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Monthly Overview:                     September  2011  

           

modeFinance Monthly  Overview  

September   2011    

                     

In order   to   give   a   financial   and   economic   overview   of     miscellaneous   companies   from   different   countries,   modeFinance     analysts   executed   a   monthly   study   regarding   the   calculated     ratings.    

   

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

How many  companies?  

In September,  2011modeFinance  calculated   829,691   ratings   based  on  2010  annual  financial  statements  in  90  countries   across   the   world.     In   the   table   of   ratings   by   country   (Tab.1),   the  first  10  countries  with  the  number  of  the  ratings  which   are   evaluated   by   modeFinance   using   MORE   rating   technology  (please  see  the  details  here)  are  presented.      

Country  

Number of  evaluated  ratings  

France Belgium   United  Kingdom   Russian  Federation   Italy   Sweden   Denmark   Norway   Germany   Finland   Others   TOTAL  

320,277 82,807   75,333   70,336   58,949   50,937   40,512   28,116   22,872   22,001   57,551   829,691  

Mean Rating   BB   B   CCC   BB   B   BB   B   BB   BB   BB  

BB BB  

Tab 1  the  first  10  countries  in  terms  of  number  of  evaluated  ratings  in  September  2010    

Fig  1Distribution  of  evaluated  companies  

   

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

 

How much  is  the  Total  Turnover?      

In September,   2011the   value   of   the   sum   of   the   Total   Turnover  of  the  rated  companies  is  6,220,804  millionEuros.   The   distribution   of   the   Total   Turnover   for   the   rated   companies  is  shown  if  the  following  graph.    

 

The evolution  of  ROI  and  ROE?    

On the   evaluated   companies,   a   statistical   study   of   the   distribution   of   ROI   and   ROE   during   the   observed   years   (2008-­‐2009-­‐20010)  is  executed.    

   

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

 

The evolution  of  the  debts?    

Using the  Leverage  Ratio  it  is  possible  to  understand  the   evolution  of  total  debts  during  the  years.      

 

How many  companies  with  profits  or   losses?    

In the   following   graph   it   is   possible   to   understand   the   evolution  of  Profit&Loss  during  the  years  in  our  study.    

     

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

And what  about  the  corporate  credit   rating?    

To understand  the  trends  in  ratings  over  the  years,  the   comparison  among  2008,  2009  and  2010  performances   are   exhibited   in   the   following   graph.   Thanks   to   the   comparison   among   years   it   is   possible   to   observe   the   trends   in   the   ratings   within   the   years.   The   first   figure   shows  the  distribution  of  the  three  years’  rating  results;   in  addition  to  this  the  aggregated  classes  of  ratings  can   be   observed   in   the   second   figure.   (The   aggregated   classes  are  Healthy,  Equilibrated,  Vulnerable  and  Risky-­‐   please  see  the  Appendix).    

   

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

And what  about  probability  of   default?    

It is   interesting   to   check   the   evolution   of   the   mean   probability   of   default   evaluated   on   every   companies   with   2010   data.   This   month   the   modeFinance   Risk   Index  is  0,0903.      

                           

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

Which company  had  the  best  rating  in   September?      

The top   ten   companies   with   the   best   ratings   (according   to   the  available  data  in  September  2010)  are  exhibited  in  Table   2.   The   companies   were   selected   from   the   global   database,   hence  they  represent  different  countries.    

Company name  

Country

Rating

ADISSEO FRANCE  

France

AAA AAA   AAA   AAA   AAA   AAA   AAA   AAA   AAA  

GAZPROM YURGM  TREIDING  

Russian Federation  

SOCIETE PAR  ACTIONS  FERMEE  L`OREAL  

Russian Federation  

GAZPROM YURGM  DEVELOPMENT  

Russian Federation  

STANDARD FOOD  CORPORATION  

Taiwan

ROHM-­‐WAKO ELECTRONICS  (MALAYSIA)  SDN  BHD  

Malaysia

CASINO COSMOPOL  AB  

Sweden

NOVO-­‐SALAVATSKAYA TETS  

Russian Federation  

MOSKOVSKAYA OBLASTNAYA  ENERGOSETEVAYA  KOMPANIYA   OTKRYTOE  AKTSIONERNOE  OBSHCHESTVO  PO  NALADKE,   SOVERSHENSTVOVANIYU  EKSPLUATATSII  I  ORGANIZATSII   UPRAVLENIYA  ATOMNYKH  STANTSII  ATOMTEKHENERGO    

Russian Federation   Russian  Federation  

AAA

                         

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

The best  company  in  September,2011:  modeFinance  Credit  Report    

 

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

 

APPENDIX MORE  rating  guide     General  vision   A   credit   rating   is   an   opinion   of   the   general   creditworthiness   of   an   obligor   (issuer   rating),   or   the   creditworthiness   of   an   obligor   in   respect   of   a   specific   debt   security,   or   other   financial   obligation   (issue   rating),  based  on  relevant  risk  factors.     The   Multi   Objective   Rating   Evaluation   (MORE)   model   is   essentially   used   to   assess   the   level   of   distress   of   industrial  companies  by  using  data  included  in  financial  statements.   The   basic   idea   of   the   model   is   to   analyze   a   set   of   financial   and   economic   ratios   in   a   predictive   corporate   bankruptcy   model   with   the   purpose   of   creating   a   fundamental   credit   rating   model   for   each   industrial   sector.     Results   of   the   model   are   obtained   by   applying   newly   developed   numerical   methodologies,   drawing   together  financial  theory,  data  mining  and  engineering  design  methodologies.  The  heart  of  MORE  is  a  multi   dimensional   and   multi   objective   algorithm   that   produces   a   classification   of   each   company,   by   taking   into   account  any  attributes  (such  as  sector  and  country)  characterizing  a  firm.   The  model  gives  the  opportunity  to  assign  a  rating  to  a  company  even  without  considering  a  complete  data   analysis   and   allows   to   process   quality   information.   It   induces   a   better   understanding   of   a   company’s   strength   and   weakness   thanks   to   sophisticated   data   mining   tools   and   taking   into   account   the   analysts’   knowledge.     The   MORE   rating   vision   is   to   look   at   the   fundamental   economics   of   the   company.   The   main   idea   is   to   evaluate  the  rating  observing  every  aspect  of  the  economical  and  financial  behavior  of  the  company:  better   is  the  equilibrium  between  the  different  aspects,  better  will  be  the  final  rating.   This   is   done   studying,   evaluating   and   aggregating   the   most   important   sections   of   the   financial   and   economic  behavior  of  a  company  as:  profitability,  liquidity,  solvency,  interest  coverage  and  efficiency.    

 

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

Rating  scale     Rating  class  

Rating Macro  class  

The company's  capacity  to  meet  its  financial  commitments  is  extremely   strong.  The  company  shows  an  excellent  economic  and  financial  flow  and   fund  equilibrium  

AAA

Healthy

AA

Assessment

The company  has  very  strong  creditworthiness.  It  also  has  a  good  capital   structure  and  economic  and  financial  equilibrium.  Difference  from  'AAA'  is   slight   The  company  has  a  high  solvency.  The  company  is  however  more   susceptible  to  the  adverse  effects  of  changes  in  circumstances  and   economic  conditions  than  companies  in  higher  rated  categories  

A

Capital structure  and  economic  equilibrium  are  considered  adequate.  The   company's  capacity  to  meet  its  financial  commitments  could  be  affected   by  serious  unfavourable  events  

BBB Equilibrated   BB  

A company  rated  'BB'  is  more  vulnerable  than  companies  rated  'BBB'.   Furthermore  the  company  faces  major  ongoing  uncertainties  or  exposure   to  adverse  business,  financial,  or  economic  conditions  

B

The company  presents  vulnerable  signals  with  regard  to  its  fundamentals.   Adverse  business,  financial,  or  economic  conditions  will  be  likely  to  impair   the  company's  capacity  or  willingness  to  meet  its  financial  commitments   Vulnerable  

CCC

A company  rated  'CCC'  has  a  dangerous  disequilibrium  on  the  capital   structure  and  on  its  economic  and  financial  fundamentals.  Adverse   market  events  and  an  inadequate  management  could  affect  with  high   probability  the  company's  solvency   The  company  shows  signals  of  high  vulnerability.  In  the  event  of  adverse   market  and  economic  conditions,  the  company's  strong  disequilibrium   could  increase  

CC Risky  

C

The company  shows  considerable  pathological  situations.  The  company's   capacity  to  meet  its  financial  commitments  is  very  low   The  company  has  not  any  longer  the  capacity  to  meet  its  financial   commitments  

D

     

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

 

Fundamental Credit  Rating  Ratios     Solvency  ratios   Leverage  ratio   Measures  the  level  of  total  liabilities  of  the  company  in   comparison  with  equity   Assets  to  debt   Indicates  company’s  solvency.  The  company  shows  a  level  of   deficit  when  the  value  of  this  ratio  is  under  one  unit   Financial    ratios   Fixed  Assets  coverage  ratio   Only  for  holdings.  It  measures  the  capital  structure  i.e.  whether  a   company  covers  the  fixed  assets  with  long  term  capital.   Liquidity    ratios   Current  ratio   The  current  ratio  measures  whether  a  company  has  sufficient   short-­‐term  assets  to  cover  its  short-­‐term  liabilities.   Quick  ratio   The  quick  ratio  compares  current  liabilities  only  to  those  assets   that  can  be  readily  turned  into  cash.   Profitability  and  economic  ratios   Return  on  Investment  (ROI)   It  measures  the  profitability  of  company  investments  without   regard  to  the  way  the  investment  is  financed.   Return  on  Equity(ROE)   It  measures  the  profitability  of  the  equity.   Asset  turnover   It  indicates  the  investments  turnover  with  regard  to  sales.  The   level  assumed  from  the  ratio  depends  on  the  sector  in  which  the   company  operates.   Profit  margin   It  indicates  the  profitability  of  the  sales.   Interest  coverage  ratio   Interest  Paid  coverage   Indicate  the  ability  of  the  company  to  cover  interest  expenses   through  the  economic  margins  (Gross  profit  and  EBIT)  and  through   the  cash  flow  from  operating  activities.  

                     

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

   

mF Credit  Limit   mF   Credit   limit   is   the   estimation   of   the   amount   of   maximum   credit   that   is   possible   to   assign   on   a   commercial  relationship  with  the  analyzed  company  with  an  outlook  of  one  year.   modeFinance  used  the  following  values  associated  with  the  company  analyzed  while  computing  the  credit   limit:  

• • • • • •

Size; Years  in  Business;   Average  number  of  suppliers;   Liquidity  of  the  company  and  the  comparison  with  its  sector;;   The  funds  dedicated  to  be  paid  to  suppliers;   The   likelihood   that   a   company   September   pay   its   debts   in   the   next   12   months   (MORE   Ratings).    

The credit   limit   in   this   report   is   merely   a   suggested   value   of   commercial   credit   limit   calculated   on   the   basis   of   annual   public   data.   This   value   should   be   reviewed   by   paying   attention   at   the   Confidence   Level   value   and   by  using  other  information  such  as  other  business  information,  news...  etc;  and  private  information  such  as   the  relationship  with  client,  history  of  payments,  guarantees  andthe  knowledge  of  the  sector.  

Probability  of  default  and  Confidence  Level   In   addition   to   the   MORE   rating,   modeFinance   also   estimates   the  probability   of   default   and   provides   a   level   of  confidence.  The  probability  of  default  is  the  degree  of  certainty  (in  quantitative  terms)  that  the  company   will  go  into  default.   As   the   probability   of   default   is   strongly   affected   by   the   economic   climate   the   company   is   operating   in,   companies  in  the  same  MORE  class  will  not  necessarily  have  the  same  probability  of  default.       The   MORE   model   can   produce   a   MORE   rating   even   if   there   is   missing   data   by   using   an   associated   confidence  level:       The   level   of   confidence   does   not   indicate   financial   confidence   in   the   company.   It   is   a   reflection   of   the   variations   in   availability   of   financial   data   across   Europe   due   to   filing   regulations   and   suggests   the   degree   of   financial  detail  the  MORE  rating  is  able  to  take  into  account  for  each  company.       For  companies  with  fully  populated  records  a  confidence  level  of  100%  would  be  applied:  companies  where   no   financial   data   is   provided,   0%.   This   puts   the   MORE   rating   in   a   context   for   the   user   and   aids   interpretation.      

modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com


Monthly Overview:                     September  2011  

   

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modeFinance AREA Science Park Padriciano 99 34012 Trieste ITALY

For more information visit: www.modefinance.com

modeFinance Monthly Oveview: September 2011  

modeFinance Monthly Oveview: September 2011

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