Press releaseI) Revenue for the first nine months of 2006/2007: up 21.9% on a reported basis and up 25.3% like-for-like.
Fimalac's consolidated revenue for the first nine months of 2006/2007 - consisting entirely of Fitch Group revenue - amounted to 563.4 million. Like-for-like growth excludes a negative 27.1 million currency effect due primarily to the increasingly weak dollar and an additional 11.3 million in revenue from the consolidation of Korea Ratings in April 2007.
| Change | Change | ||||
| (in millions) | Oct. 2005 to June 2006 | Oct. 2006 to June 2007 | (reported) | (like-for-like*) | |
| Ratings | 391.6 | 482.3 | + 23.2% | + 27.0% | |
| Risk management | 72.8 | 77.4 | + 6.3% | + 15.5% | |
| Other businesses** | __ | 6.0 | |||
| Eliminations*** | (2.3) | (2.3) | |||
| Consolidated revenue | 462.1 | 563.4 | +21.9% | + 25.3% | |
** Based on a comparable scope of consolidation and at constant exchange rates.
**Various Korea Ratings businesses
***Algorithmics/Fitch Ratings billings
Commenting on this strong growth, Marc Ladreit de Lacharriθre noted:
"Our businesses experienced very strong growth in the first half, with revenue up 25.3% like-for-like at March 31, 2007. The third quarter was also very good in almost every segment and region, with the result that our businesses enjoyed exactly the same like-for-like growth in the nine months to June 30, 2007. We have already amply exceeded our targets and are therefore confident with just three more months to go in 2006/2007."
II) Recent Transactions and Events
1) Acquisition of Korea Ratings
In April, Fitch Ratings significantly strengthened its presence in Asia by raising its interest in Korea Ratings, South Korea's leading rating agency, to 53% from 8% previously.
The investment amounted to $64 million. Korea Ratings contributed 11.3 million to third-quarter consolidated revenue, of which 5.3 million from rating services.
2) Construction of an office building in London
On June 29, Fimalac signed a contract for the construction of around 30,000 square meter office building in the prestigious Canary Wharf financial district, which will serve as the head office for its UK businesses. Along with other tenants, Fitch Ratings is expected to move into the building in the final quarter of 2010. It will centralize the company's ever-increasing workforce, which is expanding to meet the strong growth in its London-based business.
The total cost, including land, construction and interior fittings, is estimated at £290 million. The project will be carried out by a company that is 80% owned by Fimalac and 20% by Hearst Corporation, Fimalac's partner in the Fitch Group.
The project is not expected to have a material impact on 2006/ 2007 consolidated results.
3) Offer to purchase the Les Echos Group
On July 11, Fimalac made a firm offer to Pearson to purchase the Les Echos Group for 245 million. The offer is valid until December 31, 2007.
The acquisition would enable Fimalac to extend its presence in the financial and business information sector, where it is already a leading player through Fitch Ratings and Algorithmics.
III) Financial Results and Cash Position
In light of the continued strong revenue performance in the third quarter, Fitch Group's nine-month EBITDA* in US dollars, the subgroup's functional currency, continued to rise faster than revenue. Note that in the first half of 2006/2007, which ended March 31, Fitch Group's EBITDA rose 44.5% to $166.9 million.
In addition, no material non-recurring income or expense was recognized in the third quarter, either by Fitch Group or by Fimalac.
In early July, the parent company's net cash position stood at around 310 million, even after the 66.7 million payment for the office building in London.
*EBITDA = earnings before interest, taxes, depreciation and amortization.