1
2
Sales
from reported to like-for-like
(in € millions)
SALES (reported)
Currency translation impact ($ and £)
First half
2005/2006
303.8
0.8
First half
2006/2007
Change
365.7 + 20.4 %
16.0
Changes in consolidation scope
SALES
(like-for-like)
304.6
381.7 + 25.3 %
Sales by company
(reported)
(in € millions)
First half
2005/2006
First half
2006/2007
303.8
365.7
+ 20.4 %
Fitch Ratings
255.9
313.3
+ 22.4 %
Algorithmics
47.9
52.4
303.8
365.7
FITCH GROUP
SALES
(reported)
Change
+
9.4 %
+ 20.4 %
Sales by company
(like-for-like)
(in € millions)
First half
2005/2006
First half
2006/2007
Change
304.6
381.7
+ 25.3 %
Fitch Ratings
256.3
325.1
+ 26.8 %
Algorithmics
48.3
56.6
+ 17.2 %
304.6
381.7
+ 25.3 %
FITCH GROUP
SALES
(like-for-like)
Sales by geographic regions
(reported)
First half
2005/2006
%
First half
2006/2007
%
1 USA
154.2
50.8 %
178.5
48.8 %
2 UK
43.3
14.3 %
53.2
14.6 %
3 Germany
11.0
3.6 %
13.8
3.8 %
4 Netherlands
7.3
2.4 %
10.4
2.8 %
5 Japan
5.7
1.9 %
8.9
2.4 %
6 Italy
7.3
2.4 %
8.6
2.4 %
7 Spain
5.8
1.9 %
8.3
2.3 %
8 France
6.1
2.0 %
8.1
2.2 %
9 Switzerland
6.5
2.1 %
6.7
1.8 %
3.0
1.0 %
6.7
1.8 %
10 Ireland
TOTAL SALES
(reported)
82.4 %
82.9 %
From sales
to recurring operating income
(in € millions)
Sales (reported)
Operating expenses
Recurring operating income (reported)
First half
2005/2006
First half
2006/2007
303.8
365.7
- 255.2
- 287.5
48.6
78.2
Currency translation impact ($ and £)
Change
+ 20.4 %
+ 60.9 %
2.9
Changes in consolidation scope
RECURRING OPERATING INCOME
(like-for-like)
48.6
81.1
+ 66.9 %
Recurring operating income by company
(reported)
(in € millions)
FITCH GROUP
First half
2005/2006
First half
2006/2007
Change
54.7
84.3 + 54.1 %
Fitch Ratings
74.1
101.0 + 36.3 %
Algorithmics
- 19.4
- 16.7 + 13.9 %
Other (Parent company)
- 6.1
- 6.1
RECURRING OPERATING
INCOME (reported)
48.6
78.2 + 60.9 %
Recurring operating income by company
(like-for-like)
(in € millions)
FITCH GROUP
First half
2005/2006
First half
2006/2007
Change
54.7
87.2 + 59.4 %
Fitch Ratings
74. 3
105.3 + 41.7 %
Algorithmics
- 19.6
- 18.1 +
- 6.1
- 6.1
Other (Parent company)
RECURRING OPERATING
INCOME (like-for-like)
Operating margin (ROI / Sales)
48.6
16.0 %
7.7 %
81.1 + 66.9 %
21.2 %
From recurring operating income
to operating result (reported)
(in € millions)
Recurring operating income
First half
2005/2006
First half
2006/2007
48.6
78.2
6.8
26.4
55.4
104.6
Change
+ 60.9 %
(reported)
Other operating income and
expense
OPERATING RESULT
(reported)
+ 88.8 %
From operating result to net earnings
(reported)
(in € millions)
Operating result
First half
2005/2006
55.4
First half
2006/2007
Change
104.6 + 88.8 %
(reported)
Interest expense
Other financial income / (expense)
Taxes
Equity in net earnings of affiliated companies
Minority interests
- 6.0
7.1
8.1
-
3.6
- 13.8
- 47.0
0.5
0.3
- 1.6
- 8.5
NET EARNINGS Groupe share
(except Net earnings from discontinued operations)
41.6
53.9 + 29.6 %
Net earnings from disposals
384.1
(20 % Fitch Group)
Net earnings from discontinued operations,
and in process of disposal
78.4
NET EARNINGS
504.1
Groupe share (reported)
53.9
Cash and cash equivalents / (net debt) by company
(in € millions)
09/ 30/ 2006
03/ 31/ 2007
Fitch Group
- 273
- 231
Parent company
+ 413
+ 367
Net cash position - Fimalac
+ 140
+ 136
Fimalac share performance vs. CAC 40 and SBF 120
Decembre 1992 to May 10, 2007
1700
FIMALAC
1500
1 435
1300
1100
900
700
SBF 120
337
500
CAC 40
300
301
100
Fimalac share performance vs CAC 40 & SBF 120
January 2006 to May 10, 2007
150
145
140
135
130
125
120
115
110
105
100
FIMALAC
144
SBF 120
125
CAC 40
124
"Total Shareholder Return" over 10 years
SBF120 companies
Ranking
TSR
Over 10 years
Annualized
in %
in %
1
Be ne te au
3 582,8%
43,4%
2
Valloure c
2 619,6%
39,1%
3
Eiffage
1 819,3%
34,4%
4
C FF Re cycling
1 545,1%
32,3%
5
Vinci
1 452,7%
31,6%
6
Are va
1 213,2%
29,4%
7
Unibail
1 090,0%
28,1%
8
Bouygue s
965,5%
26,7%
9
We nde l Inve stisse me nt
798,7%
24,6%
10
Kle pie rre
792,7%
24,5%
11
Socie te Ge ne rale
737,8%
23,7%
12
Maure l e t Prom
732,2%
23,6%
13
Fimalac SA
616,8%
21,8%
14
C ime nts Français
588,8%
21,3%
15
BNP Paribas
543,4%
20,5%
Source JCF Group
16
History
Fitch Group Structure
80%
20%
100%
100%
100%
Fitch Group
Revenue Growth (fiscal year)
800
$693
700
$565
600
$511
(in US $ millions)
500
$483
$455
400
$474
$366
$356
$305
300
$222
200
100
$156
$169
1998
1999
$43
0
1997
2000
2001
Fiscal year-end December 31
Fiscal year-end September 30
2002
2003
2004
2005
Nine
Nine
Months Months
Ended Ended
Sept 05 Sept 06
1H06
1H07
Fitch Group
Sales to Operating Income
(in US $ millions)
1H
2005/2006
1H
2006/2007
% Change
365.9
473.6
+ 29.4%
190.8
231.6
+ 21.4 %
59.6
75.1
+ 26.0 %
250.4
306.7
+ 22.5 %
115.5
166.9
+ 44.5 %
31.9
37.9
+ 18.8 %
Depreciation
8.8
8.5
Intellectual property
9.1
11.4
+ 25.3 %
Operating Income
65.7
109.1
+ 66.1 %
Revenue
Personnel costs
External expenses
Total charges
EBITDA
Profit sharing plan
-
3.4 %
Key Figures by Company
(in US $ millions)
Revenue FITCH GROUP
1H
2005/2006
1H
2006/ 2007
%
Change
365.9
473.6
+ 29.4 %
FitchRatings
308.0
405.7
+ 31.7 %
Algorithmics
58.6
70.1
+ 19.6 %
Intercompany revenue
-0.7
-2.2
115.5
166.9
+ 44.5 %
FitchRatings
128.1
175.1
+ 36.7 %
Algorithmics
- 12.6
- 8.2
65.7
109.1
+ 66.1 %
89.2
- 23.5
130.8
- 21.7
+ 46.6 %
EBITDA FITCH GROUP
Operating Income FITCH GROUP
FitchRatings
Algorithmics
22
Fitch Ratings
Revenue Growth (fiscal year)
700
$594
(in US $ millions)
600
$502
500
$481
$448
400
$419
$406
$353
$308
$305
300
200
100
0
2001
2002
2003
Year-end December 31
Year-end March 31
2004
2005
Nine
Months
Ended
Sept 05
Nine
Months
Ended
Sept 06
1H06
1H07
Fitch Ratings
Revenue Growth (pro-forma)
Six Year CAGR = 18%
800
$703
700
$594
(in US $ millions)
600
$502
500
$448
$406
400
$353
$308
$305
300
200
100
0
2001
2002
2003
2004
Year-end December 31
Year-end September 30
*Calendar year 2006 presented proforma.
2005
2006*
1H06
1H07
Global Debt Issuance
($ Volume)
(US $ trillions)
8
$7.0
$6.2
6
4
$5.0
$5.3
$3.9
$2.0
2
0
2002
2003
Source: Thomson Financial
2004
2005
2006
Jan-Mar 07
Quarterly Global Debt Issuance
Source: Thomson Financial
Global CDO Market Issuance
200
$178
180
$158
160
$139
140
$125
(US $ billions)
120
$108
100
80
$72
60
$43
40
$42
$48
$50
$69
$52
$25
20
0
1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05
Source: Securities Industry and Financial Markets Association
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
CDO Market Issuance includes Cash Flow and Hybrid, Synthetic Funded and Market Value CDOs.
Unfunded Synthetic Tranches are not included.
Fitch Ratings
Market Share
Market Share by Dollar Volume
100%
89%
89%
80%
65%
60%
53%
67%
53%
40%
20%
0%
Structured Finance
Financial Institutions
Twelve Months ended Dec 05
Non-Financial Corporates
Twelve Months ended Dec 06
Fitch Ratings
Revenue by Segment
(in US $ millions)
1H
1H
2005/2006 2006/2007
% Change
Structured Finance
162.8
215.0
+ 32.1%
Corporate Finance
110.0
147.4
+ 34.0%
35.2
43.3
+ 23.0%
308.0
405.7
+ 31.7%
Subscriptions /Training
TOTAL FITCH RATINGS
Fitch Ratings
Revenue by Region
(in US $ millions)
1H
1H
% Change
2005/2006 2006/2007
North America
174.1
216.4 + 24.3%
Europe, Middle East &
Africa
Latin America
110.7
159.4 + 44.0%
12.6
15.5 + 23.0%
10.6
14.4 + 35.8%
308.0
405.7 + 31.7%
Asia Pacific
TOTAL FITCH RATINGS
Fitch Ratings
EBITDA and Operating Income
(in US $ millions)
1H
1H
2005/2006 2006/2007
% Change
Revenue
308.0
405.7
+ 31.7%
EBITDA
128.1
175.1
+ 36.7 %
EBITDA Margin
41.6%
43.2%
31.8
37.7
+ 18.6 %
7.1
6.6
- 7.0 %
89.2
130.8
+ 46.6 %
29.0%
32.2%
Profit sharing plan
Depreciation & Amortization
Operating Income
Operating Income Margin
Fitch Ratings
Investment in Human Capital
Headcount
2 100
2 105
2 085
12/31/06
03/31/07
1 827
1 800
1 500
1 617
1 350
1 447
1 200
900
600
300
0
12/31/02
12/31/03
12/31/04
12/31/05
Investment in Korea Ratings

Founded in 1983, Korea Ratings is the largest domestic
rating agency in Korea



Long successful working relationship




Rates 386 Korean companies and has a strong presence in structured
finance
Employs 170 people with annual revenues in 2006 of $34m.
1999 – Strategic alliance between Fitch Ratings and Korea Ratings
2001 – Fitch Ratings makes investment in 8% of Korea Ratings
2007 – Fitch Ratings increases investment to 53% of Korea Ratings for
over $60m
Korean government is committed to developing a long-term
bond market
Areas of Focus in 1H 2007
Structured Finance


Credit concerns in Sub-prime Markets and CMBS
Release and implementation of new models:




ResiLogic, new US RMBS model
New US CMBS model
Derivative Fitch
Continued focus on EMEA expansion and emerging
markets securitization growth
Areas of Focus in 1H 2007
(cont’d)
Corporate Finance
 Continued expansion into rapidly growing new markets




Continued expansion in existing markets


Corporate loan ratings
Emerging markets
Covered bonds
The high yield and loan markets
Introduction of new analytical tools and procedures
including new quantitative models and analytics
 Focused effort at servicing the burgeoning infrastructure
financing market
Regulatory Update
Global


Fitch has received ECAI (External Credit Assessment Institution)
recognition in all markets for which a decision on international rating
agencies has been taken.
IOSCO (International Organization of Securities Commissions)
taskforce published a draft report with positive comments regarding
codes of conduct adopted by global rating agencies, now reviewing
the role of rating agencies in the development of structured finance
transactions.
EMEA

Review of implementation of codes of conduct by Committee of
European Securities Regulators (CESR) returned positive feedback
on the quality of implementation of agency codes, however concerns
were noted with ancillary services, disclosure of initiation and
participation, and fee negotiation policies.
Regulatory Update
(cont’d)
Asia/Pacific

The Japanese Financial Services Authority (FSA) plans to bolster
oversight of credit rating agencies to improve the quality of information
provided to investors. The FSA will designate credit rating agencies as
investment information providers to the marks and draft new rules for
them.
United States




The Credit Rating Agency Reform Act of 2006 was signed into law on
September 29, 2006.
SEC given authority to implement registration, recordkeeping, financial
reporting, and oversight rules with respect to registered credit rating
agencies.
SEC published proposed rules which received public comment by Fitch
and other participants in the industry.
Final rules to be issued no later than June, 2007.
Fitch Ratings
2007 Goals

Create and maintain reputation for highest quality
ratings and research

Maintain and grow market share across all key
segments and regions

Enhance pricing flexibility

Continue consistent long-term investment plan

Fitch Ratings secular revenue growth: 10–12%

US: 8–10%

International: 15–20%
39
Introduction
Algorithmics is a leading provider in the development
and delivery of enterprise risk solutions that enable
growth, innovation and the efficient use of risk capital.
Financial organizations from around the world rely on
our software, content, delivery and advisory services to
make risk aware business decisions and meet regulatory
requirements.
Revenue by Region
(in US$ millions)
1H
2005/2006
1H
2006/2007
% Change
North America
17.7
18.7
+ 5.6%
Europe, Middle East & Africa
31.1
36.2
+ 16.4%
Latin America
2.8
3.0
+ 7.1%
Asia Pacific
7.0
12.2
+ 74.3%
TOTAL ALGORITHMICS
(1) Includes inter-company revenue of $0.7M
(2) Includes inter-company revenue of $2.2M
58.6
(1)
70.1 (2) + 19.6%
Pro-forma EBITDA &
Operating Income
(in millions of US$)
Revenue
EBITDA
1H
2005/2006
58.6
- 12.6
(1)
1H
2006/2007
(2)
70.1
- 8.2
Profit sharing plan
0.1
0.2
Depreciation
1.7
1.9
Intellectual property
9.1
11.4
- 23.5
- 21.7
Current Operating Income
(1) Includes inter-company revenue of $0.7M
(2) Includes inter-company revenue of $2.2M
% change
+ 19.6%
Highlights

369 software solution clients (39 net new in 1H)

122 data and content clients (2 net new in 1H)

69 of the world’s top 100 banks 1

726 professionals in 19 global offices
1 Top
100 banks according to “The Banker”. Changed from 70 in September 2006 to 69 in March 2007 as a result of
revisions to the top 100 list.
Recent Achievements
Growth

51 new license orders in 1H 2006/2007

19.6 % revenue growth vs. 1H 2005/2006 (comparable numbers)
Investment in Human Capital

Maintaining current level of product development

Expanding services, sales and marketing
Media and Analyst Recognition

Risk Technology rankings: #1 in 6 categories (December 2006)

Op Risk and Compliance Magazine rankings: #1 for Regulatory and
Economic Capital (May 2007)
Client Growth
End Sept. 2006
End March 2007
Credit and capital
108
117
Market risk
128
151
Operational risk
89
93
Collateral management
68
73
Solutions
Executing our Growth
Strategy for 2006/2007

Expanding sales and services to support revenue growth
Advisory mandate for top Japanese bank on Basel II IRB strategy
Successfully completed major Basel II implementations for global banks

Establishing presence in new geographical markets
Enterprise risk solutions for major banks in Turkey and the Gulf
Transforming the credit related business processes of a leading Asian bank

Investing in managed service solutions for asset managers and hedge funds
Client wins include a large commodities broker dealer, several prime
brokers, premier asset managers and a global multi-strategy fund

Developing broader risk solution for the insurance industry
Integrated management of assets and liabilities for global insurers

Continued focus on core solutions
Leading banks in EMEA and Asia are leveraging and broadening their
usage of our solutions
Outlook for 2006/2007
Market Drivers

Adoption of ‘risk aware’ business applications in financial services
Large regional banks in EMEA – full credit approval solution
Large NA asset manager – one solution for portfolio and risk managers

Increasingly complex financial markets and products which require
more sophisticated tools
Valuation and hedging of Variable Annuity Products for top NA insurer

Regulation for banks (more countries adopting Basel II), asset
managers and insurance companies (e.g. Solvency II)
Leading bank won FST Compliance Project of the Year Award (Basel II)
Full enterprise risk management and Basel II solutions for regional banks

Financial institutions’ increasing use of external vendors for risk
solutions
Integrated value based management for large regional banks in EMEA
Adoption of our solutions in mission-critical trading environments
Algorithmics
in the News 1H 2006/7
•
Pension Insurance Corporation Selects Risk Platform from
Algorithmics to Manage Assets and Liabilities
•
Danske Bank Completes First Phase of Economic Capital Project with
Algorithmics
•
Algorithmics Awarded Patent for Innovative Portfolio Performance
Measurement Methodology
•
Cannizaro Signs on to Algorithmics' Leading-Edge Managed Service
Platform
•
Algorithmics Hosts Credit Risk Management Forum with the Chinese
•
Banking Regulatory Commission
Marex Financial Live with a Managed Risk Service Hosted by
Algorithmics
•
TD Securities Prime Brokerage Now Live with a Managed Risk
Service Hosted by Algorithmics
Appendix
49
Fitch Ratings
Glossary of Terms

Asset Backed Security (ABS) - A financial security backed by a loan, lease or
receivables against assets other than real estate and mortgage-backed securities.

Commercial Mortgage Backed Security (CMBS) - A type of mortgagebacked security that is secured by the loan on a commercial property.

Residential Mortgage Backed Security (RMBS) - A type of
security whose cash flows come from residential debt such as mortgages, homeequity loans and sub-prime mortgages.

Sub-prime Mortgage - Loans made to borrowers unable to qualify under
traditional, more stringent criteria due to a limited or blemished credit history
and limited capacity for repayment. Because sub-prime borrowers are
considered at higher risk to default, sub-prime lenders require a higher interest
rate and fees than they would require from a traditional borrower with good
credit terms.

Covered Bond – A Covered bond is a security issued by financial institutions,
secured against pools of mortgages or public-sector loans.
Fitch Ratings
Glossary of Terms

Collateralized Debt Obligation (CDO) - An investment-grade security backed by a
pool of bonds, loans and other assets. A CDO is unique in that it is comprised of
different tranches, each with a different maturity and risk associated with it.

Cash Flow CDO – A CDO structured to pay off liabilities with the interest and
principal payments (cash flows) of its collateral. These expose investors to credit
risk by actually holding collateral that is subject to default.

Synthetic CDO – A CDO that sells credit protection via credit default swaps
rather than cash assets. Synthetic CDOs use credit default swaps to synthetically
replicate a cash flow CDO.

Hybrid CDO - A CDO that utilizes the funding structures of both cash and
synthetic CDOs.

Market Value CDO – A CDO structured to pay off liabilities by generating cash
from trading assets and from interest on invested assets.
Fitch Ratings
Glossary of Terms (cont’d)



RAP CD - Fitch’s Risk Analytics Platform for Credit Derivatives is a breakthrough global
market-risk assessment service that helps investors understand how their CDO investments
trade by tracing price movements back to the changes in the CDOs underlying portfolio from
which they stem.
VECTOR Default Model (VECTOR) - Fitch Ratings’ main quantitative tool for evaluating
default risk in credit portfolios backing CDOs. The main outputs of VECTOR are the rating
default rate, rating loss rate and the rating recovery rate corresponding to each rating tier
within a security.
Matrix – Fitch Ratings’ financial guarantee capital model which provides a stochastic
assessment of a financial guarantor’s capital adequacy position.