RATING REPORT

The Slovak Rating AgencyTM hereby confirms the rating for the Town of Snina in Slovak koruna and increases its rating in foreign currencies as follows:

Long-term domestic currency rating	BB- (stable outlook)
Long-term foreign currency rating	B (stable outlook)
Short-term rating	S3

The Town of Snina was assigned the long-term rating of BB- (stable outlook) in the category of transactions in Slovak koruna. In the category of transactions in foreign currencies the Town of Snina was assigned the rating of B (stable outlook). The short-term rating of the Town of Snina is S3, which is the best possible short-term rating for entities with a long-term rating of BB-.

Justification:

• In respect of strategic planning, the town is currently in the stage of preparing the strategic planning document - Local development and action plan of the Town of Snina with the aim of setting out priorities of investment and defining the possibilities of drawing finances from EU funds. The town is concurrently finishing off preparations on a new Land Planning Document in line with the future development of the town.
  
  
• The economic results of the town in 2003 ended with a surplus of SKK 3,731,000. Liabilities of the town in excess of 60 days overdue to the end of 2003 comprising SKK 123,000 were reported solely from title of lien, from title of failure of suppliers to satisfy contractual conditions. The balance of receivables to the end of 2003 was rectified by adjusting entries calculated to selected claims, with a volume of SKK 141.2 million. Despite the fact that the town adopted measures for enforcing claims, the agency regards the balance of claims as still too high. In the opinion of the agency, the town should approach the enforcement of claims more aggressively, especially with regard to housing management, and in relation to the cash-flow of the town.
  
  
• At the incentive of the State the town granted surety for the provision of a returnable financial transfer from the State budget to a business entity in the territory of the town worth SKK 1.86 million. The town has arranged monitoring of this surety liability, which the agency regards as positive.
  
  
• The agency perceives a certain level of uncertainty surrounding resolution of the problems of hospitals under the administration of the town, which the town ended up with thanks to the inaction of the State. The town has adopted rationalisation measures that contributed to balancing out the economics of hospitals from April 2004. The agency recommends that the town continue with already started changes in an assertive manner.

Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.

Slovak Rating Agency
Bratislava, 16 November 2004