Companies at risk

Among the companies at risk of bankruptcy, according to the report, are Atlas Estates, eCard, Petrolinvest, Kofola-Hoop, SkyEurope Holding, Vistula & Wólczanka, Makarony Polskie, Stalexport Autostrady and Energopol-Południe.

The K&P report examined more than 240 bourse-listed firms based on H1 2008 data. It found that 29.8 percent were in the increased risk zone, while 10.2 percent were in the high risk zone. That was an increase compared to the full year analysis for 2007, 26 percent and 5.9 percent of the companies analyzed were at increased or high risk zone, respectively. Thomas Kolaja, a partner at K&P, told Puls Biznesu that six listed firms were in a worse state than they were a year ago. This could be because the companies recently borrowed money despite their profits were too low, he said.

A Z-score of three or above is considered safe, while a score of less than 1.8 is considered high risk.

However, a weak score does not necessarily mean that the companies have genuine financial problems, Kolaja said. "A good example is when acquisitions are made. A firm often has spent money on a takeover but has not yet made the savings connected to synergy," he said. It should be noted that K&P’s report earned the ire of the Association of Stock Exchange Issuers (SEG). The association voiced a strong objections to both the "thesis and its method of presentation." SEG argued that the report increased distrust of the bourse among investors.

Roberto Galea