2003, deposits and liabilities to investors of 91 insured
were covered by insurance at the Undertaking, including 69 credit institutions and 22 Financial Broker under takings.
The Undertaking insures deposits in national currency, US dollars, euros and national currencies of the Member States
of the European Union, the liabilities to investors in securities – in all currencies and the liabilities to investors in money – in national
currency, US dollars, euros and national currencies of Member States of the European Union. The credit institutions pay insurance
premiums every month according to the daily balances of deposits. Financial Broker undertakings pay insurance premiums once a
year according to the value of transactions carried out by the broker during the previous calendar year at the expense of the
investors. The Undertaking controls constantly, whether the insured observe the procedure of insurance. For this purpose, all
reports submitted by the insured are carefully checked up in order to establish whether the insurance premiums had been
calculated correctly, the monitoring of payment of insurance premiums is carried out; inspection of the insured is carried out using
sampling method. In 2003, inspections were carried out at one bank and 7 credit unions.
The Undertaking continued paying insurance compensations to depositors of the failed AB “Litimpex” bank; in 2003, the
total amount of the paid compensation was LTL 3,618.49.
The Undertaking invests the funds of its capital and the Funds administered according to the principles of safety, liquidity
and profitability of investments. In 2003, the Undertaking invested its resources into Governmental securities of Republic of
Lithuania, issued in Litas and Euro, as well as into governmental securities of foreign states, issued in US dollars. Income received
from the investments is distributed to the capital of the Undertaking and to the both Funds in propor tion to their sizes. In 2003,
return of investments was 6.24%.
During the year under report, the Authorized capital of the Under taking was increased by LTL 698,330 – from LTL
30,276,495 to 30,974,825 – after the appropriation of the profit of the Undertaking for the year 2002. In the beginning of 2003, the
equity of the Undertaking amounted to LTL 31,256,607 and the end of the year – to LTL 31,522,619. The equity increased for the
profits from its investment. Within the year under report, the disposable resources of the Under taking increased by LTL 70.5
million; such increase was caused by insurance premiums of the insured and the income from investments.
In 2003, the Council of the Undertaking arranged 8 meetings where 52 resolutions on various issues were passed. Not
only the resolutions of the Council on an approval of the financial accounting of the Undertaking for the year 2002 as well as on an
approval of proposals of the Administration on alterations of the Law of Republic of Lithuania on Insurance of Deposits and
Liabilities to Investors and alterations of the By-laws of the Undertaking should be notable, but also the resolutions passed by the
Council (in course of implementation of the Law of Republic of Lithuania on Insurance of Deposits and Liabilities to Investors) on
establishment and approval of the following legal acts:
• The Procedure of calculation and payment of insurance premiums;
• The Regulations for the Head of the Administration of the Undertaking and the Chief Accountant;
• The Procedure of Investment of the Capital Resources of the Undertaking and of the administered Funds;
• The Regulations on Activities of the Council of the Undertaking;
• The Procedure of Supplementary Insurance of Deposits and Liabilities to Investors.
2
2. MAIN FUNCTIONS AND MANAGEMENT OF THE UNDERTAKING
In the year 2003, the main functions of the Undertaking were as follows:
- to accumulate resources in Deposit Insurance Fund and Liabilities to Investors Insurance Fund;
- to invest capital resources of the Undertaking and the administered Funds into Governmental securities;
- to inspect whether the insured violate the procedure of insurance of deposits and liabilities to investors;
- to calculate and pay insurance compensations to depositors and investors of the insured;
- to perform other functions, specified in the Law of Republic of Lithuania on Insurance of Deposits and Liabilities to
Investors and the By-laws of the Undertaking.
The managing bodies of the Undertaking are Council and Administration. The Council of the Under taking performs the
functions provided in the Law of Republic of Lithuania on Insurance of Deposits and Liabilities to Investors. In 2003, the Council of
the Undertaking consisted of the following members:
Lina Adakauskienë
Chairwoman of the Council
Secretary of the Ministry of Finance;
Audrutë Dziskienë
Deputy Chairwoman of the Council
Director of the Department of the Financial Markets of the Ministry of Finance;
Simona Grinevièienë
The Deputy Director of the Department of the Financial Markets of the Ministry of Finance;
Audrius Misevièius
Deputy Chairman of the Board of the Bank of Lithuania;
Kazimieras Ramonas
Director of the Department of the Supervision of Credit Institutions of the Bank of Lithuania;
Virgilijus Poderys
Chairman of the Securities Commission of Republic of Lithuania.
Head of the Administration - Director of the Undertaking Raimundas Þilinskas.
3
3. ADMINISTERED FUNDS AND CAPITAL RESOURCES OF THE UNDERTAKING
The Undertaking has in its disposition the capital resources of the Under taking, Deposit Insurance Fund and Liabilities to
Investors Insurance Fund. On 1 January 2003, the total amount of the disposed resources was 329.29 million Litas and on 31
December 2003 it was equal to 399.78 million Litas. These funds had increased because of the income received from insurance
premiums, investments as well as funds exacted form AB “Litimpeks” bank being under liquidation. On 31 December 2003, the share
of the capital resources of the Undertaking in the total disposed resources was 7.88 per cent, the share of Deposit Insurance Fund –
91.26 per cent and the share of Liabilities to Investors Insurance Fund – 0.86 per cent.
Change in Deposit Insurance Fund (in thousand of Litas)
Chart 1
450,000
430,000
410,000
390,000
370,000
350,000
330,000
310,000
290,000
270,000
250,000
31.12.2002 31.01.2003 28.02.2003 31.03.2003 30.04.2003 31.05.2003 30.06.2003 31.07.2003 31.08.2003 30.09.2003 31.10.2003 30.11.2003 31.12.2003
Since its establishment, Deposit Insurance Fund is replenished by insurance premiums of credit institutions, the income
received from the investment of this Fund, funds exacted from insured in liquidation. As the premiums are paid every month and the
income received from the investment of this Fund is accounted to the Fund every month as well, the Fund gradually grows (Chart 1).
On 12 December 2003, AB “Litimpeks” bank repaid the amount of 14.38 million Litas to the Deposit Insurance Fund for the paid
insurance compensations for the depositors of this bank. On 31 December 2003, the amount of 364.82 million Litas totaled this Fund.
Change in Liabilities to Investors Insurance Fund (in thousand of Litas)
Chart 2
3,500
3,450
3,400
3,350
3,300
3,250
3,200
3,150
3,100
31.12.2002 31.01.2003 28.02.2003 31.03.2003 30.04.2003 31.05.2003 30.06.2003 31.07.2003 31.08.2003 30.09.2003 31.10.2003 30.11.2003 31.12.2003
4
Liabilities to Investors Insurance Fund are replenished by insurance premiums of broker undertakings and the income
received from the investment of this Fund. Financial Broker undertakings pay their insurance premiums once a year, so this Fund
shows a steep increase in January, after the payment of insurance premiums (Chart 2). Then, until the end of the accounting
period, the resources of this Fund continued to increase gradually because of income received from investments and insurance
premiums of new insured and on 31 December 2003 summed up to 3.44 million Litas. Changes of the amount of this Fund in AprilSeptember were caused by changes of the value of investments that, in their turn, were caused by considerable changes of
exchange rates of foreign currencies.
Change in capital resources of the Undertaking (in thousand of Litas)
Chart 3
32,000
31,800
31,600
31,400
31,200
31,000
30,800
30,600
30,400
31.12.2002 31.01.2003 28.02.2003 31.03.2003 30.04.2003 31.05.2003 30.06.2003 31.07.2003 31.08.2003 30.09.2003 31.10.2003 30.11.2003 31.12.2003
On 1 January 2003, the capital resources of the Undertaking amounted to 31.26 million Litas. The capital resources of
the Undertaking (Char t 3) augmented due to income received from investments and made up 31.52 million Litas at the end of the
year under accounting. Fluctuations of the amount of the capital resources of the Undertaking were mostly affected by fluctuations
of rates of exchange of foreign currencies.
4. INSURANCE PREMIUMS
In the beginning of the year 2003, 11 banks, including 1 branch of a foreign bank, 53 credit unions and 21 Financial
Broker undertakings were par ticipating in the insurance system that was total of 85 insured. The number of insured increased in
the year 2003. At the end of the year, there were total 91 insured, among them 11 banks, including 1 branch of a foreign bank, 58
credit unions and 22 Financial Broker undertakings.
Insurance premiums of credit institutions are paid to Deposit Insurance Fund and the premiums of Financial Broker
undertakings – to Liabilities to Investors Insurance Fund.
5
Insurance premiums paid to Deposit Insurance Fund in 2003 (in thousand of Litas)
Chart 4
19,893.10
AB Vilniaus bankas
17,132.46
AB bankas ´Hansabankas”
6,455.84
AB bankas ´NORD/LB Lietuva”
4,088.85
AB bankas ´Snoras”
2,153.97
AB Ûkio bankas
1,644.23
AB Ðiauliø bankas
UAB Sampo bankas
776.78
AB Parex bankas
771.82
388.31
Credit unions 150.05
UAB Medicinos bankas
Kredyt Bank S.A. Vilniaus sk. 7.53
In 2003, credit institutions paid the total of 53.46 million Litas of insurance premiums to Deposit Insurance Fund. Banks
paid 53.31 million of Litas, and credit unions paid 0.15 million Litas.
In 2003, the biggest share of insurance premiums (81 per cent of the total amount) was paid by AB Vilniaus bankas, AB
bankas “Hansabankas” and AB bankas “NORD/LB Lietuva”, if compared to other credit institutions (Chart 4). The biggest
insurance premiums among credit unions were paid by the credit union “Pakruojo ûkininkø” – 14.14 thousand Litas, “Ðilutë” credit
union – 13.32 thousand Litas, “Ûkininkø sëkmë” credit union – 9.20 thousand Litas, “Zanavykø bankelis” credit union – 6.67
thousand Litas, “Lietuvos Centrinë kredito unija” credit union – 6.33 thousand Litas, “Vievio taupa” credit union – 6.07 thousand
Litas.
Insurance premiums paid to Liabilities to Investors Insurance Fund in 2003 (in Litas)
Chart 5
´Kapitalo srautai”
20,000
´Finasta”
20,000
´Suprema”
20,000
´Spekonis ir Gastonas”
18,600
Other Financial Broker undertakings
17,856
´Baltijos vertybiniai popieriai”
16,316
´Finbaltus”
12,939
´Finvesta”
12,493
´Jûsø tarpininkas”
11,880
´Vivum”
11,282
´Steponkaus kontora”
11,000
´International Market Investments”
11,000
´Trigon Capital”
11,000
´Diskontas”
11,000
´Naugvilda”
11,000
´Technologijø valdymo centras”
10,000
´Investicijø portfeliø valdymas”
3,682
´Finasta investicijø valdymas”
3,452
´VB investicijø valdymas”
3,000
´VB Vilfima”
´Hansa investicijø valdymas”
´NORD/LB investicijø valdymas”
´Medicinos banko investicijø valdymas”
3,000
1,036
921
690
6
Financial Broker undertakings paid a total amount of 262.2 thousand Litas to Liabilities to Investors Insurance Fund in
2003. The maximum insurance premiums, i.e. 20 thousand Litas, were paid by Financial Broker undertakings, which carried out
transactions of the total value of no less than 100 million Litas within the prior calendar year. The most insurance premiums were
paid by AB FMÁ “Finasta”, UAB FMÁ “Sinkus”, UAB FMÁ “Kapitalo srautai” and UAB FMÁ “Suprema” (Charter 5). In addition, in 2003
insurance premiums were paid by Financial Broker undertakings that terminated their activities in 2003 (in Char t 5 – “Other
Financial Broker undertakings”).
Insurance premiums paid since March 1997 (%)
Chart 6
UAB Medicinos bankas - 0.52%
AB bankas ´Hansabankas” - 44.90%
AB bankas ´Snoras” - 4.89%
0.34%
AB bankas ´NORD/LB LIETUVA“ - 10.03%
0.62%
3.18%
AB Ðiauliø bankas - 1.66%
AB Vilniaus bankas - 33.24%
AB Ûkio bankas - 3.18%
0.01% 0.08% 0.11%
0.41%
0.52%
44.90%
33.24%
AB Parex bankas - 0.62%
Kredyt bank S.A. Vilniaus sk. - 0.01%
UAB Sampo bankas - 0.34%
Credit unions - 0.08%
Financial Broker undertakings - 0.11%
1.66%
10.03%
4.89%
Other Credit institutions - 0.41%
Chart 6 demonstrates the share of insurance premiums paid by each bank, all credit unions and all Financial Broker
undertakings since the beginning of deposit insurance (March 1997). Despite the fact that AB Vilniaus bankas paid most of the
insurance premium in 2003 (37.21 per cent), AB bankas ´Hansabankas” (including insurance premiums paid by AB Lithuanian
Savings Bank and Lithuanian State Commercial Bank) paid the most insurance premiums, i.e. 44.90 per cent of all paid premiums,
while AB Vilniaus bankas (including insurance premiums paid by AB bankas ´Hermis”) paid only 33.24 per cent, if counting since
March 1997 (Chart 6).
5. INVESTMENT ACTIVITIES
In its activities, the Undertaking acts in accordance with the procedure of investment of administered funds and capital
resources provided by the Undertaking, which provides that the key criteria for investment are safety, liquidity and profitability. The
Undertaking may invest administered funds and capital resources into the securities of Republic of Lithuania and foreign states,
which have long-term credit rate no less than Aa2 according to Moody’s or other appropriate credit rating agencies at the moment
of investment.
On 31 December 2003, the investment portfolio at disposition of the Under taking consisted of the following: capital of
the undertaking made up 31.52 million Litas; Deposit Insurance Fund amounted to 364.82 million Litas; and Liabilities to Investors
Insurance Fund made up 3.44 million Litas. In 2003, disposable resources of the Undertaking increased by 70.5 million Litas. On
31 December 2003, the disposable investment portfolio of the Under taking by currencies consisted of securities, issued in Litas,
US dollars and Euro, the total value of which (on the base of the value of acquisition) was equal to 394.76 million Litas, including
282.46 million in Litas, 66.72 million in US dollars and 45.58 million in Euro.
The indicators of the investment activities by 31 December 2003 had been calculated and provided in accordance with
the market values.
7
Total market value of the investment 409.0 million LTL
Yield
3.90%
Return of investments
6.24%
Standard deviation
1.22%
Modified duration
3.27
Investments by currencies:
12%
LTL
18%
USD
EUR
70%
Investments in Litas
Market value (million)
Yield
Return of investments
Standard deviation
Modified duration
Investments in Euro
297.2 Litas
5.05%
7.70%
1.36%
3.28
10 maximum
Code
60703
60504
61004
60507
60508
60503
60505
60702
60311
60312
Total
Maturity date
18.12.2008
19.10.2006
24.01.2013
04.10.2007
24.01.2008
01.06.2006
19.04.2007
13.03.2008
30.06.2005
20.10.2005
Market value (million)
Yield
Return of investments
Standard deviation
Modified duration
Investments in USD
45.0 LTL (13.0 EUR)
3.56%
2.18%
0.3%
3.45
Composition of the investments
Range
6.40
6.10
5.60
4.90
4.70
7.90
5.60
8.60
4.70
4.30
Share
14%
9%
9%
7%
7%
7%
6%
6%
5%
4%
74%
Code
XS0163880502 EUR 4.5 BONDS
LT 2013 03 05
XS0124828418 EUR 6.625
BONDS LT 2008.02.20
REP. OF LITHUANIA
EUROBONDS 5.875 % EUR,
2012/05/12
XS0095395496 LITHUANIA 04
8.00 % 2004 03 29
DE0004525209 LITHUANIA 05
7.75 % 2005 02 22
Market value (million)
Yield
Return of investments
Standard deviation
Modified duration
66.8 LTL (24.2 USD)
3.06%
2.50%
1.21%
3.11
Composition of the investments
Share
16%
20%
20%
21%
23%
Code
Moody's
XS0127540515 USD 5.25 ITALY,
REP. 5 1/4 04/05/2006
Aa2
US9128276X55 US GOVT
NATIONAL 4.625 % 15/02/2006 Aaa
XS014368612 AUST 5
08/31/2007 5%
Aaa
US317873BD89 FINLAND, REP.
4.75 % 06/06/2007
Aaa
XS0137815246 REPUBLIC OF
ITALY 4.375 % 10/25/2006
Aa2
XS0089378938 SPAIN 5 7/8
07/28/2008
Aaa
Dalis
9%
9%
14%
17%
20%
31%
Comparison of difference between arithmetical
mean of investment profitability at Lithuanian Comparison of the difference of yield of Comparison of the difference of yield of
Bank auctions of securities and the average investments and yield of Finnish securities:
investments and yield of USA securities:
profitability of auctions and the difference
between arithmetical means of investment in 1.00%
1.00%
the secondary market and the best quotations 0.50%
0.50%
of the key participants of the market in the same
0.00%
issue during the transaction:
01.01.2003 02.04.2003 02.07.2003
01.10.2003 31.12.2003
0.00%
-0.50%
0.10%
01.01.2003
up to 3 years
up to 5 years
up to 10 years
02.04.2003
up to 2 years
02.07.2003
01.10.2003
up to 3 years
31.12.2003
up to 5 years
0.05%
0.00%
01.01.2003
02.04.2003
02.07.2003
01.10.2003
31.12.2003
-0.05%
-0.10%
LB auctions
Secondary market
The Chairwoman of the Council
Lina Adakauskienë
The Director of the Undertaking
Raimundas Þilinskas
8
6. FINANCIAL STATEMENT
9
The State Undertaking “Insurance of Deposits and Investments”
BALANCE SHEET FOR 31 DECEMBER 2003
(in LTL)
ASSETS
Notes and charts 31 December 2003
31 December 2002
160,454
176,036
NON-CURRENT ASSETS
Intangible assets
1
7,482
1,785
Tangible assets
2
152,972
174,251
388,804,933
321,607,501
50
6,593
CURRENT ASSETS
Inventories
Amounts receivable within one year
3
5,063,618
4,425,772
Investments and time deposits
4
383,692,118
316,981,045
49,147
194,091
11,082,334
7,792,679
400,047,721
329,576,216
31 December 2003
31 December 2002
31,522,619
31,256,607
30,974,825
30,276,495
Cash at bank and in hand
ACCRUED (RECEIVABLE) INCOME AND DEFERRED CHARGES
5
TOTAL ASSETS
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
6
Capital
Reserves
281,782
Retained earnings (loss)
266,012
980,112
368,254,998
298,035,817
364,819,620
294,886,355
3,435,378
3,149,462
FUNDS ADMINISTERED BY THE UNDERTAKING
7
Deposit Insurance Fund
Liabilities to Investors Insurance Fund
AMOUNTS PAYABLE WITHIN ONE YEAR AND CURRENT LIABILITIES
8
262,600
273,393
ACCRUED CHARGES AND DEFERRED INCOME
9
7,504
10,399
400,047,721
329,576,216
TOTAL EQUITY AND LIABILITIES
10
INCOME STATEMENT
For the year ended 31 December 2003
(in LTL)
Notes and charts The year 2003 The year 2002
INCOME OF THE UNDERTAKING
10
943,241
25,230,982
-
21,902,306
Administration fee for the Funds administered
669,283
457,636
Income from investments
273,511
2,847,211
-
23,829
447
-
677,229
865,677
-
315,928
669,283
457,636
-
75,316
7,946
16,797
266,012
24,365,305
-
-
266,012
24,365,305
Insurance premiums
Grants and subsidies received
Other activities
EXPENSES
General and administration expenses of the state undertaking Deposit Insurance Fund
Administration expenses in respect of the Funds administered
Investment expenses of the state undertaking Deposit Insurance Fund
Expenses of investing the Undertaking‘s capital
PROFIT (LOSS) BEFORE TAXES
Income tax
NET PROFIT (LOSS)
APPROPRIATION ACCOUNT
For the year ended 31 December 2003
(in LTL)
Items
Profit (loss) brought forward from the previous year
Notes and charts
980,112
58,605,456
266,012
24,365,305
1,246,124
82,970,761
Transfers from reserves
-
182,645,415
Profit to be appropriated
1,246,124
265,616,176
980,112
264,636,064
- to Deposit Insurance Fund
-
261,636,064
- to Liabilities to Investors Insurance Fund
-
3,000,000
49,006
-
- to other reserves for increasing the authorized capital
698,330
-
- for other needs
232,776
-
Profit (loss) to be carried forward at the end of the current year
266,012
980,112
Current year net profit (loss)
Profit (loss) to be appropriated
Appropriation of profit:
- to legal reserves
11
11
The year 2003 The year 2002
CASH FLOW STATEMENT
For the year ended 31 December 2003
(in LTL)
The year 2003 The year 2002
Items
Cash flow from operating activities
Net profit (loss)
Depreciation and amortization expenses
Change in inventories
Unrealised foreign exchange loss (gain)
Decrease (increase) in amounts receivable from the insured and other trade receivables
Increase (decrease) in liabilities of the Undertaking
Decrease (increase) in prepayments
266,012
24,365,305
45,805
67,540
6,543
89
951,723
206,276
(637,846)
(924,242)
(13,688)
35,390
(467)
640
Formation (use) of funds
80,075,302
35,337,814
Net cash flow from operating activities +/(-)
80,693,384
59,088,812
(30,223)
(21,501)
Cash flow from investing activities
Disposal (purchase) of non-current assets
Disposal (purchase) of investments
(80,808,105)
(58,924,685)
Net cash flow from investing activities +/(-)
(80,838,328)
(58,946,186)
Other cash inflow (outflow)
Net increase (decrease) in cash flow
Cash at the beginning of the period
Cash at the end of the period
-
-
(144,944)
142,626
194,091
51,465
49,147
194,091
THE STATEMENT ON MOVEMENT OF DEPOSIT INSURANCE FUND
For the year ended 31 December 2003
(in LTL)
Numbers
Items
I.
Opening balance of the Fund
II.
Transfer of the assets controlled by the state
undertaking Deposit Insurance Fund on 01 July 2002
III.
III.1.
The year 2003
The year 2002
294,886,355
-
-
261,636,064
Income of the Fund:
70,596,152
33,702,931
Insurance premiums of the insured
53,463,160
24,864,031
III.1.1.
Banks
53,313,109
24,818,508
III.1.2.
Credit unions
150,051
45,523
III.2.
Investment income
2,748,396
8,838,900
III.2.1.
Income from interest on government securities
14,070,499
7,395,476
III.2.2.
Profit from sales of government securities
III.2.3.
Foreign exchange gain (loss)
III.3.
Funds exacted from the insured under liquidation
IV.
Administration expenses:
IV.1.
Fund investment expenses
IV.2.
Administration, payroll and other expenses
V.
Insurance compensations
Closing balance of the Fund
242,643
2,797,628
(11,564,746)
(1,354,204)
14,384,596
-
662,238
452,640
81,947
154,549
580,291
298,091
649
-
364,819,620
294,886,355
12
THE STATEMENT ON MOVEMENT OF LIABILITIES TO INVESTORS INSURANCE FUND
For the year ended 31 December 2003
(in LTL)
Numbers
Items
The year 2003 The year 2002
I.
Opening balance of the Fund
II.
Transfer of the assets controlled by the state
undertaking Deposit Insurance Fund on 01 July 2002
III.
Income of the Fund:
262,201
56,192
30,760
98,266
149,472
82,267
2,606
30,355
(121,318)
(14,356)
7,045
4,996
III.1.
Insurance premiums of the insured
III.2.
Investment income
III.2.1.
Income from interest on government securities
III.2.2.
Profit from sales of government securities
III.2.3.
Foreign exchange gain (loss)
IV.
Administration expenses:
IV.1.
Fund investment expenses
IV.2
Administration, payroll and other expenses
Closing balance of the Fund
3,149,462
-
-
3,000,000
292,961
154,458
864
1,686
6,181
3,310
3,435,378
3,149,462
NOTES TO THE FINANCIAL STATEMENTS FOR 2003
BACKGROUND INFORMATION
The State Undertaking “Indëliø ir Investicijø Draudimas”
(Insurance of Deposits and Investments) is a state
undertaking established in accordance with the Law of the
Republic of Lithuania on Insurance of Deposits of Individuals
by the Government of Republic of Lithuania and registered
with the Ministry of Economy on 16 December 1996. The
founder of the Undertaking is the Ministry of Finance.
In 2003, insurance premiums to Deposit Insurance Fund were
paid by 11 banks and 58 credit unions, and insurance
premiums to Liabilities to Investors Insurance Fund were paid
by 26 financial brokerage companies and management
undertakings of investment companies with variable capital.
As at 31 December 2003, the Undertaking had 9 employees.
Accounting policies
Registration No. of the Undertaking: VÁ 96-4.
Code of the Undertaking: 1006945.
The Undertaking is involved in insurance of deposits and
liabilities to investors and investment of the Undertaking’s
capital and the Funds administered by it, as well as in
calculation and payment of insurance compensations to the
depositors and investors of the insured.
In its activities, the Undertaking follows the provisions of the
Law of the Republic of Lithuania on Insurance of Deposits and
Liabilities to Investors, based on which it covers with
insurance the deposits of individuals and legal entities held
with the banks and credit unions, as well as liabilities of
commercial banks, financial brokerage companies and
investment funds or management undertakings of investment
companies with variable capital.
13
The financial statements of the state undertaking Insurance of
Deposits and Investments have been prepared in accordance
with the Lithuanian regulatory legislation on accounting.
The financial statements have been prepared on a going
concern basis assuming that the Undertaking will be able to
continue its activities in the near future.
The financial year of the Undertaking coincides with the
calendar year.
The principal accounting policies adopted by the Undertaking
in the preparation these financial statements are set out below.
Non-current assets
Assets with useful life over one year and acquisition
value over LTL 500 are attributed to non-current tangible
assets. Non-current tangible assets, except for the premises
of the Undertaking, are stated at cost, less accumulated
depreciation. The acquisition value comprises the purchase
price of the asset, including all related costs, such as customs
duty, excise duty and other taxes, freight and delivery charges
(installation, probation, tuning, etc.), incurred before the asset
is brought into use. The premises are shown at re-valued
amount, less accumulated depreciation. Independent property
valuers performed a valuation of the Under taking‘s premises
on 26 March 1998.
The expenses for repairs of non-current tangible assets (if
any) are recognized in the Income Statement. Software with
the useful life over one year and acquisition value over LTL 500
is attributed to non-current intangible assets. Non-current
intangible assets are stated at cost, less accumulated
amortization.
Residual value of non-current assets is equal to LTL 1, as
established by the Undertaking. Amor tization and depreciation
are calculated using the straight-line method.
The following rates of amortization and depreciation are used:
Depreciation and amortization rates (in years)
Category of non-current assets
Rights acquired
3
Premises
10
Vehicles
3
Computer and telecommunication equipment
3
Office furniture
6
Inventories
Inventories of low value (up to LTL 500) and various
consumables, including petrol, are recorded in the inventory
account. Inventories are stated at actual acquisition cost and
written off at the moment when they are brought into use. The
acquisition cost of inventories comprises the acquisition value
and certain taxes that are not subsequently recoverable by the
Undertaking from the state institutions.
Amounts receivable within one year
This item includes all amounts receivable by the Undertaking
from third parties no later than next year after the cur rent year.
Debts are estimated at their nominal value.
Investments
The capital resources of the Undertaking and the Funds
administered by it are invested in accordance with the
investment procedure approved by the Council of the
Undertaking. The Under taking‘s funds are invested pursuant
to safety, liquidity and profitability criteria in the securities of
the Republic of Lithuania and other states, which have a longterm credit rating no less than Aa2 according to Moody‘s and
other appropriate credit rating agencies at the moment of
investment.
Investments in treasury bills are accounted for at their
acquisition value. In the financial statements, the amount of
interest accrued on these securities is recognized as income
and recorded under accrued interest income.
Investments in Government coupon securities are accounted
for at their acquisition value. Securities of foreign states
denominated in foreign currency are translated to the litas at
the official exchange rate of the litas and the respective foreign
currency at the date of acquisition. At the end of the
accounting period, the securities denominated in foreign
currency are translated into the litas at the official exchange
rate of the litas and the respective foreign currency at the last
day of the period.
Income from coupons is recognized on the accrual basis and
included in interest income. Discounts (premiums) are
amortized over the period from acquisition to maturity and the
value of securities is increased (decreased) by the amount of
the amortized discount (premium).
The cost of the securities sold is calculated using the FIFO
accounting method.
The costs related to the acquisition of securities are
recognized as expenses in the Income Statement.
14
Cash and cash equivalents
Cash and cash equivalents in the Cash Flow Statement include
cash in hand and at bank.
Foreign currency
Foreign currency transactions are translated using the official
exchange rate of the litas and the respective foreign currency
prevailing at the date of the transaction: foreign exchange gain
and loss from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in
foreign currencies are recognised in the Income Statement.
Balances in foreign currency are translated according to the
official year-end exchange rate.
Accrued income and deferred charges
In this item, the accrued income includes the accrued interest
income on treasury bills and accrued coupon on securities of
the Government of the Republic of Lithuania and on
Government bonds of foreign states, calculated according to
the accrual principle.
Deferred charges comprise amounts paid by the Undertaking
in 2003, which will, however, be recognized as expenses in the
following accounting periods.
Reserves
Reserves are established upon appropriation of the
Undertaking‘s profit. The Under taking‘s profit is appropriated
in accordance with the By-laws of the Undertaking approved
by the Resolution of the Government of the Republic of
Lithuania No. 769, dated 26 June 1996 (earlier version of
Resolution No. 1851 of the Government of the Republic of
Lithuania, dated 26 November 2002). The Undertaking‘s profit
is to be appropriated to the following reserves:
1) transfers to the legal reserves of the Undertaking, by
applying a 5% annual deduction rate on the profit. Reserves
are replenished every year until they reach 1/20 of the
authorized capital of the Undertaking.
2) profit reserve for increase of the authorized capital – 75% of
the remaining profit is transferred;
3) profit reserve for other needs – the remaining 25% of profit
is allocated.
Funds
The Deposit Insurance Fund and Liabilities to Investors
Insurance Fund are stated in the balance sheet of the
Undertaking. These Funds are recorded in different accounts
in the Undertaking’s General Ledger. The following income is
attributed to the Funds: insurance premiums of the insured,
amounts exacted from the insured in liquidation in accordance
with the effective legislation, the Funds’ investment income.
The following expenses are recognized as the Fund’s
expenses: insurance compensations and Fund administration
expenses. Investment income earned attributable to the Funds
and expenses incurred for administration of the Funds are
allocated on a monthly basis to the Deposit Insurance Fund
and Liabilities to Investors Insurance Fund in proportion to
their size at the beginning of the month.
15
Insurance premiums of the insured, amounts exacted from the
insured in liquidation, and insurance compensations are
attributed directly to the Fund that they belong to, i.e. insurance
premiums paid by commercial banks, branches of foreign
banks and credit unions, amounts exacted from the
aforementioned insured in liquidation and insurance
compensations paid to these insured are attributed to the
Deposit Insurance Fund, while insurance premiums paid by
financial brokerage companies and investment funds and
management undertakings of investment companies with
variable capital, amounts exacted from these insured and
insurance compensations paid to them are attributed to
Liabilities to Investors Insurance Fund.
Income and expenses of the Funds are recorded in book
accounts and presented in the financial statements on an
accrual basis.
Amounts payable within one year and other liabilities
This item reflects all current liabilities of the Undertaking to
third parties that should be discharged no later than within the
year following the accounting year.
Accrued charges and deferred income
This item reflects insurance premiums paid in advance by the
insured.
Recognition of revenue and expenses of the Undertaking
In accordance with the Law of the Republic of Lithuania on
Insurance of Deposits and Liabilities to Investors, the following
income received by the undertaking is recognized as the
Undertaking‘s income:
income from investing the
Undertaking‘s capital, administration fees received for the
Funds administered and other income (grants, subsidies,
etc.), and the expenses to be recognized as expenses of the
Undertaking are the following: expenses of investing the
Undertaking‘s capital, administration expenses of the Funds
administered and other expenses.
Income from investing the Company‘s capital includes the
share of the income from investing all funds of the
Undertaking (the Funds administered and the capital)
proportional to the capital of the Under taking.
Income from administration of the Funds administered
represents the administration expenses of the Funds
administered attributable to the Undertaking‘s income. This
income recognised in the financial statements by reducing the
Funds administered by the amount of expenses incurred in
respect of these Funds.
The Undertaking‘s revenue and expenses are recorded and
presented in the financial statements on an accrual basis.
Taxes
The Undertaking is exempt from Income Tax, Road Tax and
interest on the use of state capital.
Comparative figures
Where necessary, the comparative figures have been
reclassified to conform to changes in presentation in the
current year.
NOTES
All the amounts in these Notes are in the litas, unless otherwise indicated.
NOTE 1 – NON-CURRENT INTANGIBLE ASSETS Movement of non-current intangible assets in 2003:
Software
Acquisition cost
Balance at 31 December 2002
35,645
Additions
7,352
Written off
-
Balance at 31 December 2003
42,997
Accumulated amortization
Balance at 31 December 2002
33,860
Charge for the year
1,655
Amounts written off during the year
-
Balance at 31 December 2003
35,515
Net book value at 31 December 2003
7,482
Net book value at 31 December 2002
1,785
NOTE 2 – NON-CURRENT TANGIBLE ASSETS Movement of tangible fixed assets in 2003:
Buildings
Vehicles
Office
equipment, etc
Total:
262,342
38,200
248,230
548,772
-
-
22,871
22,871
Acquisition cost
Balance at 31 December 2002
Additions
Written off
Balance at 31 December 2003
-
-
(29,356)
(29,356)
262,342
38,200
241,745
542,287
107,496
38,199
228,826
374,521
Accumulated depreciation
Balance at 31 December 2002
Charge for the year
32,609
-
11,541
44,150
-
-
(29,356)
(29,356)
Amounts written off during the year
Balance at 31 December 2003
140,105
38,199
211,011
389,315
Net book value at 31 December 2003
122,237
1
30,734
152,972
Net book value at 31 December 2002
154,846
1
19,404
174,251
NOTE 3 – AMOUNTS RECEIVABLE WITHIN ONE YEAR
Amounts receivable within one year consist of:
31 December 2003
1. Insurance premiums receivable from the insured (banks and credit unions)
2. Other amounts receivable
Total:
5,063,019
31 December 2002
4,425,710
599
62
5,063,618
4,425,772
16
NOTE 4 – INVESTMENTS AND TIME DEPOSITS
Balance Sheet item Investments and Time Deposits is used to account for debt securities acquired.
31 December 2003 31 December 2002
Lithuanian treasury bills
Bonds of the Government of the Republic of Lithuania
7,161,483
9,183,266
267,374,913
213,123,506
Lithuanian Eurobonds issued in EUR
43,414,218
19,334,740
Securities of the Republic of Italy issued in USD
18,695,205
22,759,238
Securities of the Kingdom of Spain issued in USD
21,335,203
14,780,301
5,963,230
21,559,329
Securities of the Government of USA issued in USD
Securities of the Republic of Austria issued in USD
8,817,426
5,352,695
Securities of the Republic of Finland issued in USD
10,930,440
10,887,970
383,692,118
316,981,045
Total:
NOTE 5 – ACCRUED INCOME AND DEFERRED CHARGES
31 December 2003 31 December 2002
1. Accrued interest income on government securities
2. Expenses of subscription to newspapers
3. Expenses of property insurance
Total:
11,076,875
7,787,687
4,830
4,370
629
622
11,082,334
7,792,679
NOTE 6 – CAPITAL AND RESERVES, RETAINED EARNINGS
The authorized state capital of LTL 30,974,825 registered in the Undertaking’s By-laws, the reserves in amount of LTL 281,782
(formed from the profit for 2002), and 2003 profit to be carried forward of LTL 266,012 are presented under the equity in the
Balance Sheet.
On the distribution of the profit earned in 2002, the authorized capital was increased by LTL 698,330 in 2003.
NOTE 7 – FUNDS
Fund investment income and administration expenses incurred are distributed on a monthly basis to these Funds in proportion to
their size at the beginning of the month, i.e. on average 98.9% and 1.1% of the income received from investing of the Funds and the
administration expenses incurred are attributed to the Deposit Insurance Fund and Liabilities to Investors Insurance Fund,
respectively.
In 2003, the Deposit Insurance Fund was replenished with the amount of LTL 14,384,596 exacted from Litimpeks AB bank in
liquidation.
17
NOTE 8 – AMOUNTS PAYABLE WITHIN ONE YEAR AND THE LIABILITIES
31 December 2003
1. Unpaid insurance compensations to depositors with Litimpeks bank
2. Debt to Lietuvos Telekomas AB
3. Debt to Finasta, a financial brokerage company,
for the management of the accounts of securities
4. Debt to Vilniaus Energija UAB for services
5. Other amounts payable
Total:
31 December 2002
235,885
238,854
749
694
23,295
32,655
428
794
2,243
396
262,600
273,393
NOTE 9 – ACCRUED CHARGES AND DEFERRED INCOME
Deferred income accounted in this item comprises advance insurance premiums received from the insured.
31 December 2003
31 December 2002
1. Balance of advance insurance premiums
7,504
10,399
Total:
7,504
10,399
NOTE 10 – INCOME STATEMENT
The figures in the Income Statement for the year 2003 cannot be compared with the corresponding figures of 2002 due to the
changes introduced in the accounting policies. The figures of 2002, restated in accordance with the procedure used in 2003, are
submitted for comparative purposes.
(in LTL)
No.
1.
Items
INCOME OF THE UNDERTAKING
2003
2002
943,241
2,041,880
1.1.
Administration fees received for the Funds administered
669,283
840,842
1.2.
Income from investment of the Undertaking’s capital
273,511
1,177,209
1.2.1.
Interests on government securities
1,381,973
1,730,429
1.2.2.
Profit from sales of government securities
1.2.3.
Foreign exchange gain (loss)
1.3.
Income from grants and subsidies
1.4.
Other income
24,128
314,280
(1,132,590)
(867,500)
-
23,829
447
-
2.
EXPENSES
677,229
865,374
2.1.
General and administration expenses
669,283
840,842
2.2.
Capital investment expenses
PROFIT (LOSS) BEFORE TAX
Income tax
NET PROFIT (LOSS)
7,946
24,532
266,012
1,176,506
-
-
266,012
1,176,506
Other income in amount of LTL 447 is the income from selling unnecessary, fully depreciated assets through auction.
Decrease in profit in 2003 was caused by a lower interest rate on government securities in the market and a negative foreign
exchange impact on investments.
18
NOTE 11 – THE APPROPRIATION ACCOUNT
The financial statements for the year 2003 reflect appropriation of profit of 2002, which was carried out in 2003.
The appropriation of the profit was performed pursuant to the Law of the Republic of Lithuania on Insurance of Deposits and
Liabilities to Investors, as well as based on the By-Laws of the Undertaking, i.e.:
- transfers to profit reserve of the Undertaking amounted to LTL 49,006;
- LTL 698,330 to increase the authorized capital;
- LTL 232,776 to meet other needs.
The retained earnings of the Undertaking at the end of 2003 amounted to LTL 266,012.
19
The Director
R. Þilinskas
The Chief Accountant
A. Kantakevièiûtë