I. RATING REPORT
Slovak Rating Agency, a.s. assigns the company Stredoslovenská vodárenská spoločnosť, a.s. the following ratings:
| Long-term domestic koruna rating | BBB- (stable outlook)
|
| Long-term foreign currency rating | BB+ (stable outlook)
|
| Short-term rating | S2
|
The waterworks company Stredoslovenská vodárenská spoločnosť, a.s. was assigned the long-term rating of BBB- (stable outlook) in the category of transactions in Slovak koruna. In the category of foreign currency transactions it was assigned the rating of BB+ (stable outlook). The short-term rating of the company Stredoslovenská vodárenská spoločnosť, a.s. is S2, which is the best possible short-term rating for entities with a long-term rating of BBB-.
Justification:
- Stredoslovenská vodárenská spoločnosť, a.s. was established in the second half of 2002 by the transformation of the state enterprise Vodárne a Kanalizácie into a private joint stock company. The core activities of the company are the supply of drinking water, and the operation of waterworks, drainage and sewage treatment plants.
- The water management sector has undergone transformational changes in recent times. The agency can state that the potential of the sector is huge, considering its investment requirements. In the coming years we can expect to see extensive investment activity directed at renewing existing infrastructure and sewage treatment facilities, and at the creation of new ones. The intake of capital required for investment is best done with the use of sources from EU funds and in future also by way of the entry of a foreign partner
- By the nature of its operations the company is classed as a utility, and so is affected by certain restrictive regulatory instruments. Prices in the sector are regulated by the State via utility regulator URSO, which approves the prices of water and drainage for large water management companies.
- The company has a clearly defined strategy. With the aim of incorporating the concept of the State and approximated directives of the EU in the area of water management to the activities of the company, it elaborated the draft "Medium-term Development Plan of StVS, a.s. Banská Bystrica 2005 - 2010", which is the first comprehensive document to be produced for managing core activities of Stredoslovenska vodárenska spoločnost, a.s. Banská Bystrica up to 2010.
- The economics of the company are influenced above all by the process of transformation and the ongoing changes in the system of management. The year 2003 was the first uniform year of activities of the new joint stock company. Various steps were taken in 2003 with the aim of determining the real value of assets, which had a negative impact on the red figures of the company in 2003 (a loss of SKK 248,925,000).
- In 2004 the solvency of the company improved compared with the preceding year thanks to the settlement of receivables by healthcare facilities. Slovak Rating Agency, a.s. regards the clearance of overdue liabilities in 2004 worth SKK 28 million as positive.
- Stredoslovenská vodárenská spoločnosť, a.s. has a thoroughly prepared system of organisational and management documents that clearly define the position and powers of individual organisational units in the company, and which determine the basic rules of internal order within the company. Slovak Rating Agency, a.s. positively perceives the ongoing changes regarding management processes of the company.
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Slovak Rating Agency
Bratislava, 1 Februar 2005