ANNUAL REPORT 2009
CONTENTS DIRECTOR S REVIEW...3 INFORMATION ABOUT THE COMPANY...5 OVERVIEW OF THE COMPANY S ACTIVITIES AND DEVELOPMENT...7 Guarantees Issued to Credit Institutions...7 Volume of Guarantees Issued...7 Guarantees by Credit Institutions...8 Guarantees for Investments and Current Assets...8 Guarantees by Type of Credit...9 Guarantees by Distribution Area...9 Guarantees by Customer Type...11 Guarantee Distribution by Activities...11 Guarantee Risk and Fulfilment of Guarantee Liabilities to Credit Institutions...12 Administration of State Support...14 Administration of the Credit Fund...14 Information about Research and Development Activities of the Company...15 Information about the Company s Personnel...15 Outlook of the Activities of the Company...15 FINANCIAL OUTCOMES OF ACTIVITIES...16 Auditor s Report...17 Balance Sheet (LTL)...18 Profit and Loss Account (LTL)...22 ANNEXES...23 Annex 1. Use of State Guarantee Limit...23 Annex 2. Consolidated Activity Results...24 Annex 3. Guarantees Granted and Guarantee Liabilities Fulfilled to Credit Institutions...25 2
DIRECTOR S REVIEW Last year was a year of new challenges and development for the Rural Credit Guarantee Fund (thereinafter referred to as the Company). Financial and economic crisis has affected many sectors of economy, including agriculture. Tightened borrowing terms and increased interest rates conditioned a marked decrease in borrowing. This has also influenced activities of the Company, i.e. guarantee issuing to credit institutions for the credits granted to agricultural entities. In 2009, the Company has issued 194 guarantees totalling 49.2 million LTL for 80.3 million LTL of credits granted to farmers, rural entrepreneurs and entities processing agricultural produce. Moreover, 153 million LTL of guarantees were issued for the credits granted to the Lithuanian Agricultural and Food Products Market Regulation Agency. In total, 202.2 million LTL of guarantees were issued for 233.3 million LTL of credits granted by credit institutions in 2009. If compared to 2008, guarantee amount, issued for credits granted to farmers, rural entrepreneurs and processing companies, has decreased 3 times. The borrowings have declined for both investment credits and credits to supplement current assets. However, due to credits granted to the Agency, the total guarantee amount issued by the Company in 2009 has increased by almost 40 percent. The average amount of credits granted to farmers, rural entrepreneurs and processing companies reached 410 thousand LTL and average guarantee amount 250 thousand LTL. Since the beginning of its activities (1998 2009) the Company has issued 2,935 guarantees for 2 billion LTL, including 2,891 guarantees totalling 766 million LTL for credits granted to farmers, rural entrepreneurs and processing companies, and 44 guarantees totalling 1.23 billion LTL for credits granted to the Agency. The Company has cooperation agreements with all commercial banks and credit unions operating in Lithuania. Unlike the previous year, the largest share of credit guarantees for agricultural entities and rural entrepreneurs was issued to the bank AB SEB, i.e. 14.9 million LTL or 30 percent of all guarantees issued in 2009. Credit guarantees issued to the bank AB DnB NORD amounted to 12.1 million LTL or 25 percent of all guarantees, and to the bank AB Swedban 8.8 million LTL or 18 percent of all guarantees issued over the reporting year. The Company has issued twice as many guarantees for the credits granted by the credit unions if compared to 2008. The year 2009 was also a year of challenges for the Rural Credit Guarantee Fund. In order to improve competitive ability of the agricultural sector, to accelerate the assimilation of the Lithuanian ANNUAL REPORT 2009 3
Rural Development 2007 2013 programme funds, and to create more favourable financing opportunities for business development, the Ministry of Agriculture has established Credit Fund the administration of which was assigned to the Rural Credit Guarantee Fund. Through financial intermediaries, the Credit Fund enables farmers and entities processing agricultural produce to receive support for credits, i.e. to borrow from credit institutions on easy terms. In the reporting year, the Company announced the first contest for financial intermediaries (banks) and signed contracts with selected banks. In the first stage of the Credit Fund s activity, contracts with 8 banks operating in Lithuania were signed and 100 million LTL were allocated to the banks for preferential credits. In 2009, financial intermediaries and credit beneficiaries have signed 10 preferential credit contracts amounting to 2.6 million LTL. The largest share of contracts was signed by the bank Medicinos bankas (4 contracts); the banks Šiaulių bankas and Snoras have signed 2 contracts each. of Company s activities, a total of 14.5 million LTL has been paid off to credit institutions, and in 2009 3.8 million LTL. By the end of the year, default guarantees amounted to 0.7 percent of all issued guarantees. In 2009, the Government of the Republic of Lithuania has approved 488 million LTL of state guarantee limit for the Rural Credit Guarantee Fund. Guarantee liabilities to credit institutions amounted to 428.9 million LTL, as of 31 December 2009. In 2010, we hope to remain a reliable financial partner for both the farmers and credit institutions. We plan to continually improve the credit guarantee issuing procedures, develop our IT systems, analyze agricultural sector crediting tendencies and provide this information to our clients and partners. We believe that the Rural Credit Guarantee Fund will remain an important link between the birth of a business idea and its realization. In the guarantee issuing process a great attention is paid to the risk control. The Company accumulates provisions to cover potential loss of guaranteed credits. Provisions are comprised of guarantee fees and net profit. In the end of 2009, 75.9 million LTL were accumulated for fulfilment of guarantee liabilities. Throughout the whole period Danguolė Čukauskienė Rural Credit Guarantee Fund Director ANNUAL REPORT 2009 4
INFORMATION ABOUT THE COMPANY Rural Credit Guarantee Fund (thereinafter referred to as the Company) is a closed-stock company registered in the Register of Legal Entities on 26 November 1997 (company code 124261860). The new edition of the Company s regulations was registered on 16 July 2009. The Company guarantees banks the repayment of up to 70 percent of the unpaid credit amount (80 percent of the unpaid credit amount is guaranteed for credits granted to young farmers and agricultural entities that insured their crop) and to the state enterprise Lithuanian Agricultural and Food Products Market Regulation Agency (thereinafter referred to as the Agency) up to 100 percent of the unpaid credit amount. 2007 2013 programme, as well as to enterprises engaged into activities of food processing, buying, realization and (or) production; supplementing current assets and (or) payment for services included in the List of Services for Agriculture, approved by the Minister of Agriculture the order No. 528 of 31 December 2002, granted to subjects engaged in agricultural activities and (or) activities alternative to agriculture as well as to cooperative companies; supplementing current assets and granted to companies which are buying up and (or) processing and (or) realizing agricultural production, and which shall sell the assets to agricultural entities of the Republic of Lithuania; The Company issues guarantees (the amount of which shall not exceed the State guarantee limit for the given year) to credit institutions for credits granted in relation to: supplementing current assets, which shall be utilized during the course of processing of agricultural production, and granted to companies which process agricultural production; investments and granted to subjects engaged in agricultural and (or) alternative to agriculture activities, rural communities and local action groups, educational institutions and organizations of professional education, owning experimental or educational farms and implementing investment projects under the Lithuanian Rural Development purchasing agricultural production and granted to enterprises engaged into activities of food processing, buying, realization and (or) production; interventional purchases and repayment of credits and granted to the Agency. ANNUAL REPORT 2009 5
In 2009, the Government of the Republic of Lithuania has approved 488 million LTL of state guarantee limit for the Rural Credit Guarantee Fund. Guarantee liabilities to credit institutions amounted to 428.9 million LTL, as of 31 December 2009 (Annex 1). Modernization of agricultural holdings support for credits ; Processing of agricultural products and increasing of added value support for credits. In order to improve competitive ability of the agricultural sector, to accelerate the assimilation of the Lithuanian Rural Development 2007 2013 programme (thereinafter referred to as the RDP) funds, and to create more favourable financing opportunities for business development, the Ministry of Agriculture has established Credit Fund. Through financial intermediaries, the Credit Fund enables farmers and entities processing agricultural produce to receive support for credits. By the Order No. 3D-525 of 17 July 2009, Minister of Agriculture of the Republic of Lithuania has assigned Rural Credit Guarantee Fund to carry out the administrative functions of the Credit Fund. Finances of the Credit Fund can be used to support the credits granted in accordance with two RDP measures of the Axis 1 Improving the competitiveness of the agricultural and forestry sector : Eligibility criteria for the potential credit beneficiaries remain the same as the ones applied for the RDP measures. Preferential credits can only be granted for the implementation of the investment projects. By the Order of 27 May 2009 of the Government of Lithuania and by the Order No. 3D-527 of 17 July 2009 of the Minister of Agriculture, Company s activities were expanded, the regulations of the Credit Fund s administration were established, guarantee issuing procedures were simplified, and the total amount of guarantees issued for the credits granted to farmers was increased. A new guarantee requisition form was worked out in accordance with the new regulations. ANNUAL REPORT 2009 6
OVERVIEW OF THE COMPANY S ACTIVITIES AND DEVELOPMENT Guarantees Issued to Credit Institutions Volume of Guarantees Issued produce. 153 million LTL of guarantees were issued for the credits granted to the Lithuanian Agricultural and Food Products Market Regulation Agency. In 2009, the total amount of guarantees accounts for 202.2 million LTL issued for credits totalling 233.3 million LTL (Picture 1). In 2009, Rural Credit Guarantee Fund has issued 194 guarantees totalling 49.2 million LTL for 80.3 million LTL of credits granted to farmers, rural entrepreneurs and entities processing agricultural Amount, m LTL Credits, m LTL Guarantees, m LTL Number 300 276.5 256.1 600 250 241.2 246.7 233.3 500 202.2 167.4 200 183.1 400 151.4 150 145.2 300 100 50 0 200 100 0 2005 2006 2007 2008 2009 Picture 1. Credits and guarantees by year (including Agency), m LTL Number, units In 2009, credit interest rate has increased, banks were more demanding when assessing investment projects of economic entities and overall economic-financial situation remained complicated in Lithuanian economy. Consequently, farmers and agricultural processing companies were borrowing less. If compared to 2008, guarantee amount, issued for credits granted to farmers, rural entrepreneurs and entities processing agricultural produce, has decreased 3 times. However, due to credits granted to the Agency, total guarantee amount increased by almost 40 percent in 2009. In the reporting year, average amount of credits granted to farmers, rural entrepreneurs and processing companies reached 410 thousand LTL and average guarantee amount 250 thousand LTL. Since the beginning of its activities (1998 2009) the Company has issued 2,935 guarantees for 2 billion LTL, including 2891 guarantees totalling 766 million LTL for credits granted to farmers, rural entrepreneurs and processing companies, and 44 guarantees totalling 1.23 billion LTL for credits granted to the Agency (Annex 2). ANNUAL REPORT 2009 7
Guarantees by Credit Institutions Guarantees for Investments and Current Assets The Company has cooperation agreements with all commercial banks and credit unions operating in Lithuania. Unlike the previous year, the largest share of credit guarantees for agricultural entities and rural entrepreneurs was issued to SEB bank, i.e. 14.9 million LTL or 30 percent of all guarantees issued in 2009. Credit guarantees issued to DnB NORD bank amounted to 12.1 million LTL or 25 percent of all guarantees, and to Swedbank 8.8 million LTL or 18 percent of all guarantees issued over the reporting year. The Company has issued twice as many guarantees for the credits granted by the credit unions if compared to 2008 (Picture 2). Amount, m LTL 30.00 25.00 20.00 15.00 10.00 5.00 0.00 SEB bankas Credits, m LTL Guarantees, m LTL 22.8 21.0 14.9 15.7 12.1 8.8 7.4 4.2 3.2 2.8 2.4 2.3 1.7 2.1 2.0 1.7 1.6 0.7 0.4 1.2 0.0 0.4 0.3 0.0 DnB Nord bankas Swedbankas Šiaulių bankas Medicinos bankas Nordea bankas UniCredit bankas Snoras Credit Unions Parex bankas Danske bankas Ūkio bankas The Company issues guarantees for investment credits as well as credits to supplement current assets. In 2009, guarantees totalling 41.8 million LTL were issued for long-term credits and guarantees amounting to 7.4 million LTL for short-term credits, i. e. investment credit guarantees comprised 85 percent of all issued guarantees (Picture 3). Investment credit guarantees 85% Picture 3. Guarantees by credit type (according to guarantee amount) in 2009, percent Short-term credit guarantees 15% Picture 2. Distribution of Credits and Guarantees by Credit Institutions in 2009 (excluding Agency), m LTL ANNUAL REPORT 2009 8
Guarantees by Type of Credit Guarantees by Distribution Area The guaranteed credits allowed farmers, small rural entrepreneurs and processing companies to develop their businesses, modernize equipment and start new economic activities. As in previous year, most of the credits were used to purchase agricultural equipment, i.e. 57 percent of all guarantees. If compared to previous year, more of the borrowed credits were used for industrial construction and reconstruction. However, the amount of the credit guarantees to purchase livestock has been reduced (Picture 4). Other production equipment 3% Purchase of livestock 0,01% Agricultural machinery 57% Other purposes 5% Working capital 13% Construction and reconstruction 11% Dairy farm equipment 6% Land acquisition 3% Purchase of agricultural produce 2% Farmers and rural entrepreneurs from almost all districts of Lithuania actively used credits in the year 2009. Traditionally, most active were farmers who own fertile lands. Farmers of Kaunas region were granted 53 guarantees accounting for 10.4 million LTL, i.e. 21 percent of all issued guarantees. The guarantee volumes to the farmers and agricultural enterprises of Šiauliai and Panevėžys regions were about the same. As for guarantees issued by district, it is obvious that farmers of Anykščiai and Kėdainiai districts were the most active in borrowing with credit guarantees and investing into their businesses. They were granted 13 and 24 guarantees for 3.7 and 2.8 million LTL respectively (average guarantee amount being 282 and 115 thousand LTL respectively). Farmers from the districts of Mažeikiai, Molėtai, Zarasai, and Švenčionys did not take any credits in 2009 (Picture 5). Picture 4. Guarantees by type of credit in 2009 (according to guarantee amount), percent ANNUAL REPORT 2009 9
0 up to 3 units 3 6 units 6 10 units more than 10 units Picture 5. Guarantee distribution by districts in 2009 ANNUAL REPORT 2009 10
Guarantees by Customer Type As in previous year, the main client of the Company remains a farmer. Guarantees granted to farmers make 66 percent of the whole guarantee portfolio. If compared to the previous year, rural SMEs reduced their borrowing by 25 percent and agricultural enterprises by 20 percent (Picture 6). Farmers Farms 66% Picture 6. Guarantees by customer type in 2009 (according to guarantee amount), percent Guarantee Distribution by Activities Agricultural entreprises 7% Agricultural companies 7% Agricultural co-operatives 9% Processing companies 2% Rural SMEs 9% There were no big structural changes concerning guarantee distribution by type of activity of guarantee beneficiaries. As well as in previous year, the largest shares of guarantee beneficiaries were economic entities engaged into crop production (55 percent of all guarantees) and stockbreeding (24 percent), according to the guarantee amount and number. If compared to previous year, the share of borrowers engaged into fishery has increased and the share of borrowers engaged into rural tourism and food production in urban areas has decreased. The share of guarantees to small rural businesses engaged into activities alternative to agriculture has also decreased by 38 percent if compared to 2008. One of the main reasons for this many banks took a stronger stance on risk evaluation and collateral was depreciated. Moreover, borrowing became both expensive and risky. Crop production 55% Picture 7. Guarantees by activities (according to guarantee amount), percent Stockbreeding 24% Food production in urban areas 2% Services to agricultural sector 0,2% Fishery 3% Activities alternative to agriculture 16% Young farmers, relating their future with countryside, have been active in borrowing. 79 young farmers have been granted guaranteed credits ANNUAL REPORT 2009 11
to start, expand or modernize their activities. Guarantees for credits granted to young farmers accounted for 47 percent of all guaranteed credits over the reporting year. Farmers belonging to the age group of 40 50 were also active in using credit guarantees. Guarantees issued to this age group accounted for 33 percent of all guarantees (Picture 8). Guarantee amount Number of guarantees The guarantee risk is evaluated over the whole validity period of the guarantee and guarantee provisions are calculated in order to cover potential losses. All guarantees are grouped into 5 groups: A (standard risk), B (potential risk), C (increased risk), D (high risk), E (highest risk). At the end of the year 2009, the standard risk guarantees made the largest share of all guarantees, i.e. 36.2 percent of the whole guarantee portfolio (Picture 9). Amount, m LTL 12.00 10.00 8.00 6.00 4.00 2.00 0.00 0.00 0 5.50 31 10.59 48 11.35 up to 20 20-30 30-40 40-50 50-60 60-70 above 70 59 5.33 27 1.24 5 0.00 0 70 60 50 40 30 20 10 0 Number, units Potential risk 28% Standard risk 36% Increased risk 24% High risk 6% Highest risk 6% Picture 9. Guarantee distribution by the risk groups in 2009-12-31, percent Picture 8. Guarantees by farmers age in 2009 Guarantee Risk and Fulfilment of Guarantee Liabilities to Credit Institutions The Company evaluates risks of issued guarantees according to indicators reflecting financial and economic standing of credit beneficiaries. However, guarantee amount in high and highest risk groups has increased. In 2008, high and highest risk groups (D and E) contained 22.6 million LTL of guarantees while in 2009 guarantee amount for these risk groups made 43.4 million LTL. These figures reveal that many farmers and rural SMEs, which did not have any major financial difficulties in previous years, now were unable to fulfil their financial obligations. This was influenced by drop in production trade prices, unsettled payments for agricultural ANNUAL REPORT 2009 12
produce, collateral depreciation and other reasons conditioning activities of the customers of the Company. 24.3 million LTL are budgeted for fulfilment of guarantee liabilities in 2010 2012, including 17.4 million LTL for credits not repaid by entities processing agricultural produce and rural SMEs, and 6.9 million LTL for credits not repaid by farmers. The Company accumulates provisions to cover potential loss of guaranteed credits. Provisions are comprised of guarantee fees (90 percent of fees paid by the customers) and net profit. In the end of 2009, 75.9 million LTL were accumulated for fulfilment of guarantee liabilities. The Company aims to reduce its risks and therefore looks for solutions and opportunities to help the customers facing problems of insolvency. It is in communication with banks making decisions to change crediting conditions and extend guarantee maturity. Over the reporting year, 415 banks were approved for adjustments of crediting conditions, including postponement of final credit repayment term for 63 credit beneficiaries. As of 31 December 2009, the ratio of fulfilled guarantee liabilities to all issued guarantees, i.e. default guarantees, amounted to 0.7 percent of all issued guarantees (throughout all operational period) and the share issued to farmers, rural entrepreneurs and processors (excluding the Agency) totalled 1.9 percent (Picture 10). 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2.90 0.63 1.93 1.45 1.49 0.55 0.50 0.59 Total Excl. the Agency 1.89 0.72 2005.12.31 2006.12.31 2007.12.31 2008.12.31 2009.12.31 Picture 10. Ratio of fulfilled guarantee liabilities and issued guarantees, percent In 2009, the Company fulfilled 5 guarantee liabilities to banks and paid out 3.79 million LTL. Throughout the whole period of Company s activities, a total of 14.5 million LTL has been paid to banks for credits that were not repaid by 100 credit beneficiaries, 13 million LTL of which are long-term credits and 1.5 million LTL short-term credits (Annex 3). Upon fulfilling the guarantee liabilities to banks, the Company acquires the right of regress; therefore, the amount paid is later recovered from the credit beneficiary. Debt is recovered according to the procedure prescribed by the law, or agreements are concluded with debtors on the terms of repayment of a debt. In 2009, a total of 212 thousand LTL of debt was recovered. The total amount of debts recovered in 2000 2009 accounts for 3.3 million LTL, 2 million LTL of which according to agreements, 1.2 million LTL through the sale ANNUAL REPORT 2009 13
of assets and 45.1 thousand LTL through court rulings. 27 farmers of 95 debtors have fully repaid the debt. Some debts are released when there is no question of repayment. 30 million LTL of debts or 20.5 percent of total repayments to banks were released. Administration of State Support The Company administrates partly compensation of guarantee fee and interest paid to credit institutions. Compensations paid out under the Special Rural Support programme amount to 7 million LTL for credit interest and 3.3 million LTL for guarantee fee. 1,083 credit beneficiaries received interest rate compensation. By the Order No. 728 of 15 July 2009 of the Government of the Republic of Lithuania and Order No. 3D-996 of 23 December 2009 of the Minister of Agriculture of the Republic of Lithuania, interest for guaranteed credits taken by agricultural entities since 1 January 2010 is no longer compensated. Credit beneficiaries who were granted a credit with a guarantee before that date can still receive interest compensation under the former conditions. Administration of the Credit Fund Farmers implementing investment projects gained an opportunity to receive preferential credits in autumn of 2009, when Credit Fund, administrated by the Company, was established. In the reporting year, the Company announced the first contest for financial intermediaries (banks) and signed contracts with selected banks. In the first stage of the Credit Fund s activity, contracts with 8 banks operating in Lithuania were signed and 100 million LTL were allocated to the banks for preferential credits (Picture 11). Parex bankas 3% Medicinos bankas 4% DnB Nord bankas 40% SEB bankas 20% Snoras 9% Picture 11. Banks by credit allocation in the first stage of Credit Fund s activity, percent Swedbankas 12% Šiaulių bankas 8% Ūkio bankas 4% In 2009, financial intermediaries and credit beneficiaries have signed 10 preferential credit contracts amounting to 2.6 million LTL. The largest share of contracts was signed by Medicinos bank (4 contracts); Šiaulių bank and bank Snoras have signed 2 contracts each. The first credit beneficiaries receiving preferential credits were farmers from the districts of Šiauliai, Marijampolė, Utena and Tauragė, engaged mostly in crop and rape production, dairy farms and stockbreeding. ANNUAL REPORT 2009 14
Information about Research and Development Activities of the Company Opportunity to borrow from credit institutions in some measure determines the success of business the better borrowing conditions for farmers and rural entrepreneurs, the stronger agricultural and food economy and more successful rural development. The Company is actively participating in the development of borrowing processes and seeks to improve conditions for investments in rural areas. In 2009, by means of survey of credit institutions and agricultural entities, tendencies and volumes of lending as well as crediting possibilities were investigated. Furthermore, results of the economicfinancial activities of agricultural cooperatives and enterprises were summarized and analyzed. The summarized material was discussed in a seminar arranged for the employees of banks. A lot of attention was given to the introduction and development of the new measure of financial engineering. The Company has organized a cycle of seminars about Credit Fund s activities to the employees of credit institutions, representatives of agricultural departments and farmers associations. In addition, the Company has arranged a series of seminars together with specialists of credit institutions. Trainings were organized together with Šiaulių, Snoras and DnB NORD banks. Company s services and experience were introduced to the representatives of the Ukrainian farmers. The Company actively participated in the specialized exhibitions Ką pasėsi 2009 and Agrovizija 2009. Information about activities of the Company is being continually provided to media representatives and available on the Company s website. Information about the Company s Personnel The quality of services provided depends on the Company s employees. In order to improve the quality of its services, professional qualifications and skills of the employees of the Company are enhanced on an ongoing basis. For this purpose, trainings, consulting, meetings and seminars are organized and attended. A new division was established within the Company as it became the administrator of the Credit Fund. The average number of employees of the Company is 17, turnover of the personnel is not high. Outlook of the Activities of the Company The strategy of the Company is to promote the economic development of agricultural sector and foster the establishment of businesses engaged in activities alternative to agriculture, by granting credit guarantees. ANNUAL REPORT 2009 15
Seeking to implement the Strategy, action plan for the year 2010 has been developed, outlining the following objectives: To improve the framework of projects assessment and guarantee fee calculation for to meet EU requirements; To improve inner control framework and IT system; To continually analyze borrowing tendencies and risk factors; To provide information to credit beneficiaries and credit institutions on activities of the Company, trends in agricultural sector as well as risk factors. In 2010, the Company expects growth in amount of guarantees by 5 percent and plans on the fulfilment of guarantee liabilities to banks totalling 13.4 million LTL. Despite the increase of payments to the banks, the Company expects to stay profitable and ensure the accumulation of funds sufficient for the fulfilment of guarantee liabilities. FINANCIAL OUTCOMES OF ACTIVITIES The increase of the Company s authorized capital from 6 million LTL to 7.3 million LTL was registered on 16 July 2009. The authorized capital was divided into 730 ordinary registered shares at par value of 10 thousand LTL. The State owns 100 percent of the shares which are held in trust by the Ministry of Agriculture of the Republic of Lithuania. In the beginning of 2009, the Company did not own any of the shares and did not purchase any during the reporting cycle. In 2009, the activities of the Company were profitable and earned 2.38 million LTL profit before-tax, i.e. 0.39 million LTL more than in 2008. Accounted profit-tax amounts to 492 thousand LTL. The Company has paid 420 thousand LTL in dividends. The annual audit of financial accountancy of the Company for 2009 was carried out by Audifina. The audit of activities of the Credit Fund was carried out by Tezaurus auditas. ANNUAL REPORT 2009 16
AUDITOR S REPORT UAB Audifina, Gedimino pr. 1-13, 01103 Vilnius Tel. +370 5 212 73 65, faks. +370 5 261 29 35 info@aufifina.lt, www.audifina.lt TO THE SHAREHOLDERS OF THE RURAL CREDIT GUARANTEE FUND We have audited the annual financial accountancy of the Rural Credit Guarantee Fund for the period ending 31 December 2009, in compliance of which the summary of annual financial reports was prepared, in accordance with the International auditing standards. In the auditor s conclusions of 7 April 2010, we have expressed our unconditional opinion concerning annual financial accountancy, in compliance of which summary of the annual financial reports attached was prepared. In our opinion, the summary of annual financial reports attached in every material respect give a true and fair view of the annual financial accountancy in compliance of which this summary was prepared. For a better understanding of the financial state and activity results of the Rural Credit Guarantee Fund as well as the scope of our audit, summary of the annual financial statements must be read together with annual financial accountancy in compliance of which it was prepared and concerning which we have made an auditor s statement. 9 April 2010 Vilnius, Republic of Lithuania UAB Audifina Audit Certificate No.001243 Director Jolanta Ruzgienė Auditor Certificate No.000239 Auditor Gediminas Vaskela Auditor Certificate No.000483 ANNUAL REPORT 2009 17
Balance Sheet (LTL) 31 Dec. 2009 ASSETS Current financial year Previous financial year A. FIXED ASSETS 135.631.103 43.487.400 I. INTANGIBLE ASSETS 127.931 99.331 I.1. Development work - - I.2. Goodwill - - I.3. Patents, licences - - I.4. Software 127.931 99.331 I.5. Other intangible assets - - II. TANGIBLE ASSETS 629.299 685.217 II.1. Land - - II.2. Buildings and works 505.125 556.062 II.3. Machinery and equipment - - II.4. Vehicles 52.783 67.185 II.5. Other equipment, devices, tools and plants 71.391 61.970 II.6. Construction in progress - - II.7. Other tangible assets - - II.8. Investment assets - - II.8.1. Land - - II.8.2. Buildings - - III. FINANCIAL ASSETS 134.871.966 42.702.852 III.1. Investment in subsidiary and associated companies - - III.2. Credits to associated and subsidiary companies - - III.3. Amounts receivable after one year - - III.4. Other financial assets 134.871.966 42.702.852 IV. OTHER FIXED ASSETS 1.907 - IV.1. Deferred tax assets - - IV.2. Other fixed assets 1.907 - ANNUAL REPORT 2009 18
Balance Sheet (LTL). Cont d 31 Dec. 2009 ASSETS Current financial year Previous financial year B. CURRENT ASSETS 35.340.990 21.782.916 I. INVENTORIES, PREPAYMENTS AND ONGOING CONTRACTS 34.185 19.998 I.1. Inventories 190 82 I.1.1. Raw materials and consumables 190 82 I.1.2. Work in progress - - I.1.3. Finished products - - I.1.4. Goods purchased for resale - - I.2. Prepayments 33.995 19.916 I.3. Ongoing contracts - - II. AMOUNTS RECEIVABLE WITHIN ONE YEAR 4.167.378 2.461.425 II.1. Trade debtors 613.451 202.358 II.2. Debts of subsidiary and associated companies - - II.3. Other amounts receivable 3.553.927 2.259.067 III. OTHER CURRENT ASSETS 30.670.603 18.911.856 III.1. Short-term investment 17.501.626 6.905.399 III.2. Term deposits 13.168.977 12.006.457 III.3. Other current assets - - IV. CASH AND CASH EQUIVALENTS 468.824 389.637 TOTAL ASSETS: 170.972.093 65.270.316 ANNUAL REPORT 2009 19
Balance Sheet (LTL). Cont d 31 Dec. 2009 EQUITY CAPITAL AND LIABILITIES Current financial year Previous financial year C. EQUITY CAPITAL 12.813.227 11.348.160 I. CAPITAL 7.300.000 6.000.000 I.1. Authorised (subscribed) capital 7.300.000 6.000.000 I.2. Subscribed but unpaid capital (-) - - I.3. Share premium account - - I.4. Own shares (-) - - II. REVALUATION RESERVES (RESULTS) - - III. RESERVES 3.606.710 3.571.952 III.1. Legal 867.256 867.256 III.2. For purchase of own shares - - III.3. Other reserves 2.739.454 2.704.696 IV. PROFIT (LOSS) BROUGHT FORWARD 1.906.517 1.776.208 IV.1. Current year profit (loss) 1.885.067 1.776.208 IV.2. Previous year profit (loss) 21.450 - D. GRANTS, SUBSIDIES 177.327 - ANNUAL REPORT 2009 20
Balance Sheet (LTL). Cont d 31 Dec. 2009 EQUITY CAPITAL AND LIABILITIES Current financial year Previous financial year E. ACCOUNTS PAYABLE AND LIABILITIES 157.981.539 53.922.156 I. ACCOUNTS PAYABLE AFTER ONE YEAR AND LONG-TERM LIABILITIES 157.621.075 53.640.288 I.1. Financial debts - - I.1.1. Leasing or similar obligations - - I.1.2. Credit institutions - - I.1.3. Other financial debts - - I.2. Debts to suppliers - - I.3. Prepayments received - - I.4. Provisions 57.561.064 53.640.288 I.4.1. Liabilities and claims 57.561.064 53.640.288 I.4.2. Pension and similar liabilities - - I.4.3. Other provisions - - I.5. Deferred tax liability - - I.6. Other accounts payable and long-term liabilities 100.060.011 - II. ACCOUNTS PAYABLE WITHIN ONE YEAR AND SHORT-TERM LIABILITIES 360.464 281.868 II.1. Current portion of long-term debts - - II.2. Financial debts - - II.2.1. Credit institutions - - II.2.2. Other debts - - II.3. Debts to suppliers - - II.4. Prepayments received 57.593 37.435 II.5. Liabilities related to profit tax 190.569 158.912 II.6. Liabilities related to labor relations 94.665 44.071 II.7. Provisions - - II.8. Other accounts payable and short-term liabilities 17.637 41.450 TOTAL EQUITY CAPITAL AND LIABILITIES: 170.972.093 65.270.316 ANNUAL REPORT 2009 21
Profit and Loss Account (LTL) 31 Dec. 2009 No. ITEMS Current financial year Previous financial year I. INCOME FROM SALES 4.356.418 5.718.456 II. COST OF SALES 3.920.776 5.146.611 III. GROSS PROFIT (LOSS) 435.642 571.845 IV. OPERATING EXPENSES 1.959.088 1.812.640 IV.1 Sales - - IV.2 General and administrative 1.959.088 1.812.640 V. PROFIT (LOSS) FROM ORDINARY ACTIVITIES (1.523.446) (1.240.795) VI. OTHER OPERATIONS 213.446 284.370 VI.1. Income 213.446 284.370 VI.2. Expenditure - - VII. FINANCIAL AND INVESTMENT ACTIVITIES 3.687.075 2.947.359 VII.1. Income 4.041.831 3.208.069 VII.2. Expenditure 354.756 260.710 VIII. PROFIT (LOSS) FROM ORDINARY ACTIVITIES 2.377.075 1.990.934 IX. EXTRAORDINARY GAIN - - X. EXTRAORDINARY LOSS - - XI. PROFIT (LOSS) BEFORE TAXES 2.377.075 1.990.934 XII. PROFIT TAX 492.008 309.092 XIII. NET PROFIT (LOSS) 1.885.067 1.681.842 ANNUAL REPORT 2009 22
ANNEXES 1 annex. Use of State Guarantee Limit 31 Dec. 2009 Credit Institutions Total Guarantee liabilities to credit institutions Agricultural entities, processing companies and economic entities, engaged into activities alternative to agriculture of which State Enterprise Lithuanian Agricultural and Food Products Market Regulation Agency Number Amount, m LTL Number Amount, m LTL Number Amount, m LTL Danske bankas 6 2,47 6 2,47 0 0,00 DnB NORD bankas 600 120,30 599 105,26 1 15,04 Credit Unions 17 2,29 17 2,29 0 0,00 Medicinos bankas 63 7,61 63 7,61 0 0,00 Nordea bankas 22 53,85 20 4,65 2 49,20 Parex bankas 137 16,93 137 16,93 0 0,00 SEB bankas 217 113,72 213 37,96 4 75,76 Snoras bankas 100 32,42 100 32,42 0 0,00 Swedbankas 228 34,06 228 34,06 0 0,00 Šiaulių bankas 117 29,95 117 29,95 0 0,00 UniCredit bankas 2 1,37 2 1,37 0 0,00 Ūkio bankas 91 13,93 91 13,93 0 0,00 Total 1600 428,9 1593 288,9 7 140,0 Guarantee liabilities, m LTL 428,9 Guarantee limit in 2009, m LTL 488,0 Unused guarantee limit, m LTL 59,1 ANNUAL REPORT 2009 23
2 annex. Consolidated Activity Results 31 Dec. 2009 Number Total Credit amount, m LTL Guarantee amount, m LTL Guarantees granted for credits Number of which 2008 2009 Credit amount, m LTL Guarantee amount, m LTL Number Credit amount, m LTL Guarantee amount, m LTL Agricultural entities, rural businessmen, processing 2891 1259,75 766,21 464 246,69 145,19 194 80,28 49,21 companies Guarantees for investment credits - 1092,31 668,87-223,17 130,81-69,05 41,84 of which under EU support 836 681,96 411,07 163 128,20 73,14 143 58,46 35,73 short-term credit guarantees - 167,44 97,34-23,52 14,38-11,23 7,37 Lithuanian Agricultural and Food Products Market Regulation Agency 44 1233,82 1233,82 0 0,00 0,00 8 153,00 153,00 Total 2935 2493,57 2000,03 464 246,69 145,19 202 233,28 202,21 Credits and guarantees according to credit institutions (without Agency) Danske bankas 10 21,77 9,63 0 0,00 0,00 0 0,00 0,00 DnB NORD bankas 949 462,65 269,13 155 96,69 53,76 38 20,96 12,07 Credit Unions 22 5,06 3,47 3 0,86 0,60 6 1,71 1,24 Medicinos bankas 95 23,22 15,39 14 3,62 2,55 13 3,16 2,12 Nordea bankas 33 23,91 16,74 6 6,25 4,38 3 2,81 1,97 Parex bankas 156 53,39 31,46 89 23,83 14,78 3 0,75 0,41 SEB bankas 466 235,25 143,12 59 33,55 20,13 58 22,76 14,89 Snoras bankas 140 112,79 70,00 33 24,57 16,70 8 2,28 1,59 Swedbankas 660 164,54 106,39 63 35,32 18,70 45 15,71 8,78 Šiaulių bankas 187 105,63 65,13 22 15,64 9,13 15 7,36 4,19 UniCredit bankas 4 6,19 4,33 0 0,00 0,00 2 2,39 1,67 Ūkio bankas 169 45,34 31,42 20 6,37 4,46 3 0,41 0,29 Total 2891 1259,75 766,21 464 246,69 145,19 194 80,28 49,21 ANNUAL REPORT 2009 24
3 annex. Guarantees Granted and Guarantee Liabilities Fulfilled to Credit Institutions 31 Dec. 2009 Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total Farmers, rural businessmen, processing companies Investment credit guarantees, m LTL 13,7 23,0 0,4 1,6 9,9 51,0 52,0 92,7 130,1 121,8 130,8 41,8 668,8 Short-term credit guarantees, m LTL 0,0 0,0 4,9 1,8 12,8 6,2 13,8 13,9 20,7 14,4 7,4 97,3 Total Number 230 345 9 10 40 118 162 334 462 523 464 194 2891 Amount, m LTL 15,2 23,0 0,4 6,5 11,7 63,8 58,1 106,5 144,0 142,5 145,2 49,2 766,2 Lithuanian Agricultural and Food Products Market Regulation Agency Number 5 6 3 5 6 5 1 2 2 1 0 8 44 Amount, m LTL 217,6 113,4 117,7 125,5 115,3 42,5 60,9 39,1 8,9 0,0 153,0 1233,8 Total Number 235 351 12 15 46 123 163 336 464 524 464 202 2935 Amount, m LTL 255,2 240,5 113,8 124,2 137,3 179,1 100,6 167,4 183,1 151,4 145,2 202,2 2000,0 Average guarantee amount (without Agency) Average guarantee size, m LTL 0,07 0,07 0,04 0,65 0,29 0,54 0,36 0,32 0,31 0,27 0,31 0,25 0,27 Fulfilment of guarantee liabilities Number of payoffs 0 1 10 34 25 13 3 4 2 0 3 5 100 Amount of payoffs, m LTL 0,00 1,50 1,24 2,74 1,99 0,49 0,09 0,23 0,03 0,00 2,37 3,79 14,46 ANNUAL REPORT 2009 25
Rural Credit Guarantee Fund Blindžių str. 17, 08111 Vilnius, Lithuania Tel.: +370 5 260 84 06 Fax: +370 5 260 84 05 E-mail: info@garfondas.lt www.garfondas.lt