I. STATEMENT ON RATING
Slovak rating agency granted following ratings to City Malacky:
| Long-term local currency rating | BB+ (stable outlook)
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| Long-term foreign currency rating | B+ (stable outlook)
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| Short-term rating | S3
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In the category of transactions in Slovak crowns, long-term rating BB+ (stable outlook) has been granted to the city Malacky. In the category of transactions in foreign currencies rating B+ (stable outlook) has been granted to the City Malacky. Short-term rating of Malacky is S3, which is the best possible short-term rating for the entities attaining long-term rating BB+.
Rationale:
- We see positively the continuity in realising of strategic plans and investment projects during the new election period. In strategic area, priority of the city continues to be promotion of employment, business development, flat building and development programs in delimitated areas - education and healthcare.
- Slovak rating agency negatively appreciates the slow pace of realised changes in the accounting administration system. The city doesn't continue its activities in elimination of auditor's restrictions in 2001 rapidly enough, especially in bookkeeping and inventory. However, we see positively performing of continuous audit during 2003 that will be finished at the end of September.
- Deficiencies in bookkeeping have been recognised by the chief auditor in final balance report for 2002. Even though the city succeeded in eliminating most of them during 2003, deficiencies shown by the chief auditor result from insufficient communication and cooperation between departments of municipal authorities and are of system origin. However, we highly appreciate processes and changes realised in disposal with the city property.
- Due to unstable revenue flow, liquidity of the city has been violated. As of ultimo of 2002 and as of ultimo of the first half of 2003, the city showed liabilities after maturity date, whereby liabilities-after-maturity-to-total-liabilities ratio increased from 8,5 % (2002) to 11,4 % (as of June 30, 2003). However, delay in liabilities repayment has been recorded only to a company with the equity share of the city. Therefore, we suggest to pay more attention to the mentioned area and to improve the cash-flow planning.
Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.
Slovak Rating Agency
Bratislava, 30 September 2003