3. Ratios Analysis of Municipalities Financial Statements

“School of Social Science ”

“DISSERTATION”

Master in Business Administration (MBA)

“Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on Municipalities. Case study: Municipality of Patra”

“Louiza Vasileiou”

Supervisor: TSEKREKOS ANDRIANOS

Patra

July,2020 ΕΛΛΗΝΙΚΟ ΑΝΟΙΚΤΟ ΠΑΝΕΠΙΣΤΗΜΙΟ

ΣΧΟΛΗ ΚΟΙΝΩΝΙΚΩΝ ΕΠΙΣΤΗΜΩΝ

ΔΙΠΛΩΜΑΤΙΚΗ ΕΡΓΑΣΙΑ

Πρόγραμμα Μεταπτυχιακών σπουδών στην Διοίκηση Επιχειρήσεων (MBA)

Οικονομική Ανάλυση των Δήμων του Νομού Αχαΐας.

Οι επιπτώσεις της οικονομικής κρίσης στους Δήμους.

Η περίπτωση του Δήμου Πατρέων.

“Λουΐζα Βασιλείου ”

Επιβλέπων: ΤΣΕΚΡΕΚΟΣ ΑΝΔΡΙΑΝΟΣ

Πάτρα

Ιούλιος,2020

Theses / Dissertations remain the intellectual property of students (“authors/creators”), but in the context of open access policy they grant to the HOU a non-exclusive license to use the right of reproduction, customisation, public lending, presentation to an audience and digital dissemination thereof internationally, in electronic form and by any means for teaching and research purposes, for no fee and throughout the duration of intellectual property rights. Free access to the full text for studying and reading does not in any way mean that the author/creator shall allocate his/her intellectual property rights, nor shall he/she allow the reproduction, republication, copy, storage, sale, commercial use, transmission, distribution, publication, execution, downloading, uploading, translating, modifying in any way, of any part or summary of the dissertation, without the explicit prior written consent of the author/creator. Creators retain all their moral and property rights.

“Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on Municipalities. Case study: Municipality of Patra”

“Louiza Vasileiou”

Supervising Committee

Supervisor: Co-Supervisor: “Andrianos Tsekrekos” “Konstantinos Tolikas”

Patra, Greece, July,2020 Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Feeling the deep obligation to address my acknowledgements to all those who contributed in various ways and helped in the implementation of this dissertation that follows, I would like to thank in particular: First of all, I thank kindly the Supervising Professor of the present work Mr. Tsekrekos Andrianos for constructive cooperation, and his immediate response at all stages. Also, I consider it necessary to address my thanks, to all the Human Scientific Resources of the University and individually to each Professor throughout the study in this Postgraduate Program, because from each of their Lectures, I gained scientific knowledge and was led to fulfilling a personal goal of my self-completion .Through this journey of knowledge I gained great experiences. In addition, I would like to thank specific individuals with their institutional status who contributed to the completion of the research part of this paper. Finally, I have to thank my family for the understanding, tolerance, and "endurance" they showed in my decision to be ranked in the "second" hierarchical priority until the completion of my postgraduate studies.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Abstract

The present work concerns the analysis of the financial data of the five Municipalities of the Prefecture of Achaia for the years 2014 to 2018. Municipalities are non-profit organizations. Their purpose is to provide services to citizens to cover their needs and add value to their lives. Therefore evaluating Municipalities’ financial condition refers to examine if they can meet these obligations now and in the future. Also, the Municipalities have to serve citizens with different demographic, sociocultural, and socioeconomic characteristics and operate in different geomorphologic conditions and this is something that one must take into account especially in economic crisis conditions. The main concern of the work was to present the institutional framework in which the Municipalities move, the adversities they faced in the conditions of the economic crisis, and to evaluate these organizations financially. This evaluation was made using ratios such as activity, profitability, liquidity, and financial structure. In addition, the Z-score model of Altman was used to determine whether there is credit risk for the organizations under consideration. The data that was analyzed, come from the financial statements of the municipalities (Balance Sheet & Income Statement). The Municipality of Patra was also selected as the largest Municipality of the Prefecture and as a metropolitan Municipality for further analysis of revenues and expenditures -again in the same five years- with the use of indicators related to the structure of revenues and expenditures. The first Chapter presents their institutional framework, jurisdictions, and the impact of the financial crisis on them. The financial administration and management is the second Chapter followed by ratios analysis of their financial statements in the third Chapter and the revenue and expenses analysis by ratios for the Municipality of Patra in the fourth Chapter while the conclusion is available in chapter 5.

Keywords

Municipalities, financial condition, economic analysis, financial ratios.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Περίληψη

Η παρούσα εργασία αφορά την ανάλυση των οικονομικών δεδομένων των πέντε Δήμων του Νομού Αχαΐας για τα έτη 2014 έως 2018. Οι δήμοι είναι μη κερδοσκοπικοί οργανισμοί. Σκοπός τους είναι να παρέχουν υπηρεσίες στους πολίτες για να καλύψουν τις ανάγκες τους και να προσθέσουν αξία στη ζωή τους. Επομένως, η αξιολόγηση της οικονομικής τους κατάστασης έχει να κάνει με το εάν μπορούν να εκπληρώσουν αυτές τις υποχρεώσεις τώρα και στο μέλλον. Επίσης, οι Δήμοι πρέπει να εξυπηρετούν πολίτες με διαφορετικά δημογραφικά, κοινωνικά, πολιτισμικά και οικονομικά χαρακτηριστικά και να λειτουργούν σε διαφορετικές γεωμορφολογικές συνθήκες και αυτό είναι κάτι που πρέπει κανείς να λάβει υπόψη ειδικά σε συνθήκες οικονομικής κρίσης. Το κύριο μέλημα της εργασίας ήταν να παρουσιάσει το θεσμικό πλαίσιο στο οποίο κινούνται οι Δήμοι, τις αντιξοότητες που αντιμετώπισαν στις συνθήκες της οικονομικής κρίσης και να αξιολογήσει οικονομικά αυτούς τους οργανισμούς. Αυτή η αξιολόγηση πραγματοποιήθηκε χρησιμοποιώντας δείκτες δραστηριότητας, κερδοφορίας, ρευστότητας και χρηματοοικονομικής δομής. Επιπλέον, το μοντέλο Z-score του Altman χρησιμοποιήθηκε για να προσδιοριστεί εάν υπάρχει πιστωτικός κίνδυνος για τους υπό εξέταση οργανισμούς. Τα δεδομένα που αναλύθηκαν προέρχονται από τις οικονομικές καταστάσεις των δήμων (Ισολογισμός & Αποτελέσματα χρήσης). Ο Δήμος Πατρέων επιλέχθηκε επίσης ως ο μεγαλύτερος Δήμος του Νομού και ως μητροπολιτικός Δήμος για περαιτέρω ανάλυση των εσόδων και δαπανών - και πάλι τα ίδια πέντε χρόνια - με τη χρήση δεικτών που σχετίζονται με τη διάρθρωση των εσόδων και των δαπανών. Το πρώτο κεφάλαιο παρουσιάζει το θεσμικό πλαίσιο των Δήμων, τις δικαιοδοσίες και τον αντίκτυπο της χρηματοπιστωτικής κρίσης. Η οικονομική διαχείριση είναι το δεύτερο κεφάλαιο ακολουθούμενο από ανάλυση δεικτών των οικονομικών τους καταστάσεων στο τρίτο κεφάλαιο και ανάλυση εσόδων και εξόδων με δείκτες για τον Δήμο Πατρέων στο τέταρτο κεφάλαιο, ενώ το συμπέρασμα είναι διαθέσιμο στο κεφάλαιο 5. Λέξεις – Κλειδιά

Δήμοι, οικονομική κατάσταση, οικονομική ανάλυση, χρηματοοικονομικοί δείκτες.

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Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Table of Contents

Abstract ...... vi Περίληψη...... vii Table of Contents ...... viii List of Figures ...... x List of Tables ...... xi List of Graphs ...... xii List of Abbreviations & Acronyms ...... xiii 1. Municipalities in Greece ...... 1 1.1 The institutional framework ...... 1 1.1.1 Historical review ...... 1 1.1.2 Legal basis ...... 3 1.1.3 Structure of first and second level Local Authorities and Decentralized Administration Authorities...... 5 1.2 Municipalities jurisdictions and their role during the recent crisis ...... 9 1.2.1 Classification of jurisdictions of the first local authorities ...... 9 1.2.2 The global financial crisis of 2008 ...... 10 1.2.3 The impact of the financial crisis on the Municipalities ...... 13 2. Financial Administration and Management of Municipalities ...... 15 2.1The accounting of Municipalities ...... 15 2.1.1 Process of Instruction and Voting of Balance Sheet and Income Statement (Profit and Loss account) and Cash Reports ...... 17 2.1.2 Basic concept and type of Municipalities Budget ...... 18 2.1.3 Monitoring and supervision of the Municipalities financial data ...... 29 2.1.4 Differences in the financial statements between firms and Organizations of Local Authorities ...... 31 2.2 Brief presentation of the Municipalities of Achaia prefecture ...... 31 2.2.1The Municipality of Patra ...... 31 2.2.2The Municipality of Aigialeia ...... 33 2.2.3The Municipality of Western Achaia ...... 34 2.2.4 The Municipality of Kalavrita ...... 35 2.2.5 The Municipality of Erymanthos ...... 35 3. Ratios analysis of Municipalities financial statements ...... 37 3.1 Ratios’ categories ...... 37 3.1.1 Ratios analysis based on the financial statements (BS, Income Statement) ...... 38 3.2 Analysis of the accounting statements of the five Municipalities of the Prefecture of Achaia ...... 45 3.2.1 Municipality of Patra ...... 45 3.2.2 Municipality of Agialeia ...... 47 3.2.3 Municipality of West Achaia ...... 49 3.2.4 Municipality of Kalavryta ...... 51 3.2.5 Municipality of Erymanthos ...... 53 3.2.6 Application of the Altman’s z-score for the five Municipalities ...... 55 4. Municipality of Patra-Revenue and expenses analysis ...... 57

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Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

4.1 Ratios analysis based on cash reports ...... 57 4.2 Earned Revenue for the fiscal years 2014-2018 of the Municipality of Patra ...... 60 4.3 Expenses of the Municipality of Patra for the fiscal years 2014-2018 ...... 65 4.4 Revenue and expenses structure Ratios of the Municipality of Patra ...... 72 5. Conclusions ...... 75 References ...... 1 Appendix A: “Types/categories of Municipalities expenses and revenue” ...... 2 Appendix B: “Balance Sheets and Income Statements of the examined Municipalities” .... 1

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

List of Figures

Figure 1.1: Greek regions (European Union NUTS 2 Administrative boundaries)Source: boundaries by the Greek Ministry of Interior, Decentralisation and E-government-Open Public Data (geodata.gov.gr)...... 6 Figure 1.2:GDP per capita in EU regions 2018,source:Eurostat ...... 7 Figure 1.3: Regional per capita in the EU 2017,Source: Eurostat ...... 8 Figure 1.4:Regional CDP in the European Union,2017,Source:Eurostat ...... 8 Figure 1.5:EU countries’ debt(%GDP) in 2007 and 2018,Source: European Parliamentary research service blog ...... 11 Figure 1.6:Debt in percent of GDP compared to the average of Eurozone, Source: Wikipedia ...... 11 Figure 1.7:Unemployment rate, Source: OECD Economic Surveys: Greece 2018 ...... 12 Figure 1.8:Unemployment rates in November 2019(%),Source: Eurostat ...... 12

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

List of Tables

Table 3 -1:Municipality of Patra-Ratios ...... 46 Table 3-2:Ratios-Municipality of Aigialeia ...... 48 TABLE 3-3:Ratios-Municipality of West Achaia ...... 50 TABLE 3- 4:Ratios-Municipality of Kalavryta ...... 52 TABLE 3- 5:Ratios-Municipality of Erymanthos ...... 54 TABLE 3- 6:Z-score ...... 56

Table 4- 1: Municipality of Patra-Earned Revenue for the fiscal years 2014-2018 ...... 62 Table 4- 2: Municipality of Patra-Expenses for the fiscal years 2014-2018 ...... 66 Table 4- 3: Revenue and expenses structure ratios ...... 73

APPENDIX A TABLE A- 1: Types of Municipalities’ revenues...... 2 TABLE A- 2: Type of Municipalities’ expenditure...... 3 TABLE A- 3: Main Categories of Municipal Revenues...... 5 TABLE A- 4:Revenue and expenditure types and amounts of the Municipality of Patra (2014-2018) ...... 7

APPENDIX B TABLE B- 1:Municipality of Patra-Balance sheet (2014-2018) ...... 1 TABLE B- 2:Municipality of Patra-Income Statement (2014-2018) ...... 5 TABLE B- 3:Municipality of Aigialeia-BS and IS (2014-2018) ...... 8 TABLE B- 4:Municipality of West Achaia-BS and IS 2014-2018 ...... 15 TABLE B- 5:Municipality of Kalavryta-BS and IS 2014-2017 ...... 21 TABLE B- 6:Municipality of Erymanthos-BS and IS 2014-2017 ...... 27

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

List of Graphs

Graph 4- 1: Total revenue (2014-2018)Municipality of Patra ...... 62 Graph 4- 2:2014-Revenue category and percentage ...... 63 Graph 4- 3:2015-Revenue category and percentage ...... 63 Graph 4- 4: 2016-Revenue category and percentage ...... 64 Graph 4- 5: 2017-Revenue category and percentage ...... 64 Graph 4- 6: 2018-Revenue category and percentage ...... 65 Graph 4- 7:Total expenditure 2014-2018 ...... 66 Graph 4- 8:Cash balance 2014-2018 ...... 67 Graph 4- 9:2014-Composition and percentage of expenses ...... 68 Graph 4- 10: 2015-Composition and percentage of expenses ...... 69 Graph 4- 11: 2016-Composition and percentage of expenses ...... 70 Graph 4- 12: 2017-Composition and percentage of expenses ...... 71 Graph 4- 13: 2018-Composition and percentage of expenses ...... 72

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Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

List of Abbreviations & Acronyms

ATEI: Senior technological institute BIOPA: Industrial park Ct: Constitution ELSTAT: Hellenic statistical authority ENFIA: Uniform real estate tax EU: European Union GDP: Gross Domestic Product GGE: General Government Entities JMD: Joint Ministerial Decision KAP: Central Autonomous resources KEDE: Central Union of Greek Municipalities L.: Low OLA: Organizations of Local Administration OPD: Integrated framework for action P.D: Presidential decree PNP: Legislative act POE: Previous financial years SATA: Investment Grants VAT: Value added tax

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Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

1. Municipalities in Greece

1.1 The institutional framework

1.1.1 Historical review The institution of local government in Greece began with the autonomous Greek cities of antiquity and has been preserved through the centuries to the present day. The origin of the new administrative history dates back to the first year of the Greek Revolution (1821) where the first local governments were created. In the Treaty of London (May 7, 1832) the great powers of the time agreed that Greece will be an independent state with a monarchical regime. One of the first laws that the new powers are drafting is the Royal Decree with which Greece is divided into 10 counties and 47 provinces.

The expansion of the Greek territory after the successful outcome of the two Balkan wars made the new planning of the administrative map of the country imperative. Thus, a new law in 1912 inaugurates a long period of time where the country is divided into numerous small administrative units.

This period typically ceases to be valid under Law 2539/1997 (Kapodistrias), which seeks to unite administrative units. The Kapodistrias program, was named after the Governor of Greece, Ioannis Kapodistrias who ruled the newly formed Greek state from January 18, 1828 until his assassination on September 27, 1831.This was the first, after the World War II, big reform in the institutional framework that local authorities operated in Greece. The program has brought about several significant changes concerning the previous laws that have been implemented, so it is a milestone in the evolution of the system of local government today. The most characteristic change was the merging of a large number of communities into larger municipalities to ensure a more effective organization of public administration at the level of local government. The implementation of Kapodistrias merged 5.318 local communities and created 1.100 new municipalities.

The main reasons for a new system of administration were the following:

1. The community number was extremely large and caused many difficulties in organizing and distributing the available resources of the Greek economy.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

2. Inadequate absorption of European funds by municipalities and communities due to their inefficient infrastructure. 3. The communities’ merge into larger and more powerful economic organizations of local authorities would reduce state’s subsidies. 4. Rejuvenation of life in the countryside as the urban phenomenon has been increasing over the last years.

Although that the implementation of the Law 2539/1997 led to a faster absorption of European Community funds and reduced state subsidies for the maintenance of communities the results were not as expected. The model of centralized power, with a focus on the country's overall political and economic agenda dominated. The role of local self-government was complementary. In most cases Municipalities and communities were the executive body of public administration’s decisions. This has provoked the frequent resistance of local societies which was mainly due to the unequal treatment of the local affairs of some communities to those that were larger in population.

It was realized that, to substantially improve the effectiveness of the organization of public administration, it was necessary to adopt a law that would address the problems that would be most likely to arise. Thus, in May 2010, the Parliament adopted the application of Law 3852/2010 "New Architecture of Decentralization and Decentralized Administration – Kallikrates Program", which brought significant changes in the structure and administration of the organization. Regulatory arrangements, about OLA, are primarily aimed at creating strong municipalities, which are capable of contributing to the local development and provision of services, while reducing operating costs.

The Kallikrates program implemented fully on January 1, 2011, and its objective was to improve local self-government at the administrative, financial, political, and ethical levels, and, at the same time, move ahead with a major reform agenda. These reforms do not address only in a group of municipalities or communities but in the whole of central and local government. Thus, in order to achieve these, a new concept of self-government is adopted that emphasizes the decentralization of key responsibilities, as well as the decentralization of personnel, resources, accountability, and responsibility. However, the most significant change to this plan was a significant reduction in the number of self- governing bodies.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

The Cleisthenes program (L.4555/2018), attempts another reform in the Local Government.

1.1.2 Legal basis The institutional basis for Local Government in Greece is set by the Constitution of the Hellenic Republic of 1975, as revised in 2001 and 2008. Below we mention the main articles which are 101 and 102.

Article 101- Organization of the Administration

1. The administration of the State shall be organized according to the principle of decentralization.

2. The administrative division of the Country shall be based on geo-economic, social, and transportation conditions.

3. Regional administrations of the State shall have general decisive authority on matters of their district. The central administrations of the State, in addition to special powers, shall have the general guidance, coordination, and review of the legality of the acts of regional administrations, as specified by law.

4. The legislator and the Public Administration, when acting in their regulatory capacity, must take into consideration the special circumstances of the insular and mountainous areas caring for their development.

Article 102- Local authorities

The administration of local affairs shall be exercised by local authorities of the first and second levels. For the administration of local affairs, there is a presumption of competence in favor of local authorities. The range and categories of local affairs, as well as their allocation to each level, shall be specified by law. Law may assign to local authorities the exercise of competences constituting the mission of the State.

2. Local authorities shall enjoy administrative and financial independence. Their authorities shall be elected by universal and secret ballot, as specified by law.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

3. Law may provide for compulsory or voluntary associations of local authorities to execute works or render services or exercise competences belonging to local authorities; these shall be governed by elected administrations.

4. The State shall exercise the supervision of local authorities, which shall consist exclusively in the review of the legality and shall not be allowed to impede their initiative and freedom of action. The review of legality shall be exercised as specified by law. With the exception of cases that automatically result in forfeiture of office or suspension, disciplinary sanctions to elected administrations of local authorities shall be imposed only with the concurrent opinion of a council composed in its majority of judges, as specified by law.

5. The State shall adopt the legislative, regulatory and fiscal measures required for ensuring the financial independence and the funds necessary to the fulfillment of the mission and exercise of the competences of local authorities, ensuring at the same time the transparency in the management of such funds. Matters pertaining to the attribution and allocation, among local authorities, of the taxes or duties provided in their favor and collected by the State shall be specified by law. Every transfer of competences from central or regional administrations of the State to local government also entails the transfer of the corresponding funds. Matters pertaining to the determination and collection of local revenues directly from local authorities shall be specified by law.

Furthermore, the basic legal texts that compose the institutional framework in which Local Authorities move are:

Law 1850/1989- “European Charter of local self-government”

PD 30/1996- “Prefectural Administration Code”

Law 3463/2006– “Ratification of the municipal and Communal Code”. This law encodes in a single text the current legislation on the functioning of municipalities and communities.

Law 3852/2010 - ” New Architecture of Self-Government and Decentralized Administration - Kallikrates Program”. This law restructures the administrative organization of the country for the first and the second level of local government

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

(municipalities and regions) and establishes seven Decentralized Administration Authorities as single decentralized state administration units, which automatically and without any further formality enjoy all the rights and responsibilities /obligations of the abolished ones.

1.1.3 Structure of first and second level Local Authorities and Decentralized Administration Authorities. The public sector in Greece includes the General Government, the public-law legal entities out of it, and also the public-sector businesses and agencies out of the General Government.

The General Government includes three subsets the Central Government, the Local Government, and the Social Security Agencies. Local Government in Greece had always had two levels. The first one refers to Municipalities and the second one to Regions. Their organizational structure has been reformed several times over the past years to increase effectiveness, accountability, and transparency in operations and the provided services to the citizens.

The current administrative division of Greece is according to Law 3852/2010 (Kallikrates Program). The implementation of the " Kallikrates Program " law from 1.1.2011 marks a historic turning point. This administrative reform has radically changed local government in Greece in terms of its size, structures, and functions. Kallikrates program regroups first and second level Local Authorities into larger geographical units through mergers and results to the administrative division of the country in seven (7) Decentralized Administration Authorities, thirteen (13) Regions(second level Local Authorities ) and 325 municipalities ( first level Local Authorities). There is also one autonomous region, Mount Athos (Agion Oros, or "Holy Mountain"), a monastic community under Greek sovereignty

The decentralized Administration Authorities represent the state organizationally, extend within the boundaries of one, such as Attiki and Kriti, or more regions, exercise delegated state powers, and enjoy administrative and financial autonomy. State administration, under the decentralization system, means in principle that the country is subdivided into regional administrative units with geo-economic, social and transport

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” criteria (Article 101 Par. 2 Ct.) where regional state bodies are established with general decisive responsibility. According to the Constitution, the central organs of the state must confine themselves to the monitoring of the legitimacy and coordination of the regional state organs, as well as to the provision of general guidance.

The second level of local authorities is formed by Regions that are responsible for planning and implementing regional policies to the issues of the region according to their responsibilities which are delegated by law and taking into account national and European policies. Each Region is set up in a wider area of the country ( except Mount Athos), include one or more prefectures within their geographical boundaries, has its independent services and budget, and its bodies are elected by suffrage. Figure 1.1 portraits the Greek regions.

Municipalities form the first level of local authority. They are self-government territorial entities responsible for the handling of the local affairs.

Figure 1.1: Greek regions (European Union NUTS 2 Administrative boundaries)Source: boundaries by the Greek Ministry of Interior, Decentralisation and E-government-Open Public Data (geodata.gov.gr).

According to the Impact Assessment Report for the New Architecture of Self-Government and Decentralized Administration (April 2010), by the Ministry of Interior

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Decentralization and E-government, the new law aims to remedy structural deficiencies in the Greek public sector which, according to reports on the Greek economy, are a deterrent to achieving high rates of economic and social growth. Despite the influx of significant EU resources over the last three decades, key indicators of economic and social development such as GDP, unemployment, and the level of poverty show significant and persistent imbalances in the country's productive potential.

Unfortunately, though significant steps have been taken towards economic and social convergence with the other EU Member States, there is no significant improvement as shown in the following figure 1.2 which presents the Regional GDP per inhabitant in European Union the year 2018. In 2018,regional GDP per capita, expressed in terms of purchasing power standards(PPS), ranged from 30% of the European Union (EU) average in Mayotte, an overseas region of France, to 263% in Luxembourg. As we can observe most of the Greek regions are below 67%.

Figure 1.2:GDP per capita in EU regions 2018,source:Eurostat

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

According to Eurostat figures released 34/2019 (February 26, 2019), four Greek regions are among the 20 poorest in the EU. These are Eastern Macedonia and Thrace (11th place), Epirus (13th place), North Aegean (14th place), and Western Macedonia (17th place). At the same time, with the exception of Athens, all regions except Attica were below 75% of average Community GDP per capita as we can see in Figure 1.3 and 1.4.

Figure 1.3: Regional per capita in the EU 2017,Source: Eurostat

Figure 1.4:Regional CDP in the European Union,2017,Source:Eurostat

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

1.2 Municipalities jurisdictions and their role during the recent crisis

1.2.1 Classification of jurisdictions of the first local authorities

The management of local affairs with the aim of protecting, developing, and continually improving the interests and quality of life of the local community is the responsibility of the municipalities.

The Municipalities have a large number of jurisdictions which are mainly concern development actions, environment, quality of life and proper functioning of cities, employment, social protection and solidarity, civil protection, education, culture, and sports.

Development responsibilities include the protection and exploitation of local natural resources and areas, the electrification and extension of electricity and general energy networks, within their administrative boundaries for public benefit purposes, design, construction, maintenance and management of infrastructure and others in order to stimulate the development of the local economy and support it.

Environmental responsibilities aim to control, protect, and improve the natural, cultural, and architectural environment. Responsibilities/jurisdictions about the protection and administration of water resources, ground, and rivers belong in this section. Responsibilities of keeping communal territories clean and the urban design belong in this section too.

Quality of life responsibilities include pedestrians, electric lighting, green areas, and regulating traffic.

Employment responsibilities include promoting and enhancing entrepreneurship and the development of free-of-charge consulting services to help the local workforce to be absorbed.

The social protection and solidarity responsibilities include taking measures to support the homeless and economically disadvantaged.

The local authority in its first level also includes a range of responsibilities related to the prevention and response to natural disasters, the maintenance, and preservation of school buildings and the organization of cultural and sports activities.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

1.2.2 The global financial crisis of 2008

The financial crisis of 2008 was a serious worldwide economic crisis which is considered by many economist experts to have been the most severe in economy since the one in 1930.The crisis begun with the collapse of Leman Brothers in US and started a chain reaction which affected worldwide economy. The European debt crisis eruption was around late 2009 and the main characteristics were high government structural deficits and accelerating debt levels. The relative fragile at this time bank sector in Europe suffered large capital losses and most states had to support this sector with recapitalization loans since the financial stability of the economy was strongly linked with banks’ survival. Large preexisting debt to GDP ratios, competitive weakness, low actual and potential growth, and considerable liability stocks of government and private sector compose an explosive mix at the time. In the first weeks of 2010, there was great anxiety about national debt levels and lenders demanded higher interest rates from the countries with higher deficits. This in turn made difficult the financing of further budget deficits and repaying or refinancing the existing government debts especially for countries with low economic growth and a high percentage of debt in the hands of foreign creditors.

The Greek economy for much of the 20th century was one of the fastest- growing in the Eurozone with a public debt-to-GDP not exceeded 104% but associated with a large structural deficit. The financial crisis of 2008 hit hard the country. The high budget deficit in combination with a high public debt to GDP ratio leads to an uncontrolled rise of the government debt (% GDP) which already reached 127% of GDP in 2009. The aggregate government debt ratio in the EU had been relatively stable at around 60 % of GDP from 2000 to 2008. In 2009 erupted to 73% of GDP and kept rising. In Greece increases exceeded 50 percentage points, the markets increased borrowing rates and the country as a member of the Eurozone had no autonomous monetary policy flexibility. Consequently, it was impossible for the country to finance its debt. Figure 1.5 shows the evolution of private and public investment by member state between 2007 and 2017 and the total investment in 2018 (%GDP).Figure 1.6 presents the Greece's debt percentage since 1977, compared to the average of the Eurozone

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Figure 1.5:EU countries’ debt(%GDP) in 2007 and 2018,Source: European Parliamentary research service blog

Figure 1.6:Debt in percent of GDP compared to the average of Eurozone, Source: Wikipedia

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

The crisis caused unemployment to increase with the highest levels in countries that crisis hit hardest such as Greece (Figure 1.7 presents unemployment rates in EU south countries measured from 2007Q4 to 2017Q4 ). Also one of the legacies of the crisis was high percentages of unemployment among young people, particularly in the southern Member States.

Figure 1.7:Unemployment rate, Source: OECD Economic Surveys: Greece 2018

Figure 1.8:Unemployment rates in November 2019(%),Source: Eurostat

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

According to Eurostat, EU-28 unemployment reaches at 6.3% (adjusted in November 2019) while the highest unemployment rates are observed in Greece where unemployment reaches 16.8% (Figure 1.8). We can observe that there is a decline compared to previous years. Youth unemployment in Greece was reordered 32.5% in the third quarter of 2019. We can observe that youth unemployment rates are double than unemployment rates for all ages. The data show the crisis severely hit the young and reflect the difficulties faced by young people in finding jobs.

In order to deal with crisis, Greek government announced on May 1, 2010 a series of political and economic policies that aim to reduce government budget deficits and included tax increases and spending cuts. A tripartite committee formed by the European Commission, the European Central Bank, and the International Monetary Fund offered Greece bailout loans with their activation being depended on implementation of further austerity measures and debt restructuring agreement. These measures intended to strengthen the government and financial structures. They did that but also mired the country to a great recession. In total three bails out programs offered and applied in Greece which always came with harsh austerity measures and mired the country in a great recession. As declared Greece’s bailouts successfully ended on 20 August 2018 but the impacts were severe. Beyond the rise of unemployment, the economic crisis reduce money for welfare services and sent numerous of middle-class households into poverty.

1.2.3 The impact of the financial crisis on the Municipalities The austerity policies implemented to cope with the financial crisis have created a number of problems for local governments, mainly in terms of their income and staff (number, pay, employment status). This situation has worsened with the decentralization of powers implemented in Greece. Municipalities are at a disadvantage of trying to secure an acceptable level of services with scarce resources as reorganization programs were implemented with the argument of achieving economies of scale and limiting public spending in a climate of general austerity. Regular staff was reduced and deteriorated working relationships were recruited.

The consequences of the crisis, as a result of the obligations arising from the "Memorandums", are mainly felt in the financing of municipalities, their financial

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” independence, and the ongoing financial controls that simultaneously affect the provision of services and infrastructure construction (local public goods).

Population, housing, administrative, financial, etc. sizes of the 325 municipalities formed with the implementation of the program "Kallikrates", are now much larger than those of the 1,034 municipalities that resulted from the Kapodistrias program. Through the responsibilities transferred in 2011, Municipalities have now been transformed into political, administrative and development institutions with expanded functions, great services, and many new activities.

In this context, Municipalities have two major problems to deal with. How to ensure the provision of services and the construction/maintenance of infrastructure related to the exercise of their responsibilities, under the pressing needs and increased demand caused by the socio-economic crisis and how will they utilize all possible sources of funding to exercise their responsibilities as they face:

 An unprecedented cut in government grants, reaching 60%  Increased needs for resources, staff, and support.  The increased funding and staffing needs of social structures such as kindergartens, home help, etc. and social initiatives (catering, social grocery, medical, pharmacy) in the face of demand for services caused by the socio-economic crisis.

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Municipalities. Case study: Municipality of Patra”

2. Financial Administration and Management of Municipalities

2.1The accounting of Municipalities

Speaking about Local Government accounting, a modern definition of accounting science should be given. Accounting, a branch of Economics, is a system which analyzes, records and summarizes the results of the economic activities of a company and then reports the results to decision makers . Of course, Accounting does not only provide information internally to companies. It deals with the preparation of financial statements (such as balance sheets, statement of income results, etc.), which are published and therefore other individuals outside the business can use the information provided to make rational decisions. Such individuals are investors and capitalists who are interested in investing their money in any business, as well as the various suppliers or creditors who use the information to provide credit to businesses. It is clear that this information is useful to various other agencies as well.

Accounting is a science that relies on given measurement and recording practices so that we can discern and conclude between different accounting bases, with the most important being Accrual Accounting and Cash Accounting. All in all, we can talk about Cash accounting, Modified cash accounting, Accrual accounting, and Modified accrual accounting. In the public sector, the use of cash accounting through budget monitoring has traditionally prevailed, as Accrual accounting is related to the notion of profit, which is not compatible with non-profit organizations. Finally, in the Public Sector, the use of a simplified accounting method prevailed, called Public Accounting which emphasizes the legality of budgeting and addresses a set of rules governing how public wealth is managed.

In particular, these rules specify and regulate those concerning the forecasting and realization of public revenue and expenditure and those relating to the presentation of the results of the management of public revenue and expenditure. In addition, the manner in which each Municipality deals with various third parties is determined. Finally, the relationships of public finance managers, their responsibilities, audits of management operations, and the organization of the Public Services dealing with the above, are defined and regulated by the Public Accounting Office.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Governments, for their part, as long as they maintain strong financial incentives, such as saving resources in times of austerity, particularly when it is not possible to secure debt, and the requirement for efficiency - effectiveness of the services offered, adopt the methods of administration, accounting, budgeting and control applied by businesses. This practice was called "New Public Administration", through which the accrual accounting and the duplicate accounting were introduced to the public sector, where it was until recently found applicable in the business sector.

The objectives of the "New Public Administration" can be defined as follows:

 Efficiency in resource management.  Increasing the effectiveness of public policy implementation.  Economy Savings.  Improving the quality of public services provided.  Increasing public accountability.  Facilitating public officials to exercise management by reducing bureaucracy.

Nowadays, Local Government Organizations are implementing Public Accounting through the new budget type of Joint Ministerial Decision 7028/2004, as amended or supplemented and is applied until today. The budget instructions for the financial year 2020 are given with the JMD house 55905 / 29.07.2019 (Government Gazette 3054 / 29.07.2019 issue B ').At the same time they are implementing a duplicate system with the Accrual accounting through Presidential Decree 315/1999 (Government Gazette 302 / 30.12.1999 issue B '). These two systems work interconnected, as they serve different purposes that each of them alone could not accomplish.

According to the Presidential Decree mentioned above, the financial statements of the Accrual accounting, which are required by Local Government Organizations to publish, are the following:

 Balance Sheet  Income Statement  Appropriation account  General Operating Results Account Statement

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

 Certified Auditor certificate of Audit

On the other hand, the financial statements of the Municipalities according to the Accounting of Local Government Organizations. is:

 Budget  Cash Report  Quarterly budget execution statement

2.1.1 Process of Instruction and Voting of Balance Sheet and Income Statement (Profit and Loss account) and Cash Reports Until the end of May, the one who acts as the cashier of the Municipality submits through the mayor to the Economic Committee an account of the management of the financial year that has expired. The data included in the management account are defined by the presidential decree of par. 2 of article 175 of law 3463/2006. The account is submitted uniformly, regardless of any changes that may have been made to the persons acting in the cashier's office.

The final statement of the money management account shows:  The cash balance of the previous year  The ordinary revenues of the year in total.  The extraordinary revenues in total.  The annual payments to ordinary expenses in total.  The annual payments in extraordinary expenses in total.  The cash balance.

Within two (2) months after receiving the above data, the Financial Committee shall reads and control them and no later than five (5) days after the end of the two-month period, submit the report, and the Balance Sheet and the Income Statement of the fiscal year, together with its report to the Municipal Council. (par. 2 article 163 L.3463 / 06)

The Balance Sheet and the results of the year, before their submission to the Municipal Council, are checked by a certified auditor-accountant (par. 3 article 163 L.3463 / 06) who prepares an audit report with the audit findings and provides the Municipality with a control certificate attached to the financial statements as published by the Municipality.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

The Municipal Council, within two months after receiving the Balance Sheet, the results of the fiscal year, and the decision of the Economic Committee, decides on the approval and formulates remarks, in a special meeting for this purpose, in which the director of finance is also present. In the aforementioned meeting the certified auditor-accountant or his/her deputy is also present.

Subsequently, the Balance Sheet with the certificate and the audit report but also with all the other supporting documents required, are submitted to the Court of Auditors, within one month after the act of the Municipal Council was issued and its submission is announced to the Inspector of Legality. Finally, the financial statements, together with the control certificate, are published uniformly in at least one daily or weekly newspaper or in a newspaper that is issued within the prefecture where the Municipality is located. The above data it is also required to post on the Municipality’s website and "Diavgeia" website.

Cash reports are divided into revenue accounts and expense accounts and each of these accounts is divided into codes that draw data from the execution of the budget. The accounts are the actual income-expense data of the organization as they record the total amount collected and spent in a financial year per payment code. This recording leads to either a positive result (profit) from the comparison of income - expenses (cash balance) or a loss that will be transferred to a new year. Each main revenue-expenditure code is a separate unit and is broken down into subcategories.

2.1.2 Basic concept and type of Municipalities Budget The Budget of Municipalities is the administrative act that determines the revenue and expenses for a financial year and forms the basis of their financial operation. Annual budget revenue is the amounts to be collected during the financial year to which the budget refers, irrespective of the period from which they are derived, as well as the confirmed budget revenue of the previous financial year that has not been received. Expenditures of the annual budget are payments made during the budget year, irrespective of the time in which the payment obligation arose. The general principles for the preparation of Municipal Budgets are mainly defined by the provisions of Law 4270/14 and are as follows:

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” a) Principle of annularity, according to which the budgetary operations refer to a financial year beginning on 1 January and ending on 31 December of the same calendar year. b) Principle of unity and all-embracing. According to this principle, all revenue and expenditure are entered into a single budget without any offset, and no further revenue and expenditure can be incurred unless it corresponds to a budget code number. c) Principle of budget specialization. Every credit is specialized and exists only for the purpose it is intended for. According to the budget specialization principle, public revenues and expenditures are determined by a detailed classification code, defined by a relevant decision of the Minister of Finance which is updated at regular intervals. According to the principle of specialization of credits, the use of credit for the satisfaction of a different need than that indicated in the budget is prohibited. d) The principle of budget honesty and accuracy, according to which any budget revenue and expenditure forecasts must be as accurate as possible and not overestimate or underestimate the facts on which the forecasts are based. e) The principle of a balanced budget (Article 77 par. 6 Law 4172/13, as replaced by Article 189 of Law 4555/2018). The total expenditure cannot be greater than the total revenue. The above revenue and expenditure balance must be maintained not only during drafting but also during budgetary reform. f) Principle of proper financial management: Assets and liabilities must be managed with due diligence and with a view to financial sustainability. g) Effectiveness principle: The achievement of specific objectives and results is monitored h) Transparency Principle: All officials and entities managing resources are obliged to ensure timely information related to the management of fiscal policy to enable effective public control. i) Publicity Principle: A summary financial statement of the budget, as finally adopted by the city council, is mandatory posted on the municipality's website and published in at least one daily or weekly local newspaper or, if none, in a newspaper published within the county limits where the relevant municipality

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

is based. It is clarified that the aforementioned situation is obligatory posted on the official website of the Municipality but also "diavgeia" website.

The budget shall include revenue and expenditure provided for by law as well as expenditure which, without expressly provided for by law, serves the operational needs of the municipality or fulfills its mission. Budget revenue and expenditure are broken down into groups, categories, subcategories, and types. The classification of revenue and expenditure is thus achieved by classifying it into single-digit, two-digit, three-digit, and four-digit numbers respectively. The code numbers and generally the type of budget of the Local Authorities were set by JMD 7028/2004 (Government Gazette 253 / B), which has been amended in succession with the last one adopted by JMD 55905/2019. The decision of the Minister of Finance defines the detailed classification of the revenue and expenditure of the budgets of all the public legal entities, whether or not they belong to the general government bodies with a predetermined breakdown code. The use of credit for a need other than that indicated in the budget is prohibited.

The financial year begins on 1st of January and ends on 31st of December. Municipalities also draft a five-year plan, an annual plan, and a Technical plan in addition to the annual budget but only the annual technical plan is a prerequisite to approving the budget. After the approval of the Municipal Council and the relevant Supervising Authority (Decentralized Administrator’s Legal Auditor), the budget is published and then executed.

The Budget as well as the Review according to the current institutional framework is divided into two parts. Part I includes Revenue and Part II includes the Reserve and Expenses. In these statements, the financial activities and transactions of the Municipality are depicted, so their analysis provides important data on the priorities and functions of the Municipality.

PART 1 REVENUE

Paragraph 5 of Article 102 of the Constitution sets out that the state shall take the legislative, regulatory and fiscal measures required to ensure financial independence and the resources necessary to fulfill the mission and to exercise the responsibilities of local governments while ensuring transparency in the management of resources. The law determines the distribution of taxes and fees collected by the state, between the Local

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Government bodies. Any transfer of responsibilities from central or regional bodies of the State to the local government also implies the transfer of the respective resources.

Revenue is classified into groups based on their origin, which are coded into categories and types of revenue. Every category is further divided into subcategories. There are six categories of revenue which are ordinary, extraordinary, previous years’ revenue confirmed for the first time (POE 1st), receipts from loans and receivables from previous years’ revenue(POE),collections on behalf of the state and cash returns, and cash balance.

Category 0 –Ordinary revenue includes the following subcategories:  01:Revenue from immovable assets. This subcategory includes rents from the lease of municipal real estate, farmland, arable land, municipal markets, quarries, fees and royalties from festivals and bazaars, and other income from immovable assets.  02:Revenue from movable assets. This includes interest on cash deposits in bank or credit institution accounts, rental of movables (machinery, means of transport, etc.) as well as other income from movable property.  03: Revenue from contributory fees and royalties. Within this sub-category there is income from reciprocal fees and royalties such as cleaning and electricity services, water, irrigation, and sewerage services is recorded in this .  04:Revenue from other fees, royalties, and services such as income from cemeteries, slaughterhouses, special parking spaces used by municipalities (sheltered or guarded parking lots, where other services such as cleaning and polishing of vehicles can be provided), income from entrance tickets to theaters, cinemas, museums, tourist facilities, zoos and other similar places, revenues from the provision of transportation, tuition fees or other cultural institutions, real estate tax and other fees.  05:Taxes and levies. For example as municipal Kinder garden fees or cash contributions paid in cases of real estate’s urban integration into urban planning  06:Grants for operating expenses. This is revenue from the state intended to meet operating needs.  07:Other ordinary revenue. In this sub-category the Municipalities report grants for Municipal legal entities

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

The second type of revenue group, Category 1 –Extraordinary (exceptional) revenue includes the following subcategories:

 11: Revenue from the sale of movable and immovable property such as income from the sale of real estate, and income from the sale of vehicles or other movable property  12:Extraordinary grants to cover operating costs. This subcategory records state funding for part-time employees, special government funding for overdue payments, income from European Union funding programs etc.  13:Investment grants. It refers to grants from institutional resources for investment expenditures.  14:Donations - inheritances – bequests. Amounts from donations and inheritances are recorded respectively.  15:Surcharges - fines – fees. This sub-category includes for example fines for controlled parking, fines for building and maintaining arbitrary buildings, revenue from various imputation decisions.  16:Other extraordinary income for example income (profits) from pure or mixed enterprises of the local self-government, and income from the sale of goods or the provision of services, in the case of extraordinary transactions and not permanent activities.

The third category, Category 2 –Previous years’ revenue confirmed for the first time (POE) refers to revenues from past financial years, which are confirmed (or collected from the Municipality) for the first time during the year. It is divided to two subcategories depending on whether the income relating to the past financial years is ordinary or extraordinary.

 21:Ordinary previous years revenue  22:Extraordinary previous years revenue

The Category 3 –Receipts from loans and receivables from previous years’ revenue(POE) is consist of two subcategories:

31:Receipts from loans refers to revenue from loans to finance investments or debts. It is not allowed to conclude a loan to cover operating expenses or to fulfill other

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” purposes(article 264 par. 1 L 3852/10). The appeal to the loan for the balancing of the budget in general, without the restrictions of article 264 par.1 L3852/20, is provided in article 43 of L 4325/2015, as it was modified by article 2 of PNP of 26/8/2015 and was completed with article 132 of Law 4604/2019. The loan can be used to pay any kind of debt. From 1/1/2014 it is not allowed in principle to apply for a loan for any purpose other than investment, unless it is a loan concluded under Article 43 of Law 4325 / 15, as applicable, to balance the budget. Especially for local authorities, borrowing does not require the approval of the Minister of Finance. As an exception, it is allowed to enter into loans for the sole purpose of refinancing already concluded loans.

32:Receivables from previous years revenue (confirmed in previous years).It refers to revenues from past financial years, which are already confirmed in previous years but are not collected.

The Category 4- Collections on behalf of the state and cash returns is divided to three subcategories:

 41:Collections on behalf of the state and third parties which includes pension contributions of employees and employers, the tax withheld from employees, suppliers, service providers ,and constructors when paying them, employees’ loans installments deducted from payroll etc.  42:Cash returns. For example remuneration cuts that appear to the payroll due to a strike.  43:Revenue that must be attributed to third parties such as grants that state gives to cover schools’ operating expenses and must be attributed to school committees.

The last category, Category 5 refers to Cash balance.

In addition to the general distinction between ordinary and extraordinary, local government revenues are classified on the basis of their origin and the costs permitted by law to cover, in general or free, contributory, and specialized.

Generally or free are revenues which, due to the non-existence of any commitment by law, may be available for the payment of any kind of legal expenditure. General revenue is e.g. most of the Central Autonomous Recourses (KAP), the tax on electrified spaces, the advertising fee, etc.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Specialized are the revenues intended by law to cover specific expenses, such as e.g. the part of the KAP available for the execution of projects (former SATA), the cash contribution of laws 1337/1983 and 2508/1997, which is available for the execution of public works in the area of integration and expansion of the city plan, the fees for controlled parking available to improve traffic conditions, etc.

Contributory income is that which is used only to cover the expenses related to the services, for the operation of which they are imposed and collected (cleaning fees, water supply, etc.).

Extraordinary income may belong to any of the above categories depending on its source of origin.

The basic provisions for local government revenues are contained in the Royal Decree of 24 / 09-20 / 10/1958 "On the codification in a single text of the law of the current provisions on the revenues of Municipalities and Communities" (Government Gazette 171 / A), which has been modified so many times that a new encoding has long been absolutely necessary. Important regulations for local government revenues are also scattered in various legislation, which are mentioned in the relevant title.

The state grants Municipalities with the Central Autonomous Recourses (KAP) which come from the following sources of revenue of the State Budget:

 The Income Tax on persons and legal entities at 19.5%,(with the PD. 170/14 Government Gazette 266 / 24.12.2014 issue A) of the total annual collections of this tax.  The Value Added Tax (VAT) at 12% of the total annual collections of that tax.  The Single Property Tax (ENFIA) at a rate of 11,3% of the total annual collections of this tax.  Taxes introduced in favor of the local government and not abolished and that is a tax on interest on the deposit and transfer tax on real estate and ships.  Special grants from the Ministry of Health and Welfare for the purposes and activities of the Ministry. This grant is a regular income and covers the needs for operation, acquisition of land, construction of facilities, and purchase of necessary equipment for the Open Care Centers for Elderly.

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Municipalities. Case study: Municipality of Patra”

These resources are "central" because they are imposed, certified and collected by the central administration, and then allocated to the local authorities, and "autonomous", because the amount of revenue they give depends solely on their capacity and not the will of the state administration and replaced the regular financial support of local governments from the state budget.

Under the provisions of par. 12 of article 9 of L 4071/12 and par. 7 of article 2 of L 4038/2012, all revenues from the Central Autonomous Resources of par. 1 of article 259 of L 3852 / 2010 (19.5% of income tax, 12% of VAT and 11.3% of single property tax) are registered in the regular state budget and are deposited in a single account entitled "Central Autonomous Resources of Municipalities". Up to one third (1/3) of the income tax of natural and legal persons is available to cover the investment expenses of the municipalities.

KAPs cover operating and investment costs such as the payroll, maintenance and operating expenses of the state kindergartens, which were transferred to the Local Authorities by Laws, the costs of repair and maintenance of school buildings, payroll, maintenance and operating expenses of national gyms transferred to Local Authorities, personnel payroll costs employed in the cleaning of school units, etc. Since 2010, a large reduction in KAPs has been observed. New responsibilities have been transferred to local government but, the corresponding resources transferred are not sufficient to cover them.

By a joint decision of the Ministers of Internal Affairs and Finance, which is issued annually following the opinion of the Central Union of Municipalities of Greece (KEDE), the amount of KAP, such as also the criteria and their distribution process, are defined, taking into account, in particular, the demographic, administrative, economic, social, environmental and cultural characteristics of each.

In addition to the above, the Municipalities are funded by the state for development activities such as the new program named “Antonis Tritsis”.

The goals of this program are:

a) the improvement and modernization of the basic infrastructures

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Municipalities. Case study: Municipality of Patra”

b) the resumption of social and economic life, the normalization of the consequences of the crisis due to the covid-19, the protection of public health and the strengthening of social cohesion and the local economy, c) the implementation of actions and initiatives of social cohesion and solidarity and in particular the support of the structures of social services of the local self- government, d) the introduction of information and communication technologies in the relationship of local government with the citizen to consolidate the concept of digital culture, e) the strengthening of the administration's response in the areas of competence of the local self-government with the continuous integration of new needs and requirements and the modernization of the institution of civil protection at the local level. [par. 1 article 1 JM 22766 / 09.04.2020 (Government Gazette 1386 / 14.04.2020 issue B ')] Other financing programs are the “Green Fund” Financial Program for the acquisition of public spaces and green spaces and “Philodimos” a Special Program for the Support of Municipalities to strengthen the balanced, sustainable and fair municipal development, enhance competition, improve infrastructure, and increase the local economy.

As far as loans are concerned the articles 176 of Law 3463/06 and 264 of Law 3852/10 define the procedure. Municipalities can enter into loans with recognized credit institutions or financial institutions in Greece and abroad, exclusively for financing investments and financing their debts if the following conditions are cumulatively present:

a) the annual cost of servicing the public credit of each municipality does not exceed 20% of its annual regular revenues. This percentage may be adjusted by the decision of the Minister of Interior, Decentralization, and e-Government, following the opinion of the Central Union of Greek Municipalities. b) the total debt of the municipality that borrows does not exceed a percentage of its total revenues, as determined by a decision of the Minister of Interior, Decentralization, and e- Government, following the opinion of the Central Union of Greek Municipalities. Its total debt is considered to be its total long-term and short-term liabilities. According to No. 43093/10 (Government Gazette 1153 B / 30-7-2010) JMD the ceiling of the total debt of the municipality that is borrowing, is 60% of its total revenues.

Table A.1 in Appendix A presents the types of Municipalities’ revenue.

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Municipalities. Case study: Municipality of Patra”

PART 2 EXPENSES In the second part (expenditure budget) all municipalities expenses are recorded (mandatory, optional, investment, etc.). Without the appearance of the costs on the part of the expenses these cannot be realized. Budget expenditures are divided into four chapters as shown below.

Operating expenses. This includes staff salaries and expenses, elected and third party fees, rents, insurance expenses, taxes expenses, transport means expenses (fuel, lubricants, etc.), travel expenses, accommodation and daily allowance for employers or others who travel to serve the municipal purposes, public relations, loan payments, expenses consumables, etc. The two digital level code numbers that illustrate these expenses are from 60 to 68.

Investments. This chapter represents investment expenses such as expropriations and purchases of plots of land, expenditures for the supply of movable fixed assets (machinery, means of transport, furniture, etc.), and immovable fixed assets, construction costs, development projects, studies, participation in municipal enterprises. The two digital level code numbers that illustrate these expenses are 71,73,74, and 75.

Previous Years' payments, other returns, and forecasts. This chapter reflects the liabilities for expenses incurred in previous years that were not paid as well as returns to third parties (public, insurance funds) of withheld taxes and contributions. The two digital level code numbers that illustrate these expenses are 81,82,83, and 85

Reserve. It is the Expenditure Group 9 and consists of a single code with the amount provided for the strengthening of credits that prove to be insufficient or for the registration of new credits that were not provided during the preparation of the budget. The reserve amounts are until 5% of the regular budget revenues.

Local government expenditures are divided into mandatory and optional (article 158 par. 1 N 3463/06). Mandatory expenditures are prioritized in the municipal budget, while optional expenditures are recorded only (if and to the extent that) the remaining balance of income remains unallocated.

According to article 158 para. 1 case a of Law 3463/06) mandatory expenses are:

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

 The remuneration of the mayor, the deputy mayors and the president of the municipal council.  The compensation of the councilors for their participation in the meetings of the municipal or community council and the municipal committee, as well as the travel expenses of the presidents of the local councils.  Any kind of staff remuneration  Expenses for the protection of employers  The stationery, all kinds of fuel ,oil and lubricant, spare parts and maintenance of machinery and vehicles, electricity, gas and water consumption, as well as postal and telecommunications services.  The rents of the properties used for municipal or community services.  Loan interests  Vehicle insurance expenses  The annual contributions in favor of the associations of Municipalities and Communities.  The costs of implementing the inter-municipal cooperation agreements and program contracts.  The grants of the institutions and legal entities established by each Municipality or Community, as to the amount indicated in the relevant constituent act.  The costs for the execution of the final court decisions and the repayment of the debts, according to their operative part.  The contributions imposed by special laws.  The amounts for the payment of welfare benefits and the supply of materials and food for the exercise of social protection and solidarity.  Expenditures arising from contracts for the execution of works, supplies, services, and studies.  The materials and the cost of repairing the damage to the road network and the water supply, sewerage, irrigation, and electricity network, the repair of the equipment of schools, kindergartens and playgrounds, and their general maintenance, as well as the costs for environmental protection and civil protection.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Categories types of expenses and their code numbers are presented in Appendix A Table A.2.

From 1/1/2017, the procedure regarding the commitment of appropriations in the municipalities’ budget is defined by the provisions of Presidential Decree 80/16 "Commitment of obligations by the authorizing officers" (Government Gazette 145 / A), which was issued under article 68 of Law 4270/14, in replacement of the previous PD 113/2010, and is applied from the above date to all bodies of the general government.

The aforementioned PD sets out the exact protocol to be followed as a first move before any cost is incurred. Expenditures can be counted against the budget appropriations only when there is a commitment decision from an authorized person (which involves a dual sense of commitment legal and financial) to charge expenditure against an article of the relevant budget. For most types of Municipal expenses, the authorized person is the Mayor and the decision of expenditure undertaken is checked and signed by the Financial Manager who checks if the expenditure complies with the provisions of the law (depending on the nature of the expenses), the appropriateness of the code expenditure number and if the sum of expenditure is within the budget.

All undertaken commitments are registered in the Register of Commitments and take a single number in it. After this registration, the specific amount cannot be used for any other reason. If for some reason part of the whole amount is not needed the release process is followed. During this process the same authorized person who approved the commitment release it with a relevant decision.

Realized expenditures that are already invoiced by the municipality’s creditor and not paid during the fiscal year have to carried forward the next fiscal year under a specific code number (POE)and recommitted in priority.

The procedure that law sets aims to prevent deficits. The most important things to control and check are:1)The legality of the expense and 2)The adequacy of the revenue to cover the expenditure.

2.1.3 Monitoring and supervision of the Municipalities financial data The State in Greece supervises and consults Municipalities.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

The Ministry of Interior maintains databases of OLA financial data for the collection, processing, and dissemination of financial data of the bodies of the Local Government of the country, in the context of the responsibilities exercised by the Ministry as a body of the Hellenic Statistical System (Law 3832/2010) and as the supervisory authority of those entities.

Through these databases, the Hellenic Statistical Authority (ELSTAT) is supplied with the data necessary to determine the fiscal size of the subdivision of the Local Government. The data are provided to the General Accounting Office of the State under the General Financial Reporting System. This facilitates the preparation and monitoring of the Unified Budget of Local Government by the Financial Directorate of Local Self-Government of the Ministry of Interior, the effective supervision of local government bodies by the authorized entities, the support, and analysis of their financial position, the planning, implementation, and evaluation of policies for the local self-government and the planning of control programs by the Court of Auditors.

All entities registered as G.G.E in the Hellenic Statistical Authority's Registry, including OLA, are required to report its financial information on a monthly and annual basis to the General Accounting Office at the Ministry of Finance. In addition, all G.G.E. entities must set financial targets on a monthly, quarterly, and annual basis. These targets are also monitored. The long-term monitoring of the financial figures of the Local Government and the care for the rationalization of their financial statements belongs to the Observatory of Local Authorities. When a negative deviation of OPD Financial Outcome over 10% is found, the Observatory shall, within one month from the end of the quarter, inform the body responsible for the supervision of the Authority and the Ministry of the Interior, providing instructions and suggested methods for correcting it.

When this happens the Municipality has to draft a recovery plan and take measures to increase revenue and decrease expenses. These measures are analytical and timetable. The Municipal Board approves the plan and from that point on, the municipality’s five-year plan, annual plan, technical program (plan), and budget must comply with the Financial Recovery Plan. In these cases exclusively inelastic and obligatory expenditure is realized, levies, taxes, and other fees increase and personnel recruiting is limited.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

2.1.4 Differences in the financial statements between firms and Organizations of Local Authorities A firm is a commercial enterprise that sells products or services to consumers aiming at profit. The term is usually synonymous with company or business entity such as a corporation, limited liability company, public limited company, sole proprietorship, or partnership that sells products or services. On the contrary, the Local Authorities, as we have mentioned above, are legal entities under public law, each of which has been established in a specific territorial region of Greece and aims to manage local issues. In other words, Local Authorities are non-profit organizations.

It is clear, then, that the financial statements of local authorities and non-profit organizations, in general, differ from those of financial entities. The main differences are that:

 Through financial statements, companies seek to compare the cost of the goods they produce or the services they provide with the revenue they generate. The Municipalities, for their part, seek to link the various costs to be covered by their general revenues.  The financial statements of the Local Authorities also contain non-financial data, which inform any interested parties about the work of each Municipality. On the other hand, the financial statements of companies include only financial data.

2.2 Brief presentation of the Municipalities of Achaia prefecture

2.2.1The Municipality of Patra The Municipality of Patra is a municipality of Greece, in the Regional Unit of Achaia (Prefecture of Achaia) of the Region of Western Greece. The seat of the municipality is the city of Patra from the day it was constituted in 1835 to the present day. With the Kallikrates Program on January 1, 2011, the Municipality united with the pre-existing municipalities of Vrachnaika, Messatida, Paralia, and Rio. The area of the new Municipality is 333.14 sq. Km. and its permanent population is 213.984 citizens, according to the 2011 Census. It is the third-largest municipality in Greece.

The Municipality of Patra is the strongest Municipality of the Achaia Prefecture but also of the Region of Western Greece.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

It is Greece's gateway to the West due to its port and international trade center and a focal point for trade and communication with Italy and Europe. Also, its weighty position strengthens its productive, administrative and social role. The Municipality of Patra is the center of entrepreneurship, operations, and services for the entire Unit of Achaia, but also the wider region of Western Greece and the Ionian Islands. In addition, the "Metropolitan" role of Patra, the third largest city in the country, after Athens and Thessaloniki, is increasingly enlarge. This among other things strengthens the city’s dynamic and develops strong relationships in the areas of transport, commerce, tourism, culture, research & technology, health and all services.

The port has always played an important role in the economic, social and political life of the city. During the last century it experienced a period of great prosperity as a center of raisin trade. The advantages of its geographical location offered an extensive period of prosperity, which marked the life of Patra and largely shaped the characteristics of the local economy.

The development of ferry transport led to a new period of prosperity, which began in the 1960s.It was a milestone date, because it is the year that the first ferry is launched on the Greece-Italy line, the ship "Egnatia".

The location of Patra as the closest important mainland port to Western Europe, as an urban center of supra-local scale and transport hub, favored its use by tourists, either as an entry –exit point or as a crossing point.

Today, the port is the most important sea terminal installation in Western Greece and the most important point of the country's ferry connection with Italy. The port also has an important role in the network of internal ferry connections with the Ionian Islands.

The area of the Municipality of Patra has a low agricultural activity, although after the unification of Patra with the Municipalities of Rio, Paralia, Vrachneika and Messatida, the population of the city engaged in agricultural and livestock work increased significantly. The main agricultural products produced in the area are olives, vegetables, etc.

The city of Patra has a long industrial tradition. During the interwar period, Achaia was one of the first important industrial centers.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

The radical reshuffle that took place after the 1980s in the global financial establishment has resulted in the closure of major industrial enterprises and the unemployment of a large percentage of experienced workers, especially those employed in textile, clothing, apparel and paper industry.

Now the industrial Zone in a specially organized area of 4,050 acres, the Industrial Park (BIOPA) for the installation - in favorable terms - of the area industry, the Scientific Park of Patra, the operation of the Research Departments at the University of Patra, the completion of the development projects that are in progress, create a solid hope that the investment climate will be stimulated. There are sectors and branches that can be developed.

The economy of the region, as well as the majority of the country's major urban centers, is based mainly on the tertiary sector. Patra is one of the main poles of the development of new technologies and high-tech products in Greece. It is the seat of important research organizations.

A very important industry for the local economy, in terms of its effects on society, is that of education. The operation of higher education institutions, i.e. the University and the A.T.E.I. Patra, which are of a supra-local character, give multiple benefits to the economic life of the place. The presence of a large number of students in the city of Patra brings economic benefits. In addition, the operation of educational institutions has direct benefits for the region, due to the high number of jobs in the industry and the high potential for research production. However, it should be noted that the diffusion of scientific achievements and productive research work in society and in the enterprises operating in the region is still significantly behind.

2.2.2The Municipality of Aigialeia

The Municipality of Aigialeia is a municipality of the Region of Western Greece that was established with the Kallikrates Program by the merger of the pre-existing municipalities of Aigeira, Aigio, Akrata, Diakopto, Erineos and Sympoliteia.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

The area of the municipality is 729.42 sq.km. and its population amounts to 49.872 inhabitants according to the 2011 census. The seat of the municipality is Aigio.

The main economic activity of the area is agriculture. Processing has been hit hard by the deindustrialization of previous decades. The port of the city has low commercial traffic, which has significant development margins, especially with the prospect of completing the works of the railway, Olympia Road, as well as exploitation of the new port of Aigio. Today, the passenger and tourist use of the port is virtually non-existent, despite the significant advantages of the area. The tourist traffic in the wider area mainly concerns holiday tourism, with the utilization of the large coastline.

Aigio has intellectual institutions, a modern hospital, a spacious stadium, and an indoor gym.

Aigio has always had a high spiritual level and has from time to time brought out brilliant scientists, remarkable spiritual people, and enlightened teachers.

Many cultural associations are active in the Municipality with rich artistic activity, covering the concerns of the citizens for creation and expression and promoting the Municipality in Greece and abroad. The city of Aigio is a vibrant city with significant commercial activity, which tries to make its presence felt in the daily Greek reality both at the regional and Peloponnese level.

2.2.3The Municipality of Western Achaia

In the context of the implementation of the Administrative Reform of the Kallikrates program in the Local Government, the Municipality of Western Achaia was created. A municipality in the region of Western Greece that was established with the merger of the pre-existing municipalities of Dymi, Olenia, Larissos, and Movri.

The area of the new Municipality is 572.22 sq.km and the population of 25.916 inhabitants according to the 2001 census. The seat of the municipality is Kato Achaia, the largest urban center of the new Municipality.

The Municipality of Western Achaia is a mainly agricultural area consisting of 354,000 acres of agricultural land and with 26% of its permanent population engaged in agriculture

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” and animal husbandry, but also a large part of the rest of the population is engaged in standardization, processing, trade, transport and other activities related to the primary sector.

The main crops are olive groves, vineyards, orchards, cereals, livestock, and other tree crops. It also has a significant number of sheep and goats being bred, as well as a natural fish farm.

2.2.4 The Municipality of Kalavrita The municipality in its current form emerged with the implementation of the Kallikrates program, at which point its neighboring "Kapodistrian" municipalities of Aroania, Lefkasiou ,and Paion were merged. It occupies the southern part of the Prefecture of Achaia, which almost entirely coincides with the older district of Kalavrita. It has an area of 1,065.5 sq. Km and a permanent population of 11.045 inhabitants according to the 2011 census. The seat of the municipality is Kalavrita.

The Municipality of Kalvrita is a tourist destination with many attractions such as the station of the cog railway, the gorge of Vouraikos, the cave of Lakes, the Monastery of Agia Lavra, the Holy Monastery of Megalo Spilaio, the ski center and the city of Kalavrita. The Municipal Museum of the Kalavrita Holocaust and the Ecclesiastical Orphanage of Kalavrita are some of the attractions of the area. There is also an agricultural dairy cooperative and organic farming and animal husbandry in the area. The residents of this mountainous Municipality are mainly engaged in animal husbandry and secondarily in tourism.

2.2.5 The Municipality of Erymanthos The Municipality of Erymanthos, established by the Kallikrates Program, came from the merger of the pre-existing municipalities of Tritaia, Farrai and the communities of Kalentzi ,and Leontio. The seat of the municipality is Chalandritsa. The area of the municipality is 582.93 sq.km. and the population, according to the 2011 national census, is 8.877 permanent residents.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

The Municipality of Erymanthos, consisting of many villages, is characterized as a mainly rural area and the local economy is mainly based on the primary production sector, especially agriculture and livestock. However, there are many restaurants, shops, services, etc., which are part of the local economy and are found to a greater extent in the larger villages. In addition, there is even tourist development in places.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

3. Ratios analysis of Municipalities financial statements

The most important source of information for an organization's activity is the basic accounting statements and that is the balance sheet and the income statement. The purpose of any analyst of these situations is to be able to analyze the past and present course of the organization and draw the most reliable conclusions about its future course. The use of ratios is one of the most widespread and dynamic methods of financial statement analysis of organizations. Ratios analysis is a quantitative method of gaining insight into the liquidity, operating performance, and productivity of a business by analyzing the financial statements.

Ratios are relationships between sizes that are intended to determine the actual position or profitability either of the whole entity or the entire industry in which it operates. Calculating ratios is an extremely informative process. With their help, the unit's performance is measured and the results of its activities are explained. Generally speaking, analyzing the ratios is very important as they draw conclusions about the entity's viability and profitability. They judge the business. Also, it is a very important process for external analysts, as they are informed about the short-term financial situation and liquidity. At this point, it is useful to mention that there are also limitations in ratios analysis. For example, the analysis does not consider the impact of market conditions or inflation. In conclusion ratios analysis takes into account only the quantitative aspect of the business and totally ignores the important qualitative aspects. Moreover, the quality of the financial statements determines the accuracy of the analysis. If the financial statements are manipulated by the business or presented to show a better position than the actual one the results are incorrect.

3.1 Ratios’ categories

With the development of indexes, we attempt to present a complete picture of the financial situation of the study municipalities with more secure conclusions about their course. Indexes have been introduced, with para. 2 of article 165 of L. 3463/2006 and article 267 of L.3852/2010, to evaluate the financial management of OLAs as accompanying elements of the Budget, the Report, and the Balance Sheet. The financial indicators of OLAs are

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” calculated by taking their financial figures from the OLA's Public Accounting Office, and the Financial Statements (Balance Sheet, Income Statement).

For the purposes of evaluating the financial data of the Local Authorities, and in accordance with the above institutional framework, indicators and the manner in which they are exported have been established in Article 6 of the Ministerial Decision 74712/2010 Ministry of Interior Decentralization and E-Government (Government Gazette 2043 / Issue B / 30-12-2010) titled as: "Determining the type, content of data, time and method of updating the database" Financial data of municipalities”, of evaluation indicators as well as any other necessary details ". According to the above, for the purpose of our study, we export ratios for the five municipalities of the Achaia prefecture based on the Municipal Board's Approved Financial Statements of the Municipal Sector Accounting Plan implemented by the above Municipalities for the fiscal years 2014 to 2018. The data were requested from the aforementioned Municipalities and given since they are published.

At this point, it should be mentioned that Municipalities have not yet approved and publish their Balance Sheet and Income Statement for the fiscal year 2019.

Especially for the case of the Municipality of Patra, further analysis is attempted regarding Cash Reports’ data for the five financial years 2014 to 2018. Relevant data were not available for use from the other four Municipalities of the study since they are not published.

3.1.1 Ratios analysis based on the financial statements (BS, Income Statement) The following ratios were used: Financial statement structure ratios These ratios indicate the percentage share of each account in the assets and liabilities shown in each year's Balance Sheet and Income Statement.

From this category we will use the following ratios:

푪풖풓풓풆풏풕 풂풔풔풆풕풔 Current assets to total assets ratio (CATA) = =% (1) 푻풐풕풂풍 풂풔풔풆풕풔

in combination to

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

푭풊풙풆풅 풂풔풔풆풕풔 Fixed assets to total assets ratio = =%(2) 푻풐풕풂풍 풂풔풔풆풕풔

These ratios illustrate the proportion of funds allocated to these categories of commitment. The optimum point between the Current Assets and the Fixed Assets depends on the business unit of the entity. The current assets account sums up the balances of Inventories, Requirements ,and Cash accounts. Current assets also are actively involved in liquidity. The statutory areas of competence of municipalities require the commitment of significant funds in Fixed Assets such as Infrastructure, Buildings, Technical Works, Roads, Machinery ,and Equipment. So it is next that Municipalities will be designated as Fixed Capital-intensive financial units.

푪풖풓풓풆풏풕 풂풔풔풆풕풔−풔풉풐풓풕 풕풆풓풎 풍풊풂풃풊풍풊풕풊풆풔 Net Working Capital to Current assets = =%(3) 푪풖풓풓풆풏풕 풂풔풔풆풕풔

This is a financial sustainability ratio indicating the ability of an entity to finance its current assets with its working capital. It can be computed by dividing the company’s working capital by its current assets. When evaluating an entity with this ratio, the principles which are followed are the following:

When its value is equal to one (1), the whole of the Liabilities comprises shareholders' equity and long term liabilities. When the index is equal to zero (0), Working Capital is non-existent. When the index value is negative we cannot interpret the ratio reliably.

Normative for the working capital to current assets ratio is the value of 0.1 and higher. A high value indicates a good level of financial sustainability and the ability to actively operate even in the absence of access to the short-term loan capital and external source of finance. And vice versa, low ratio values witness a significant financial dependence from creditors’ funds. Summing up everything said, the lower the dependence on the loan capital, the more financially sustainable the entity is.

Financial structure and leverage ratios

Indicators of this category refer to the Capital Structure and solvency of the entity, i.e. the ability of the entity to meet its long-term liabilities. They provide information on the extent to which the Asset has been financed by foreign capital. They are also called Loan Indicators.

The ratios that we will use are the following:

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

푺풉풐풓풕 풕풆풓풎 풍풊풂풃풊풍풊풕풊풆풔+푳풐풏품 풕풆풓풎 풍풊풂풃풊풍풊풕풊풆풔 Debt ratio(Total liabilities to total assets)= =%(4) 푻풐풕풂풍 풂풔풔풆풕풔

Total debt to total assets is a leverage ratio that defines the total amount of debt relative to assets. This metric enables comparisons of leverage to be made across different companies. The higher the ratio, the higher the degree of leverage (DoL) and, consequently, financial risk. The total debt to total assets is a broad ratio that analyzes a company's balance sheet by including long-term and short-term debt (borrowings maturing within one year), as well as all assets both tangible and intangible. A ratio equal to 1 reveals that all assets were financed with foreign capital. The higher the ratio, the greater the pressure to pay interest and repay the capital.

푺풉풂풓풆풉풐풍풅풆풓풔 푬풒풖풊풕풚 Equity to debt Ratio = = %(5) 푻풐풕풂풍 푳풊풂풃풊풍풊풕풊풆풔

The ratio indicates the degree of economic self-sufficiency of the entity. It is most often used to gauge the extent to which a company is taking on debt as a means of leveraging its assets. The shareholders' equity account includes and summarizes the accounts of share capital (AI), Revaluation reserves-Investment Grants (AII), Reserves (AIII), and results carried forward (AIV). Total liabilities include Long term and short term liabilities. Long term liabilities include bank loans that expire after the end of each subsequent financial year. Short term liabilities include the liabilities that expire within the next fiscal year. Suppliers, creditors, tax liabilities, fees, insurance agencies, long-term liabilities paid in the following year, and checks payable are shown here. A high ratio indicates that Equity over time overcomes the Total Liabilities to third parties, which gives the entity the character of solvency as an economic unit.

푺풉풂풓풆풉풐풍풅풆풓풔 풆풒풖풊풕풚 Equity to fixed assets ratio= =%(6) 푭풊풙풆풅 풂풔풔풆풕풔

The “equity to fixed assets” ratio indicates the relative exposure of shareholders and debt holders to the fixed assets of the entity. Thus, if the “equity to fixed assets” ratio is 0.9, this means that shareholders have financed 90% of the fixed assets of the company. The remaining 10% as well as current assets and investments have all been financed by debt holders. The “equity to fixed assets” ratio is an index of creditworthiness which bankers and other lenders use widely to understand how much of the fixed assets of the firm are already financed by debt. A firm with a low “equity to fixed assets” ratio has not utilized

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” its credit to the maximum and therefore extension of credit is relatively secure. This is because, in the event of liquidation, the creditors have the first claim over the proceeds recovered from the assets. On the other hand, a high value of the ratio is not a very good sign for the shareholders because it means that the organization does not use credit to its advantage. Based on empirical evidence, certain analysts have concluded that companies that have an “equity to fixed assets” ratio of less than 0.65 are very risky bets.

푻풐풕풂풍 풂풔풔풆풕풔 Assets to Shareholder Equity= =%(7) 푺풉풂풓풆풉풐풌풅풆풓풔 풆풒풖풊풕풚 Assets to Shareholder Equity ratio is a measurement of financial leverage. It shows the relationship between the total assets of the company to the amount on which equity holders have a claim.

A ratio above 2 shows that the company funds more assets by issuing debt than by equity, so it could be a risky investment. A low ratio could is more conservative. The Assets to Shareholder Equity ratio moves in conjunction with the debt to equity ratio.

Liquidity ratios

Liquidity ratios determine the organization’s short-term financial position and measure the ability to pay Short-Term Liabilities (suppliers, tax payable, short-term loans, customer advances, etc.) with current assets. The ability of the organization to repay its liabilities depends on the size of the working capital (Current Assets less Short Term Liabilities). Through the liquidity ratios we find out about the current financial status of the organization, the availability of it, whether it can meet its daily requirements, whether it is able to pay its short-term liabilities, and whether it has sufficient Working Capital.

In this study we use the following liquidity ratios:

푻풐풕풂풍 풄풖풓풓풆풏풕 풂풔풔풆풕풔 Current ratio= =%(8) 푺풉풐풓풕 풕풆풓풎 풍풊풂풃풊풍풊풕풊풆풔

The current ratio is a measure of liquidity of an entity. It measures the ability to pay short term obligations. A high current ratio indicates a positive financial position of the business and illustrates its ability to repay from its liquid assets its short-term liabilities. When this specific ratio is studied it is useful to take under consideration certain other categories that constitute current assets along with their participation percentage in the total current assets. In the case of Municipalities, it is certainly a question of whether they can

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” immediately collect the debts of their citizens due to the financial crisis and their inability to meet their debts to the Municipality.

푪풂풔풉 풊풕풆풎풔 Cash ratio= =%(9) 푪풖풓풓풆풏풕 풍풊풂풃풊풍풊풕풊풆풔

The cash ratio is an indicator of an entity’s liquidity position and measures a company’s ability to meet its current obligations using only cash and cash equivalents. A ratio equal to 1 reveals that the entity has exactly the same amount of current liabilities as it does cash and cash equivalents pay off those debts. If a company's cash ratio is less than 1, there are more current liabilities than cash and cash equivalents and that means insufficient cash to pay off short-term debt. A cash ratio greater than 1 shows that the company has more cash and cash equivalents than current liabilities so it has the ability to cover all short-term debt and still have cash remaining. On the other hand a higher cash ratio does not necessarily reflect a company's strong performance, especially if it is significantly greater than the industry norm. In this case may indicate that the entity is inefficient in the utilization of cash or not maximizing the potential benefit of low-cost loans. For example instead of investing in profitable projects, it's letting money stagnate in cash items. It may also suggest that a company is worried about future profitability and is accumulating a protective capital cushion.

Profitability ratios

Profitability ratios determine the profitability of an entity in terms of its earnings potential, ability to manage it, and the degree of success or failure of the entity at a given time. In this study we use the following ratios:

푶풑풆풓풂풕풊풏품 풑풓풐풇풊풕 Return on sales= =%(10) 푵풆풕 풔풂풍풆풔

푵풆풕 풊풏풄풐풎풆 Return on Equity= =%(11) 푻풐풕풂풍 푬풒풖풊풕풚

푵풆풕 풊풏풄풐풎풆 Return on Assets= =%(12) 푻풐풕풂풍 푨풔풔풆풕풔

푮풓풐풔풔 푷풓풐풇풊풕 Gross Profit margin= =%(13) 푵풆풕 풔풂풍풆풔

푵풆풕 풐풑풆풓풂풕풊풏품 풑풓풐풇풊풕 Net Profit margin= =%(14) 푵풆풕 푺풂풍풆풔

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Gross profit margin is a ratio used to assess a company's financial health and business model by revealing the amount of money left over from sales after deducting the cost of goods sold. It shows the operating efficiency of an entity and the price policy that it follows. A high value of the ratio provides positive information about the unit’s profitability. The Net profit margin informs about the profit derived from business activities.

Activity ratios

Activity ratios indicate how efficiently a company is leveraging the assets on its balance sheet, to generate revenues and cash. These ratios are also known as asset management ratios or performance/ efficiency ratios.

In this study the ratio that we will use are the following:

푵풆풕 풔풂풍풆풔 Receivables turnover ratio = =%(15) 푨풗풆풓풂품풆 풐풇 풂풄풄풐풖풏풕 풓풆풄풆풊풗풂풃풍풆풔

The receivables turnover ratio provides information about the efficiency with which a unit collects on its receivables or the credit it had extended to its customers. In other words, measures how many times the organization collects its receivables on average in a year or how many times its receivables are converted to cash in a year. The analysts use the average of the beginning and the ending accounts receivable. A high value of the ratio indicates the efficiency of the collection customer’s debts.

ퟑퟔퟓ Average collection period= (16) 푹풆풄풆풊풗풂풃풍풆풔 풕풖풓풏풐풗풆풓 풓풂풕풊풐

The ratio measures the interval time between the credit sales and the day that the credit is paid off. This time interval indicates the credit policy of the organization. Normally the average collection period should be as low as possible but in the case of the Municipalities, the ratio is usually high due to their credit policy which takes into consideration the current crisis and the citizens’ inability to pay.

푪풐풔풕 풐풇 품풐풐풅풔 풔풐풍풅 Trade creditors to turn over ratio= (17) 푨풗풆풓풂품풆 풉풊품풉 풐풇 풔풉풐풓풕 풕풆풓풎 풍풊풂풃풊풍풊풕풊풆풔

This ratio measures the average number of times an organization pays its creditors over an accounting period. The ratio indicates the short-term liquidity of the entity. A higher

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” payable turnover ratio is undoubtedly more favorable but in the case of the municipalities, bureaucracy must be taken on the account.

ퟑퟔퟓ Average duration of unpaid trade creditors= (18) 푻풓풂풅풆 풄풓풆풅풊풕풐풓풔 풕풐 풕풖풓풏풐풗풆풓 풓풂풕풊풐

The ratio measures the average number of days that creditors remain unpayable. A low value of the rate implies that municipalities' financial position is strong and permits them to pay creditors in decent time intervals. On the other hand, a high value of the ratio may be to other non-financial reasons such as understaffing or problems in the organizational structure.

푵풆풕 풔풂풍풆풔 Asset Turnover= (19) 푨풗풆풓풂품풆푻풐풕풂풍 풂풔풔풆풕풔

The higher the ratio the better the organization performs since it is generating more revenue per assets.

푵풆풕 풔풂풍풆풔 Owners’ Equity Turnover= (20) 푨풗풆풓풂품풆푻풐풕풂풍 풆풒풖풊풕풚

The ratio measures the proportion of the sales of the organization to the equity of its shareholders. The aim of the calculation is to decide how effectively the equity is used to generate revenue.

푵풆풕 풔풂풍풆풔 Fixed assets Turnover= (21) 푨풗풆풓풂품풆푭풊풙풆풅 풂풔풔풆풕풔

The FAT ratio shows how effectively an organization uses the substantial fixed assets to produce revenue.

Ratios per capita (citizens)

These ratios evaluate the financial situation of the organizations and inform them of the extent to which they are responding to their social mission to meet the present and future needs of citizens, and in particular in the case of municipalities in the population of their territorial jurisdiction. In this study we use the following ratios:

푳풐풏품 풕풆풓풎 풍풊풂풃풊풍풊풕풊풆풔 Long term liabilities per capita= (22) 풏풖풎풃풆풓 풐풇 풄풊풕풊풛풆풏풔

푻풐풕풂풍 풂풔풔풆풕풔 Total assets per capita= (23) 풏풖풎풃풆풓 풐풇 풄풊풕풊풛풆풏풔

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

The ratios informs about the amount of long term liabilities and total assets each citizen incurs.

3.2 Analysis of the accounting statements of the five Municipalities of the Prefecture of Achaia

This section is the empirical part of the study, which calculates and evaluates the financial ratios mentioned above for the five municipalities of Achaia regarding the fiscal years 2014-2018. Sources of data were the basic financial statements of the municipalities, as published, posted on their official websites, and the website "diavgeia.gov.gr". The financial data of the Municipalities of Kalavryta and Erymanthos for the fiscal year 2018 were not available since these organizations had not yet prepared their Balance sheets and Income Statements for the year 2018. The presentation of Local Government Organizations follows the order in which these organizations are presented, according to a census conducted by the Greek Statistical Authority in 2011.

3.2.1 Municipality of Patra The following Table3.1.exhibits the aforementioned indices of the Municipality of Patra, for the five year period from 2014 to 2018 after processing its financial statements presented in Appendix B Tables B.1 and B.2.

Municipality of Patra Financial statement structure ratios 2014 2015 2016 2017 2018 Current assets to Current assets = 0,30 0,33 0,35 0,37 0,39 total assets ratio total assets Fixed assets to total Fixed assets = 0,70 0,66 0,65 0,63 0,60 assets ratio total assets Net Working Capital Current assets -short term liabilities = 0,79 0,79 0,79 0,81 0,81 to Current assets Current assets Financial structure and leverage ratios 2014 2015 2016 2017 2018 Total liabilities to Total liabilities = 0,19 0,18 0,17 0,15 0,17 total assets Total assets Shareholders equity Equity to debt Ratio = 4,17 4,59 5,05 5,75 5,04 Total liabilities Equity to fixed assets Shareholders equity = 1,16 1,24 1,29 1,35 1,39 ratio Fixed assets Assets to = Total assets 1,24 1,22 1,20 1,17 1,20

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Shareholder Equity Shareholders equity (Equity Multiplier) Liquidity ratios 2014 2015 2016 2017 2018 Total current assets Current ratio = 4,79 4,68 4,79 5,28 5,26 Short term liabilities Cash items Cash ratio = 2,70 2,76 3,60 4,22 4,25 Current liabilities Profitability ratios 2014 2015 2016 2017 2018 Operatig profit Return on sales = 0,07 0,10 0,07 0,09 0,07 Net sales+Other operating income Net profit Return on Equity = 0,04 0,06 0,04 0,05 0,04 Average Total Equity Return on assets Net profit = 0,04 0,05 0,04 0,04 0,03 Total assets Gross Profit Gross Profit margin = 0,23 0,27 0,34 0,27 0,28 Net sales+Other operating income Net operating profit Net profit margin = 0,07 0,10 0,07 0,09 0,07 Net sales+Other operating income Activity ratios 2014 2015 2016 2017 2018 Receivables turnover Net sales = 4,05 3,85 4,77 5,73 6,19 ratio Average of account receivables Average collection 365 = 90,04 94,91 76,58 63,68 58,92 period Receivables turnover ratio Trade creditors to Cost of goods sold = 13,10 10,73 8,32 7,05 6,56 turn over ratio Average high of short term liabilities Average duration of 365 unpaid trade = 27,87 34,01 43,88 51,79 55,61 creditors Trade creditors to turn over ratio Net sales Asset turnover ratio = 0,52 0,51 0,52 0,46 0,45 Average total assets Owner's Equity Net sales = 0,65 0,62 0,63 0,54 0,53 turnover ratio Average total equity Fixed assets turnover Net sales = 0,75 0,75 0,80 0,72 0,73 ratio Average fixed assets Ratios per capita 2014 2015 2016 2017 2018 Long term liabilities Long term liabilities = 89,25 80,18 70,89 61,40 49,52 per capita Number of citizens Total assets per Total assets = 723,69 785,93 822,93 849,31 894,08 capita Number of citizens

Table 3 -1:Municipality of Patra-Ratios

We observe that the Municipality does not present prejudice uses. The current to total assets ratio increases and the fixed assets to total asset decreases during the five years. As we mentioned above it is foreseeable for the Municipalities a high fixed assets to total assets ratio because of their statutory role. The networking capital to current assets ratio

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” range high indicating financial sustainability. The debt ratio decreases over time meaning that the organization pays its liabilities and avoids potential financial risks Equity to debt ratio in conjunction with the Equity multiplier implies low financial risk therefore the organization does not face a long-term risk of bankruptcy. Capital structure indicators also show that there is no long-term risk of survival since the organization relies primarily on equity.. The studied liquidity ratios are also satisfactory. The cash ratio has an upward trend indicating a positive financial position so there is no short-term financial risk. Profitability ratios fluctuate but are positive so we have a profitable organization. Regarding the repayment of suppliers, we observe that initially fewer days were required but in the case of the municipalities, bureaucracy must be taken on the account. The collection of receivables is delayed in comparison to payments but both indices are satisfactory regarding Municipalities indicating that the Municipality manages properly its payments and receipts. The turnover ratios regarding assets also fluctuate suggesting that the use of assets is not as effective every year. The fact that long term liabilities per capita decreases whilst total assets per capita increases are also positive.

3.2.2 Municipality of Agialeia The Balance Sheet and the Income Statement for the Municipality of Aigialeia are presented in Appendix B Table B.3(fiscal years 2014-2018). Table 3.2 below presents the financial indicators based on the aforementioned data.

Municipality of Agialeia Financial statement structure ratios 2014 2015 2016 2017 2018 Current Current assets assets to total = 0,07 0,08 0,09 0,09 0,09 assets ratio total assets Fixed assets Fixed assets to total assets = 0,92 0,92 0,91 0,91 0,91 ratio total assets Net Working Current assets -short term liabilities Capital to = 0,56 0,65 0,71 0,74 0,83 Current Current assets assets Financial structure and leverage ratios 2014 2015 2016 2017 2018 Total Total liabilities liabilities to = 0,08 0,07 0,07 0,07 0,06 total assets Total assets Equity to Shareholders equity = 11,85 12,65 12,61 13,53 16,22 debt Ratio Total liabilities Equity to Shareholders equity fixed assets = 1,00 1,01 1,02 1,02 1,03 ratio Fixed assets Assets to = Total assets 1,08 1,08 1,08 1,08 1,06

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Shareholder Equity Shareholders equity (Equity Multiplier) Liquidity ratios 2014 2015 2016 2017 2018 Total current assets Current ratio = 2,27 2,87 3,47 3,87 5,85 Short term liabilities Cash items Cash ratio = 0,35 0,74 1,03 1,25 1,75 Current liabilities Profitability ratios 2014 2015 2016 2017 2018 Return on Operatig profit = 0,01 0,01 0,00 0,00 -0,06 sales Net sales+Other operating profit Return on Net profit = 0,00 0,00 0,00 0,00 0,00 Equity Total Equity Return on Net profit = 0,00 0,00 0,00 0,00 0,00 assets Total assets Gross Profit Gross Profit = 0,01 0,04 0,01 0,09 -0,14 margin Net sales+Other operating income Net profit Net operating profit = 0,01 0,01 0,00 0,00 -0,06 margin Net sales+Other operating income Activity ratios 2014 2015 2016 2017 2018 Receivables Net sales turnover = 1,00 1,12 1,04 0,96 0,98 ratio Average of account receivables Average 365 collection = 365,27 326,15 350,35 380,69 370,85 period Receivables turnover ratio Trade Cost of goods sold creditors to = 3,76 4,12 4,56 5,55 8,63 turn over Average high of short term liabilities ratio Average 365 duration of = 97,20 88,69 80,04 65,82 42,29 unpaid trade Trade creditors to turn over ratio creditors Asset Net sales turnover = 0,05 0,06 0,06 0,05 0,05 ratio Average total assets Owner's Net sales Equity = 0,06 0,06 0,06 0,06 0,06 turnover Average total equity ratio Fixed assets Net sales turnover = 0,06 0,06 0,06 0,06 0,06 ratio Average fixed assets Ratios per capita 2014 2015 2016 2017 2018 Long term Long term liabilities liabilities per = 146,36 139,47 143,18 135,44 123,77 capita Number of citizens Total assets Total assets = 3.107,76 3.055,59 3.006,77 2.834,54 2.764,74 per capita Number of citizens

Table 3-2:Ratios-Municipality of Aigialeia

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Fixed assets are a large percentage of assets as it was expected. We observe that the profitability ratios decrease over the five years and finally, the Municipality has a loss- making use for 2018.This results in negative profitability indices that year. In 2018 the revenue declines and the cost of goods sold increases. During the five years period ROE and ROA are equal to zero so there is no substantial capability of the organization to generate profits. The assets turnover ratio fluctuates from 0.05 to 0.06 and in 2018 is 0.05.In addition, the fixed assets turnover ratio is 0.06 throughout the five years period. Perhaps the organization could manage its assets better to generate revenue. The same applies to owners’ equity turnover ratio. The average collection period is quite high and increases and this implies that the Municipality has to manage its collections better. On the other hand, the average duration of unpaid trade creditors decreases so the Municipality pays its debts sooner than it collects. The liquidity ratios are rising indicating that the Municipality has not short-term financial bankruptcy problem . Also, the debt ratio is low and decreases ,and in combination with the other financial and leverage structure ratios we conclude that there is no long-term bankruptcy danger. 3.2.3 Municipality of West Achaia

The Balance Sheet and the Income Statement for the Municipality of West Achaia are presented in Appendix B Table B.4 (fiscal years 2014-2018).Table 3.3 below presents the financial indicators based on the aforementioned data.

Municipality of West Achaia Financial statement structure ratios 2014 2015 2016 2017 2018 Current assets to Current assets = 0,06 0,09 0,12 0,11 0,09 total assets ratio total assets Fixed assets to Fixed assets = 0,93 0,90 0,87 0,88 0,90 total assets ratio total assets Net Working Current assets -short term liabilities Capital to = -0,12 0,49 0,77 0,68 0,74 Current assets Current assets Financial structure and leverage ratios 2014 2015 2016 2017 2018 Total liabilities to Total liabilities = 0,16 0,13 0,14 0,13 0,11 total assets Total assets Equity to debt Shareholders equity = 7,50 10,54 10,14 9,60 12,34 Ratio Total liabilities Equity to fixed Shareholders equity = 0,91 0,97 0,99 0,99 0,99 assets ratio Fixed assets Assets to Total assets Shareholder = 1,19 1,15 1,16 1,15 1,13 Equity (Equity Shareholders equity Multiplier)

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Liquidity ratios 2014 2015 2016 2017 2018 Total current assets Current ratio = 0,89 1,97 4,27 3,17 3,87 Short term liabilities Cash items Cash ratio = 0,18 0,95 2,25 1,54 1,25 Current liabilities Profitability ratios 2014 2015 2016 2017 2018 Operatig profit Return on sales = -0,34 0,31 0,12 0,02 0,03 Net sales+Other operating income Net profit Return on Equity = -0,05 0,05 0,02 0,00 0,01 Total Equity Net profit Return on assets = -0,04 0,05 0,02 0,00 0,01 Total assets Gross Profit Gross Profit = 0,03 0,19 0,12 0,05 0,08 margin Net sales+Other operating income Net profit Net operating profit = -0,34 0,31 0,12 0,02 0,03 margin Net sales+Other operating income Activity ratios 2014 2015 2016 2017 2018 Receivables Net sales = 2,98 3,62 3,97 3,94 5,44 turnover ratio Average of account receivables Average 365 = 122,35 100,86 92,05 92,73 67,06 collection period Receivables turnover ratio Trade creditors Cost of goods sold = 1,86 2,16 4,18 6,39 9,51 to turn over ratio Average high of short term liabilities Average 365 duration of = 196,62 169,10 87,43 57,15 38,37 unpaid trade Trade creditors to turn over ratio creditors Asset turnover Net sales = 0,13 0,15 0,16 0,17 0,24 ratio Average total assets Owner's Equity Net sales = 0,15 0,17 0,18 0,20 0,28 turnover ratio Average total equity Fixed assets Net sales = 0,14 0,16 0,18 0,19 0,27 turnover ratio Average fixed assets Ratios per capita 2014 2015 2016 2017 2018 Long term Long term liabilities liabilities per = 88,75 75,61 124,20 117,49 97,84 capita Number of citizens Total assets per Total assets = 1.942,18 1.958,41 1.965,66 1.907,06 1.806,82 capita Number of citizens

TABLE 3-3:Ratios-Municipality of West Achaia

The financial structure and leverage ratios highlight the advantage of the Municipality to rely on funds, to expand its activities and thus is faced with bankruptcy conditions, neither short-term nor long-term as we can conclude taking also into account the capital structure. As we observe the Municipality in 2014 shows a loss but then succeeds to improve its indices. The debt ratio decreases and the major portion of its assets are

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

financed by stockholders equity. The current ratio increases while the cash ratio increases till 2016 and then is declining but generally lies on a satisfactory level. As far as ROE and ROA are concerned it seems that 2015 is the best year. The same applies to profit margin ratios which decrease after 2015 but are positive and give the Municipality the ability to create surpluses. The organization after 2015 collects its receivables in a longer time than it pays its debts so it has to manage its collections in a better way. The owners’ equity turnover ratio increases and this means that the Municipality uses more efficiently its equity to generate revenue. The same applies to the fixed assets turnover ratio. Also, the Long term liabilities and total assets per capita are satisfactory.

3.2.4 Municipality of Kalavryta The Balance Sheet and the Income Statement for the Municipality of Kalavryta are presented in Appendix B Table B.5(fiscal years 2014-2017.The financial data for the year 2018 were not available since the Municipality had not prepared its BS and IS) . Table 3.4 below presents the financial indicators based on the aforementioned data.

Municipality of Kalvryta Financial statement structure ratios 2014 2015 2016 2017 2018 Current assets to total Current assets = 0,09 0,09 0,09 0,08 assets ratio total assets Fixed assets to total Fixed assets = 0,91 0,91 0,90 0,91 assets ratio total assets Net Working Capital to Current assets -short term liabilities = 0,72 0,69 0,80 0,61 Current assets Current assets Financial structure and leverage ratios 2014 2015 2016 2017 2018 Total liabilities to total Total liabilities = 0,06 0,07 0,06 0,08 assets Total assets Shareholders equity Equity to debt Ratio = 14,84 13,89 15,42 12,00 Total liabilities Equity to fixed assets Shareholders equity = 1,03 1,03 1,04 1,01 ratio Fixed assets Assets to Shareholder Total assets Equity (Equity = 1,07 1,07 1,06 1,08 Multiplier) Shareholders equity Liquidity ratios 2014 2015 2016 2017 2018 Total current assets Current ratio = 3,56 3,27 4,98 2,59 Short term liabilities Cash items Cash ratio = 1,99 1,83 2,51 1,48 Current liabilities Profitability ratios 2014 2015 2016 2017 2018

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Operatig profit Return on sales = -0,01 -0,21 -0,07 -0,14 Net sales+Other operating income Net profit Return on Equity = 0,00 -0,03 -0,01 -0,02 Total Equity Return on assets = Net profit 0,00 -0,02 -0,01 -0,02 Total Assets Gross Profit Gross Profit margin = 0,63 0,61 0,58 0,54 Net sales+Other operating income Net operating profit Net profit margin = -0,01 -0,21 -0,07 -0,14 Net sales+Other operating income Activity ratios 2014 2015 2016 2017 2018 Receivables turnover Net sales = 3,41 3,37 2,79 3,08 ratio Average of account receivables Average collection 365 = 107,18 108,37 131,04 118,68 period Receivables turnover ratio Trade creditors to turn Cost of goods sold = 2,58 2,39 2,60 2,68 over ratio Average high of short term liabilities Average duration of 365 = 141,29 152,73 140,20 136,16 unpaid trade creditors Trade creditors to turn over ratio Net sales Asset turnover ratio = 0,11 0,12 0,11 0,11 Average total assets Owner's Equity Net sales = 0,12 0,12 0,12 0,12 turnover ratio Average total equity Fixed assets turnover Net sales = 0,12 0,13 0,12 0,12 ratio Average fixed assets Ratios per capita 2014 2015 2016 2017 2018 Long term liabilities per Long term liabilities = 169,82 163,82 157,55 151,02 capita Number of citizens Total assets Total assets per capita = 4.904,63 4.651,21 4.346,17 4.105,02 Number of citizens

TABLE 3- 4:Ratios-Municipality of Kalavryta

As we can observe the larger percentage of assets concerns the fixed assets. The Net Working Capital to current assets ratio although declining except 2016, is positive and implies short term financial health. The debt ratio is in satisfactory levels and the other financial and leverage ratios in Table 3.4 lead to the conclusion that the Municipality relies on its funds to operate and provide services to the citizens. Through the capital structure indices, we also conclude that the Municipality relies mainly on its funds. Consequently, as long as the proportion of equity is maintained at satisfactory levels, the long-term survival of the organism is ensured. The liquidity ratios also show that the organization is in a position to cover adequately its current liabilities and pay back creditors but they have

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

a downward trend except 2016. The profitability ratios are negative –except Gross Profit Margin- and the picture presented by them is not satisfactory since the Municipality has losses therefore it has not the capacity to create profitable uses mainly due to its high cost of administrative and selling expenses. The effectiveness of the assets is low but the collection of receivables is faster than the payment of liabilities. Nevertheless, the Municipality has no danger of bankruptcy.

3.2.5 Municipality of Erymanthos The Balance Sheet and the Income Statement for the Municipality of Erymanthos are presented in Appendix B Table B.6(fiscal years 2014-2017. The financial data for the year 2018 were not available since the Municipality had not prepared its BS and IS).Table 3.5 below presents the financial indicators based on the aforementioned data.

Municipality of Erymanthos Financial statement structure ratios 2014 2015 2016 2017 2018 Current assets to total Current assets = 0,10 0,10 0,11 0,12 assets ratio Total assets Fixed assets to total Fixed assets = 0,88 0,88 0,88 0,87 assets ratio total assets Net Working Capital to Current assets -short term liabilities = 0,53 0,50 0,60 0,63 Current assets Current assets Financial structure and leverage ratios 2014 2015 2016 2017 2018 Total liabilities to total Long term liabilities +short term liabilities = 0,09 0,09 0,07 0,06 assets Total assets Shareholders equity Equity to debt Ratio = 10,22 10,70 13,64 14,34 Total liabilities Equity to fixed assets Shareholders equity = 1,04 1,04 1,06 1,07 ratio Fixed assets Assets to Shareholder Total assets Equity (Equity = 1,10 1,09 1,08 1,07 Multiplier) Shareholders equity Liquidity ratios 2014 2015 2016 2017 2018 Total current assets Current ratio = 2,11 1,98 2,52 2,70 Short term liabilities Cash items Cash ratio = 1,02 0,89 1,24 1,11 Current liabilities Profitability ratios 2014 2015 2016 2017 2018 Operatig profit Return on sales = -0,02 0,02 -0,02 -0,06 Net sales Net profit Return on Equity = 0,00 0,00 0,00 -0,01 Total Equity Return on Assets = Net profit 0,00 0,00 0,00 -0,01

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Total Assets Gross Profit Gross Profit margin = 0,14 0,07 0,09 0,00 Net sales+Other operating income Net operating profit Net profit margin = -0,02 0,02 -0,02 -0,06 Net sales+Other operating income Activity ratios 2014 2015 2016 2017 2018 Receivables turnover Net sales = 3,16 3,02 3,09 2,36 ratio Average of account receivables Average collection 365 = 115,50 120,89 118,17 154,62 period Receivables turnover ratio Trade creditors to turn Cost of goods sold = 2,17 2,27 2,53 2,68 over ratio Average high of short term liabilities Average duration of 365 = 168,12 160,70 144,02 135,95 unpaid trade creditors Trade creditors to turn over ratio Net sales Asset turnover ratio = 0,13 0,13 0,13 0,13 Average total assets Owner's Equity Net sales = 0,15 0,14 0,14 0,14 turnover ratio Average total equity Fixed assets turnover Net sales = 0,15 0,15 0,15 0,14 ratio Average fixed assets Ratios per capita 2014 2015 2016 2017 2018 Long term liabilities per Long term liabilities = 116,96 104,32 91,22 73,34 capita Number of citizens Total assets Total assets per capita = 2.870,65 2.978,21 2.950,38 3.006,51 Number of citizens

TABLE 3- 5:Ratios-Municipality of Erymanthos

As we can see the current assets are a small percentage of total assets. Even so, the Municipality’s Net Working capital to Current assets ratio value indicates a good level of financial sustainability. Debt ratio is low and decreases as we are moving from 2014 to 2017 indicating in combination with the Equity Multiplier that the greater portion of the Municipality’s assets is funded by equity. The other two ratios of this group lead us to the same conclusion. Liquidity ratios also show that the organization has the ability to pay its short-term liabilities. The fiscal year 2015 cash ratio is below 1 but increases the two next years. On the other hand profitability, ratios raise concerns for the financial health of the Municipality. We observe that all financial years except 2015 have losses. The ROE and ROA ratios are zero or negative resulting in no ability for profitable uses. The above leads us to the conclusion of poor managerial practices. The average collection period fluctuates and increases in 2017 while the average duration of unpaid trade creditors decreases and in 2017 is less than that of debtors. Thus, we conclude that the Municipality was repaying its

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” obligations faster in relation to the speed of collection of its receivables. Table B.6 in Appendix B shows that the Municipality creates losses. Nevertheless there is no bankruptcy danger neither short term nor long term and it is encouraging that long term liabilities per capita are falling while total assets per capita are rising.

3.2.6 Application of the Altman’s z-score for the five Municipalities The Z-score bankruptcy forecast was created by New York University Professor of Finance Edward I. Altman. The Altman z-score estimates the probability of bankruptcy of public traded manufacturing companies based on five financial ratios. For almost four decades, the Z-score model has been recognized as a financial distress tool, leading in areas such as credit risk analysis, objective analysis of mergers and acquisitions and turnaround management. For public firms, the Z-score formula is: Z=1.2X1 +1.4X2+ 3.3X3 + 0.6X4 + 1.0X5 (24) where X1=working capital/total assets, X2=retained earnings/total assets,X3=EBIT/total assets, X4=market value of equity/book value of total liabilities, and X5=sales/total assets. To interpret the model we consider that if Z > 2.99 the entity is in safe zone, if Z< 1.81 the entity lies in the distress zone and if 1.81 <=Z <=2.99 the entity lies on a grey zone. For private firms, the Z-score modified formula is: Z=6.56X1+ 3.26X2+ 6.72X3 + 1.05X4 (25) where X1=working capital/total assets, X2=retained earnings/total assets, X3=EBIT/total assets, and X4=net worth/total liabilities. To interpret the revised model we use the following criteria: If Z>2.60 the entity is in a safe zone, if Z<1.10 the entity is in a distress zone, and if 1,10 <=Z <=2,60 is in grey zone. We use the revised Z-score formula to evaluate the credit risk of the five organizations as they do not trade on a stock exchange. The results obtained from the processing of their data are summarized in the Table 3.6 below.

Municipalities Year ZONE 2014 2015 2016 2017 2018 Patra 6,22 7,07 8,16 8,92 9,57 Safe Aigialeia 12,64 13,48 13,5 13,92 16,76 Safe West Achaia 7,38 10,97 10,24 9,61 12,14 Safe Kalavryta 16,47 15,33 17,79 13,51 null Safe

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Municipalities. Case study: Municipality of Patra”

Erymanthos 10,74 11,2 13,46 14,34 null Safe

TABLE 3- 6:Z-score

It is therefore observed that the incorporation of the Altman model in the accounting statements of the Local Government Organizations leads us to the exact same conclusions, which we reached through the analysis of these statements using the financial indicators. As we can see the five Municipalities are in the safe zone and have a high credit rating.

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Municipalities. Case study: Municipality of Patra”

4. Municipality of Patra-Revenue and expenses analysis

4.1 Ratios analysis based on cash reports In this study, we will attempt a further analysis of the Municipality of Patra (case study) regarding revenue and expenses.

For the financial analysis of the Municipality, we have relied on the data of the Municipal Cash Reports for the last five years (2014-2018) derived from the operation of their Public Accounting. The purpose of the financial analysis of the above items is to study the relationships between the financial data in these statements at the given time as well as to study them over time, that is, the measurement of past performance by year and its present condition. We aim to collect information on the annual economic activity of the Municipality, to identify and evaluate their actual situation and profitability.

Specifically, we seek to conclude the composition of its expenditure and revenue, and the evolution of the structure of the Expenditure Paid by each Expenditure Category and the Revenue Received by each Revenue Category, with Code Numbers (as single-digit or double-digit growth) of the executed Municipal Budgets for the financial years concerned. The ratios that we will study are the following:

A)Ratios of revenue’s and expenses’ structure:

Ordinary revenue to total revenue: It is an autonomy index. It shows the percentage participation of regular revenues in the total revenues of the Municipality. The high value of the ratio indicates a high degree of autonomy and independence from other sources of income such as grants for investment purposes. The Municipality relies on this type of revenue which is more predictable therefore better planning can be achieved.

At the same time, however, it may mean that the Municipality is not active in finding other resources such as extraordinary income or income from co-financed community funds that it could use.

Extraordinary revenue to total revenue: The index shows the percentage share of extraordinary revenue in the total Municipality revenue. The low value of the ratio indicates that the municipality supports its activities in controlled sources of revenue and it is stable. As the ratio increases the Municipality autonomy decreases since depending on

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” revenue sources that it cannot control undermines its independence. On the other hand, it could mean that even so, the organization is very active in finding co-financing sources to develop.

Municipal own revenue to total revenue: The index exhibits the percentage share of its own revenue in the total revenue. The low value of the ratio implies that the municipality’s support is based on grants and loans so there is no independence. The higher the index, the greater the independence of the Municipality as it relies on its own revenues rather than grants or loans.

Total grants to total revenue: This is a dependence index. This indicator shows the percentage participation of the total grants in the total revenues of the Municipality. The high value of the ratio means that the municipality is heavily dependent on financing and has limited autonomy. This in times of recession, where financing may be reduced and dispose of other purposes, the municipality faces difficulty to keep up with its planning. On the other hand, a low index could mean the municipality's inability to absorb funding.

POE recognized for the first time to total revenue: This number indicates the percentage of the total revenue of previous financial years certified first in total municipality's revenue. The higher the value of this index, the higher it is the requirement of the municipality in debts of previous years that will be certified for the first time in the current use. A high index means, if examined on the basis of budget data, the municipality's ability to locate and verify taxable material that had escaped (missing revenue) and if examined on the basis of the financial report details the municipality's ability to collect revenue previous years which are certified first. A low value of the ratio is not satisfactory since it declares failure to collect.

Previous years’ revenue (certified but uncollected) to total revenue: This number indicates the percentage share of total uncollected earned income of previous financial years in the total revenues of the municipality. The higher is the value of this number the more the uncollectible receivables of the municipality from the confirmed income of previous financial years. A low value of the ratio is not satisfactory since it declares failure to collect. Low collection rate means the transfer of no receivables from year to year and danger to lead them to the statute of limitations and never be collected. To avoid this the municipality has to proceed to compulsory collection measures according to laws.

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Cash Balance to Total Revenue: This number indicates the percentage of the cash balance in the total revenue of the municipality. The higher the value of this index, the higher the number of cash available to the municipality which can be used for repayment any obligations. The high value of this number can also mean that the municipality will transfer a lot of outstanding liabilities for the next year so its availability is high.

Operating expenses to total expenses: The ratio shows the percentage of the municipality’s operating expenses compared to total expenses. A high value means that the operating expenses are great therefore the possibility for high-value investments is limited.

Total investments to total expenses: The ratio shows the percentage of money intended for investments. A low value shows limited investment potential and thus less infrastructure action.

POE expenses to total expenses: This is an obligation indicator index. A low value of the ratio shows that the municipality creates obligations that it cannot pay thus repays its debts with little efficiency and they transfer from year to year.

B)Residential income/expenses ratios

Indicators of this category have a disadvantage because the census is taken every 10 years. When the calculation of the ratios refers to years that are close to the year of the population count, we can say that their results are correct concerning them as much we are moving away from the time of the census, although this is not always the case because the next census may not have much difference from its previous.

Total revenue to population: This ratio shows the average income per capita. The higher the ratio the greater the amount of money that the Municipality can allocate to offer citizens better services.

Total own revenue to population: This ratio, shows the amount of municipalities’ own revenue , which is collected by the citizens and returned to them in the form of services and investments projects.

Reciprocal revenue per capita: This indicator shows how much, on average, each citizen is charged with reciprocal income.

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Municipalities. Case study: Municipality of Patra”

Total expenses to population: This ratio shows the average per capita expenses. The high value of the ratio demonstrates that the Municipality allocates more resources per capita for its actions and offers more services to citizens.

Operating expenses to population: This number indicates the amount per inhabitant (citizen) required for the operation of the municipality. A high price tag means increased costs operation of the municipality or increased provision of services.

Investment expenses to population: This number indicates the amount per inhabitant (citizen) which the municipality dedicates to investments. High price range means an increased amount for investment costs.

4.2 Earned Revenue for the fiscal years 2014-2018 of the Municipality of Patra The following Table4.1 presents a summary of collected revenue for the years 2014-2018 of the Municipality of Patra according to data derived from its financial segment and its annual financial report.

REVENUE 2014 2015 2016 2017 2018

0 Ordinary

1 Revenue from immovable assets 669.628,11 528.220,29 538.015,01 509.86 7,85 776.370,70

2 Revenue from movable assets 273.421,17 225.861,62 283.029,83 684.579,70 691.968,08

Revenue from contributory fees 3 and royalties 18.156.422,51 17.683.231,40 22.876.386,77 22.055.495,70 21.846.899,13

Revenue from other fees, royalties 4 and services 3.413.833,58 3.281.772,22 3.693.615,87 4.015.110,28 3.667.520,36

5 Taxes and levies. 2.314.064,57 2.367.840,89 3.679.114,53 3.209.126,53 3.253.493,61

6 Grants for operating expenses 51.605.676,05 50.886.241,81 51.227.232,71 43.835.448,06 44.068.161,96

7 Other ordinary revenue 894.078,05 790.250,90 760.597,24 554.224,76 752.062,35

SUBTOTAL 77.327.124,04 75.763.419,13 83.057.991,96 74.863.852,88 75.056.476,19

1 Extraordinary

Ιncome from the sale of movable 11 and immovable property 9.000,24 26.586,22 4.321,44 11.646,50 23.205,33

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Extraordinary grants to cover 12 operating costs 4.112.359,26 258.563,54 62.453,69 1.957.463,72 4.888.363,53

13 Investment grants 8.998.308,25 12.129.082,08 9.432.080,52 5.121.700,04 5.432.225,79

14 Donations - inheritances – bequests 10.000,00 28.655,20 161.964,32 1.811,26 4.019,85

15 Surcharges - fines – fees 1.362.016,75 1.280.332,55 1.339.253,70 1.426.154,70 1.596.581,66

16 Other extraordinary income 127.556,04 81.241,79 83.704,56 64.845,11 99.994,38

SUBTOTAL 14.619.240,54 13.804.461,38 11.083.778,23 8.583.621,33 12.044.390,54

Previous years’ revenue 2 confirmed for the first time (POE)

21 Ordinary previous years revenue 191.158,51 272.377,89 550.196,68 427.083,15 632.073,22

Extraordinary previous years 22 revenue 22.685,24 19.800,50 25.037,76 80.823,24 56.394,39

SUBTOTAL 213.843,75 292.178,39 575.234,44 507.906,39 688.467,61

Receipts from loans and receivables from previous years’ 3 revenue(POE)

31 Receipts from loans 0,00 63.900,00 349.342,00 564.817,92 0,00

Receivables from previous years revenue (confirmed in previous 32 years) 1.880.701,63 1.009.322,81 617.654,02 1.986.996,66 2.263.800,71

SUBTOTAL 1.880.701,63 1.073.222,81 966.996,02 2.551.814,58 2.263.800,71

Collections on behalf of the state 4 and cash returns

41 Collections on behalf of the state 10.747.099,24 9.799.782,56 10.341.427,91 9.636.894,19

42 Cash returns 203.637,38 268.045,83 315.041,76 367.755,57

SUBTOTAL 10.950.736,62 10.067.828,39 10.656.469,67 10.004.649,76 10.637.300,66

5 Cash balance

51 Previous year's Cash belance 17.453.259,95 25.438.649,41 32.315.661,73 45.322.082,21 52.275.525,11

17.453.259,95 25.438.649,41 32.315.661,73 45.322.082,21 52.275.525,11

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TOTAL 122.444.906,53 126.439.759,51 138.656.132,05 141.833.927,15 152.965.960,82

Table 4- 1: Municipality of Patra-Earned Revenue for the fiscal years 2014-2018

The following Graph 4.1 presents the total revenue for the Municipality for the year 2014 to 2018. As we can observe the revenue increases.

180.000.000

160.000.000

140.000.000

120.000.000

100.000.000 YEARS 80.000.000 TOTAL REVENUE 60.000.000

40.000.000

20.000.000

0 2014 2015 2016 2017 2018

Graph 4- 1: Total revenue (2014-2018)Municipality of Patra

The following graphs 4.2 to 4.6 show the percentage composition of revenues per category for the years 2014 to 2018.

We ascertain that category 0 which is ordinary revenue and includes grants for operating expenses constitutes the largest source of income.

Extraordinary revenue fluctuates and investment grants after 2015 which is their highest point are reduced. Graphs 4.2 to 4.6 show the percentage of each revenue category in total revenue each year.

The largest percentage in the composition of income belongs to category 0 which is the regular income while the next high percentage concerns category 5 i.e. the cash balance which increases by year. The percentage of extraordinary income ranges from 6 to 12% with the lowest point in 2017 and higher in 2014 mainly due to extraordinary grants. Categories 2 and 3 concerning POE constitute a relatively small percentage of revenue.

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Municipalities. Case study: Municipality of Patra”

Revenue 2014

14% Categ.0 9% Categ.1 2% Categ.2 0% Categ.3 12% 63% Categ.4 Categ.5

Graph 4- 2:2014-Revenue category and percentage

Revenue 2015

20% Categ.0 Categ.1 Categ.2 8% Categ.3 1% 60% Categ.4 0% 11% Categ.5

Graph 4- 3:2015-Revenue category and percentage

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Municipalities. Case study: Municipality of Patra”

Revenue 2016

23% Categ.0 Categ.1 Categ.2 8% Categ.3 1% 60% Categ.4 0% 8% Categ.5

Graph 4- 4: 2016-Revenue category and percentage

Revenue 2017

Categ.0 32% Categ.1 Categ.2

53% Categ.3 Categ.4 7% Categ.5

2% 6% 0%

Graph 4- 5: 2017-Revenue category and percentage

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Municipalities. Case study: Municipality of Patra”

Revenue 2018

Categ.0 34% Categ.1

49% Categ.2 Categ.3 Categ.4 Categ.5 7%

2% 8% 0%

Graph 4- 6: 2018-Revenue category and percentage

4.3 Expenses of the Municipality of Patra for the fiscal years 2014-2018 The following Table 4.2 presents the expenses of the Municipality of Patra for the fiscal years 2014-2018 according its annual cash reports.

CODE EXPENSES 2014 2015 2016 2017 2018 NUMBER Personnel remuneration and 60 costs 25.675.421,02 24.636.488,40 24.250.535,10 25.477.496,60 26.548.907,22 Elected remuneration and third parties amenities and 61,62 payments 7.579.213,95 7.355.615,94 8.978.483,10 8.779.238,93 8.894.334,81 Taxes,fees and other general 63,64 expenses 1.560.366,01 1.702.349,48 1.395.807,98 2.474.552,12 2.991.987,16 Loans payments (Capital & 651 interest) 1.277.922,85 1.241.631,23 1.225.909,73 1.212.491,42 1.197.453,99 66 Consumables expenitture 2.231.338,98 1.618.958,03 1.807.044,57 2.263.095,57 2.066.220,90 Transferd payments to third 67,68 parties and other expenses 35.342.999,90 34.872.784,37 32.646.253,21 29.800.743,87 30.509.704,02 81 Previous years oblications 184.634,15 1.310.753,25 966.173,26 1.077.302,62 2.660.729,07 82,85 Other returns and provisions 10.847.378,48 9.656.942,13 11.689.836,18 9.727.356,52 10.377.988,95 Subsidized payments for 83 previous years obligations 2.645.735,00 0,00 0,00 566.329,98 623.948,60

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Municipalities. Case study: Municipality of Patra”

71 Fixed Assets acquisitions 463.528,91 658.236,97 1.380.726,26 871.334,94 2.289.979,99 73 Investment projects 7.639.206,02 9.680.510,06 7.068.754,69 5.406.437,49 2.651.106,44 74 Studies 129.952,78 95.939,27 94.258,35 278.673,39 5.913,34 Participations in companies' 75 capital 470.000,00 330.000,00 332.500,00 130.000,00 130.000,00 Investment Loans' payments 652 (Capital & interest) 958.861,07 963.888,65 1.497.767,41 1.493.348,59 1.492.042,82 9111 Reserves 0,00 0,00 0,00 0,00 0,00 TOTAL 97.006.559,12 94.124.097,78 93.334.049,84 89.558.402,04 92.440.317,31 Cash balance 25.438.649,41 32.315.661,73 45.322.082,21 52.275.525,11 60.525.643,51 Table 4- 2: Municipality of Patra-Expenses for the fiscal years 2014-2018

Graphs 4.7 and 4.8 below present the total expenditure and the cash balance respectively of the examined fiscal years. We can observe that the fiscal policy applied is in the direction of reducing expenditures and increasing the cash balance.

Graphs 4.9 to 4.13 present the composition of expenditure. We can see that the largest percentage concerns personnel remuneration and costs, and transfer payments to third parties. Investment projects constitute a small percentage of expenditure.

120.000.000

100.000.000

80.000.000

60.000.000

40.000.000

20.000.000

0 2014 2015 2016 2017 2018 Graph 4- 7:Total expenditure 2014-2018

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Municipalities. Case study: Municipality of Patra”

70.000.000

60.000.000

50.000.000

40.000.000

30.000.000

20.000.000

10.000.000

0 2014 2015 2016 2017 2018

Graph 4- 8:Cash balance 2014-2018

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Municipalities. Case study: Municipality of Patra”

Expenses 2014

Personnel remuneration and costs Elected remuneration and third parties amenities and payments Taxes,fees and other general 1% expenses 0% 1% Loans payments (Capital & 1% interest) 3% 8% Consumables expenitture 26% Transferd payments to third 11% parties and other expenses Previous years oblications 0% Other returns and provisions

8% Subsidiazied payments for previous years obligations 2% Fixed Assets acquisitions 36% 1% 2% Investment projects

Studies

Participations in companies' capital Investment Loans' payments (Capital & interest)

Graph 4- 9:2014-Composition and percentage of expenses

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Municipalities. Case study: Municipality of Patra”

Expenses 2015

Personnel remuneration and costs Elected remuneration and third 0% parties amenities and payments 0% 1% Taxes,fees and other general expenses Loans payments (Capital & 1% 10% 0% interest) 26% Consumables expenitture

10% Transferd payments to third parties and other expenses 2% Previous years oblications

Other returns and provisions 8%

Subsidiazied payments for 2% previous years obligations 37% 1% Fixed Assets acquisitions 2%

Investment projects

Studies

Participations in companies' capital

Graph 4- 10: 2015-Composition and percentage of expenses

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Municipalities. Case study: Municipality of Patra”

Expenses 2016

Personnel remuneration and costs Elected remuneration and third parties amenities and payments 0% 0% 2% Taxes,fees and other general expenses 1% Loans payments (Capital & 0% 8% interest)

26% Consumables expenitture

13% Transferd payments to third parties and other expenses 1% Previous years oblications

Other returns and provisions 10%

Subsidiazied payments for previous years obligations 1% 35% 1% Fixed Assets acquisitions 2% Investment projects

Studies

Participations in companies' capital

Graph 4- 11: 2016-Composition and percentage of expenses

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Municipalities. Case study: Municipality of Patra”

Expenses 2017

Personnel remuneration and costs Elected remuneration and third 0% parties amenities and payments 0% 2% Taxes,fees and other general 1% expenses 1% 6% Loans payments (Capital & interest) Consumables expenitture 28% 11% Transferd payments to third 1% parties and other expenses Previous years oblications

Other returns and provisions

10% Subsidiazied payments for previous years obligations 33% 3% Fixed Assets acquisitions

1% 3% Investment projects

Studies

Participations in companies' capital

Graph 4- 12: 2017-Composition and percentage of expenses

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Expenses 2018

Personnel remuneration and costs Elected remuneration and third parties amenities and payments 0% 2% Taxes,fees and other general 0% 1% 2% expenses 3% Loans payments (Capital & interest) Consumables expenitture 11% 29%

Transferd payments to third 3% parties and other expenses Previous years oblications

Other returns and provisions

10% Subsidiazied payments for 33% previous years obligations 3% Fixed Assets acquisitions

1% 2% Investment projects

Studies

Participations in companies' capital

Graph 4- 13: 2018-Composition and percentage of expenses

4.4 Revenue and expenses structure Ratios of the Municipality of Patra Table A.4 in Appendix A shows the amounts of income and expenses of the Municipality of Patra for the fiscal years 2014-2018 taking into account their sources. Based on these amounts we extract the data of Table 4.3 below concerning the revenue and expenses structure ratios.

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Municipalities. Case study: Municipality of Patra”

Revenue and expenses structure ratios Ratios 2014 2015 2016 2017 2018 Ordinary Revenue 0,67 0,66 0,69 0,71 0,71 Total revenue Extraordinary revenue 0,24 0,26 0,23 0,22 0,22 Total revenue Own revenue 0,24 0,22 0,25 0,25 0,23 Total revenue Grants 0,53 0,50 0,44 0,36 0,36 Total revenue P.O.E 1st 0,00 0,00 0,00 0,00 0,00 Total revenue P.O.E from previous years 0,02 0,01 0,00 0,01 0,01 Total revenue Cash balance 0,14 0,20 0,23 0,32 0,34 Total revenue Operating expenses 0,90 0,87 0,87 0,91 0,92 Total expenses Investments 0,10 0,13 0,11 0,08 0,06 Total expenses P.O.E.expenses 0,00 0,02 0,01 0,01 0,03 Total expenses Total revenue 572,22 590,88 647,97 662,82 714,85 per capita Total expenses 389,41 388,61 384,68 368,10 375,64 per capita Reciprocal revenue 85,53 82,83 107,81 105,07 102,60 per capita Own revenue 137,00 128,96 161,75 163,69 166,67 per capita Operating expenses 348,74 338,30 335,55 334,14 344,28 per capita Investments 40,67 50,31 41,48 31,25 23,73 per capita

Table 4- 3: Revenue and expenses structure ratios

We observe that the ordinary revenue constitute the largest percentage of the Municipality’s revenue. This indicates the possibility of good planning since a large

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra” percentage of its revenues is controllable. The low percentage of extraordinary revenue leads to the same conclusion. The value of the ratio Own revenue to total revenue in combination with that of the ratio regarding grants implies that the municipality’s support is based on grants and the organization depends on State’s funding to operate and offer citizens services that add value to the city and their lives. At this point, it is useful to remind that its own revenue consists mostly of reciprocal revenue and the ordinary revenue consists mostly of grants. In times of recession where state grants are reduced, finding the necessary resources to operate and provide services becomes increasingly difficult. Previous years’ revenue constitute a percentage close to zero which leads to the conclusion of failure to collect. Cash balance ratio increases indicating healthy financial condition.

The data from the above table also show that the largest percentage of expenses concerns operating expenses whilst investment expenses percentage range decreasing from 0.13 to 0.06.The ratio’s low value indicates limited investment potential. The reciprocal revenue per capita and own revenue per capita increase and these could mean that the Municipality offers more and better services so charges citizens more money, while investments per capita percentage decreases which is something foreseeable when investment grants reduce .

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Municipalities. Case study: Municipality of Patra”

5. Conclusions

The evaluation of Municipalities’ financial condition is not an unambiguous procedure since Municipalities' purpose is not to generate profit as private firms do, but to provide high- quality services to its citizens.

In addition the Municipalities operate under different circumstances regarding the area’s characteristics for example mountainous or flat, unemployment, and the number of citizens so it is difficult to compare organizations that perform in a more or less heterogeneous environment . Therefore we cannot unbiased assume that a Municipality performs better than another. However, we can tell if a Municipality has a healthy or not financial performance under particular financial situations based on financial ratios.

In the present assignment, we examined the financial situation of the five Municipality of Achaia Prefecture under the difficult economic environment that the recent global financial crisis brought.

The analysis shows that the Municipalities rely on their own funds and evolve and continue their activities through them. They have managed to be autonomous organizations despite the adversities created by the structural changes under the implementation of the Kallikrates program and the economic crisis that hit hard Greece.

The Municipalities also should be more active in order to use their assets more efficiently. As it appears from the previous analysis, the use of assets was not very effective and did not participate in increasing profitability. In this way, they can create higher yields and surpluses which will facilitate the healthy longevity of the entities.

This is even more imperative now that the pandemic of covid-19 threatens with a new recession even greater than the previous one and the social role of Local Authorities is crucial in many levels since the first degree of self-government is the closest to the citizen institution.

Circular n.2/30551/21.7.2020 of the State’s General Account Office entitled “Preparation of the General Government Budget for the year 2021" shows that the result of the consolidated budget for local government in the year 2021 will be -143 million euros.

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Municipalities. Case study: Municipality of Patra”

It is a fact that a large part of the resources of the municipalities come from the state. Now, with the provision for a deficit of so many millions of euros, each municipality must learn to operate as a company that will have a dual purpose: a) to generate revenue using all the means at its disposal such as the exploitation of real estate and land, the creation energy communities, waste management, etc., and b) the creation of multiple benefits for society at a social and economic level. Each municipality can be a profitable business with shareholders the citizens themselves.

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

References

Theodorou I., 2019 Municipalities’ Revenue, Municipalities’ Expenses Nomotelia, Accessed at: www.nomotelia.gr [Accessed 17 Jan.2020]. Dimosnet.gr. 2020. Δήμοςnet. [online] Available at: [Accessed 17 Jan 2020]. Investments 10th Edition - Bodie-Kane-Marcus (2014) Financial Statement Analysis 11th Edition - Subramanyam (2014) Service, M. (2020). A decade on from the financial crisis: Key data. [online] European Parliamentary Research Service Blog. Available at: https://epthinktank.eu/2019/10/21/a- decade-on-from-the-financial-crisis-key-data/ [Accessed 18 Jan. 2020]. Statistics.gr. (2020). The Greek Economy - ELSTAT. [online] Available at: http://www.statistics.gr/en/the-greek-economy [Accessed 18 Jan. 2020]. OECD (2018), OECD Economic Surveys: Greece 2018, OECD Publishing, Paris, https://doi.org/10.1787/eco_surveys-grc-2018-en. Managementstudyguide.com. (2020). Equity to Fixed Assets Ratio - Meaning, Assumptions and Interpretation. [online] Available at: https://www.managementstudyguide.com/equity-to-fixed-assets-ratio.htm [Accessed 8 Mar. 2020]. Ycharts.com. (2020). Assets to Shareholder Equity Definition. [online] Available at: https://ycharts.com/glossary/terms/assets_to_shareholder_equity [Accessed 8 Mar. 2020]. WallStreetMojo. 2020. Limitations Of Ratio Analysis | Top 10 Financial Ratio Limitations. [online] Available at: [Accessed 8 July 2020]. Longdom.org. 2020. [online] Available at: [Accessed 16 July 2020]. Ec.europa.eu. 2020. [online] Available at: [Accessed 23 July 2020]. En.wikipedia.org. 2020. Economy Of Greece. [online] Available at: [Accessed 24 July 2020]. E-patras.gr. 2020. Η Πόλη - Patra. [online] Available at: [Accessed 27 July 2020].

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Appendix A: “Types/categories of Municipalities expenses and revenue”

TABLE A- 1: Types of Municipalities’ revenues.

TYPES OF MUNICIPALITIES' REVENUES (Own processing, Source : Joint Ministerial Decision 55905/29-7-2019)

BUDGET GROUP & DESCRIPTION OF REVENUES CHAPTERS

0 ORDINARY REVENUES

01 INCOME FROM IMMOVABLE PROPERTY (RENTALS AND REVENUES FROM THE USE OF MUNICIPAL LANDSCAPES

02 INCOME FROM MOVABLE PROPERTY (Interest income)

03 REVENUES FROM CONTRIBUTARY FEES AND RIGHTS (Cleaning and lighting fees, water supply and irrigation services, sewage services)

04 REVENUES FROM OTHER FEES, RIGHTS AND SERVICES (Fee on Real Estate property, fee on restaurants' gross revenues et.c)

05 INCOME FROM TAXES AND LEVIES

06 STATE GRANTS FOR OPERATING EXPENSES (Κ.Α.P)

07 OTHER ORDINARY REVENUES (Advertising fees)

1 EXTRAORDINARY REVENUES (EXCEPTIONAL)

11 REVENUES FROM PROPERTY DISPOSALS

12 EXCEPTIONAL GRANTS FOR OPERATING EXPENSES COVERAGE

13 GRANTS FOR INVESTMENTS

14 DONATIONS-INHERITANCES

15 FINES, PENALTIES, SURCHARGES, ADMINISTRATIVE FEES

16 OTHER EXCEPTIONAL REVENUES

2 PREVIOUS YEARS' REVENUES (POE) RECOGNIZED FOR THE FIRST TIME WITHIN THE CURRENT YEAR

21 ORDINARY POE REVENUES

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

22 EXCEPTIONAL POE REVENUES

3 RECEIPTS FROM LOANS AND RECEIVABLES FROM PREVIOUS YEARS' REVENUES (POE)

31 RECEIPTS FROM LOANS

32 RECEIVABLES FROM PREVIOUS YEARS' (POE) RECOGNIZED REVENUES (CLEANING AND LIGHTING FEES)

4 COLLECTIONS ON BEHALF OF THE STATE AND CASH RETURNS

41 COLLECTIONS ON BEHALF OF THE STATE.

42 CASH RETURNS

43 COLLECTIONS TO BE ATTRIBUTED TO THIRD PARTIES

5 CASH BALANCE

51 CASH BALANCE BROUGT FORWARD FROM PREVIOUS YEAR

TABLE A- 2: Type of Municipalities’ expenditure.

TYPE OF MUNICIPALITIES EXPENDITURE (Own processing, Source : Joint Ministerial Decision 55905/29-7-2019)

BUDGET GROUP & DESCRIPTION OF EXPENDITURE CHAPTERS

6 CHAPTER A: OPERATING CURRENT'S YEAR EXPENDITURE

60 PERSONNEL REMUNERATION AND COSTS

61 ELECTED REMUNERATION AND THIRD PARTIES PAYMENTS (Lawyers, engineers, accountants, artists et.c)

62 THIRD PARTIES' AMENITIES (Telecommunications, Rents, Insurance fees, Repairs and maintenance of assets, Electricity, Water, Cleaning expenses)

63 TAXES-FEES

64 MISCALLENEOUS GENERAL EXPENSES (Expenses for transport, travelling expenses, Public relations expenses, expenses for the participation in conferences , celebrations' expenses, subscriptions, contributions, publication expenses, expenses for the organization of cultural and athletic events, expenses for the operation of municipal summer camps, soup kitchens et.c)

65 LOANS' PAYMENTS (Capital & interest)

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

66 CONSUMABLES' EXPENDITURE (Stationery, books, purchases of hygiene and cleaning materials, accessories and spare parts for machinery, matierials for buildings and technical works maintenance).

67 TRANSFER PAYMENTS TO THIRD PARTIES (Obligatory payments to municipal N.P.D.D, school committes, welfare allowances, obligatory contributions to Associations and others and optional grants to cultural and sports associations, to N.P.D.D et.c)

68 OTHER EXPENSES (N.P.D.I garanties' forfeiture and other warranties)

7 CHAPTER B: INVESTMENTS (ANALYZED BY DEPARTMENT)

71 BUILDINGS, TECHNICAL WORKS AND FIXED ASSETS ACQUISITION

73 INVESTMENT PROJECTS

74 STUDIES, RESEARCHES AND SPECIALIZED EXPENDITURE

75 PARTICIPATIONS IN COMPANIES' CAPITAL

8 CHAPTER C: PREVIOUS YEAR'S (P.O.E) EXPENSES AND OTHER RETURNS AND PROVISIONS

81 PREVIOUS YEARS' OBLIGATIONS REPAYMENTS

82 OTHER RETURNS

83 SUBSIDIAZED PAYMENTS FOR PREVIOUS YEAR'S OBLIGATIONS

85 PROVISIONS FOR BAD/DOUBTFULL DEBTS RECOGNIZED AS POE WITHIN THE CURRENT YEAR.

9 CHAPTER D: RESERVE

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

TABLE A- 3: Main Categories of Municipal Revenues.

MAIN CATEGORIES OF MUNICIPAL REVENUES (Own Processing, Source : Theodorou, 2020, Cited in Nomotelia)

ORDINARY EXTRAORDINARY

TYPE OF GENERAL CONTRIBUTORY SPECIALIZED (FREE) REVENUE (reciprocal)

1.MUNICIPAL OWN REVENUES

CLEANING FEE ×

LIGHTING FEE × (TAX)

FEE FOR THE × USE OF COMMUNAL SPACES V FEE ON × ADVERTISEME NTS FEE ON REAL HALF HALF FOR ESTATE (85%)* INFRASTRUCTURE PROJECTS, PURCHASE OF LAND AND REDEMPTIONS FOR COMPULSORY PURCHASES

FEE ON × HOTELS', RESTAURANTS ' ET.C GROSS REVENUES (TAX) FEES AND × RIGHTS ON THE USE OF MUNICIPAL LAND, INFRASTRUCT URE AND SERVICES -FEE ON THE × USE OF WATERWORKS POTENTIAL × FEES AND LEVIES FOR IMPROVEMEN TS IN THE QUALITY OF CITIZENS' LIFE TAX ON × ELECTRIFIED SPACES

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

RIGHTS ON OPERATIONAL EXPENSES FOR THE USE OF MUNICIPAL CEMETERIES RIGHTS ON × × THE USE OF MUNICIPAL WATER SOURCES (% ON COMPANY'S ANNUAL SALES ) FINE ON × VIOLATIONS OF ROAD CODES AND VIOLATIONS OF LD.805/71 AND FEES ON MUNICIPAL PARKING OWNERS' × CASH CONTRIBUTIO N FOR THE EXPANSION OF THE CITY'S PLAN REVENUES ON × RENTAL OF IMMOVABLE PROPERTY DIVESTMENT × OF PROPERTY MISCELLANEO × US FINES AND PENALTIES OTHER × × × × REVENUES DONATIOS, × INHERITANCES ET.C INTEREST × INCOME 2. LOANS × ×

3. STATE × × 푆퐴푇퐴 GRANTS (ORDINARY)( K.A.P) (EXCEPTIONA × L FOR OPERATIONAL EXPENDITURE ) AND GRANTS FROM EUROPEAN UNION. Note: 15% of the collected fee is deposited in a special account in Consignment Consignment Deposits and Loans Fund and attributed to municipalities through K.A.P

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

TABLE A- 4:Revenue and expenditure types and amounts of the Municipality of Patra (2014-2018)

Municipality of Patra REVENUE 2014 2015 2016 2017 2018

Total revenue 122.444.908,53 126.439.759,51 138.656.132,05 141.833.927,15 152.965.960,82 Ordinary 81.621.537,88 83.894.086,13 95.619.858,86 100.704.370,20 108.333.497,05 Extraordinary 29.872.634,03 32.413.944,99 32.030.461,52 30.560.089,27 33.995.163,11 Municipality's Own revenue 29.316.283,16 27.595.494,28 34.612.891,73 35.027.765,44 35.664.383,77 Grants 64.716.345,56 63.273.887,43 60.721.766,92 50.914.611,82 54.388.751,28 P.O.E.1st 213.843,75 292.178,39 575.234,44 507.906,39 688.467,61 Loans receipts 0,00 63.900,00 349.342,00 564.817,92 0,00 Receivables from previous years 1.880.701,63 1.009.322,81 617.654,02 1.986.996,66 2.263.800,71 Cah balance 17.453.259,95 25.438.649,41 32.315.661,73 45.322.082,21 52.275.525,11 Contributory (Reciprocal) 18.302.418,11 17.724.816,21 23.070.551,62 22.483.517,34 21.954.615,48 EXPENSES 2014 2015 2016 2017 2018

Total expenses 83.328.511,49 83.156.402,40 82.316.402,07 78.766.801,51 80.380.570,05 Investments 8.702.687,71 10.764.686,30 8.876.239,30 6.686.445,82 5.076.999,77 P.O.E. Expenses 184.634,15 1.310.753,25 966.173,26 1.077.302,62 2.660.729,07 Other returns 10.847.378,48 9.656.942,13 11.689.836,18 9.727.356,52 10.377.988,95 Operating expenses 74.625.823,78 72.391.716,10 71.801.801,10 71.500.967,10 73.670.965,32 Personel remuneration and costs 25.675.421,02 24.636.488,40 24.250.535,10 25.477.496,60 26.548.907,22

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Appendix B: “Balance Sheets and Income Statements of the examined Municipalities”

TABLE B- 1:Municipality of Patra-Balance sheet (2014-2018)

Municipality of Patra Balance sheet December December December December December 31,2014 31,2015 31,2016 31,2017 31,2018 ASSETS B. ORGANIZATION (FORMATION) EXPENSES 1.Organization (Preliminary) expenses 1.072.252,80 915.370,46 758.488,12 601.605,78 444.723,44 4.Other formation expenses 301.312,59 386.530,32 334.386,66 252.757,87 706.459,12 1.373.565,39 1.301.900,78 1.092.874,78 854.363,65 1.151.182,56

C. FIXED ASSETS II Tangible assets 1.Land 41.535.779,31 41.535.779,31 41.535.779,31 41.535.779,31 41.535.779,31 1a.Squares-Parks -Playgrounds 2.324.486,49 2.355.711,55 2.189.554,02 2.395.624,38 2.218.275,63 1b.Streets-Common pavements 8.641.569,59 7.993.489,50 7.345.622,13 6.729.849,16 17.037.792,58 1c.Sidewalks 339.454,98 432.244,01 411.556,28 792.661,82 901.776,65 2.Mines-Quarries Fields - Plantations - Forests 1.809.811,28 1.809.811,28 1.809.811,28 1.809.811,28 1.809.811,28 3.Buildings and technical works 21.313.780,80 19.728.715,53 18.093.568,89 16.459.798,78 20.382.877,10 3a.Shared building installations 502.649,27 604.764,18 582.170,67 559.577,16 536.983,65 3b.Shared lighting installations 800.783,97 779.618,11 759.087,90 738.557,69 718.038,40 3c.Other permanent sharing facilities 919.170,62 820.132,05 699.275,73 1.054.689,06 915.060,34 4.Machinery - Technical installations and other mechanical equipment 203.251,30 166.810,01 166.250,46 131.049,81 118.642,03 5.Vehicles (Transportation equipment) 802.177,37 412.137,41 771.382,50 640.163,88 2.201.561,65

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

6.Furniture and Fixtures 881.010,45 1.052.054,17 1.307.400,44 1.351.661,21 2.019.700,21 7.Payments on account and tangible assets under construction 18.198.739,37 25.519.177,16 31.685.751,79 33.849.627,19 18.129.368,65 Total tangible assets (CII) 98.272.664,80 103.210.444,27 107.357.211,40 108.048.850,73 108.525.667,48 III Financial Assets 1.Fixed income securities 12.456.614,51 12.756.614,51 13.056.614,51 13.156.614,51 13.256.614,51 minus due doses 41.953,60 41.953,60 41.953,60 41.953,60 41.953,60 depreciation forecasts 3.036.226,31 4.447.938,80 6.656.575,30 6.656.575,30 6.656.575,30 9.378.434,60 8.266.722,11 6.358.085,61 6.458.085,61 6.558.085,61 Total fixed assets (CII+CIII) 107.651.099,40 111.477.166,38 113.715.297,01 114.506.936,34 115.083.753,09

D. CURRENT ASSETS II Receivables (Debtors) 1.Doubtful – contested trade and other receivables (debtors) 52.408.540,53 54.873.339,66 59.709.922,44 64.814.231,22 65.825.508,31 Less: Provision (allowance) for doubtful receivables 34.690.254,85 34.690.254,85 46.525.736,20 53.061.181,83 53.061.181,83 17.718.285,68 20.183.084,81 13.184.186,24 11.753.049,39 12.764.326,48 5.Various receivables (Sundry debtors) 2.152.754,32 2.404.285,34 1.977.995,41 1.582.804,79 955.746,56 6.Advances to account for 2.000,00 5.000,00 5.000,00 7.000,00 6.000,00 19.873.040,00 22.592.370,15 15.167.181,65 13.342.854,18 13.726.073,04

IV Cash at bank and in hand 1.Cash in hand 35.828,61 28.044,75 29.880,83 84.713,48 32.161,98 3.Checking and savings accounts 25.757.598,00 32.632.366,23 45.960.277,47 52.907.161,21 60.627.678,24 25.793.426,61 32.660.410,98 45.990.158,30 52.991.874,69 60.659.840,22

Total current assets (DII+DIV) 45.666.466,61 55.252.781,13 61.157.339,95 66.334.728,87 74.385.913,26

E. PREPAYMENTS AND ACCRUED REVENUES 1.Prepaid Expenses (Deferred charges) 26.942,00 52.781,41 44.735,67 43.400,00 696.200,06 2.Earned Revenues Receivable 139.288,75 90.846,27 84.642,47 0,00 2.160,43

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

166.230,75 143.627,68 129.378,14 43.400,00 698.360,49

TOTAL ASSETS 154.857.362,15 168.175.475,97 176.094.889,88 181.739.428,86 191.319.209,40

EQUITY & LIABILITIES

A. LIABILITIES AND SHAREHOLDERS EQUITY I Capital 75.415.756,53 75.415.756,53 75.415.756,53 75.415.756,53 75.415.756,53 75.415.756,53 75.415.756,53 75.415.756,53 75.415.756,53 75.415.756,53 II Revaluation reserves and Invenstment grants- Fixed assets donations 1.Revaluation reserves of participations and investments 7.839.253,69 6.427.541,20 5.218.904,70 5.218.904,70 5.218.904,70 3.Fixed assets donations 540.000,00 540.000,00 540.000,00 540.000,00 540.000,00 4.Investment Grants for fixed assets 41.403.264,66 47.745.990,87 51.801.443,08 53.015.133,87 52.429.680,33 49.782.518,35 54.713.532,07 57.560.347,78 58.774.038,57 58.188.585,03 III Reserves 3.Extraordinary reserves 15.636,98 15.636,98 15.636,98 15.636,98 15.636,98 15.636,98 15.636,98 15.636,98 15.636,98 15.636,98 IV Retained Earnings (Results carried forward) Retained deficit carried forward -321.897,88 7.941.553,54 14.019.490,46 20.620.348,27 26.007.723,47 -321.897,88 7.941.553,54 14.019.490,46 20.620.348,27 26.007.723,47

Total Equity (AI+AII+AIII+AIV) 124.892.013,98 138.086.479,12 147.011.231,75 154.825.780,35 159.627.702,01

B. PROVISIONS FOR LIABILITIES AND CHARGES 1.Provision for retirement benefits 864.165,55 839.331,30 940.304,18 1.017.458,72 1.170.730,56 2.Other provisions 438.456,83 248.000,76 186.557,00 186.557,00 5.658.919,52 1.302.622,38 1.087.332,06 1.126.861,18 1.204.015,72 6.829.650,08 C. LIABILITIES I Long term liabilities

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

2.Bank Loans 19.098.370,35 17.157.048,93 15.169.679,02 13.137.695,03 10.596.178,45 19.098.370,35 17.157.048,93 15.169.679,02 13.137.695,03 10.596.178,45

II Short -Term Liabilities 1.Accounts Payable (Trade Creditors), Suppliers 1.470.685,06 2.976.019,32 3.977.669,34 3.937.124,89 4.592.497,51 5.Taxes- Duties Payable 541.125,96 462.550,89 738.256,37 825.875,45 918.025,68 6.Social security dues payable 23.622,14 16.751,94 12.142,59 65.470,91 566,54 7.Long term liabilities payable on subsequent use 1.425.439,53 1.941.020,83 1.986.668,47 2.032.841,67 2.043.517,88 8.Other Payables (Sundry Creditors) 1.291.141,42 988.577,69 1.177.074,08 2.173.896,07 1.841.855,62 4.752.014,11 6.384.920,67 7.891.810,85 9.035.208,99 9.396.463,23

Total Liabilities (CI+CII) 23.850.384,46 23.541.969,60 23.061.489,87 22.172.904,02 19.992.641,68

ACCRUED EXPENSES AND DEFERRED D. REVENUES 1.Unearned Revenues (Revenues received in advance) 3.545.923,52 4.072.696,95 3.745.038,82 2.696.728,77 3.854.609,64 2.Accrued expenses 1.266.417,81 1.386.998,24 1.150.268,26 840.000,00 1.014.605,99 4.812.341,33 5.459.695,19 4.895.307,08 3.536.728,77 4.869.215,63

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 154.857.362,15 168.175.475,97 176.094.889,88 181.739.428,86 191.319.209,40

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

TABLE B- 2:Municipality of Patra-Income Statement (2014-2018)

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

PATRA-INCOME STATEMENT (PROFIT AND LOSS ACCOUNT) December December December December December 31,2014 31,2015 31,2016 31,2017 31,2018 I OPERATING RESULTS Net Sales (turnover) 80.561.423,35 81.659.520,78 89.985.079,74 81.711.235,04 83.840.595,51 Cost of Goods Sold (Cost of Sales) 62.239.212,44 59.765.353,09 59.381.308,79 59.651.307,49 60.493.417,44 GROSS Operating results 18.322.210,91 21.894.167,69 30.603.770,95 22.059.927,55 23.347.178,07 Other Operating Income 149.686,53 246.037,22 307.969,90 339.663,18 181.450,72 TOTAL 18.471.897,44 22.140.204,91 30.911.740,85 22.399.590,73 23.528.628,79

Administrative expenses 15.916.637,15 17.791.949,55 16.324.581,35 15.264.791,01 16.527.203,78 Selling expenses 41.516,13 18.600,31 36.435,74 24.463,10 37.606,86 15.958.153,28 17.810.549,86 16.361.017,09 15.289.254,11 16.564.810,64 PARTIAL RESULTS 2.513.744,16 4.329.655,05 14.550.723,76 7.110.336,62 6.963.818,15 Gains from sale of participating interests and investments Interest and similar income 344.623,58 231.982,52 321.430,39 704.296,88 814.351,36

Interest and similar expense -829.008,49 -772.336,59 -1.285.360,03 -723.384,84 -659.435,67 INCOME BEFORE EXTRAORDINARY ITEMS 2.029.359,25 3.789.300,98 13.586.794,12 7.091.248,66 7.118.733,84

II EXTRAORDINARY RESULTS Extraordinary and non-operating revenues 1.535.301,25 1.469.603,06 1.484.896,73 1.457.759,65 1.347.426,54 Ectraordinary profit 50,00 0,00 0,00 0,00 Prior year’s income 2.809.250,44 3.264.395,38 5.497.471,90 6.240.277,13 3.608.074,35 Income of prior years provisions 36.492,21 368.790,30 97.973,46 447,00 216.093,72 4.381.043,90 5.102.838,74 7.080.342,09 7.698.483,78 5.171.594,61 Extraordinary and non-operating expenses 35.298,75 9.898,73 2.541,52 100.093,08 12.545,49 Extraordinary losses 0,00 0,00 0,00 0,00 0,00 Prior years’ expenses 816.048,73 411.664,45 2.382.975,63 869.109,53 561.627,94 Provisions for extra-ordinary liabilities 0,00 0,00 11.835.481,35 6.535.445,63 5.658.919,52 851.347,48 421.563,18 14.220.998,50 7.504.648,24 6.233.092,95

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

OPERATING & EXTRAORDINARY RESULTS 5.559.055,67 8.470.576,54 6.446.137,71 7.285.084,20 6.057.235,50 Depreciation 3.644.678,79 3.440.161,92 3.417.314,66 3.265.481,34 3.166.404,93 Depreciation charged to the operating cost -3.644.678,79 -3.440.161,92 -3.417.314,66 -3.265.481,34 -3.166.404,93 NET RESULTS FOR THE YEAR BEFORE TAXES 5.559.055,67 8.470.576,54 6.446.137,71 7.285.084,20 6.057.235,50

APPROPRIATION ACCOUNT

Net Results for the Year Before Taxes 5.559.055,67 8.470.576,54 6.446.137,71 7.285.084,20 6.057.235,50 Prior Years’ Retained Earnings (Earnings brought forward) -5.556.394,75 -321.897,88 7.941.553,54 14.019.490,46 20.620.348,27 Prior years’ tax differences 0,00 0,00 0,00 -81.290,19 -24.003,47 Reserves for appropriation 0,00 0,00 0,00 0,00 0,00 2.660,92 8.148.678,66 14.387.691,25 21.223.284,47 26.653.580,30 Income tax 324.558,80 207.125,12 368.200,79 602.936,20 645.856,83 Income (profit) for appropriation -321.897,88 7.941.553,54 14.019.490,46 20.620.348,27 26.007.723,47

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

TABLE B- 3:Municipality of Aigialeia-BS and IS (2014-2018)

Municipality of Aigialeia Balance sheet December December December December December 31,2014 31,2015 31,2016 31,2017 31,2018 ASSETS B. ORGANIZATION (FORMATION) EXPENSES 1.Organization (Preliminary) expenses 4.Other formation expenses 980.866,83 541.715,75 272.397,69 141.872,54 114.420,82 980.866,83 541.715,75 272.397,69 141.872,54 114.420,82

C. FIXED ASSETS II Tangible assets 1.Land 48.757.580,42 48.757.580,42 48.772.580,42 48.795.355,02 49.124.799,57 1a.Squares-Parks -Playgrounds 4.267.197,05 3.869.795,11 3.479.733,59 3.090.820,72 2.732.235,42 1b.Streets-Common pavements 11.225.725,54 9.718.581,97 8.446.759,81 7.126.956,51 5.886.946,90 1c.Sidewalks 803.770,60 732.149,52 660.650,63 589.501,55 518.352,47 2.Mines-Quarries Fields - Plantations - Forests 26.579.293,66 26.579.293,66 26.579.293,66 26.579.293,66 26.579.293,66 3.Buildings and technical works 24.529.019,96 22.859.630,17 21.278.139,50 13.944.262,23 12.973.772,36 3a.Shared building installations 5.975,36 4.980,26 3.985,16 2.990,06 14.944,64 3b.Shared lighting installations 477.875,92 388.426,16 310.390,93 238.601,12 172.371,84 3c.Other permanent sharing facilities 3.703.768,34 3.332.459,31 3.026.537,65 1.567.187,01 1.360.415,61 4.Machinery - Technical installations and other mechanical equipment 954.613,07 678.863,21 396.561,55 150.090,39 34.836,27 5.Vehicles (Transportation equipment) 207.293,23 141.126,96 78.947,26 26.311,51 5.966,62

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Municipalities. Case study: Municipality of Patra”

6.Furniture and Fixtures 977.214,11 777.074,31 645.960,39 604.291,13 632.109,50 7.Payments on account and tangible assets under construction 18.122.426,83 19.321.064,19 19.946.126,84 21.006.927,16 20.949.362,09 Total tangible assets (CII) 140.611.754,09 137.161.025,25 133.625.667,39 123.722.588,07 120.985.406,95 III Financial Assets 1.Fixed income securities 2.661.892,30 2.676.892,30 2.695.596,55 4.518.391,16 4.518.391,16 minus due doses 20.000,00 0,00 depreciation forecasts 47.958,47 54.416,06 87.111,21 87.111,21 87.111,21 Other financial assets 15.000,00 0,00 2.433,81 2.433,81 2.433,81 2.608.933,83 2.622.476,24 2.610.919,15 4.433.713,76 4.433.713,76

Total fixed assets (CII+CIII) 143.220.687,92 139.783.501,49 136.234.152,73 128.156.301,83 125.419.120,71

D. CURRENT ASSETS II Receivables (Debtors) 1.Doubtful – contested trade and other receivables (debtors) 8.603.372,35 8.473.751,79 9.240.974,45 8.191.638,26 8.132.594,98 Less: Provision (allowance) for doubtful receivables 300.000,00 700.000,00 700.000,00 700.000,00 700.000,00 8.303.372,35 7.773.751,79 8.540.974,45 7.491.638,26 7.432.594,98 5.Various receivables (Sundry debtors) 0,00 101.124,19 96.896,22 211.593,37 220.063,48 6.Advances to account for 3.000,00 0,00 0,00 0,00 0,00 8.306.372,35 7.874.875,98 8.637.870,67 7.703.231,63 7.652.658,46

IV Cash at bank and in hand 1.Cash in hand 18.287,81 49.041,20 68.133,95 35.266,24 30.426,30 3.Checking and savings accounts 1.668.108,18 3.066.255,57 3.910.177,62 4.179.403,25 3.664.241,29 1.686.395,99 3.115.296,77 3.978.311,57 4.214.669,49 3.694.667,59

Total current assets (DII+DIV) 9.992.768,34 10.990.172,75 12.616.182,24 11.917.901,12 11.347.326,05

E. PREPAYMENTS AND ACCRUED REVENUES 1.Prepaid Expenses (Deferred charges) 77.418,92 165.183,71 173.846,91 98.287,20 101.473,59

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

2.Earned Revenues Receivable 718.686,50 907.575,67 656.850,62 1.049.598,48 900.618,78

796.105,42 1.072.759,38 830.697,53 1.147.885,68 1.002.092,37

TOTAL ASSETS 154.990.428,51 152.388.149,37 149.953.430,19 141.363.961,17 137.882.959,95

MEMO ACCOUNTS 1.Third party asset items 2.Guarantees and real securities 63.971.993,61 47.642.221,64 44.174.028,10 45.582.947,39 50.437.149,68 3.Bilateral agreements

EQUITY & LIABILITIES

A. LIABILITIES AND SHAREHOLDERS EQUITY I Capital 84.321.587,75 84.321.587,75 84.321.587,75 84.321.587,75 85.498.027,71

84.321.587,75 84.321.587,75 84.321.587,75 84.321.587,75 85.498.027,71

II Revaluation reserves and Invenstment grants- Fixed assets donations 1.Revaluation reserves of participations and investments 0,00 0,00 0,00 0,00 0,00 3.Fixed assets donations 223.101,92 223.101,92 223.101,92 252.211,53 772.381,72 4.Investment Grants for fixed assets 57.961.192,69 56.157.418,02 53.821.032,66 46.060.011,60 43.295.976,84

58.184.294,61 56.380.519,94 54.044.134,58 46.312.223,13 44.068.358,56

III Reserves 3.Extraordinary reserves 0,00 0,00 0,00 0,00 0,00

0,00 0,00 0,00 0,00 0,00

IV Retained Earnings (Results carried forward)

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Retained deficit carried forward 427.652,87 523.007,78 567.777,88 598.057,39 33.823,01

427.652,87 523.007,78 567.777,88 598.057,39 33.823,01

Total Equity (AI+AII+AIII+AIV) 142.933.535,23 141.225.115,47 138.933.500,21 131.231.868,27 129.600.209,28

B. PROVISIONS FOR LIABILITIES AND CHARGES 1.Provision for retirement benefits 2.Other provisions

0,00 0,00 0,00 0,00 0,00

C. LIABILITIES I Long term liabilities 2.Bank Loans 7.299.048,65 6.955.811,28 6.303.946,95 5.918.259,51 5.397.195,01 4.Other long-term liabilities 836.531,64 836.531,64 775.362,82

7.299.048,65 6.955.811,28 7.140.478,59 6.754.791,15 6.172.557,83

II Short -Term Liabilities 1.Accounts Payable (Trade Creditors), Suppliers 4.196.328,42 3.646.364,13 3.363.068,27 2.388.139,88 1.164.081,31 5.Taxes- Duties Payable 52.505,99 76.680,66 53.505,93 70.678,10 66.696,35 6.Social security dues payable 3.282,04 71.743,41 69.262,97 82.400,56 71.147,11 7.Long term liabilities payable on subsequent use 326.846,19 271.555,86 271.555,86 271.555,86 399.572,20 8.Other Payables (Sundry Creditors) 178.881,99 140.878,56 122.058,36 130.380,26 114.021,52

4.757.844,63 4.207.222,62 3.879.451,39 2.943.154,66 1.815.518,49

Total Liabilities (CI+CII) 12.056.893,28 11.163.033,90 11.019.929,98 9.697.945,81 7.988.076,32

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

ACCRUED EXPENSES AND DEFERRED D. REVENUES 1.Unearned Revenues (Revenues received in advance) 434.147,09 294.674,35 2.Accrued expenses

0,00 0,00 0,00 434.147,09 294.674,35

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 154.990.428,51 152.388.149,37 149.953.430,19 141.363.961,17 137.882.959,95

MEMO ACCOUNTS 1.Beneficiaries of asset items 2.Guarantees and real securities 63.971.993,61 47.642.221,64 44.174.028,19 45.582.947,39 50.437.149,68 3.Bilateral agreements

AIGIALEIA-INCOME STATEMENT (PROFIT AND LOSS ACCOUNT) December December December December December 31,2014 31,2015 31,2016 31,2017 31,2018 I OPERATING RESULTS Net Sales (turnover) 8.300.189,98 9.054.493,09 8.601.526,26 7.833.898,70 7.556.759,74 Income from taxes-levies-fines-surcharges 1.082.687,25 1.133.276,68 1.342.514,14 1.275.781,14 1.346.691,05 Regular grants from the state budget 8.570.013,34 8.625.673,84 8.632.218,57 10.569.061,90 10.371.695,23 Cost of Goods Sold (Cost of Sales) 17.866.100,22 18.448.190,39 18.439.275,11 18.916.082,15 20.534.807,43 GROSS Operating results 86.790,35 365.253,22 136.983,86 762.659,59 -1.259.661,41 Other Operating Income 1.658.833,23 1.346.917,98 928.728,23 891.166,49 1.488.918,84

TOTAL 1.745.623,58 1.712.171,20 1.065.712,09 1.653.826,08 229.257,43

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Administrative expenses 3.746.046,23 3.810.312,76 3.935.780,05 3.763.591,58 3.593.973,30 Selling expenses 44.867,65 42.366,95 36.114,19 34.675,57 43.882,54 3.790.913,88 3.852.679,71 3.971.894,24 3.798.267,15 3.637.855,84 PARTIAL RESULTS -2.045.290,30 -2.140.508,51 -2.906.182,15 -2.144.441,07 -3.408.598,41 Gains from sale of participating interests and investments Interest and similar income 29.302,26 32.775,81 28.257,47 36.617,14 36.367,71 Forecasts of undervaluation of securities 0,00 6.457,59 Interest and similar expense 415.396,61 360.128,12 380.552,75 310.114,81 288.971,49

INCOME BEFORE EXTRAORDINARY ITEMS -2.431.384,65 -2.474.318,41 -3.258.477,43 -2.417.938,74 -3.661.202,19

I EXTRAORDINARY RESULTS Extraordinary and non-operating revenues 3.192.017,95 2.858.910,45 3.338.672,73 3.241.581,87 3.348.190,13 Ectraordinary profit 315.819,84 64.327,98 600,72 0,00 0,00 Prior year’s income 3.225,77 92.069,83 90.972,72 41.201,86 289.024,86 Income of prior years provisions 3.511.063,56 3.015.308,26 3.430.246,17 3.282.783,73 3.637.214,99 Extraordinary and non-operating expenses 128.360,30 40.570,22 46.532,88 224.754,57 525.767,82 Extraordinary losses 0,00 0,00 0,00 0,00 Prior years’ expenses 861.802,50 405.064,72 80.465,76 609.810,91 14.479,36 Provisions for extra-ordinary liabilities 0,00 0,00 990.162,80 445.634,94 126.998,64 834.565,48 540.247,18

OPERATING & EXTRAORDINARY RESULTS 89.516,11 95.354,91 44.770,10 30.279,51 -564.234,38 Depreciation 4.916.036,38 5.088.517,28 4.960.885,21 3.918.238,76 3.511.129,12 Depreciation charged to the operating cost -4.916.036,38 -5.088.517,28 -4.960.885,21 -3.918.238,76 -3.511.129,12

NET RESULTS FOR THE YEAR BEFORE TAXES 89.516,11 95.354,91 44.770,10 30.279,51 -564.234,38

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

APPROPRIATION ACCOUNT

Net Results for the Year Before Taxes 89.516,11 95.354,91 44.770,10 30.279,51 -564.234,38 Prior Years’ Retained Earnings (Earnings brought forward) 338.136,76 427.652,87 523.007,78 567.777,88 598.057,39 Prior years’ tax differences 0,00 0,00 0,00 Reserves for appropriation 0,00 0,00 0,00 0,00 0,00 427.652,87 523.007,78 567.777,88 598.057,39 33.823,01 Income tax

Income (profit) for appropriation 427.652,87 523.007,78 567.777,88 598.057,39 33.823,01

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Municipalities. Case study: Municipality of Patra”

TABLE B- 4:Municipality of West Achaia-BS and IS 2014-2018

Municipality of West Achaia Balance sheet December December December December December 31,2014 31,2015 31,2016 31,2017 31,2018 ASSETS B. ORGANIZATION (FORMATION) EXPENSES 1.Organization (Preliminary) expenses 0,00 0,00 4.Other formation expenses 763.341,53 664.102,22 640.795,30 606.865,92 560.088,70 763.341,53 664.102,22 640.795,30 606.865,92 560.088,70

C. FIXED ASSETS II Tangible assets 1.Land 17.686.051,21 17.686.051,21 17.712.424,70 17.759.063,70 17.771.063,70 1a.Squares-Parks -Playgrounds 1.187.117,13 1.108.736,95 1.193.431,27 1.108.443,70 1.023.456,13 1b.Streets-Common pavements 6.134.357,92 5.588.425,02 5.929.913,29 5.357.391,16 5.156.685,68 1c.Sidewalks 93.163,95 86.926,39 159.374,51 149.858,38 140.632,93 2.Mines-Quarries Fields - Plantations - Forests 3.420.702,30 3.420.702,30 3.420.702,30 3.420.702,30 3.420.702,30 3.Buildings and technical works 4.280.467,25 3.923.405,68 5.043.755,70 4.649.094,64 4.314.477,83 3a.Shared building installations 773.770,62 708.489,16 626.862,99 544.920,96 462.821,00 3b.Shared lighting installations 215.769,29 193.470,46 175.811,34 157.452,45 146.020,60 3c.Other permanent sharing facilities 3.716.013,20 3.476.421,37 4.865.863,02 4.599.904,69 4.353.146,57 4.Machinery - Technical installations and other mechanical equipment 27.715,82 21.927,28 14.538,93 17.708,43 13.338,89 5.Vehicles (Transportation equipment) 121.810,02 68.322,17 169.979,53 127.670,78 151.152,11 6.Furniture and Fixtures 367.591,04 332.788,54 351.845,12 372.280,00 347.085,95 7.Payments on account and tangible assets under 6.157.834,04 6.680.357,75 2.404.006,72 2.683.592,62 2.279.673,22

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

construction Total tangible assets (CII) 44.182.363,79 43.296.024,28 42.068.509,42 40.948.083,81 39.580.256,91

III Financial Assets 1.Fixed income securities 2.601.470,84 2.601.470,84 2.639.566,49 2.690.711,90 2.690.711,90 minus due doses 75.349,92 75.349,92 24.112,00 0,00 0,00 depreciation forecasts 124.800,48 124.800,48 288.005,79 137.871,65 137.871,65 7.Other financial assets 0,00 0,00 0,00 0,00 0,00 2.401.320,44 2.401.320,44 2.327.448,70 2.552.840,25 2.552.840,25 Total fixed assets (CII+CIII) 46.583.684,23 45.697.344,72 44.395.958,12 43.500.924,06 42.133.097,16

D. CURRENT ASSETS II Receivables (Debtors) 1.Doubtful – contested trade and other receivables (debtors) 3.822.717,05 3.642.052,20 3.739.142,76 3.988.101,16 4.072.902,47 Less: Provision (allowance) for doubtful receivables 1.709.155,40 1.709.155,40 1.709.155,40 1.709.155,40 2.065.155,40 3.Frozen accounts 16.440,22 0,00 0,00 0,00 0,00 2.130.001,87 1.932.896,80 2.029.987,36 2.278.945,76 2.007.747,07 5.Various receivables (Sundry debtors) 0,00 3.840,02 12.632,98 17.435,46 18.003,59 6.Advances to account for 9.000,00 9.000,00 9.000,00 0,00 0,00 2.139.001,87 1.945.736,82 2.051.620,34 2.296.381,22 2.025.750,66

IV Cash at bank and in hand 1.Cash in hand 621,56 1.030,40 53,85 1.307,43 1.096,75 3.Checking and savings accounts 600.667,96 2.115.792,52 3.105.943,30 2.581.901,62 1.331.149,13 601.289,52 2.116.822,92 3.105.997,15 2.583.209,05 1.332.245,88

Total current assets (DII+DIV) 2.740.291,39 4.062.559,74 5.157.617,49 4.879.590,27 3.357.996,54

E. PREPAYMENTS AND ACCRUED REVENUES 1.Prepaid Expenses (Deferred charges) 13.312,00 14.389,00 12.995,50 15.000,00 8.428,92 2.Earned Revenues Receivable 232.820,40 315.662,47 734.805,58 421.013,96 765.868,97

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

3.Other prepayments and accrued revenue 0,00 0,00 0,00 0,00 0,00 246.132,40 330.051,47 747.801,08 436.013,96 774.297,89 TOTAL ASSETS 50.333.449,55 50.754.058,15 50.942.171,99 49.423.394,21 46.825.480,29

MEMO ACCOUNTS 1.Third party asset items 2.Guarantees and real securities 32.933.800,50 28.289.131,18 19.125.138,88 19.929.662,77 19.508.599,72 3.Bilateral agreements 334.507,61 0,00 0,00 0,00 0,00 33.268.308,11 28.289.131,18 19.125.138,88 19.929.662,77 19.508.599,72 EQUITY & LIABILITIES

A. LIABILITIES AND SHAREHOLDERS EQUITY I Capital 21.568.841,29 25.803.962,29 25.803.962,29 25.803.962,29 25.803.962,29 21.568.841,29 25.803.962,29 25.803.962,29 25.803.962,29 25.803.962,29 II Revaluation reserves and Invenstment grants- Fixed assets donations 1.Revaluation reserves of participations and investments 0,00 0,00 0,00 71.371,36 71.371,36 3.Fixed assets donations 0,00 0,00 0,00 20.718.594,77 18.887.094,16 4.Investment Grants for fixed assets 23.344.259,72 22.902.131,41 21.779.432,58 26.639,00 26.639,00 23.344.259,72 22.902.131,41 21.779.432,58 20.816.605,13 18.985.104,52 III Reserves 3.Extraordinary reserves 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 IV Retained Earnings (Results carried forward) Retained deficit carried forward -2.650.273,70 -4.588.507,00 -3.693.196,65 -3.569.213,46 -3.233.057,18 -2.650.273,70 -4.588.507,00 -3.693.196,65 -3.569.213,46 -3.233.057,18

Total Equity (AI+AII+AIII+AIV) 42.262.827,31 44.117.586,70 43.890.198,22 43.051.353,96 41.556.009,63

B. PROVISIONS FOR LIABILITIES AND CHARGES

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

1.Provision for retirement benefits 99.128,45 117.397,12 117.397,12 117.397,12 131.859,41 2.Other provisions 2.333.792,71 2.333.792,71 2.333.792,71 1.533.876,05 1.533.876,05 2.432.921,16 2.451.189,83 2.451.189,83 1.651.273,17 1.665.735,46 C. LIABILITIES I Long term liabilities 2.Bank Loans 2.300.078,85 1.959.595,00 3.218.814,77 3.044.804,93 2.535.726,93 2.300.078,85 1.959.595,00 3.218.814,77 3.044.804,93 2.535.726,93

II Short -Term Liabilities 1.Accounts Payable (Trade Creditors), Suppliers 2.979.226,91 1.832.872,51 648.680,59 1.154.685,00 593.811,14 2.Notes Receivable 0,00 0,00 0,00 0,00 0,00 5.Taxes- Duties Payable 1.205,85 10.361,61 23.634,84 25.571,59 23.304,82 6.Social security dues payable 6.646,53 1.363,09 3.405,40 4.728,12 4.570,55 7.Long term liabilities payable on subsequent use 282.360,54 335.441,14 400.847,45 188.031,86 172.769,87 8.Other Payables (Sundry Creditors) 68.182,40 45.648,27 33.543,75 66.165,26 37.886,84 3.337.622,23 2.225.686,62 1.110.112,03 1.439.181,83 832.343,22

Total Liabilities (CI+CII) 5.637.701,08 4.185.281,62 4.328.926,80 4.483.986,76 3.368.070,15

ACCRUED EXPENSES AND DEFERRED D. REVENUES 1.Unearned Revenues (Revenues received in advance) 0,00 0,00 0,00 0,00 0,00 2.Accrued expenses 0,00 0,00 271.857,14 236.780,32 235.665,05 0,00 0,00 271.857,14 236.780,32 235.665,05

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 50.333.449,55 50.754.058,15 50.942.171,99 49.423.394,21 46.825.480,29

MEMO ACCOUNTS 1.Beneficiaries of asset items 0,00 2.Guarantees and real securities 32.933.800,50 28.289.131,18 19.125.138,88 19.929.662,77 19.508.599,72

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

3.Bilateral agreements 334.507,61 0,00 0,00 0,00 0,00 33.268.308,11 28.289.131,18 19.125.138,88 19.929.662,77 19.508.599,72

INCOME STATEMENT (PROFIT AND LOSS ACCOUNT) December December December December December 31,2014 31,2015 31,2016 31,2017 31,2018 I OPERATING RESULTS Net Sales (turnover) 6.381.039,69 7.391.396,88 7.925.187,28 8.556.876,58 11.761.664,99 Cost of Goods Sold (Cost of Sales) 6.195.737,31 6.004.285,80 6.963.491,13 8.141.387,94 10.805.151,54 GROSS Operating results 185.302,38 1.387.111,08 961.696,15 415.488,64 956.513,45 Other Operating Income 96.533,64 99.752,67 3.700,00 1.800,00 1.339,00 TOTAL 281.836,02 1.486.863,75 965.396,15 417.288,64 957.852,45

Administrative expenses 2.076.309,26 1.995.088,62 1.972.560,86 1.971.353,01 2.214.927,53 Selling expenses 73.835,29 203.729,17 216.652,49 118.370,75 188.531,87 2.150.144,55 2.198.817,79 2.189.213,35 2.089.723,76 2.403.459,40 PARTIAL RESULTS -1.868.308,53 -711.954,04 -1.223.817,20 -1.672.435,12 -1.445.606,95 Gains from sale of participating interests and investments Interest and similar income 7.089,20 16.722,28 31.767,65 31.688,69 35.589,76

Interest and similar expense -128.269,85 -111.914,14 -307.141,64 -145.978,50 -153.289,39 INCOME BEFORE EXTRAORDINARY ITEMS -1.989.489,18 -807.145,90 -1.499.191,19 -1.786.724,93 -1.563.306,58

II EXTRAORDINARY RESULTS Extraordinary and non-operating revenues 1.358.067,95 1.322.006,54 1.488.561,41 1.452.840,38 1.420.017,50 Ectraordinary profit 0,00 0,00 0,00 0,00 0,00 Prior year’s income 592.254,18 2.111.377,55 961.340,62 434.237,55 923.168,23 Income of prior years provisions 0,00 0,00 0,00 152.132,40 0,00 1.950.322,13 3.433.384,09 2.449.902,03 2.039.210,33 2.343.185,73 Extraordinary and non-operating expenses 18.865,17 10.656,46 26.016,73 97.244,19 64.023,51 Extraordinary losses 119.111,13 0,00 0,00 0,00 0,00

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Prior years’ expenses 2.000.721,73 310.229,53 11.985,62 9.068,67 357,31 Provisions for extra-ordinary liabilities 0,00 0,00 0,00 0,00 356.000,00 2.138.698,03 320.885,99 38.002,35 106.312,86 420.380,82

OPERATING & EXTRAORDINARY RESULTS -2.177.865,08 2.305.352,20 912.708,49 146.172,54 359.498,33 Depreciation 1.622.326,99 1.582.180,10 1.743.225,34 1.711.008,84 1.670.659,06 Depreciation charged to the operating cost -1.622.326,99 -1.582.180,10 -1.743.225,34 -1.711.008,84 -1.670.659,06 NET RESULTS FOR THE YEAR BEFORE TAXES -2.177.865,08 2.305.352,20 912.708,49 146.172,54 359.498,33

APPROPRIATION ACCOUNT

Net Results for the Year Before Taxes -2.177.865,08 2.305.352,20 912.708,49 146.172,54 359.498,33 Prior Years’ Retained Earnings (Earnings brought forward) -472.408,62 -6.885.394,70 -4.588.507,00 -3.693.196,65 -3.569.213,46 Prior years’ tax differences 0,00 0,00 0,00 0,00 0,00 Reserves for appropriation 0,00 0,00 0,00 0,00 0,00 -2.650.273,70 -4.580.042,50 -3.675.798,51 -3.547.024,11 -3.209.715,13 Income tax 8.464,50 17.398,14 22.189,35 23.342,05 Income (profit) for appropriation -2.650.273,70 -4.588.507,00 -3.693.196,65 -3.569.213,46 -3.233.057,18

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

TABLE B- 5:Municipality of Kalavryta-BS and IS 2014-2017

Municipality of Kalavryta Balance sheet December December December December December 31,2014 31,2015 31,2016 31,2017 31,2018 ASSETS B. ORGANIZATION (FORMATION) EXPENSES 1.Organization (Preliminary) expenses 4.Other formation expenses 383.720,15 326.028,58 333.902,28 262.519,58 383.720,15 326.028,58 333.902,28 262.519,58 0,00

C. FIXED ASSETS II Tangible assets 1.Land 7.511.429,95 7.511.429,95 7.508.472,05 7.606.522,05 1a.Squares-Parks -Playgrounds 3.391.007,01 2.983.784,67 2.793.912,97 2.058.625,76 1b.Streets-Common pavements 5.715.398,87 4.515.821,11 3.791.052,68 2.597.136,32 1c.Sidewalks 26.208,00 19.829,49 27.907,72 24.132,35 2.Mines-Quarries Fields - Plantations - Forests 5.332.334,09 5.332.334,09 5.332.334,09 5.332.334,09 3.Buildings and technical works 11.992.840,69 11.330.750,85 10.462.895,02 10.365.581,24 3a.Shared building installations 0,00 0,00 0,00 0,00 3b.Shared lighting installations 233.446,69 182.311,88 137.530,35 145.805,74 3c.Other permanent sharing facilities 6.013.415,20 5.010.931,99 5.963.550,90 4.986.070,31 4.Machinery - Technical installations and other mechanical equipment 61.402,56 53.710,86 91.434,09 96.415,27 5.Vehicles (Transportation equipment) 565.257,67 460.377,63 369.957,18 290.838,78

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

6.Furniture and Fixtures 107.835,91 80.967,05 59.768,93 122.262,06 7.Payments on account and tangible assets under construction 5.121.625,07 6.304.074,18 3.931.644,46 4.527.822,24 Total tangible assets (CII) 46.072.201,71 43.786.323,75 40.470.460,44 38.153.546,21 0,00 III Financial Assets 1.Fixed income securities 4.213.744,59 4.248.744,59 4.248.744,59 4.348.744,59 minus due doses 0,00 0,00 0,00 0,00 depreciation forecasts 1.176.255,92 1.521.925,76 1.360.884,26 1.157.307,17 7.Other financial assets 1.516,00 1.516,00 1.516,00 1.516,00 3.039.004,67 2.728.334,83 2.889.376,33 3.192.953,42 0,00

Total fixed assets (CII+CIII) 49.111.206,38 46.514.658,58 43.359.836,77 41.346.499,63 0,00

D. CURRENT ASSETS II Receivables (Debtors) 1.Doubtful – contested trade and other receivables (debtors) 860.560,85 1.031.763,54 1.382.805,67 1.313.411,07 Less: Provision (allowance) for doubtful receivables 301.191,32 362.557,31 445.412,72 525.741,85 559.369,53 669.206,23 937.392,95 787.669,22 0,00 5.Various receivables (Sundry debtors) 1.205.506,05 1.179.972,19 1.064.164,10 564.470,14 6.Advances to account for 0,00 0,00 0,00 0,00 1.764.875,58 1.849.178,42 2.001.557,05 1.352.139,36 0,00

IV Cash at bank and in hand 1.Cash in hand 0,00 16.622,97 0,00 73,49 3.Checking and savings accounts 2.617.625,63 2.521.073,02 2.173.654,84 2.126.056,74 2.617.625,63 2.537.695,99 2.173.654,84 2.126.130,23 0,00

Total current assets (DII+DIV) 4.382.501,21 4.386.874,41 4.175.211,89 3.478.269,59 0,00

E. PREPAYMENTS AND ACCRUED REVENUES 1.Prepaid Expenses (Deferred charges) 0,00 0,00 0,00 0,00

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

2.Earned Revenues Receivable 294.187,84 145.004,31 134.548,67 252.689,84 294.187,84 145.004,31 134.548,67 252.689,84 0,00

TOTAL ASSETS 54.171.615,58 51.372.565,88 48.003.499,61 45.339.978,64 0,00

MEMO ACCOUNTS 1.Third party asset items 2.Guarantees and real securities 30.931.695,26 29.847.505,16 29.847.505,16 29.847.505,16 3.Bilateral agreements 30.931.695,26 29.847.505,16 29.847.505,16 29.847.505,16 EQUITY & LIABILITIES

A. LIABILITIES AND SHAREHOLDERS EQUITY I Capital 13.703.550,49 13.703.550,49 13.055.176,94 13.055.176,94 13.703.550,49 13.703.550,49 13.055.176,94 13.055.176,94 0,00 II Revaluation reserves and Invenstment grants- Fixed assets donations 1.Revaluation reserves of participations and investments 1.715.022,13 1.715.022,13 1.715.022,13 1.715.022,13 3.Fixed assets donations 3.545.315,17 3.545.315,17 3.545.315,17 3.695.700,67 4.Investment Grants for fixed assets 33.425.943,87 31.874.733,55 30.091.506,23 27.461.459,50 38.686.281,17 37.135.070,85 35.351.843,53 32.872.182,30 0,00 III Reserves 3.Extraordinary reserves 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 IV Retained Earnings (Results carried forward) Retained deficit carried forward -1.638.975,54 -2.916.038,72 -3.327.313,07 -4.075.682,40 -1.638.975,54 -2.916.038,72 -3.327.313,07 -4.075.682,40 0,00

Total Equity (AI+AII+AIII+AIV) 50.750.856,12 47.922.582,62 45.079.707,40 41.851.676,84 0,00

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

B. PROVISIONS FOR LIABILITIES AND CHARGES 1.Provision for retirement benefits 232.000,00 253.000,00 318.214,60 380.359,02 2.Other provisions 0,00 0,00 0,00 0,00 232.000,00 253.000,00 318.214,60 380.359,02 0,00 C. LIABILITIES I Long term liabilities 2.Bank Loans 1.875.657,90 1.809.352,20 1.740.189,47 1.668.055,75 1.875.657,90 1.809.352,20 1.740.189,47 1.668.055,75 0,00

II Short -Term Liabilities 1.Accounts Payable (Trade Creditors), Suppliers 628.370,23 723.370,97 413.126,89 442.311,80 2.Notes Receivable 48.133,30 86.249,00 0,00 0,00 5.Taxes- Duties Payable 54.600,05 78.560,93 81.080,73 75.019,20 6.Social security dues payable 21.482,70 8.518,47 0,00 6.974,77 7.Long term liabilities payable on subsequent use 0,00 66.305,70 69.159,85 72.133,72 8.Other Payables (Sundry Creditors) 105.230,23 105.324,84 6.913,49 528.080,73 857.816,51 1.068.329,91 570.280,96 1.124.520,22 0,00

Total Liabilities (CI+CII) 2.733.474,41 2.877.682,11 2.310.470,43 2.792.575,97 0,00

ACCRUED EXPENSES AND DEFERRED D. REVENUES 1.Unearned Revenues (Revenues received in advance) 0,00 0,00 0,00 0,00 2.Accrued expenses 455.285,05 319.301,15 295.107,18 315.366,81 1.014.605,99 455.285,05 319.301,15 295.107,18 315.366,81

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 54.171.615,58 51.372.565,88 48.003.499,61 45.339.978,64 0,00

MEMO ACCOUNTS 1.Beneficiaries of asset items

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

2.Guarantees and real securities 30.931.695,26 29.847.505,16 29.847.505,16 29.847.505,16 3.Bilateral agreements 30.931.695,26 29.847.505,16 29.847.505,16 29.847.505,16

INCOME STATEMENT (PROFIT AND LOSS ACCOUNT) December December December December December 31,2014 31,2015 31,2016 31,2017 31,2018 I OPERATING RESULTS Net Sales (turnover) 6.010.049,78 6.086.351,84 5.362.990,40 5.157.292,30 Cost of Goods Sold (Cost of Sales) 2.216.051,21 2.301.652,94 2.132.944,83 2.271.530,74 GROSS Operating results 3.793.998,57 3.784.698,90 3.230.045,57 2.885.761,56 0,00 Other Operating Income 28.092,06 127.957,40 227.433,31 226.532,79 TOTAL 3.822.090,63 3.912.656,30 3.457.478,88 3.112.294,35 0,00

Administrative expenses 7.740.912,29 8.495.901,28 7.647.532,50 7.287.585,59 Selling expenses 214.273,48 212.524,79 114.787,70 164.548,56 7.955.185,77 8.708.426,07 7.762.320,20 7.452.134,15 0,00 PARTIAL RESULTS -4.133.095,14 -4.795.769,77 -4.304.841,32 -4.339.839,80 0,00 Gains from sale of participating interests and investments Interest and similar income 35.086,32 30.805,37 22.258,22 23.216,40

Interest and similar expense -107.429,78 -107.483,70 -97.121,74 -84.994,24 INCOME BEFORE EXTRAORDINARY ITEMS -4.205.438,60 -4.872.448,10 -4.379.704,84 -4.401.617,64 0,00

II EXTRAORDINARY RESULTS Extraordinary and non-operating revenues 4.204.822,49 3.605.543,30 3.783.640,98 3.480.517,67 Ectraordinary profit 0,00 2.329,32 0,00 0,00 Prior year’s income 36.250,81 55.988,79 54.119,18 32.708,55 Income of prior years provisions 19.483,22 0,00 223.440,01 248.680,44 4.260.556,52 3.663.861,41 4.061.200,17 3.761.906,66 0,00 Extraordinary and non-operating expenses 18.920,13 6.152,58 1.452,62 28.329,22

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Extraordinary losses 0,00 0,00 0,00 0,00 0,00 Prior years’ expenses 28.200,00 957,92 8.461,65 0,00 Provisions for extra-ordinary liabilities 51.890,05 61.365,99 82.855,41 80.329,13 99.010,18 68.476,49 92.769,68 108.658,35 0,00

OPERATING & EXTRAORDINARY RESULTS -43.892,26 -1.277.063,18 -411.274,35 -748.369,33 0,00 Depreciation 4.782.261,93 3.440.161,92 4.427.183,62 4.184.936,05 Depreciation charged to the operating cost -4.782.261,93 -3.440.161,92 -4.427.183,62 -4.184.936,05 0,00 NET RESULTS FOR THE YEAR BEFORE TAXES -43.892,26 -1.277.063,18 -411.274,35 -748.369,33 0,00

APPROPRIATION ACCOUNT

Net Results for the Year Before Taxes -43.892,26 -1.277.063,18 -411.274,35 -748.369,33 0,00 Prior Years’ Retained Earnings (Earnings brought forward) -1.595.083,28 -1.638.975,54 -2.916.038,72 -3.327.313,07 Prior years’ tax differences 0,00 0,00 0,00 0,00 Reserves for appropriation 0,00 0,00 0,00 0,00 0,00 -1.638.975,54 -2.916.038,72 -3.327.313,07 -4.075.682,40 0,00 Income tax Income (profit) for appropriation -1.638.975,54 -2.916.038,72 -3.327.313,07 -4.075.682,40 0,00

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

TABLE B- 6:Municipality of Erymanthos-BS and IS 2014-2017

Municipality of Erymanthos Balance sheet December December December December December 31,2014 31,2015 31,2016 31,2017 31,2018 ASSETS B. ORGANIZATION (FORMATION) EXPENSES 1.Organization (Preliminary) expenses 0,00 4.Other formation expenses 562.447,51 526.113,04 450.851,15 273.478,74 562.447,51 526.113,04 450.851,15 273.478,74 0,00

C. FIXED ASSETS II Tangible assets 1.Land 1.165.358,11 1.165.358,11 1.165.358,11 1.165.358,11 1a.Squares-Parks -Playgrounds 610.824,98 570.788,51 1.418.096,52 1.341.841,91 1b.Streets-Common pavements 3.896.909,42 3.723.492,36 3.431.791,93 3.331.446,63 1c.Sidewalks 273.255,72 256.169,81 239.403,60 222.669,97 2.Mines-Quarries Fields - Plantations - Forests 351.817,22 351.817,22 351.817,22 351.817,22 3.Buildings and technical works 10.467.783,18 10.560.635,89 10.399.205,11 10.305.813,32 3a.Shared building installations 2.161,40 1.702,04 1.242,68 783,32 3b.Shared lighting installations 427.195,70 404.479,07 383.494,15 362.785,24 3c.Other permanent sharing facilities 388.372,83 452.738,21 570.955,63 535.240,66 4.Machinery - Technical installations and other mechanical equipment 41.704,95 39.750,27 32.446,32 31.670,64 5.Vehicles (Transportation equipment) 44.997,70 17.472,48 6.762,59 0,01 6.Furniture and Fixtures 185.887,30 138.371,43 103.732,70 79.596,65 7.Payments on account and tangible assets under 4.331.762,02 5.453.107,94 4.740.369,53 5.390.905,68

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

construction Total tangible assets (CII) 22.188.030,53 23.135.883,34 22.844.676,09 23.119.929,36 0,00

III Financial Assets 1.Fixed income securities 232.527,43 232.527,43 245.736,70 235.025,69 minus due doses 0,00 0,00 0,00 0,00 depreciation forecasts 102.410,87 98.057,06 119.629,00 110.003,55 7.Other financial assets 0,00 0,00 0,00 0,00 130.116,56 134.470,37 126.107,70 125.022,14 0,00 Total fixed assets (CII+CIII) 22.318.147,09 23.270.353,71 22.970.783,79 23.244.951,50 0,00

D. CURRENT ASSETS II Receivables (Debtors) 1.Doubtful – contested trade and other receivables (debtors) 1.626.679,06 1.704.341,83 1.660.998,91 1.942.226,55 Less: Provision (allowance) for doubtful receivables 648.341,35 648.341,35 648.341,35 648.341,35 3.Frozen accounts 22.787,80 19.987,80 6.186,00 9.481,38 1.001.125,51 1.075.988,28 1.018.843,56 1.303.366,58 0,00 5.Various receivables (Sundry debtors) 138.421,06 96.469,93 62.305,00 42.032,34 6.Advances to account for 0,00 0,00 0,00 0,00 1.139.546,57 1.172.458,21 1.081.148,56 1.345.398,92 0,00

IV Cash at bank and in hand 1.Cash in hand 12.974,32 12.582,02 1.740,01 9.407,89 3.Checking and savings accounts 1.250.717,09 1.176.453,41 1.357.824,75 1.297.954,67 1.263.691,41 1.189.035,43 1.359.564,76 1.307.362,56 0,00

Total current assets (DII+DIV) 2.403.237,98 2.361.493,64 2.440.713,32 2.652.761,48 0,00

E. PREPAYMENTS AND ACCRUED REVENUES 1.Prepaid Expenses (Deferred charges) 13.461,31 13.431,30 11.708,39 10.316,51 2.Earned Revenues Receivable 185.435,33 264.782,71 316.487,39 507.239,04

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

3.Other prepayments and accrued revenue 198.896,64 1.428,82 0,00 0,00 0,00 279.642,83 328.195,78 517.555,55 TOTAL ASSETS 25.482.729,22 26.437.603,22 26.190.544,04 26.688.747,27 0,00

MEMO ACCOUNTS 1.Third party asset items 2.Guarantees and real securities 19.029.049,89 16.787.477,37 14.354.477,68 15.724.805,75 3.Bilateral agreements 275.957,56 281.825,61 60.168,54 69.131,21 19.305.007,45 17.069.302,98 14.414.646,22 15.793.936,96 EQUITY & LIABILITIES

A. LIABILITIES AND SHAREHOLDERS EQUITY I Capital 9.340.285,07 9.340.285,07 9.340.285,07 9.458.476,95 9.340.285,07 9.340.285,07 9.340.285,07 9.458.476,95 0,00 II Revaluation reserves and Invenstment grants- Fixed assets donations 1.Revaluation reserves of participations and investments 0,00 0,00 0,00 0,00 3.Fixed assets donations 0,00 0,00 0,00 0,00 4.Investment Grants for fixed assets 14.663.046,91 15.569.205,77 15.745.578,91 16.431.038,66 14.663.046,91 15.569.205,77 15.745.578,91 16.431.038,66 0,00 III Reserves 3.Extraordinary reserves 11.285,14 15.638,95 20.372,67 0,00 11.285,14 15.638,95 20.372,67 0,00 0,00 IV Retained Earnings (Results carried forward) Retained deficit carried forward -820.019,66 -764.331,78 -841.564,04 -1.053.283,39 -820.019,66 -764.331,78 -841.564,04 -1.053.283,39 0,00

Total Equity (AI+AII+AIII+AIV) 23.194.597,46 24.160.798,01 24.264.672,61 24.836.232,22 0,00

B. PROVISIONS FOR LIABILITIES AND CHARGES

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

1.Provision for retirement benefits 14.469,97 18.100,56 19.341,37 26.972,81 2.Other provisions 0,00 0,00 0,00 0,00 14.469,97 18.100,56 19.341,37 26.972,81 0,00 C. LIABILITIES I Long term liabilities 2.Bank Loans 1.038.212,23 926.071,44 809.798,02 651.065,91 1.038.212,23 926.071,44 809.798,02 651.065,91 0,00

II Short -Term Liabilities 1.Accounts Payable (Trade Creditors), Suppliers 964.089,89 1.007.907,95 692.734,66 706.130,34 2.Notes Receivable 0,00 0,00 0,00 0,00 5.Taxes- Duties Payable 35.674,02 37.255,01 40.114,44 44.876,42 6.Social security dues payable 11.107,77 20.348,01 13.438,69 17.999,01 7.Long term liabilities payable on subsequent use 78.346,77 111.185,42 115.409,11 156.856,50 8.Other Payables (Sundry Creditors) 141.770,29 154.508,00 107.217,73 154.829,13 1.230.988,74 1.331.204,39 968.914,63 1.080.691,40 0,00

Total Liabilities (CI+CII) 2.269.200,97 2.257.275,83 1.778.712,65 1.731.757,31 0,00

ACCRUED EXPENSES AND DEFERRED D. REVENUES 1.Unearned Revenues (Revenues received in advance) 0,00 0,00 0,00 0,00 2.Accrued expenses 4.460,82 1.428,82 127.817,41 93.784,93 1.014.605,99 4.460,82 1.428,82 127.817,41 93.784,93

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 25.482.729,22 26.437.603,22 26.190.544,04 26.688.747,27 0,00

MEMO ACCOUNTS 1.Beneficiaries of asset items 0,00 2.Guarantees and real securities 19.029.049,89 16.787.477,37 14.354.477,68 15.724.805,75

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

3.Bilateral agreements 275.957,56 281.825,61 60.168,54 69.131,21 19.305.007,45 17.069.302,98 14.414.646,22 15.793.936,96

INCOME STATEMENT (PROFIT AND LOSS ACCOUNT) December December December December December 31,2014 31,2015 31,2016 31,2017 31,2018 I OPERATING RESULTS Net Sales (turnover) 3.163.637,52 3.135.791,04 3.235.098,63 2.740.863,20 Cost of Goods Sold (Cost of Sales) 2.672.586,00 2.909.742,92 2.914.744,76 2.751.389,73 GROSS Operating results 491.051,52 226.048,12 320.353,87 -10.526,53 0,00 Other Operating Income 249.321,19 237.644,31 263.094,29 594.045,93 TOTAL 740.372,71 463.692,43 583.448,16 583.519,40 0,00

Administrative expenses 1.365.519,14 1.399.019,74 1.462.573,38 1.714.508,04 Selling expenses 18.819,58 16.894,52 15.309,84 17.614,88 1.384.338,72 1.415.914,26 1.477.883,22 1.732.122,92 0,00 PARTIAL RESULTS -643.966,01 -952.221,83 -894.435,06 -1.148.603,52 0,00 Gains from sale of participating interests and investments Interest and similar income 47.876,01 26.584,13 21.537,98 15.768,97

Interest and similar expense -73.791,44 -52.311,54 -55.610,27 -124.304,92 INCOME BEFORE EXTRAORDINARY ITEMS -669.881,44 -977.949,24 -928.507,35 -1.257.139,47 0,00

II EXTRAORDINARY RESULTS Extraordinary and non-operating revenues 757.327,06 888.803,15 1.028.352,66 1.024.182,86 Ectraordinary profit 12.849,10 0,00 0,00 0,00 Prior year’s income 0,00 246.645,20 99.985,42 19.863,11 Income of prior years provisions 0,00 0,00 0,00 18.787,11 770.176,16 1.135.448,35 1.128.338,08 1.062.833,08 0,00 Extraordinary and non-operating expenses 22.303,95 12.931,51 3.468,59 4.021,10 Extraordinary losses 0,00 0,00 0,00 0,00 0,00

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Prior years’ expenses 142.954,48 77.846,58 263.318,63 50,35 Provisions for extra-ordinary liabilities 0,00 0,00 0,00 0,00 165.258,43 90.778,09 266.787,22 4.071,45 0,00

OPERATING & EXTRAORDINARY RESULTS -64.963,71 66.721,02 -66.956,49 -198.377,84 0,00 Depreciation 0,00 0,00 4.427.183,62 1.296.902,17 Depreciation charged to the operating cost 0,00 0,00 -4.427.183,62 -1.296.902,17 0,00 NET RESULTS FOR THE YEAR BEFORE TAXES -64.963,71 66.721,02 -66.956,49 -198.377,84 0,00

APPROPRIATION ACCOUNT

Net Results for the Year Before Taxes -64.963,71 66.721,02 -66.956,49 -198.377,84 0,00 Prior Years’ Retained Earnings (Earnings brought forward) -743.122,38 -820.019,66 -764.331,78 -841.564,04 Prior years’ tax differences 0,00 0,00 0,00 0,00 Reserves for appropriation 0,00 0,00 0,00 0,00 0,00 -808.086,09 -753.298,64 -831.288,27 -1.039.941,88 0,00 Income tax 11.033,14 10.275,77 13.341,51 Income (profit) for appropriation -808.086,09 -764.331,78 -841.564,04 -1.053.283,39 0,00

Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on

Municipalities. Case study: Municipality of Patra”

Author’s Statement: I hereby expressly declare that, according to the article 8 of Law 1559/1986, this dissertation is solely the product of my personal work, does not infringe any intellectual property, personality and personal data rights of third parties, does not contain works/contributions from third parties for which the permission of the authors/beneficiaries is required, is not the product of partial or total plagiarism, and that the sources used are limited to the literature references alone and meet the rules of scientific citations.