Press releaseI) First-Half Fiscal 2008 Results (October 1, 2007 to March 31, 2008)
1) Revenue
Consolidated revenue for the first half of fiscal 2008 amounted to 297.9 million versus 365.7 million in the first six months of fiscal 2007, a decrease of 16.3% on a like-for-like basis.*
Fitch Ratings' first-half revenue fell by 20.5% like-for-like to 246.1 million, while Algorithmics delivered continued growth, with first-half revenue up 7.9% like-for-like to 53.5 million.
2) Recurring operating profit
Fitch Ratings' recurring operating profit stood at 79.2 million compared to 101 million, representing an 18.3% like-for-like decline. Despite the challenging financial environment, assertive cost management measures implemented since the beginning of the crisis enabled Fitch Ratings to produce a recurring operating margin of 33.1%, up on a like-for-like basis from 32.2% in first-half fiscal 2007.
Algorithmics reached break-even for the first half at the EBITDA** level, and its recurring operating profit, which is stated after the amortization of intangible assets recognized at the time of the 2005 business combination, came to a negative 8.3 million compared to a negative 16.7 million the year before.
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Fimalac's consolidated recurring operating margin improved to 22.9% like-for-like in first-half fiscal 2008 from 21.4% in the prior-year period, while recurring operating profit stood at 65.7 million compared to 78.2 million, representing a limited 10.6% like-for-like decrease.
3) Attributable profit for the period
Profit attributable to equity holders of the parent for the six months ended 31 March 2008 amounted to 30.9 million, after other income and expense items and income tax. Attributable profit for first-half fiscal 2007 (53.9 million) included more non-recurring gains.
II) Fiscal 2008 Outlook and Recent Developments
1) Fiscal 2008 Outlook
As announced in the April 24 press release, in light of the persistently difficult market conditions, Fitch Rating's revenue could decline by around 20% like-for-like over the twelve months ending September 30, 2008. Cost-control measures will be pursued in the second half.
2) Recent developments
The Chinese authorities have decided to open up their domestic market to international rating agencies. In particular, they have authorized Fitch Ratings to acquire a 49% stake in China Lianhe Credit Rating, one of the country's top rating agencies. The investment will enable Fitch Ratings to rate the considerable volumes of commercial paper and bonds issued on the Chinese market by large banks, financial institutions and corporates.
Fitch Ratings has thereby deepened its already strong presence in Asia and the Middle East, where it has operated in some fifteen countries since 2006, most notably in Japan, Hong Kong, India, Singapore, Thailand, Taiwan, Indonesia and the United Arab Emirates. A milestone was reached in 2007 with the acquisition of Korea Ratings following South Korea's decision also to open up its domestic market. Today, South Korea already ranks as Fitch Ratings' third largest country market by revenue, after the United States and United Kingdom.
III) Share Buyback Program
Fimalac pursued its share buyback program during the half and, as of April 30, 2008, 9.91% of the capital was held in treasury versus 6.92% at September 30, 2007.
At its meeting on May 27, the Board of Directors decided to cancel 1,952,867 shares representing 5.69% of the capital, with effect on June 1, 2008, in application of the authorization given at the Shareholders' Meeting.
Fimalac's capital will therefore be reduced to a total of 32,375,811 shares (versus 34,328,678 currently), with 1,449,534 shares remaining in treasury, representing 4.48% of the new capital.
Marc Ladreit de Lacharriθre's direct and indirect interest in the Company will represent 70.63% of the capital.
*Based on a comparable scope of consolidation and at constant exchange rates
**Earnings before interest, taxes, depreciation and amortization.