WRITTEN QUESTION E-1872/03

by Christopher Huhne (ELDR) to the Commission

(6 June 2003)

Subject: Transparency requirements

Will the Commission state how many quoted companies in each Member State currently provide quarterly accounts? Will it further estimate how many of those companies in each Member State publish such quarterly updates without the assistance of their auditor (even if such auditor approval is now required by regulation)? Will it further estimate the additional cost for companies of different sizes and complexity of preparing quarterly updates with the assistance of an auditor?

Answer given by Mr Bolkestein on behalf of the Commission

(3 July 2003)

The Commission recently presented a proposal for a Directive on the harmonisation of transparency requirements with regard to information about issuers whose securities are admitted to trading on a regulated market(1). This proposal is part of the Financial Services Action Plan. The European Council called for its adoption by April 2004 in the conclusions of the last European Council in Brussels on 21 March 2003.

One of the objectives of the proposal is to upgrade the existing interim financial reporting requirements for companies whose shares are admitted to trading on regulated markets in Member States. For this purpose, the proposal envisages to make mandatory a more detailed half-yearly financial report for the first six months of a financial year and less detailed quarterly financial information for the first and third quarter.

The Honourable Member sought for statistical information on various issues related to the proposed quarterly financial information.

The Commission has the honour to reply as follows:

Number of companies currently providing quarterly financial information

- The Commission assumes that the question refers to issuers whose shares are admitted to trading on a regulated market in Member States and who publish quarterly financial reports or more limited quarterly financial information, and not also to those companies who produce quarterly accounts for internal purposes without publishing them.

- As the Commission already pointed out in its proposal, it estimates that about 1100 publicly quoted companies(2) out of 6 000 in Europe (= 18,3 %) provide quarterly financial reports of high international standards, i.e. they publish financial statements.

- In its proposal, the Commission also stated that there are much more companies in Europe which provide less detailed quarterly financial information, which is composed of only net turnover, profit and loss before or after tax (or only operating results). Following the question of the Honourable Member, the Commission carried out an informal inquiry amongst stock exchanges, national regulators and in one case the association of security issuers in the Member States, the Commission estimates that more than 2 500 (= 41 %) out of 6 229 issuers (= domestic issuers except for Belgium, Denmark and the United Kingdom) publish either financial statements on a quarterly basis or at least quarterly financial information referred to above.This figure does not cover:

- all third country issuers (in particular from the United States) whose shares are admitted to trading on a regulated market in the Union;

- all domestic French issuers. There are no figures available, save for CAC 40 where 12 companies provide quarterly financial reports. All 796 French issuers are, however, required by law to publish net turnover on a quarterly basis.

With regard to the situation in all the Member States, the breakdown of the estimated figure of more than 2 500 issuers is as follows:

>TABLE>

Estimated number of companies publishing quarterly reports or information without the assistance of their auditor, estimated costs for the assistance by auditors

- The Commission proposal does not contain a provision making the proposed quarterly financial information subject to an audit or an auditor's review. No Member State currently requires such an involvement of auditors in the case of quarterly reports either. The Commission is therefore not in a position to provide the requested estimates.

(1) COM(2003) 138 final.

(2) Bloomberg data of June 2002, as mentioned in the Commission proposal.