ANNUAL REPORT OF THE BRATISLAVA STOCK EXCHANGE THE YEAR 2004

Transcription

1 ANNUAL REPORT OF THE BRATISLAVA STOCK EXCHANGE THE YEAR 2004 BSSE, j. s. c. Vysoká 17, P.O.Box Bratislava, Slovakia Tel.: Fax: info@bsse.sk

2 ANNUAL REPORT OF THE BRATISLAVA STOCK EXCHANGE THE YEAR 2004 BSSE, j. s. c. Vysoká 17, P.O.Box Bratislava, Slovakia Tel.: Fax: info@bsse.sk

3 01 CONTENTS INTRODUCTION BASIC INFORMATION BSSE BODIES SECURITIES ON STOCK EXCHANGE MARKETS TRADING CLEARING AND SETTLEMENT OF TRANSACTIONS INSPECTION EXTERNAL RELATIONS ECONOMIC RESULTS FOR THE YEAR 2004 REPORT OF INDEPENDENT AUDITOR STATEMENT OF THE SUPERVISORY BOARD CONTACT INFORMATION

4 22 02 INTRODUCTION Dear Readers, Slovakia became a full member of the European Union (EU) in May This important milestone not only for accession countries, but also for EU countries marks the completion of the candidate countries long-standing effort to integrate into the unified European area. The positive effect of Slovakia s entry into the EU has been reflected in the perception of the country as an attractive investment environment. For Bratislava Stock Exchange (BSSE; the Stock Exchange), our country s entry into the EU means the fulfilment of the last condition needed for its admission as a full member of the Federation of the European Securities Exchanges. Bratislava Stock Exchange has been the full member of the Federation since June Various changes in legislation, which were reflected in the Stock Exchange Rules, influenced the Stock Exchange s activity in the year An Amendment was adopted to the Act No 566/2001 (Coll.) on Securities and Investment Services and on Amendments and Supplements to Related Laws in wording of later legislation, through the Act No 635/2004 (Coll.). Within the framework of the Amendment, further amendments were adopted to the Act 429/2002 (Coll.) on the Stock Exchange in wording of later legislation and Act No 594/2003 (Coll.) on Collective Investment and on Amendments and Supplements of Related Laws in wording of later legislation. The Stock Exchange Rules, harmonised with the aforementioned amendments, came into effect on 1 April The most important changes were made in the Rules of Membership. The list of persons that can be granted BSSE membership now includes foreign securities dealers or, respectively, foreign asset-management companies which operate on the territory of the Slovak Republic based on a licence to provide investment services, issued in the country where the given company s registered office is located. What has also been changed is the definition of manipulation of price of a security, which is now defined as market manipulation instead of former manipulation of a security price. Changes implemented in the Rules for Securities Admission to the Stock Exchange Markets are related to the Listing Prospectus. For admission of foreign securities the Amendment stipulates, among other things, that the Listing Prospectus need not be translated into the Slovak language, as has been the case until now; instead it can be in a language commonly used on the international financial markets. The volume of closed transactions in the year 2004 dropped by 60.6% to billion Sk. What also deepened were the negative tendencies dominating the capital market significant predominance of bond transactions (95%) and decreasing volume of electronic order book transactions (-88.2% on a year-on-year basis). The SAX index experienced one of the most successful years in its history, strengthening by 83.9% in comparison with the previous year. The growth of the index was influenced by appreciation of all its base issues, with the most significant increase being that of the issues with the highest weight in the index. In early September, the Stock Exchange introduced to the market a new group of bond indices the SDXGroup. The SDXGroup is a modern indicator of development of the bond market, which factors in the diversity of investment portfolios. It watches the changes of prices and capital yields separately, and takes into account the sector classification of bonds. In the year 2004, the Central Securities Depositary of the Slovak Republic (CSD) started its operation, which resulted in the transfer of competence in the clearing and settlement of transactions from the Stock Exchange to the CSD. BSSE last year continued its effort to increase the transparency of corporate governance. After the creation of the Unified Code of Corporate Governance in 2002 and its implementation in the Stock Exchange Rules in 2003, the Central European Corporate Governance Association was established in October The mission of the Association is to disseminate the standards of best corporate governance. Although the Slovak capital market is a relatively small one, our interest is that it be a transparent and safe place for both issuers and investors. In spite of the fact that the last year was so demanding for the Stock Exchange, it managed to achieve a positive economic result in the amount of million Sk. The positive result was achieved thanks to cost saving. The solution of future position of the Central Securities Depositary of the Slovak Republic will be a looked-for change on the capital market in the year 2005, which is expected to enhance the infrastructure of the capital market. Another impulse for development of the capital market should be the privatisation of a 10-percent share of Západoslovenská energetika (j.s.c.) through the Stock Exchange in the first half of The privatisation is expected to expand the offer of securities on the Slovak capital market, which appears to be highly desirable in relation to the pension reform. The pension insurance companies will every year invest billions of Slovak crowns on the world financial markets, and BSSE would like to attract a part of these resources by broadening the offer of issues of securities. Let us finally express our sincere gratitude to all entities and individuals who joined us last year in our effort to strengthen the capital market s position within the framework of the financial market. The development that we anticipate in the year 2005 gives us hope that there will be changes on the capital market, which will help us create conditions for making the Stock Exchange more attractive to both investors and issuers of securities. Marián Šedo Chairman of BSSE Board of Directors Mária Hurajová BSSE Director General

5 03 BASIC INFORMATION Bratislava Stock Exchange (j.s.c.) was founded on 15 March 1991 in compliance with a Decree of the Ministry of Finance of the Slovak Republic, issued in the year The Stock Exchange is a legal entity entered in the Commercial Register of County Court Bratislava I. At present the Stock Exchange performs its activity on the basis of a licence to operate as an organiser of the public market of securities, issued by the Financial Market Authority on 25 June BSSE s registered capital amounts to million Sk. As of 31 December 2004, the Stock Exchange had 19 shareholders. As of the end of the year 2004, BSSE had 34 employees, which represents a decrease by 4 employees in comparison with the previous year. BSSE BODIES AND ORGANISATIONAL STRUCTURE Supervisory Board Anna Bubeníková Chairperson General Meeting of Shareholders Board of Directors Marián Šedo Chairman Director General Mária Hurajová Office of Director General Inspection Department Júlia Ďurišová Head Legal Department Svetlana Kucmenová Head External Relations Division Barbora Lazárová Deputy Director General Director Economic Division František Novosad Deputy Director General Director Information Systems Division Karol Gers Director Stock Exchange Trades Division Oľga Dlugopolská Director Listing Department Róbert Vlkolinský Head International Relations and Marketing Department Monika Zabadalová Head Trading and Analyses Department Oľga Dlugopolská Head Clearing and Settlement Department Miroslava Balogová Head

6 04 BSSE Shareholder Structure as of 31 December 2004 No. Name of shareholder Share in registered Number of shares Share in regist. capital (Sk) capital (%) 1 National Property Fund of the Slovak Republic ,13% 2 Všeobecná úverová banka, a. s ,20% 3 Allianz - Slovenská poisťovňa, a. s ,31% 4 OTP Banka Slovensko, a. s ,31% 5 Slovenská sporiteľňa, a. s ,98% 6 Capital Partners, o.c.p., a. s.* ,64% 7 Oost-Europa Participaties, B. V ,64% 8 Poštová banka, a. s ,34% 9 KORUNA Invest, a. s ,76% 10 Devín banka a. s. (under bankruptcy) ,88% 11 ING Bank N. V. (The Netherlands) through its Slovak branch ING Bank N. V ,88% 12 Slovenská kreditná banka, a. s. (under bankruptcy) ,88% 13 TatraCredittax s. r. o ,88% 14 Všeobecná investičná spoločnosť, a. s ,88% 15 Československá obchodní banka, a. s. (Czech Republic) through its Slovak branch Československá obchodní banka, a. s., ,65% 16 KOOPERATIVA poisťovňa, a. s ,63% 17 UniBanka, a. s ,58% 18 Tatra banka, a. s ,26% 19 UNIQA poisťovňa, a. s ,17% TOTAL ,00% * On 16 July 2004, Capital Partners acquired 100 share units from AG Banka (under bankruptcy), thus gaining a 0.88-percent share in BSSE s registered capital. On 23 November 2004, Capital Partners acquired 200 share units from HARVARDSKÁ BURZOVÁ SPOLOČNOSŤ (in liquidation), thus increasing its share in BSSE s registered capital to 2.64%.

7 05 BSSE BODIES EXECUTIVE BOARD Executive Board Chairman Marián Šedo Executive Board Vice-Chairman Peter Huňor Istrobanka, Executive Board Member National Property Fund of the Slovak Republic, Vice-Chairman of Executive Board of the National Property Fund Members Ján Valko Allianz Slovenská poisťovňa, Trading Section Director Róbert Kopál Association of Securities Dealers, Director Ivan Gránsky CA IB Financial Advisors, Executive Board Chairman Jozef Mihalik National Property Fund of the Slovak Republic, Member of Executive Board of the National Property Fund and Director of Capital Market and Bonds Section Zita Zemková OTP Banka Slovensko, Vice-President Peter Krutil Slovenská sporiteľňa, Executive Board Member until 21 May 2004 Róbert Herbec Slovenská sporiteľňa, Head of New Issues and Corporate Finance Department from 21 May 2004 Marián Matušovič VÚB Asset Management, Executive Board Chairman SUPERVISORY BOARD Chairman Anna Bubeníková National Property Fund of the Slovak Republic, Member of Executive Board of the National Property Fund and Director of Founding Activities and Shareholder Rights Exercise Section Members Juraj Wertlen Allianz Slovenská poisťovňa, Legal Department Director until 23 September 2004 Marek Jankovič Allianz Slovenská poisťovňa, Executive Board Vice-Chairman and Vice-President for Economy from 23 September 2004 Bohuslav Šolta Všeobecná úverová banka, Executive Board Member until 21 May 2004 Roman Klaban Všeobecná úverová banka, Executive Board Member and Director of Financial and Capital Markets Section from 21 May 2004

8 06 STOCK EXCHANGE ARBITRATION COURT Chairman Ľudovít Šajgal PERMANENT COMMITTEES SECURITIES LISTING COMMITTEE Chairman Ivan Gránsky CA IB Financial Advisors Members Peter Polák Československá obchodní banka, branch of foreign bank in Slovak Republic Miron Zelina INVEST BROKERS Until 14 April 2004 Boris Gubrianský INVEST BROKERS From 5 May 2004 Róbert Blaho ISTRO ASSET MANAGEMENT Andrej Sinicyn Komerční banka Martin Vajkuny OTP Banka Slovensko Until 19 April 2004 František Kurucz OTP Banka Slovensko From 5 May 2004 to 21 September 2004 Rastislav Matejsko OTP Banka Slovensko From 29 October 2004 Agnesa Kovácsová Poštová banka Until 29 January 2004 Ingrid Kolembusová Poštová banka From 30 January 2004 Rudolf Lachkovič Slovenská konsolidačná Róbert Herbec Slovenská sporiteľňa Until 23 September 2004 Ivana Čičátková Slovenská sporiteľňa From 24 September 2004 Michal Kustra Tatra Asset Management Until 28 October 2004 Dana Rudkovská Tatra banka From 29 October 2004 Richard Belyus UniBanka Soňa Kundrátová Všeobecná úverová banka Barbora Lazárová Bratislava Stock Exchange Róbert Vlkolinský Bratislava Stock Exchange

9 07 MEMBERSHIP COMMITTEE Chairman Marián Šedo Istrobanka Members Jozef Šnegoň Československá obchodní banka, branch of foreign bank in Slovak Republic Jaroslav Hora OTP Banka Slovensko Peter Šuba Poštová banka Peter Kováč Slovenská sporiteľňa Until 26 April 2005 Stanislav Figlár Všeobecná úverová banka Svetlana Kucmenová Bratislava Stock Exchange Júlia Ďurišová Bratislava Stock Exchange TRADING COMMITTEE Chairman Róbert Kopál Association of Securities Dealers Members Miloš Labaj Československá obchodní banka, branch of foreign bank in Slovak Republic Roman Hedera Dexia banka Slovensko Ivan Hrušovský HVB Bank Slovakia Marcela Mitošinková ING Bank N.V., branch of foreign bank Until 30 October 2004 Martin Koska ING Bank N.V., branch of foreign bank From 28 October 2004 Rastislav Paulíny Istrobanka Until 30 September 2004 Mojmír Hojer Istrobanka From 28 October 2004 Michal Holík J & T SECURITIES (SLOVAKIA) Peter Karcol Komerční banka Bratislava Until 28 October 2004 Igor Hornák OTP Banka Slovensko Until 28 October 2004 Bohuslav Ukropec Poštová banka From 29 January 2004 Peter Lachkovič Slovenská sporiteľňa Milan Čavojec Tatra banka Tomáš Perďoch UniBanka František Ravinger V BROKERS František Kurucz Všeobecná úverová banka Until 12 February 2004 Andrej Ungvarský Všeobecná úverová banka From 26 February 2004 Oľga Dlugopolská Bratislava Stock Exchange Peter Šály Bratislava Stock Exchange

10 08 SECURITIES ON STOCK EXCHANGE MARKETS In the year 2004, a total of 31 new issues of domestic securities (113.0 billion Sk) were admitted to BSSE s markets. That includes one issue representing an increase of registered capital (1.0 billion Sk). Although other four companies increased their registered capital last year, they did it by increasing the volume of five issues (0.7 billion Sk) that had already been admitted to the Stock Exchange. The total nominal value of capital newly admitted to the capital market amounts to billion Sk, of which the increase of registered capital (for shares) represents 1.7 billion Sk. Admitted to trading in the course of the year were 13 new issues of shares and participation certificates (of 5 issuers), in the nominal value of 2.2 billion Sk. None of them was admitted to the Stock Exchange s listed market all were registered on the regulated free market. Out of 6 share issues registered on the regulated free market, the issues of companies Termstav and Rufin were readmitted in order to execute a compulsory bid to take over. After the compulsory bids ended, the aforementioned issues were excluded from the market. The remaining 7 issues were the participation certificates of asset-management company PRVÁ PENZIJNÁ, worth 16.0 million Sk. Registered capital was increased through 6 issues of 5 issuers, with the sum of the increased registered capital amounting to 1.7 billion Sk. That includes a 1.02-billion Sk increase of registered capital through one new issue of OTP Banka Slovensko, which subsequently placed this issue on the parallel listed market. The remaining 0.7 billion Sk is the increase of 5 issues which had been previously registered on the regulated free market. In the course of the year 2004, the Stock Exchange admitted to trading 5 issues of government bonds in the total nominal value of billion Sk, 10 issues of mortgage bonds worth 6.7 billion Sk and 2 issues of corporate bonds in the nominal value of 2.0 billion Sk. No new debt security was admitted to the regulated free market. Total capital issued by means of debt securities amounts to billion Sk. An overview of securities listed on BSSE can be found in Annex 2. Following a decision adopted by an extraordinary general meeting of company Zentiva s shareholders, and in compliance with the Stock Exchange Rules, trading of the company s share issue ended on the main listed market of BSSE on 21 May In the course of the year 2004, BSSE ended trading on the regulated free market of 79 share issues and 1 issue of participation certificates, including 76 share issues of joint-stock companies and 3 share issues of investment funds. In 10 cases the share issues were cancelled in the Central Securities Depositary of the Slovak Republic; 5 share issues were replaced with new ISINs; 1 share issue ended trading due to termination of the issuer by the court; 47 share issues ended trading at the request of their issuers and 17 share issues (of 16 issuers) were excluded from trading due to the issuers failure to fulfil the obligation to inform. It can be said that the number of issuers that fail to fulfil the information obligations towards the Stock Exchange has decreased over the course of years. Due to the maturity date of bonds, BSSE in the course of the year ended trading of 12 issues of government bonds, 1 issue of bank bonds and 2 issues of corporate bonds (including one prematurely redeemed issue) on the market of listed securities. Trading of 2 issues of corporate bonds, 1 issue of government Eurobonds and 4 issues of municipal obligations (including 3 prematurely redeemed issues) ended for the same reason on the regulated free market.

11 09 SECURITIES LISTED AS OF 31 DECEMBER 2004 WITH CHANGES AS OF 21 APRIL 2005 Name of issue ISIN Date of listing SHARES Main Listed Market 1. Slovnaft, a.s. Bratislava CS Nafta a.s. Gbely CS Všeobecná úverová banka, a.s. SK Slovnaft, a.s. - 2 nd issue SK SLOVENSKÉ ENERGETICKÉ STROJÁRNE a.s. (SES a.s.) SK Slovnaft, a.s. - 3 rd issue SK SHARES Parallel Listed Market 1. Biotika a.s. CS Biotika a.s. - 2 nd issue SK Istrokapitál, a.s. SK OTP Banka Slovensko, a.s. SK NOVITECH a.s. SK Istrokapitál, a.s. - 2 nd issue SK Istrokapitál, a.s. - 2 nd issue SK OTP Banka Slovensko, a.s. 2 nd issue SK BONDS Main Listed Market 1. * Government bond 131 SK VÚB a.s. Bratislava - 2 nd issue of mortgage bonds SK Government bond 132 SK Government bond 133 SK Government bond 134 SK VÚB a.s. Bratislava - 4 th issue of mortgage bonds SK Nafta a.s. Gbely SK Government bond 142 SK Government bond 143 SK Government bond 144 SK Government bond 151 SK

12 10 Name of issue ISIN Date of listing 12. Government bond 152 SK VÚB a.s. Bratislava - 5 th issue of mortgage bonds SK ** PALMA - TUMYS - 3 rd issue SK Government bond 161 SK Government bond 163 SK Government bond 166 SK Matador, a.s. 03 SK Matador, a.s. 04 SK Government bond 170 SK Tatra banka, a.s. HZL I. SK Government bond 174 SK VÚB a.s. Bratislava - 6 th issue of mortgage bonds SK Government bond 182 SK Government bond 184 SK ISTROBANKA, a.s. HZL I. SK Government bond 188 SK Government bond 189 SK * Government bond 190 SK Government bond 191 SK Government bond 192 SK VÚB a.s. Bratislava - 7 th issue of mortgage bonds SK Government bond 199 SK Government bond 200 SK Government bond 201 SK Government bond 202 SK Government bond 203 SK Government bond 204 SK BONDS Parallel Listed Market 1. * BANSKÉ STAVBY, a.s. 2 nd issue SK Slovenská sporiteľňa, a.s. 1 st issue of mortgage bonds SK Železiarne Podbrezová, a.s. 2 nd issue SK Tatra banka, a.s. HZL II. SK Slovenská sporiteľňa, a.s. 2 nd issue of mortgage bonds SK Slovenská sporiteľňa, a.s. 3 rd issue of mortgage bonds SK Slovenská sporiteľňa, a.s. 4 th issue of mortgage bonds SK

13 11 Name of issue ISIN Date of listing 8. B.O.F., a.s. 5 th issue SK I.D.C. Holding, a.s. - 4 th issue SK ISTROBANKA, a.s. HZL II. SK OTP Banka Slovensko, a.s. HZL I. SK VÚB a.s. Bratislava - 8 th issue of mortgage bonds SK VÚB a.s. Bratislava - 9 th issue of mortgage bonds SK Unibanka, a.s. - 1 st issue of mortgage bonds SK CAC Leasing Slovakia, a.s. - 2 nd issue SK HVB Bank Slovakia a.s. HZL 1 SK VÚB a.s. Bratislava - 12 th issue of mortgage bonds SK OTP Banka Slovensko, a.s. HZL II. SK Československá obchodní banka, a.s. HZL I. SK Slovenská sporiteľňa, a.s. 5 th issue of mortgage bonds SK Slovenská sporiteľňa, a.s. 6 th issue of mortgage bonds SK B.O.F., a.s. 6 th issue SK *** ISTROBANKA, a.s. HZL III. SK *** OTP Banka Slovensko, a.s. HZL IV. SK *** ĽUDOVÁ BANKA, a.s. HZL I. SK *** Československá obchodní banka, a.s. HZL II. SK *** OTP Banka Slovensko, a.s. HZL V. SK * Following redemption of bonds, listing was cancelled and trading ended of the following bonds: Government bond 190 on 7 February 2005, bonds BANSKÉ STAVBY (j.s.c.) 02 on 20 February 2005 and government bond 131 on 30 March ** Following premature redemption of corporate bonds of issuer PALMA - TUMYS (j.s.c.) Bratislava as of 2 April 2005, their listing was cancelled and trading ended on 4 April *** After meeting the listing conditions, the following issues were admitted to the parallel listed market: ISTROBANKA (j.s.c.) mortgage bond III and OTP Banka Slovensko (j.s.c.) mortgage bond IV on 14 February 2005, issue ĽUDOVÁ BANKA (j.s.c.) mortgage bond I on 17 March 2005, issue Československá obchodní banka (j.s.c.) mortgage bond II on 8 April 2005 and issue OTP Banka Slovensko (j.s.c.) mortgage bond V on 15 April Note: HZL = mortgage bond

14 12 TRADING AND CLEARING AND SETTLEMENT Trading on BSSE in 2004 was marked by a change of income tax legislation, which (effective from January 2004) has forbidden transfers of securities to foreign entities for the purpose of tax relief, as well as by the start of operation of the Central Securities Depositary of the Slovak Republic accompanied by numerous technical difficulties. Problems in the clearing and settlement of transactions, on the part of both members and the Central Depositary, paralysed the capital market and prevented the members from trading on the Stock Exchange for several weeks. The volume of transactions closed on the Stock Exchange in 2004 amounted to billion Sk, decreasing by 60.6% against the year Notwithstanding the significant drop in volume, 2004 is the third most successful year in the Stock Exchange s history from a perspective of achieved volume of transactions. The number of transactions also fell in comparison with the previous year by more than 70% and amounted to Such a significant decrease in the number of transactions was caused, among other things, by the execution of announced compulsory take-over bids. Although their number rose from 41 in the year 2003 to 56 in the period under review, the execution of the compulsory take-over bids lagged significantly in terms of the number of transactions. While the number of transactions closed within the compulsory take-over bids totalled in the year 2003, last year it only amounted to 3 262, representing a year-on-year decrease by 92.7%. The volume of electronic order book (i.e. price-setting) transactions amounted to billion Sk, representing 5.2% of the total volume of transactions (a decrease by 81.3% against the previous year). This decrease resulted from a disruption of electronic order book transactions, especially those with bonds. While in 2003 the number of the electronic order book transactions with bonds amounted to billion Sk, last year it only totalled 14.0 billion Sk. Transactions closed by non-residents in 2004 achieved a 49.6-percent share in the total volume of transactions, of which the buy-side accounted for 53.6% and the sell-side for 45.7%. The share of foreign natural persons in the total volume represents 1.0%; the rest belongs to legal entities. TRADING OF SHARES On the last trading day of December 2004, transactions could be closed with 389 issues of shares and participation certificates of 302 issuers, including 6 issues on the main listed market, 8 issues on the main parallel market and 375 issues on the regulated free market. YEAR 2004 TRADING VOLUME STATISTICS Market capitalisation of all negotiable issues of equity securities registered on Stock Exchange markets increased, on a year-on-year basis, by 27.7% to billion Sk. Market capitalisation of the listed market totalled 68.6 billion Sk, with a 62.4-percent increase year-on-year, indicating a significant appreciation of the existing listed issues during the year 2004, notwithstanding the departure of an important listed issue (Zentiva) from the market. Equity securities were traded in the volume of 21.4 billion Sk, which corresponds to 20.1 million share units transferred. Although the year-on-year decrease is only 12.2%, it must be said that the share market considerably weakened last year due to a high share as much as 38.9% (as opposed to only 4.1% one year earlier) of transactions closed within compulsory Change (%) NUMBER OF TRADING DAYS ,82 TOTAL VOLUME OF TRANSACTIONS (SK) ,59 AVERAGE DAILY VOLUME OF TRANSACTIONS (SK) ,91 SHARES AND PARTICIPATION CERTIFICATES TOTAL VOLUME OF TRANSACTIONS (SK) ,21 AVERAGE DAILY VOLUME OF TRANSACTIONS (SK) ,92 NUMBER OF ISSUES ,17 MARKET OF LISTED SECURITIES MARKET OF UNLISTED SECURITIES ,59 BONDS TOTAL VOLUME OF TRANSACTIONS (SK) ,69 AVERAGE DAILY VOLUME OF TRANSACTIONS (SK) ,00 NUMBER OF ISSUES ,14 MARKET OF LISTED SECURITIES ,45 MARKET OF UNLISTED SECURITIES ,33

15 13 take-over bids. Share transactions represented only 5% of the total volume of transactions, which shows how far behind the bond market the share market lags. From a perspective of achieved volume of transactions in 2004 (excluding compulsory take-over bids), Nafta, Slovnaft and Zentiva were the most successful share issues. The regulated free market was dominated, in terms of volume, by the issue of Inžinierske stavby Košice, which was at the same time the most successful issue among all registered share issues on BSSE last year. OTP Banka Slovensko s shares achieved the highest number of transactions in the period under review. From a perspective of financial volume of transactions, the shares of Všeobecná úverová banka was the most active listed issue in the area of electronic order book transactions. As many as 52 compulsory take-over bids expired in the year 2004, of which the bid for issues of Slovnaft and Geos had been announced back in In the period under review, BSSE carried out a total of 56 new compulsory take-over bids. The financial volume of transactions closed within the framework of compulsory SAX INDEX DEVELOPMENT IN 2004 HODNOTA INDEXU 330,00 295,00 260,00 225,00 190,00 155,00 take-over bids amounted to the historically highest level 8.3 billion Sk in transactions thus representing 38.9% of the total volume and 21.7% of the number of all share transactions. The Slovak share indicator the SAX index experienced one of the most successful years in its existence. SAX strengthened on a year-on-year basis by 83.9%, which represents an increase by points. The last time the index grew faster was in the year 1994, when it strengthened by 95.5% on a year-onyear basis. For the SAX index, the last trading day of the year (23 December) was also the day of the year s high as well as a more than 10.5-years high. SAX ended the year at points, gaining 83.9%. In the course of the year, the second issue of OTP Banka Slovensko was added to the SAX index base, and the issue of company Zentiva was excluded from the base due to the end of its trading on the Stock Exchange. Company Novitech was also added to the index base. However, as no electronic order book transaction was closed with the shares of this company in the course of the year 2004, Novitech I II III IV V VI VII VIII IX X XI XII was excluded from the base at the beginning of the year The following are year-on-year changes of the SAX index base issues in 2004: Biotika (+45.9%; 321 Sk), OTP Banka Slovensko (+46.3%; 300 Sk), Nafta (+18.1%; Sk), Novitech (0.0%; 43 Sk), SES Tlmače (+33.3%; 180 Sk), Slovnaft (+114.7%; Sk), VÚB (+98.6%; Sk). The shares of Slovnaft, which is currently the company with the highest capitalisation on BSSE, are the only representative of the Slovak share market in the base of the Central European Stock Index (CESI). CESI is computed by the Budapest Stock Exchange and comprises the most liquid listed companies traded on the Stock Exchanges in Prague, Budapest, Warsaw, Ljubljana and Bratislava. In 2004 the weight of issue Slovnaft in the index slightly increased from 1.3% to 1.36%, which can be attributed to the strengthening of the company s share price. TRADING OF BONDS At the end of the year 2004, 65 bond issues could be traded on the Stock Exchange markets, including 38 issues on the main listed market, 22 issues on the parallel listed market and 5 issues on the regulated free market (including one issue of Eurobonds). As of the last trading day of the year 2004, market capitalisation of debt issues amounted to billion Sk (including listed issues worth billion Sk), increasing by 9.2% in comparison with the year The volume of bond transactions in the period under consideration amounted to billion Sk, corresponding to 2.3 million bond units traded in transactions. There was a dramatic decline in the number of transactions against the year 2003 after the Ministry of Finance adopted an amendment to the Income Tax Law, which forbids securities transfers to foreign entities for the purpose of tax relief.

16 14 Their year-on-year decrease equals as much as 61.7%. Nevertheless, 2004 is the most successful year (after the years 2003 and 2002) for debt securities from a perspective of financial volume. The largest investments traditionally went into the risk-free government bonds. Their total financial volume amounted to billion Sk, representing a 99.2-percent share in the total volume of transactions. The following bond issues achieved the highest financial volumes: Restructuring government bond of series 142, government bonds of series 191 and series 200; in the private sector mortgage bonds ISTROBANKA II and Železiarne Podbrezová 02. From a perspective of the number of transactions, the most frequently traded issue was the zero-coupon government bond of series 200 which also achieved the highest financial volume within the framework of electronic order book transactions. On the last trading day of the year, the SDX index component for corporate/bank bonds closed with an 8.6-percent annual gain at % of nominal value, offering a percent average yield to maturity and duration of 1.77 years. This component recorded the year s low ( %) on 7 January and the year s high ( %) on 23 December. At the end of the year, the average price of the portfolio of government bonds in the SDX index base represented %, with an average yield of 4.324% and duration of 3.87 years. This component recorded the year s low ( %) on 7 January and the year s high ( %) on 22 December. THE SDXGROUP INDICES The Slovak capital market can be currently regarded as a bond market due to the fact that, from a longterm perspective, more than 90% of the total volume of transactions are closed with debt securities. BSSE has therefore decided to create a modern indicator of the bond market s development, which would take into account the newest methodology of computation as well as the diversity of investment portfolios. On 2 September 2004, the Stock Exchange started publishing a new group of bond indices the SDXGroup. The SDXGroup indices were created in response to the ever more demanding financial market, which is characterised by the diversity of investor portfolios and investment strategies and puts ever higher demands on the capital market indicators. The SDXGroup belongs to the family of proportional indices. Each index from the group consists of two components, with the first component being a price index and the second one being a performance index. The following seven indicators belong to each index: average yield to maturity, average coupon rate, average duration, average period to maturity, average modified duration, average convexity and the number of base issues. According to the classification by sectors, the SDXGroup indices are divided into the SDXGroup for government bonds and the SDXGroup for bonds of the private sector. The SDXGroup for private sector is further divided into the index for corporate bonds, the index for bank bonds and the index for mortgage bonds. In addition, the indices factor in the residual maturity of bonds in the base: short-term with maturity of up to 5 years and long-term with maturity of over 5 years. Therefore the SDXGroup indices allow investors to watch only a part of portfolio depending on its maturity, or only a particular sector or sub-sector, respectively. This represents the most significant contribution in comparison with the currently published SDX index, which does not provide the aforementioned advantage. CLEARING AND SETTLEMENT OF TRANSACTIONS Following the changes in legislation, the clearing and settlement of Stock Exchange transactions was transferred from the Stock Exchange to the Central Securities Depositary of the Slovak Republic (CSD), effective from 19 March Due to the fact that, as of the aforementioned date, the CSD was not technically prepared to ensure the clearing and settlement, a temporary solution was found after a nearly two-week disruption of Stock Exchange trading and an agreement concluded between the Ministry of Finance of the Slovak Republic (the CSD s only shareholder), the CSD, the Financial Market Authority, the Association of Slovak Banks and BSSE. A transitional period started on 31 March 2004, during which the clearing and settlement of Stock Exchange transactions was ensured in the original manner, i.e. by means of the Stock Exchange s software. The transitional period ended on 30 September Starting from 1 October 2004, the clearing and settlement of Stock Exchange transactions has been provided by the CSD.

17 15 INSPECTION In addition to continuously monitoring Stock Exchange transactions in the Stock Exchange trading and clearing system, in the course of the year 2004 the Stock Exchange Inspection Department carried out a systematic and complex inspection at the registered offices of 9 BSSE members, and investigated 3 instigations of the financial market participants regarding Stock Exchange transactions. No serious faults were found in the members activity as securities dealers during the systematic inspection. However, based on the faults found during the continuous inspection and inspection at instigation, sanctions were imposed by BSSE on two Stock Exchange members. A part of inspection was the preparation of information for the Financial Market Authority, departments of the Police Force of the Slovak Republic, courts of the Slovak Republic, tax, customs and distrainment offices of the Slovak Republic, commercial-law offices, as well as for the capital market participants. In compliance with the Act on the Stock Exchange No 429/2002 (Coll.), the Stock Exchange Inspection Department submitted a report on its activity to the Financial Market Authority after the end of every calendar quarter. MEMBERSHIP As of 31 December 2004, BSSE had 29 regular members. The National bank of Slovakia is the only entity authorised to Stock Exchange trading by law. There were no changes in the number and composition of BSSE members in the course of the year LIST OF MEMBERS AND ENTITIES AUTHORISED TO STOCK EXCHANGE TRADING AS OF 31 DECEMBER CALYON BANK SLOVAKIA a.s. 2 Capital Partners, o.c.p., a.s. 3 CAPITAL INVEST, o.c.p., a.s. 4 Československá obchodní banka, a.s. (Czech Republic) via its branch Československá obchodní banka, a.s., branch of foreign bank in the Slovak Republic 5 Dexia banka Slovensko a.s. 6 DLHOPIS, o.c.p., a.s. 7 FOCUS FINANCE o.c.p., a.s. 8 GASFIN, a.s., o.c.p. 9 HVB Bank Slovakia a.s. 10 ING Bank N.V. (The Netherlands) via its branch ING Bank N.V., branch of foreign bank 11 INVEST BROKERS, o.c.p., a.s. 12 ISTROBANKA, a.s. 13 J&T SECURITIES (SLOVAKIA), o.c.p., a.s. 14 Komerční banka Bratislava, a.s. 15 ĽUDOVÁ BANKA, a.s. 16 National Bank of Slovakia* 17 OTP Banka Slovensko, a.s. 18 PALČO BROKERS o.c.p., a.s. 19 Poštová banka, a.s. 20 Pro Partners, o.c.p., a.s. 21 RM-S Market, o.c.p., a.s. 22 SEVISBROKERS FINANCE o.c.p., a.s. 23 SLÁVIA CAPITAL, a.s., obchodník s cennými papiermi 24 Slovenská sporiteľňa, a.s. 25 Stredoeurópsky maklérsky dom, o.c.p., a.s. 26 Sympatia Financie, o.c.p., a.s. 27 Tatra banka, a.s. 28 UniBanka, a.s. 29 V BROKERS, o.c.p., a.s. 30 Všeobecná úverová banka, a.s. * Entity authorised to Stock Exchange trading

18 16 EXTERNAL RELATIONS In connection with Slovakia s entry into the European Union, the Stock Exchange was admitted as a full member by the Federation of European Securities Exchanges (FESE). The decision was made by the General Assembly of FESE that met in Frankfurt am Main on 1 June We view the General Assembly s decision as an acknowledgement of the joint effort of the Stock Exchange and other entities that strive to build such a capital market in Slovakia, which would meet the criteria of Europe s advanced capital markets. Admitted as full members of FESE, together with BSSE, were all Stock Exchanges from 9 new member countries of the EU. The Federation aims to support mutual dialogue between its members, development of the European securities market and co-operation in the area of mutual approximation of legislation. By means of FESE, the voice of the Stock Exchanges can be heard when the future of the European capital market is discussed with EU institutions. At the present time, when the consolidation of Europe s capital markets is in progress, the question of the Stock Exchange s further existence as an independent entity arises. We are convinced that BSSE, as a regional Stock Exchange, has its place within the framework of the European Union, because smaller companies would struggle to find investors on the big European Stock Exchanges, or possibly out of Europe. Nevertheless, it has become apparent that in a long-term the Stock Exchange, as an independent entity, will not be able to provide to investors and issuers interesting services at reasonable prices. Discussions about possible co-operation were held with the Prague Stock Exchange; however, they had to be interrupted due to the absence of functioning and mutually communicating securities depositaries in both countries. A more suitable, long-term solution for the Central European region seems to be the creation of closer mutual relations between the Stock Exchanges. Steps in this regard have been initiated by the Vienna Stock Exchange, which is interested in creating an Alliance of Central European Stock Exchanges. For more than two years, BSSE has been striving to increase transparency of corporate governance. The first important step in this area was the compilation of the Unified Code of Corporate Governance (the Code) and its subsequent implementation into the Stock Exchange Rules. In attendance of international experts, the Stock Exchange organised a seminar for listed companies where they discussed the importance of corporate governance and the way in which companies can submit to the principles of the Code. Several other seminars were held afterwards on the premises of professional associations. The most important event in this area, however, is the founding of a civil association named the Central European Corporate Governance Association (CECGA). The CECGA s primary goal is to enhance the perception and understanding of the role of executive and supervisory board members in Slovakia, to promote and disseminate the standards of best corporate governance practices to all executive and supervisory board members of companies, regardless of their size. Economical measures within the company affected also the BURZA magazine, the periodicity of which had to be reduced last year to two issues per year. The publication of the magazine has completely stopped for the year Starting from February 2005, information about the Stock Exchange s activities, updates, profiles of companies listed on the Stock Exchange and various other information can be found on a once-per-month basis in PROFIT biweekly. Since June 2004, the Stock Exchange s daily price lists and announcements have been published in PRAVDA daily, in addition to Hospodárske noviny daily. BSSE has been constantly increasing the amount and quality of provided information. On the Internet website of the Bratislava Stock Exchange, we publish shortened versions of financial statements of listed companies for 4 accounting periods, supplemented with statements for the current quarter or half-year, respectively. Professional subscribers of Stock Exchange data and information may choose from three basic information packages: data on trading in real time, date on trading after the closing of trading and data on issuers. The service on issuers has been supplemented with financial statements of not only listed companies, but also those from the free market which utilise the new information system (IRIS) to collect, process and disseminate information from issuers. The volume of financial information has thus been broadened with more than 100 companies.

19 17 ECONOMIC RESULTS FOR THE YEAR 2004 REVIEW OF THE YEAR 2004; ANTICIPATED DEVELOPMENT IN THE YEAR 2005 In the year 2004, the Stock Exchange experienced a significant decrease in revenues in comparison with the year What significantly affected the decrease in revenues were the lower fees for trading, which corresponded to the decrease in transaction volumes. The decrease in revenues was dampened by cost savings. Notwithstanding the unfavourable situation, the Stock Exchange ended the year 2004 with a profit of million Sk. For the year 2005, BSSE projects revenues of million Sk and expenses of million Sk. The profit before tax is projected at 1.79 million Sk. We expect the Stock Exchange to continue operating under the conditions corresponding to those in the year YEAR 2004 FINANCIAL STATEMENTS Balance sheet as at 31 December 2004 Descrip- ASSETS line Current accounting period Immediately tion preceding accounting period Gross Provision Net Net a b c (Sk 000) (Sk 000) (Sk 000) (Sk 000) Total assets l l l l A. Amounts receivable for subscribed capital (353) B. Non-current assets l l l B.I. Total intangible fixed assets (l. 005 to l. 012) B.I.1. Incorporation expenses (011) - /071, 091A/ B.I.2. Research and development costs (012) - /072, 091A/ B.I.3. Software (013) - /073, 091A/ B.I.4. Valuable rights (014) - /074, 091A/ B.I.5. Goodwill (015) - /075, 091A/ B.I.6. Other intangible fixed assets (019, 01X) - /079, 07X, 091A/ B.I.7. Intangible fixed assets in acquisition (041) B.I.8. Advance payments for intangible fixed assets (051) - 095A B.II. Total tangible fixed assets (l. 014 to l. 022) B.II.1. Land (031) - 092A B.II.2. Structures (021) - /081, 092A) B.II.3. Separate movable assets and sets of moveables (022) - /082, 092A/ B.II.4. Natural agricultural assets (025) - /085, 092A/ B.II.5. Livestock and draught animals (026) - /086, 092A/ B.II.6. Other tangible fixed assets (029, 02X, 032) - /089, 08X, 092A/ B.II.7. Tangible fixed assets in acquisition (042)

20 18 Descrip- ASSETS line Current accounting period Immediately tion preceding accounting period Gross Provision Net Net a b c (Sk 000) (Sk 000) (Sk 000) (Sk 000) B.II.8. Advance payments for tangible fixed assets (052) - 095A B.II.9. Correction item to acquired assets (+/- 097) +/ B.III. Total long-term financial investments (l. 024 to 031) B.III.1. Shares and ownership interests in subsidiaries (061) - 096A B.III.2. Shares and ownership interests in associates (062) - 096A B.III.3. Other long-term securities and ownership interests (063, 065) - 096A B.III.4. Loans to entities in consolidation field (066A) - 096A B.III.5. Other long-term financial assets (067A, 069, 06XA) - 096A B.III.6. Loans due in one year (066A, 067A, 06XA) - 096A B.III.7. Long-term financial assets in acquisition (043) - 096A B.III.8. Advance payments for long-term financial assets (053) - 095A C. Current assets l l l l C.I. Total inventory ( l. 034 to 040) C.I.1. Material (112, 119, 11X) - /191, 19X/ C.I.2. Work-in-progress and semi-finished products (121, 122, 12X) - /192, 193, 19X/ C.I.3. Construction contracts with anticipated expiry period exceeding one year 12X - 192A C.I.4. Finished products (123) C.I.5. Livestock (124) C.I.6. Merchandise (132, 13X, 139) - /196, 19X/ C.I.7. Advance payments for inventory (314A) - 391A C.II. Total long-term receivables (l. 042 to l. 047) C.II.1. Trade receivables (311A, 312A, 313A, 314A, 315A, 31XA) - 391A C.II.2. Receivables from subsidiaries and controlling entity (351A) - 391A C.II.3. Other receivables from entities in consolidation field (351A) - 391A C.II.4. Receivables from partners, members, and consortium (354A, 355A, 358A, 35XA) - 391A C.II.5. Other receivables (335A, 33XA, 371A, 373A, 374A, 375A, 376A, 378A) - 391A C.II.6. Deferred tax asset (481A) C.III. Total short-term receivables (l. 049 to 055) C.III.1. Trade receivables (311A, 312A, 313A, 314A, 315A, 31XA) - 391A C.III.2. Receivables from subsidiaries and controlling entity (351A) - 391A C.III.3. Other receivables from entities in consolidation field (351A) - 391A C.III.4. Receivables from partners, members, and consortium (354A, 355A, 358A, 35XA, 398A) - 391A

21 19 Descrip- ASSETS line Current accounting period Immediately tion preceding accounting period Gross Provision Net Net a b c (Sk 000) (Sk 000) (Sk 000) (Sk 000) C.III.5. Social security (336) - 391A C.III.6. Tax assets (341, 342, 343, 345) - 391A C.III.7. Other receivables (335A, 33XA, 371A, 373A, 374A, 375A, 376A, 378A) - 391A C.IV. Total financial accounts (l. 057 to l. 061) C.IV.1. Cash in hand (211, 213, 21X) C.IV.2. Bank accounts (221A, 22X +/-261) C.IV.3. Bank accounts bound for period exceeding one year 22XA C.IV.4. Short-term financial assets (251, 253, 256, 257, 25X) - /291, 29X/ C.IV.3. Short-term financial assets in acquisition (259) D.I. Total accrued and deferred items l. 063 and l D.I.1. Prepaid expenses (381, 382) D.I.2. Accrued income (385) Control number total (l. 001 to l. 064) Descrip- EQUITY AND LIABILITIES line Current accounting period Immediately preceding tion accounting period a b c 5 6 (Sk 000) (Sk 000) Total liabilities and equity l l l A. Equity l l l l l A.I. Total registered capital (l. 068 to 070) A.I.1. Registered capital (411 or +/- 491) A.I.2. Treasury stock and treasury shares (/-/252) A.I.3. Changes in registered capital +/ A.II. Total capital funds (l. 072 to 077) A.II.1. Share premium (412) A.II.2. Other capital funds (413) A.II.3. Legal reserve fund (Non-distributable fund) from capital contributions (417, 418) A.II.4. Asset and liability revaluation reserve (+/- 414) A.II.5. Financial investments revaluation reserve (+/- 415)