The annual results published by listed companies are a strong blow to the Athens Stock Exchange (ASE) and the economy. The effects of the crisis are painful for business activity. Enterprises small and large and in most sectors of the economy, are hurting. Many of these enterprises now face bankruptcy, since they are piling up heavy losses, have increased their indebtedness beyond the point where they can pay back debt installments, are losing market share, and are seeing their activity and their financial base shrink. On the other hand, only 60-70 listed firms display the necessary effectiveness, dynamism and capital adequacy that allow analysts to think they have a bright future. Still, many of them owe their good profile to state procurements and big public projects undertaken during this period ahead of the 2004 Athens Olympics (the construction sector, for example). Unimpressive turnover Except for these companies, total chaos prevails. There are commercial enterprises with turnover lower than 10 million euros; others have excessive debt – their assets, including their shares are mortgaged. One wonders how firms such as these have found their way onto the ASE. Enterprise profitability experienced a dramatic downturn in the final quarter of 2002. As a result, company profits show a 25 percent decline from last year, while, after three-quarters, this decline was 20 percent – for consolidated profits, the respective decline is 22 and 16 percent. One small consolation is the overall rise of 7 percent in turnover (9 percent on a consolidated basis). This rise, however, was primarily concentrated in the construction and telecommunications sectors. Lossmakers rise According to an analysis of 300 of the 340 active listed firms by investment firm Magna Trust, 89 of the companies in the sample showed losses. Of these, 54 are showing losses for the first time in recent years. The total number of lossmaking listed firms is expected to grow further if the other 40 firms are included. In 2001, the number of lossmakers was 65 and, in 2000, only 27. According to Manos Hadzidakis, chief analyst at Magna Trust, it was the financial companies, in a wider sense – banks, insurance and investment firms – where profitability took the biggest hit. In the banking sector, especially, there was significant portfolio restructuring. The loss of profits in financial firms was also due to significantly lower revenues from stock market operations and commissions, a loss varying from 50 to 80 percent. Thriving mid-caps On the other hand, some middle-capitalization firms had a positive performances in 2002. Among them are Kalpinis-Simos, Sidenor, Elmec Sport, Hyatt, Katselis and Attica Publications – all companies with sound fundamentals and high growth, despite the negative climate. There were other companies, lossmakers in 2001, that returned to profitability. Among them, are passenger shipper ANEK, ETBA bank, Phoenix insurance, Tzirakian Brothers, ETBA Leasing and Maritime of Lesvos (NEL). Other, bigger enterprises, showed big losses, among them, Hellenic Exchanges – the ASE’s parent company – Corinth Pipeworks, General Bank, Korassidis, Infoquest and Gregory’s. In any case, the actual state of the market is even worse than what annual financial statements show. In many cases, accounting tricks were used – and were often pointed out in very small letters by independent accountants. These tricks embellish the situation. Danger This tactic is a potential danger for the market, since the introduction of International Accounting Standards (IAS) in the 2003 statements will cause a shock. Among the 300 statements examined, only one firm, Boutaris, compared the results achieved under current standards and those that would show using IAS: It showed that their 526,900 euros in profit would turn into a 4.8-million-euro loss, and the group’s net position – assets minus debt – would diminish from 40.3 million to 7.2 million euros. One can only imagine what will happen to the actual lossmakers. This is why, perhaps, only a few banks dared to publish their results under IAS, with only EFG Eurobank publishing its statement exclusively using the new rules. Worse results will, of course, make the stocks of these companies even less attractive, which is not quite what the battered stock market needs.