contents - Fimalac

Transcription

contents - Fimalac

2013
ANNUAL REPORT
Year ended December 31, 2013
2013
Contents
CONTENTS
CHAPTER 1 – PRESENTATION OF THE FIMALAC GROUP .................................................................. 5
1.1. –
Chairman’s Message .................................................................................................................... 5
1.2. –
Key Figures ................................................................................................................................. 8
1.3. –
Legal Structure........................................................................................................................... 10
1.3.1. – Group structure as of December 31, 2013 ............................................................................. 10
1.3.2. – Significant subsidiaries at December 31, 2013 ...................................................................... 11
1.4. –
Fimalac (Parent Company) ......................................................................................................... 11
1.5. –
Fitch Group ................................................................................................................................ 11
1.5.1. – History of Fitch Group ......................................................................................................... 12
1.5.2. – Operating highlights ............................................................................................................. 14
1.5.3. – Fitch Ratings, Fitch Solutions And Fitch Learning ................................................................ 14
1.6. –
Fimalac Developpement ............................................................................................................. 16
1.7. –
Creation of a Digital Division (Media and Information) .............................................................. 18
1.8. –
Real Estate Activities ................................................................................................................. 18
1.9. –
Additional Information ............................................................................................................... 20
1.9.1. – Dependence factors .............................................................................................................. 20
1.9.2. – Employee, environmental and societal information ............................................................... 20
1.9.3. – Provisions for environmental risks........................................................................................ 25
1.9.4. – Investment policy ................................................................................................................. 25
1.9.5. – Property, plant and equipment .............................................................................................. 26
1.9.6. – Material contracts................................................................................................................. 26
CHAPTER 2 - “CULTURE & DIVERSITÉ” FOUNDATION .................................................................... 27
CHAPTER 3 - RISK FACTORS................................................................................................................. 31
3.1. –
Liquidity risk ............................................................................................................................. 31
3.2. –
Market risks (currency and interest rate risks) ............................................................................. 32
3.2.1. – Currency risk ....................................................................................................................... 32
3.2.2. – Interest rate risk ................................................................................................................... 33
3.2.3. – Equities risk ......................................................................................................................... 34
3.3. –
Customer risk............................................................................................................................. 35
3.3.1. – Fitch Group .......................................................................................................................... 35
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Contents
3.3.2. – Groupe Lucien Barrière ........................................................................................................ 35
3.3.3. – Live entertainment production and entertainment venue management ................................... 35
3.3.4. – Digital Segment ................................................................................................................... 36
3.4. –
Risks associated with off-balance sheet commitments ................................................................ 36
3.5. –
Legal risks ................................................................................................................................. 37
3.5.1. – Fitch Group .......................................................................................................................... 37
3.5.2. – Other legal risks ................................................................................................................... 39
3.6. –
Industrial and environmental risks .............................................................................................. 40
3.7. –
Other risks ................................................................................................................................. 40
3.7.1. – Risks affecting the industries in which the Group operates .................................................... 40
3.7.2. – Risks associated with Vega’s business (entertainment venue management) ........................... 40
3.7.3. – Risks associated with the live entertainment production business .......................................... 40
3.7.4. – Risks associated with Groupe Lucien Barrière’s business ..................................................... 41
3.7.5. – Risk associated with the Digital businesses ........................................................................... 42
3.8. –
Liens or mortgages on Fimalac’s assets ...................................................................................... 42
3.9. –
Insurance ................................................................................................................................... 42
3.10. –
Real estate market risks ............................................................................................................ 43
CHAPTER 4 - MANAGEMENT'S DISCUSSION AND ANALYSIS......................................................... 44
4.1. –
Management’s discussion and analysis of the consolidated financial statements ......................... 44
4.2. –
Management’s discussion and analysis of the company financial statements ............................... 49
CHAPTER 5 - TREND INFORMATION ................................................................................................... 50
5.1. –
Recent Developments ................................................................................................................. 50
5.2. –
Outlook for fiscal 2014 .............................................................................................................. 50
5.3. –
Financial calendar ...................................................................................................................... 51
CHAPTER 6 - FINANCIAL INFORMATION ........................................................................................... 52
6.1. –
Consolidated financial statements ............................................................................................... 52
6.2. –
Statutory auditors' fees ............................................................................................................. 126
6.3. –
Report of the Statutory Auditors on the consolidated financial statements ................................. 127
6.4. –
Company financial statements .................................................................................................. 129
6.5. –
Report of the Statutory Auditors on the Company financial statements ..................................... 148
6.6. –
Statutory Auditors’ special report on related party agreements .................................................. 150
CHAPTER 7 - CORPORATE GOVERNANCE ....................................................................................... 154
7.1. –
Senior Management structure ................................................................................................... 154
7.2. –
Chairman's Report (Article L. 225-37 of the French Commercial Code) and Report
of the Auditors on the Chairman's Report ........................................................................... 154
7.2.1. – Chairman's Report .............................................................................................................. 154
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Contents
7.2.2. – Report of the Auditors on the Chairman's report ................................................................. 172
7.3. –
Information about directors and non-voting directors ................................................................ 174
7.4. –
Directors' interests .................................................................................................................... 194
7.4.1. – Directors’ individual compensation packages ..................................................................... 194
7.4.2. – Funding of central services by Group companies ................................................................ 203
7.4.3. – Cash pooling agreement ..................................................................................................... 203
7.4.4. – Other agreements entered into in prior years and which remained in force in
2013................................................................................................................................... 204
7.4.5. – Agreements authorized during the year ............................................................................... 204
7.4.6. – Loans and guarantees granted to directors........................................................................... 204
7.5. –
List of transactions governed by article L.621-18-2 of the French Monetary and
Financial Code ................................................................................................................... 205
7.6. –
Employee profit-sharing plans .................................................................................................. 206
7.6.1. – Profit-sharing and incentive bonus agreements ................................................................... 206
7.6.2. – Management stock options ................................................................................................. 206
CHAPTER 8 - GENERAL INFORMATION ABOUT FIMALAC AND ITS CAPITAL ........................... 207
8.1. –
Legal information..................................................................................................................... 207
8.2. –
Information About the Company’s Capital ............................................................................... 210
8.2.1. – Share capital at December 31, 2013 .................................................................................... 210
8.2.2. – Share buybacks .................................................................................................................. 210
8.2.3. – Stock option plans .............................................................................................................. 212
8.2.4. – Share equivalents ............................................................................................................... 212
8.2.5. – Authorized, unissued capital ............................................................................................... 212
8.2.6. – Changes in capital over the last five years........................................................................... 213
8.3. –
Sources and Amounts of Cash Flows ........................................................................................ 213
8.4. –
Ownership Structure ................................................................................................................ 213
8.5. –
Market for Fimalac Securities................................................................................................... 217
8.5.1. – Listings .............................................................................................................................. 217
8.5.2. – Share performance over the last 18 months ......................................................................... 218
8.6. –
Dividends................................................................................................................................. 218
8.6.1. – Dividends paid over the last five years................................................................................ 218
8.6.2. – Statute of limitations for dividends ..................................................................................... 218
8.7. –
Five-Year Financial Summary .................................................................................................. 219
CHAPTER 9 - ANNUAL SHAREHOLDERS’ MEETING OF June 17, 2014 ........................................... 220
9.1. –
Report of the Board of Directors on the Proposed Resolutions .................................................. 220
9.2. –
Statutory Auditors’ Reports on the Extraordinary Resolutions .................................................. 223
9.2.1. – Statutory Auditors’ special report on the capital reduction(s) to be carried out by
canceling treasury shares .................................................................................................... 223
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Contents
9.2.2. – Statutory Auditors’ special report on the granting of new or existing shares ........................ 224
9.2.3. – Statutory Auditors’ special report on the employee rights issue ........................................... 225
9.3. –
Text of the Proposed Resolutions ............................................................................................. 226
CHAPTER 10 - MISCELLANEOUS INFORMATION ............................................................................ 233
10.1. –
Statutory Auditors .................................................................................................................. 233
10.2. –
Information Policy ................................................................................................................. 233
10.3. –
Information published or disclosed to the public since january 1, 2013 ................................... 234
10.4. –
Documents on Display ........................................................................................................... 235
CHAPTER 11 - CROSS-REFERENCE LIST OF INFORMATION REQUIRED IN THE ANNUAL
REPORT............................................................................................................................ 236
CHAPTER 12 - CORPORATE SOCIAL AND ENVIRONMENTAL RESPONSIBILITY INDEX .......... 237
CHAPTER 13 - REPORT ON SOCIAL, ENVIRONMENTAL AND SOCIETAL INFORMATION ........ 241
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Presentation of the Fimalac Group
CHAPITRE 1 – PRESENTATION OF THE FIMALAC GROUP
1.1. –
CHAIRMAN’S MESSAGE
Dear Shareholder,
I was pleased to announce to you that the Fimalac Group reported attributable profit of €79 million in 2013, up
a strong 52.5% on the previous year, excluding non-recurring items. The increase was led by the excellent
performance delivered by Fitch, which enjoyed one of its best years ever in terms of both its businesses and
operating results.
Given this strong performance, at the Annual Shareholders’ Meeting on June 17, the Board of Directors will
recommend increasing the dividend to €1.90 per share, compared with €1.80 including a special dividend of
€0.30 per share in the previous year.
Another cause for satisfaction is that last July we created a digital division that is well positioned in media and
news. Our Group is continuing to diversify, not only in digital operations but also in the entertainment business
that we have been developing in recent years. Lastly, our office building in London is now fully let, which is
another positive point.
***
1) Excellent Performance by Fitch in 2013
Fitch delivered one of its best performances ever in 2013, with revenue increasing 12.5% like-for-like to €740
million.
All segments of the rating business generated higher revenues in 2013, led by corporate finance and financial
institutions. Strong gains were achieved in the EMEA region (Europe, Middle East, Africa) during the year (up
17.7%), with growth remaining robust in North America (up 10.1%) and Latin America (up 11.2%). This
dynamic performance was supported by good cost discipline, leading to an even sharper increase in operating
results for 2013, with EBITDA up 22.2% like-for-like to €299.7 million.
Fitch is a full-service ratings agency that covers every segment of the ratings market and operates in around 50
countries. In today’s difficult, uncertain global economic environment, the growing reliance on Fitch’s
opinions is evidence of investors’ sustained confidence.
Subscription-based research services provided by Fitch grew at an exceptional pace in 2013. Constituting
Fitch’s second business line, they now account for roughly 15% of its revenue. In a challenging environment,
market participants as well as major international and government institutions are increasingly calling on
Fitch’s research services to interpret the massive quantities of economic and financial data that are available
worldwide. umTo meet the credit analyst training needs of major financial institutions, banks and insurance
companies, Fitch has created a third business line dedicated to specialized credit analysis training and learning
solutions. This business already accounts for nearly 5% of Fitch’s total revenue.
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More recently, on March 13, 2014 Fitch acquired all outstanding shares in Business Monitor International
(BMI), a widely recognized provider of country risk analysis and industry research specialising in in emerging
and frontier markets. The company employs around 300 people worldwide and has offices in London, New
York, Singapore and Pretoria. The BMI acquisition is consistent with Fitch’s strategy of developing the
business by meeting the ever-growing needs of public and private-sector investors and issuers.
2) Investments in Leisure Activities and Luxury Hotels hold up well
Fimalac is also present in leisure activities and luxury hotels, with a 40% interest in Groupe Lucien Barrière, a
leader in this sector, and a 10% stake in Société Fermière du Casino Municipal de Cannes (SFCMC).
Groupe Lucien Barrière is the leading casino operator in France and Switzerland as well as a major player in
luxury hotels through the Barrière and Fouquet’s brands.
In an overall economic environment that remains difficult, revenue was virtually stable at €1,055.7 million
(before gambling taxes) and EBITDA held up well at €140.2 million.
Groupe Lucien Barrière clearly demonstrated resilience and maintained satisfactory profit margins thanks to a
series of management measures, growth generated by the most recent establishments and on-going investment.
3) Sustained Diversification in Entertainment
In 2010, Fimalac decided to diversify into the Entertainment industry. Today, it ranks among the French
leaders in this field, in both live entertainment production and venue management. The aggregate revenue of
these two segments (excluding Groupe Lucien Barrière’s venue management business) exceeded €150 million
in 2013.
Several additional partnerships were created in 2013, for example, to acquire the Le Comédia theatre business
and to launch a number of musical shows.
4) Creation and development of a Digital Division
Fimalac now holds a 65.2% stake in the recently merged Webedia/TFCo group, which in turn owns all
outstanding shares in the Allociné group.
Webedia manages leading news aggregator websites, such as purepeople.com and puremedia.com, and is also
present in consulting, outsourced content creation and web community management for brands and companies.
Allociné is France’s number one news media group in the cinema and TV-series segment.
In December 2013, Webedia acquired a controlling interest in Groupe Confidentielles (owner of the 750g
recipe website) and Exponaute (a cultural events website). After the 2013 year-end, it acquired the Dubaibased company Diwanee and the French company Melberries to further extend its offering.
Through these acquisitions, Fimalac has created France’s seventh largest digital media group – with 17.2
million discrete visitors in February 2014 – and become the leader in entertainment and leisure information. As
a result, Fimalac will operate seamlessly across the media and entertainment value chain and intends to speed
its growth in this area, both in France and internationally, where Webedia and Allociné are already established.
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5) Real Estate Activities
In August 2013, the remaining vacant floors of the Canary Wharf office building in London, with its roughly
33,000 square meters of floor space, were let to KPMG.
Fully let under long-term leases, the building will provide Fimalac with a secure revenue stream over many
years.
***
Our 2013 fiscal year was very positive in many ways. As I mentioned before, our earnings were high – and
sharply higher – thus enabling us to increase the dividend to be paid to shareholders following the Annual
Meeting. I also hope that the diversifications undertaken in recent years – and especially in the digital sector
this year – will open up new prospects for your Company’s future.
Marc Ladreit de Lacharrière
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1.2. –
KEY FIGURES
Profit attributable to equity holders (in € millions)
(*) Pro forma 12 months excluding non-recurring items (see 4.1 B)
Equity attributable to equity holders (in € millions)
8
Dividends per share (in €)
(*) Including a special dividend of €0.30
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1.3. –
LEGAL STRUCTURE
1.3.1. – GROUP STRUCTURE AS OF DECEMBER 31, 2013
(See Note 3 to the consolidated financial statements).
(1) Includes shares held directly and indirectly by Marc Ladreit de Lacharrière. Note also that shares representing 6.7% of t he capital
are held by Fimalac.
(2) U.S.-based Hearst Corporation is Fimalac’s sole partner in Fitch Group. It initially acquired 20% of the capital and voting rights in
April 2006, and raised its interest to 50% of the capital and voting rights on April 11, 2012.
Hearst Corporation is one of the world’s largest communication groups. Created more than 120 years ago, the privately owned group
currently has over 20,000 employees. Its diversified business base encompasses the print media (newspapers and magazines), television
and radio and the Internet.
The agreement between Fimalac and Hearst Corporation, which has been in force since 2006, can be downloaded from the Investor
Relations section (Legal Documents) of the Fimalac website (www.fimalac.com). It is available in French only. A summary of the
agreement is provided in section 8.4 (“Ownership Structure”).
(3) Following Fimalac’s investment in Groupe Lucien Barrière, Fimalac and Groupe Desseigne-Barrière, as sole shareholders, decided
to adopt new bylaws for the company, (a closely-held corporation organized as a société par actions simplifiée) that include provisions
governing its management and corporate governance (committees of the Board, executive management powers, etc.) and the sale of
shares (lock-up clause, right of first offer, tag-along rights, etc.). These bylaws (in French only) can be downloaded from the Fimalac
website, www.fimalac.com, by selecting the French version and clicking on “Relations Investisseurs”, “Documentations financiè res et
juridiques”, “Documents juridiques”.
(4) Following Fimalac’s acquisition of 10% of Société Fermière du Casino Municipal de Cannes (SFCMC), a shareholders’ pact was
signed with Dominique Desseigne, dated June 29, 2011, providing for tag-along rights, drag-along rights and a reciprocal right to
information. The pact has been entered into for a renewable period of ten years.
(5) Fimalac and the minority shareholders of Webedia signed a ten-year shareholders’ pact when Fimalac acquired a stake in Webedia,
providing for put and call options, tag-along rights and drag-along rights.
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1.3.2. – SIGNIFICANT SUBSIDIARIES AT DECEMBER 31, 2013
Name
Country of registration
Fitch Group*
United States
Fimalac Développement
Luxembourg
North Colonnade Ltd (*)
United Kingdom
Vega (*)
France
Trois S (*)
France
Webedia
France
Business
Holding company for the
Fitch Group
Holding company for the
Group’s
diversified
investments, investment of
cash reserves
Owner of the London
building
Entertainment
venue
operator
Entertainment and leisure
organizer
Digital content, holding
company for the Digital
division
% interest held by
Fimalac*
50.0%
100.0%
80.0%
100.0%
100.0%
65.2%
(*) Indirectly owned
1.4. –
FIMALAC (PARENT COMPANY)
The Group’s parent company, Fimalac, does not conduct any business on its own behalf. It holds a stake in
several operating subsidiaries and is actively involved in determining their strategies.
In addition, Fimalac provides cash management services to most Group companies.
The subsidiaries’ profits generally flow to Fimalac and there are no restrictions on the use of their cash
reserves.
1.5. –
FITCH GROUP
Fitch Group, a 50%-owned subsidiary of Fimalac, heads the ratings business conducted by Fitch Ratings and
Fitch Solutions (research, subscriptions) and Fitch Learning (learning and training).
Fitch Group reported consolidated revenues of €740 million ($982 million) for the twelve months ended
December 31, 2013, with 50 offices and some 2,500 employees worldwide.
Fitch Group had three business segments in 2013. Alongside Fitch Ratings (credit ratings) and Fitch Solutions
(research and analytics), the Group announced the acquisition on January 24, 2013 of 7city, a professional
training specialist with notable expertise in credit risk analysis. This latest acquisition led to the creation of
Fitch Group’s third business segment, Fitch Learning.
A significant post-balance sheet event was the acquisition on March 13, 2014 of all outstanding shares in
Business Monitor International (BMI), a widely recognized provider of country risk analysis and industry
research specialising in in emerging and frontier markets. BMI employs around 300 people worldwide, with
offices in London, New York, Singapore and Pretoria. The acquisition is consistent with Fitch’s strategy of
developing the business by meeting the ever-growing needs of public and private-sector investors and issuers.
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1.5.1. – HISTORY OF FITCH GROUP
1) 1992-1997: from the initial investment in the rating business to the creation of a European business base
Fimalac made its first investments in the ratings business in 1992, with the aim of leveraging the opportunities
that were expected to arise from financial market deregulation and disintermediation. At the time, credit ratings
were still relatively unheard of in Europe.
It was clear from the outset that a French base would quickly prove too small to build a rating agency, and at
the end of 1992 Fimalac seized the opportunity to purchase IBCA, a small London-based agency with 38
employees that had an excellent reputation, particularly in European bank ratings.
The period 1993-1997 was devoted to widening IBCA's ratings offering and growing the business, focusing on
Europe. Over time, IBCA extended its coverage to include the entire financial institutions sector, corporate
finance, public finance, managed funds and structured finance. Originally based in London, IBCA gradually
built an international network of offices, mainly in continental Europe but also in South America. By the end
of 1997, IBCA had revenues of over $30 million and some 180 employees.
The successful development of IBCA attested to the quality of Fimalac’s strategy and its skill in seeking out
businesses with strong international capabilities that have the potential to serve as the foundation for creating a
European champion. As was the case for the other Fimalac companies that expanded in Europe from a national
base, it became clear that IBCA needed to achieve global scale and to set up operations in the United States,
the world’s largest ratings market. This was particularly important because IBCA was not an SEC-recognized
NRSRO and therefore could not rate U.S. issuers.
2) 1997-2000: creation of an international rating Agency
To achieve its goal of establishing a global market presence, IBCA merged with U.S.-based Fitch Ratings in
1998. The combination created a leading global rating agency by leveraging the excellent geographic and
product fit between IBCA and Fitch, as well as Fitch’s status as an NRSRO.
Thanks to this U.S. presence and expanded business base, Fimalac reached its goal of becoming an
international rating agency sooner than expected. The two companies were merged in 1998 to form FitchIBCA, with headquarters in both New York and London. Revenues grew from $156 million in 1998 to $172
million in 1999, with around 750 employees.
3) 2000: emergence of the world's third largest rating agency
Following the merger, the challenge was to raise Fitch-IBCA to a position alongside Moody’s and Standard &
Poor’s, the two U.S.-based agencies that dominated the global market.
A major step forward in meeting this challenge was taken in April 2000, with Fimalac’s successful takeover
bid on the New York stock exchange for Duff & Phelps, the fourth largest rating agency.
To complete the consolidation process, Marc Ladreit de Lacharrière persuaded Thomson Financial Services to
sell him their BankWatch subsidiary, specialized in financial institutions and ranked No. 5 in the ratings
market with a significant presence in Asia.
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On completion of these transactions, the current Fitch Ratings was formed and Fimalac fulfilled its goal of
creating the world’s third largest rating agency with 2001 revenues of more than $300 million and close to
1,250 employees worldwide.
4) 2008-2012: creation and growth of Fitch Solutions
In January 2008, Fitch Group created Fitch Solutions, a new division of Fitch Ratings bringing to market a
wide range of data, analytical tools and related services that also distributes Fitch Ratings’ content.
Since then, Fitch Solutions has been committed to delivering value beyond the rating by providing flexible
product offerings to meet the diverse needs of the credit markets. These products round out Fimalac’s presence
in the ratings business by providing financial professionals the intelligence they need to make informed risk
management and investment decisions.
5) 2013: Creation of Fitch Learning
Following its January 2013 acquisition of 7city, a professional training specialist with primary expertise in
credit analysis, Fitch Group created the new business segment Fitch Learning, a future global leader in
financial analysis and credit risk analysis training.
6) Fitch Group Today
Fitch Group’s presence spans every major region of the world with operations in some 50 countries. Fitch
Group continues to expand its expertise and market presence. The acquisition of Business Monitor
International in March 2014 further strengthens its offer in the field of financial information services.
Milestones:
Early 1992:
Creation of a rating department
End-1992:
Acquisition of UK-based IBCA
1997:
Acquisition of US-based Fitch
Fitch and IBCA merged to form Fitch-IBCA
2000:
Acquisition of US-based Duff & Phelps
Duff & Phelps merged with Fitch-IBCA to create Fitch-IBCA Duff & Phelps
End-2000:
Acquisition of Canada’s Bankwatch
Fitch-IBCA Duff & Phelps renamed Fitch Ratings
2008:
Creation of Fitch Solutions
2013:
Acquisition of 7city and creation of Fitch Learning
2014:
Acquisition of Business Monitor International (BMI)
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1.5.2. – OPERATING HIGHLIGHTS
In 2013, Fitch Group generated revenues of €740 million ($982 million) compared with €654.4 million
($841.3 million) in the prior 12-month period.
Consolidated recurring operating profit came to €250.4 million ($332.3 million), versus €211.5 million ($271.9
million) for the comparable period in 2012.
1.5.3. – FITCH RATINGS, FITCH SOLUTIONS AND FITCH LEARNING
Fitch Ratings’ global expertise, built on a foundation of local market experience, spans across capital markets
in over 150 countries. Fitch Ratings conducts analysis of the credit markets covering Corporate Finance
(including Financial Institutions and Insurance), Structured Finance, Public Finance, and Global Infrastructure
and Project Finance.
The agency’s ratings and research products and services offer the debt capital markets an opinion on the
relative ability of an entity or a transaction to meet financial commitments such as interest payments,
repayment of principal, insurance claims or counterparty obligations. The agency’s credit ratings are used by
investors worldwide as an indication of the likelihood of receiving their money back in accordance with the
terms on which they invested.
In addition to ratings, Fitch offers fixed income research, analytics, data, pricing and valuation services
through its Fitch Solutions unit. It also provides professional training services through Fitch Learning.
Significant events
Fitch Group enjoyed sustained growth in 2013, thanks to strong debt market issuance activity.
As the sovereign crisis highlighted the role of rating agencies, financial reform continued to be a hot topic. In
Europe, regulators called on rating agencies to provide more transparency in the rating process, a request Fitch
Ratings has always supported. This year the agency continued to invest in its structure, tools, people, and
processes to reflect the complex credit and regulatory environment, as well as to make Fitch Ratings’ opinions
even more timely, relevant and ultimately even more valuable to market constituents.
Fitch is expecting to see growth in 2014, thanks to the recovery of the main developed economies and
moderate improvements in emerging markets. In the United States, the improved job market and soaring
corporate profits indicate a positive economic growth outlook. Concerns over the budget and debt ceiling,
global shocks and a sharp increase in long-term government borrowing rates could nevertheless hamper the
upturn. In Europe, the recovery will strengthen with time thanks to competitiveness gains and restructuring
measures, gentler austerity plans and a return to normal financing conditions.
The Federal Reserve’s quantitative easing program should be pursued in 2014 but the short-term lending rate is
expected to remain unchanged until mid-2015. According to Fitch, the four major central banks (FED, ECB,
BoE and BoJ) will draw up their exit strategies based on growth prospects in their respective economies.
Emerging markets will continue to report higher growth than advanced economies.
However, the gap should narrow as a result of thbe various challenges they are facing – tighter lending
standards in international markets, declining non-energy commodity prices and political risks.
Fitch Solutions continued to enhance its product offerings throughout 2013. In addition to continuous product
enhancements, Fitch Solutions is focused on greater commercialization of Fitch Ratings’ research content and
strategic expansion of third-party distribution channels, especially non-traditional channels, in order to boost
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its presence in financial markets.
Financial Review
In total, Fitch Group’s businesses generated combined revenues of $982 million in 2013, compared with
$841.3 million in the previous 12-month period. After translation into euros, their contribution to consolidated
revenue came to €740 million versus €654.4 million for the previous period, an increase of 13.1% on a
reported basis and 12.5% like-for-like (at constant exchange rates and comparable scope of consolidation).
On the ratings side, 2013 saw revenue increases across most asset classes driven by favourable issuance trends,
continued acceptance of Fitch’s credit opinions and business development efforts worldwide.
On the solutions side, the business saw increased demand for credit-related research, data and training that
support credit analysis and compliance efforts. Fitch Solutions’ main source of revenue is its subscription and
research business, which enjoys a strong, recurring revenue stream.
Recurring operating profit was $332.3 million for 2013 compared with $271.9 million for the prior twelve
month period. Translated into euros, recurring operating profit (€250.4 million) increased 18.4% on a reported
basis and 21.8% like-for-like.
Market Share and Competition
Fitch Ratings competes with other credit rating agencies, on a local and global scale, along with investment
banks, brokerage houses, asset managers, and independent research firms that offer credit research, data,
analysis, and opinions. Its largest competitors in the global credit rating business are Moody’s Investors
Service (“Moody’s”) and Standard & Poor’s Rating Services (“S&P”), a division of The McGraw-Hill
Companies, Inc.
Fitch Ratings’ market share of global debt issuance, measured in terms of dollar issuance volume, stands at an
estimated 67%. The table below lists global market share for the individual sectors where Fitch is an active
player.
Fitch Ratings Market Share
(2013)1 :
Non-Financial Corporates
Financial Institutions
Structured Finance
U.S. Public Finance
Sovereigns
Total
1
64%
85%
56%
56%
95%
67%
Source: Fitch Ratings
15
Fitch Ratings’ Scope (source: Fitch Ratings)
Fitch Ratings currently maintains coverage of approximately 6,000 financial institutions, including over 3,500
banks and 1,200 insurance companies. Finance & leasing companies, broker-dealers, asset managers, managed
funds, and covered bonds make up the remainder of its financial institution coverage universe.
Additionally, the agency currently rates more than 1,700 corporate issuers, 100 sovereigns, 250 subsovereigns, 515 global infrastructure transactions, and 45,000 U.S. municipal transactions. Fitch Ratings
maintains surveillance on over 7,800 structured finance transactions worldwide.
Fiscal 2014 Outlook
Fitch’s analytical and research capabilities continue to be widely valued by market participants and this will
continue to support its businesses and financial performance in 2014. Fitch’s performance during the year will
also be dependent on macroeconomic trends and capital market conditions. Such factors include bond market
issuance activity, credit conditions, interest rates, and GDP growth, which can vary by region.
Fitch Ratings, Fitch Solutions and Fitch Learning will remain focused on meeting the evolving and increasing
ratings, research, and analytical needs of issuers and investors.
1.6. –
FIMALAC DEVELOPPEMENT
Fimalac Développement indirectly holds the North Colonnade building (see section 1.8 below), but is also the
platform for the Group’s diversification investments, which target competitive companies with strong growth
potential. The Group invests in these companies alongside their managers and plays an active role in helping to
run their business. Over the years, Fimalac Développement has made significant investments in the leisure and
luxury hotel segments as well as in the entertainment industry.
a) – Investments in leisure activities and luxury hotels
On March 4, 2011, Fimalac Développement acquired 40% of Groupe Lucien Barrière in a €186 million deal.
Groupe Lucien Barrière is a renowned luxury hotel and casino operator with two prestigious brands, Barrière
and Fouquet’s. It is the leading casino operator in France and Switzerland, and one of the top tier players in
this market in Europe. In all, it operates 37 casinos.
It also operates entertainment venues and owns most of the 15 luxury hotels that it manages.
On June 29, 2011, furthering its ties with the Desseigne-Barrière family, the Group purchased a 10% stake in
Société Fermière du Casino Municipal de Cannes (SFCMC) for €35 million. SFCMC operates two casinos and
two prestigious hotels in Cannes (including the Majestic Barrière) offering a comprehensive range of gaming,
leisure and entertainment options.
Despite an overall economic environment that remains difficult, Group Lucien Barrière’s fiscal 2013 revenue
(covering the 12 months to October 31, 2013) was only slightly down on the previous year, totalling €1,055.7
million versus €1,095 million, before gambling taxes.) EBITDA came to €140.2 million (compared to €151.1
million for the prior 12 month period.)
16
In this way, Groupe Lucien Barrière demonstrated strong resilience in a challenging economic environment. It
maintained satisfactory profit margins thanks to a series of cost control measures and growth at its most
recently opened establishments (Le Caire and Toulouse in 2007, Port-Leucate and Blotzheim in 2008, Lille in
2010 and Hôtel Balnéo de Ribeauvillé in 2012), and reaped the benefits of its investments.
b) – Investments in the entertainment industry
In 2010, Fimalac decided to diversify into the Entertainment industry. Today, it ranks among the French
leaders in this field, in both live entertainment production and venue management.
For the organization of concerts and shows, Fimalac Développement partnered Gilbert Coullier, one of the
market leaders, in 2010, with the acquisition of a 40% interest in Gilbert Coullier Productions. In 2011, it then
acquired 40% of Auguri Productions, alongside Charles Bensmaine. More recently, in 2013, Fimalac
Développement acquired a 40% stake in K-Wet Productions, which is managed by Michel Lumbroso.
Today, the artist portfolio comprises the leading, internationally renowned French-speaking singers, as well as
younger singers with great potential. It also includes well-known French-speaking comedians.
Given the indications that combining content and delivery would be strategic, in 2010 Fimalac also acquired a
majority interest in Vega, France’s leading entertainment venue management company. Through it, Fimalac
now manages around 30 venues, including the Zenith in Paris and multi-purpose facilities in many other
French cities. Vega also has a controlling interest in Ellipse, a manager of sports and water sports centres.
In 2012, the Group created Trois-S, a company dedicated to serving the entertainment and leisure industry,
including through the provision of technology and marketing resources.
Several additional partnerships were created in 2013, for example, to acquire the Le Comédia theatre business
and to launch a number of musical shows.
In 2013, the Entertainment business generated aggregate revenue of €153.9 million. Given the consolidation
method used for certain investments (several are accounted for by the equity method), its contribution to
Fimalac’s consolidated revenue stood at €40.2 million.
c) – Key balance sheet data for Fimalac Développement
€ millions
306.7
30.8
337.5
310.8
26.7
At December 31, 2013
Subsidiaries and affiliates (*)
Cash and cash equivalents and current financial assets
Total assets
Equity
Debt (Fimalac 100%)
Total equity and liabilities
337.5
(*) Of which, interests acquired during the year: €23.6 million
17
1.7. –
CREATION OF A DIGITAL DIVISION (MEDIA AND INFORMATION)
Fimalac acquired control of Webedia, TFCo (Terrafemina websites and various consulting businesses) and
Allociné in July 2013.
Webedia manages leading news aggregators like purepeople.com and puremedia.com. Already established in
consulting, outsourced content creation and web community management for brands and companies, Webedia
will exploit the industry inroads made by TFCo. Allociné is France’s number one news media group in the
cinema and TV-series segment
At end-2013, Fimalac held a 65.2% stake in the recently merged Webedia/TFCo group, which in turn owns all
outstanding shares in Allociné. In December 2013, Webedia acquired a controlling interest in Groupe
Confidentielles (owner of the 750g recipe website) and Exponaute (a cultural events website). After the 2013
balance sheet date, Webedia acquired the Dubai-based company Diwanee and the French company Melberries.
Through these acquisitions, Fimalac has created France’s seventh largest digital media group and strengthened
its leadership in entertainment and leisure information. Fimalac aims to speed its expansion in the digital
industry, both in France and internationally.
The digital division companies’ contribution to Fimalac’s consolidated revenue corresponds to the revenue
they generated from the date of acquisition, i.e. €21.4 million in 2013.
1.8. –
REAL ESTATE ACTIVITIES
The Group has also developed significant real estate activities. Through its indirect subsidiary North
Colonnade Ltd, the Group owns a roughly 33,000-square-meter office building in the Canary Wharf financial
district of London.
In France, the Fimalac holding company acquired an office building next to its headquarters on rue de Lille in
Paris in November 2010. The building has since been renovated and refurbished to provide offices for some of
the Group’s businesses, including Vega and Trois S.
Key balance sheet data for North Colonnade Ltd (London building), the Group’s main real estate asset, is
presented below:
18
in £ millions
Net carrying amount
in € millions
215.8
258.8
3.0
3.6
226.0
271.1
- Fimalac 80%
69.6
97.0
- Hearst 20%
17.4
24.0
(78.5)
(110.8)
- Fimalac 80%
110.0
131.9
- Hearst 20%
27.5
33.0
- Non-bank financing
80.0
96.0
- Cash and cash equivalents
(7.2)
(8.6)
226.0
271.1
Other assets and liabilities
Financed through equity
- Translation reserve and retained earnings
Financed through debt
At the end of 2010, Fitch’s London-based teams moved their headquarters to the 30 North Colonnade building
in Canary Wharf, where they occupy a significant portion of the floor space.
Fimalac’s marketing strategy for the remaining floors consisted of looking outside the Group for a first-class
tenant with a strong capital base capable of leasing all of the vacant space on a long-term basis. This goal was
met with the signature in early August 2013 of a lease with accounting and consulting firm KPMG for all of
the available space.Fully let under long-term leases, the building will provide Fimalac with a secure revenue
stream over many years.This positive development enabled North Colonnade Ltd to partially refinance its debt
with a major insurance company in December 2013, in the form of an £80 million (€96 million) seven-year
bullet loan.
The building’s fair value takes into account Fimalac’s ability and intention to hold the asset over a long period,
the quality of the building and its prime location; its current rental and market values and the terms of the
leases, especially the most recent lease, signed with KPMG in August 2013.As in prior years, fair value was
determined by the discounted cash flows method, taking into account the rent-free period granted under the
latest lease, a projected yield over the life of the property ranging from 5.10% to 5.50% and a discount rate of
between 5.75% and 6.20%.
The leases include clearly defined escalation clauses.
The base value, calculated using a terminal yield of 5.10% and a discount rate of 5.75%, amounts to £217.4
million (€260.8 million). Its sensitivity to changes in the terminal yield or discount rate is discussed in Note 5.3
to the consolidated financial statements.
In connection with the replacement of part of the financing for the property by a loan from an insurance
company, a separate indepedent valuation was obtained in December 2013 at the insurance company’s request.
19
The valuation-date fair value, including a discount for the rent-free period granted under the latest lease, is in
the range of £202 million to £210 million (€242 million to €252 million). The future fair value, after the rentfree period has elapsed and assuming all the leases are rolled over with the current tenants, is estimated at £235
million to £243 million (€282 million to €291 million).
Although the basic assumptions applied by the valuer (particularly rental value and projected yield) were
consistent with those used in the discounted cash flows model described above, the independent valuation was
based on the price that would be expected to be obtained for the sale of the entire building, less a conservative
discount.
1.9. –
ADDITIONAL INFORMATION
1.9.1. – DEPENDENCE FACTORS
Management considers that the Group is not materially dependent on any patents, licenses, supply,
manufacturing, sales or financial contracts, new industrial processes, suppliers or government agencies.
Certain specific dependence factors, mainly related to investments, are discussed below.
1.9.2. – EMPLOYEE, ENVIRONMENTAL AND SOCIETAL INFORMATION
Scope of employee, environmental and societal information
Fimalac’s accounting department has drawn up a report explaining its sustainable development and CSR
policy, and that of its subsidiaries.
This report was compiled from data provided by its correspondents in the subsidiaries. Information in this
report concerns fully consolidated companies in the Fimalac Group.
For this reason, no information is given on the Fitch Group or Group Lucien Barrière, for example, which ar e
accounted for by the equity method. Nonetheless, Fitch Group employees are mentioned in a separate
paragraph, for information purposes only (see chapter 13 – Corporate social and environmental responsibility
index).
1) EMPLOYEE INFORMATION
For fiscal 2012, Fimalac’s consolidated employee data primarily corresponded to the Vega and 3S
entertainment businesses and the parent company and its holding companies.
Since July 2013, Fimalac has created a Digital Division (Webedia, TFCo, Allociné), which is also fully
consolidated. Reporting procedures are being put in place in the companies that make up this division to
collect employee, societal and environmental information starting next year. To date, only the number of
employees in these companies is mentioned in the report.
The information below primarily concerns the Group’s operational subsidiaries. The parent company Fimalac
only employs a small team, mostly working in management, investment operations, and the Group’s growth. It
has low rates of absenteeism and turnover.
20
a) Average number of Group employees by business segment
Average number of employees
2012
2013
Entertainment
195
382
Digital (*)
415*
Real estate
1
1
Parent and holding companies
27
27
223
825
(*) Number of employees at the yer-end (exceptionally) given the date of acquisition
The increase in the number of employees in the Entertainment segment (primarily Vega and its subsidiaries) is
largely due to the inclusion of 182 employees from Ellipse, a new consolidated subsidiary of Vega that
specialises in managing water sports centres.
As the Digital Division was only created in the second half of 2013, its end-2013 headcount was deemed to be
a more representative measure of its total workforce.
b) Group employees at the year-end
Employees at the year-end
December 31, 2012
December 31, 2013
211
423 (*)
Digital
-
415
Real estate
1
1
31
36
243
875
Entertainment
(*) including 179 for Vega and 205 for its subsidiary Ellipse.
c) Group employees by category at December 31, 2013
Employees at December 31, 2013
Managers
293
Supervisors, technicians and administrative staff
578
Production staff
1
Other
3
875
21
d) Group employees by geographical region at December 31, 2013
France
800
Other European Union countries
15
Latin America
55
Other
5
875
The Group’s employees are mainly concentrated in France (91%). The Digital Division also operates
internationally through its subsidiaries in Brazil, Germany, Spain and Turkey.
e) Group employees by gender at December 31, 2013
Men
Women
Total
Entertainment
210
213
423
Digital
199
216
415
-
1
1
19
17
36
428
447
875
49%
51%
100%
Real estate
The gender balance is even across business segments, as shown in the above table.
f) Group employees by age at December 31, 2013
Under 30
398
30 to 50
414
Over 50
63
875
Teams in the Digital Division are generally young, with 249 out of 415 under the age of 30 (60% of the
workforce). The age pyramid for other businesses is more balanced.
g) Employee information specific to the Entertainment business
The payroll (excluding payroll taxes) for this business stood at €11.2 million in 2013 and corresponds almost
exclusively to permanent staff.
The compensation policy currently in place complies with the collective bargaining agreements (Syntec,
performing arts, ELAC, sports) applicable to the business segments concerned.
22
This sector employs a significant number of casual workers (“intermittents”), generating by nature a high
turnover.
The number of employees under traditional permanent contracts is, however, rising and turnover is tending to
decline (95 hires under permanent contracts, 79 departures). Departures were primarily motivated by reasons
other than dismissal (end of trial period, mutually agreed termination, or resignation).
Concerning the organization of work hours, Vega signed an agreement ten years agothat affords the company
the flexibility it needs to operate in the events segment, with alternating peak and off-peak periods. It also
allows employees to benefit from additional rest time during the summer holidays.
At Ellipse, work hours are organized to meet the legal requirements of the French Labor Code (Code du
Travail) and the specific provisions of the applicable collective bargaining agreements.
In addition, employee dialogue procedures comply with the regulations in force regarding consultation with
employee representative bodies.
In terms of workplace health and safety conditions, Vega conducts an annual audit at all of its sites as a
preventive measure, to check compliance with legislation in terms of mandatory documents, jointly organize
prevention plans with producers working at its sites, and set up systems to prevent work-related hardship.
These measures reduced the number of workplace accidents recorded in 2013 to fewer than 30.
Training in subsidiaries is tailored to operational requirements, particularly in the case of orientation training
for new employees and technical training for employees in charge of monitoring equipment.
This business segment provides a total of 1,196 hours of training to its staff.
Vega also pays careful attention to combatting discrimination in all its forms, both in hiring its own permanent
staff and dealing with the employment agencies that supply its temporary receptionists, technicians and
cleaners.
h) Employee information specific to Fitch (for information purposes)
For information purposes, Fitch Group (accounted for by the equity method) had 2,484 employees at
December 31, 2013 compared with 2,394 at December 31, 2012.
The breakdown by geographical area is as follows:
North America
857
Europe, the Middle East & Africa
737
Latin America
240
Asia
650
2,484
At December 31, 2013 Fitch Group employed 1,469 men (59%) and 1,015 women (41%).
At that date, around 25% of employees were under 30, 64% were between 30 and 50 and 11% were over 50.
23
2) ENVIRONMENTAL INFORMATION
Fimalac is not materially concerned by environmental issues, with the exception of the developments listed
below concerning Vega (venue management) and its subsidiary Ellipse (watersports centres).
a) Environmental information/Vega
At its venues, Vega encourages the public to use green, clean and alternative modes of transportation, by
communicating about the use of public transportation on venue websites. Many documents, such as
newsletters, are digitized to reduce waste production at the source.
Cleaning services at venues are all committed to using sustainable products, and provide data sheets to prove
it.
Waste is systematically sorted at refreshment stands on performance nights, as well as by cleaning services at
the venue, as a contractual obligation.
Vega also takes noise pollution very seriously and fits noise limiters at venues if necessary.
In addition, its venues offer spectators hearing protectors at concerts.Energy use is carefully controlled, with
close daily monitoring of fluid inflows and outflows by centralized technical management facilities and
investments made when necessary to reduce heat loss (public entrances and technical areas equipped with
airlocks, for example.)
b) Environmental information/Ellipse
In its competitive bids to operate publicly owned sports complexes, Ellipse systematically specifies the actions
planned and measures taken in order to meet sustainable development requirements.
This is the case, for example, of the fluid use management and monitoring service that Ellipse outsources to
specialists.
An annual water use report is compiled by the designated company, reporting the ratio between the volume of
water consumed and the number of swimmers, and the actions required or suggested to optimize that ratio. The
report indicates that an average of 188 litres of water are used per swimmer per year across all sites.
Use per swimmer refers to the total volume of water used to fill the pools plus any top ups required in response
to swimmer traffic, divided by the recorded number of swimmers.
Measures to promote consumer health and safety – apart from regulatory measures – are controlled by
implementing procedures within each unit to monitor water quality (pH index), the accountability of the
responsible person and actions taken, all noted and stamped in a health and safety book monitored by the
regional health agency ARS. These are supported by periodic inspections carried out at random by independent
laboratories commissioned by the ARS.
c) Environmental information/property assets
The recently constructed building held in London by the Group through North Colonnade Ltd. complies with
the most rigorous building environmental standards and is BREEAM-certified with an “Excellent”
sustainability rating.
The building at 101, rue de Lille in Paris as well as the Fimalac Group’s headquarters at 97, rue de Lille have
been completely renovated.
24
3) SOCIETAL INFORMATION
Committed to promoting French artistic and cultural heritage and convinced that culture plays a unifying role
in human society, Fimalac creates and partners many projects that foster France’s cultural influence, encourage
diversity and facilitate access to the arts and to artistic and cultural practices. See section 2 of this document
for examples of the many actions taken by Fimalac’s “Culture & Diversité” Foundation.
1.9.3. – PROVISIONS FOR ENVIRONMENTAL RISKS
At December 31, 2013, provisions for environmental liabilities – arising mainly from the Group’s past
activities or divested businesses – amounted to €3.6 million before discounting (see Note 5.14 to the
consolidated financial statements).
Environmental risks associated with sites used directly by Fimalac or its current subsidiaries
Fimalac has performed risk analyses and audits with the assistance of specialized external consultants, to
determine the work to be carried out to eliminate soil and subsurface water pollution at sites where the Group
formerly conducted industrial activities. These analyses and audits concerned years prior to fiscal 2013.
At the sites concerned, various clean-up solutions are possible and are being or will be reviewed with the
environmental authorities. The provision of €1.8 million recorded in the balance sheet at December 31, 2013
for these sites is based on the external consultants’ highest estimate of the costs involved.
Environmental risks associated with sites owned by divested companies for which the Group has given
environmental warranties
Provisions have been booked for claims under the seller’s warranties given to the buyers of Facom Tools and
Sempsa, based on cost estimates made by specialized external consultants. At December 31, 2013, the related
provisions amounted to €4 million.
1.9.4. – INVESTMENT POLICY
Acquisitions
Fitch Group
Fitch Group mainly focused on the ratings, research, data and analytics businesses conducted through Fitch
Ratings and Fitch Solutions. It now also provides professional training services through Fitch Learning and
acquired Business Monitor International in March 2014.
Fitch considers acquisitions as a component of its growth strategy and is continually evaluating opportunities
to enhance its products and services offering.
Fitch’s core strategy is to further develop its areas of financial services expertise and Fitch looks favorably
upon businesses that complement its existing product portfolio. Expansion into other financial services-related
offerings could also be incorporated into our development policy, depending on opportunities that arise.
25
Fimalac and its other subsidiaries
General external growth strategy
Since 2007, Fimalac has developed significant real estate activities, notably with the construction of an office
building in London and the acquisition and renovation of the building located next door to Fimalac’s head
office in Paris. Several new proposed investment projects were examined in fiscal 2013.
In terms of acquisitions, the highlights of 2013 were the acquisitions of Webedia, TFCo and AlloCiné, to
create a Digital Division in media and news. Webedia also extended its offering in December 2013 with the
acquisition of Groupe Confidentielles (750g), and Exponaute, followed by Dubai-based Diwanee and French
company Melberries at the start of 2014. The aim is to further expand this division in the coming years to make
it a leading player both in France and internationally.
Since 2010, Fimalac has been developing an Entertainment business (show production and venue
management), which was further strengthened by several investments and partnerships in 2013. The Group is
also aiming to grow this business in the coming years.
Capital expenditure
Fitch, Vega and the Digital Division operate in the services sector and, as a result, capital expenditure by in
these sub-groups is not material.
Concerning the real estate activities, since July 2007 when Fimalac announced its decision to build a large
office building in London’s Canary Wharf financial district, the Group has acquired a new building in Paris, at
101 rue de Lille in the 7th arrondissement. The Canary Wharf building is held through North Colonnade Ltd, a
company set up for this purpose that is 80%-owned indirectly by Fimalac and 20% by Hearst Corporation.
Research and development
Research and development costs recorded as an expense in the period amounted to €2.5 million and only
concerned Webedia and Allociné.
1.9.5. – PROPERTY, PLANT AND EQUIPMENT
The Group’s main property asset is the London building, which was completed in 2010.
In addition, the Group owns:
- A 1,500-square-meter office building at 97 rue de Lille, Paris 7, which houses the corporate teams and the
employees of the FCBS GIE intercompany partnership. There are no material charges on the property. The
Group renovated the premises in 2013.
- A complex at 101 rue de Lille, Paris 7 acquired in 2010. It comprises two buildings, one with four floors
overlooking the street and the courtyard, and one with three floors overlooking the courtyard. It has been fully
renovated.
All other offices are leased. There are no ties between the lessors and Fimalac or its officers.
1.9.6. – MATERIAL CONTRACTS
With the exception of the shareholders’ pacts with Hearst Corporation for Fitch Group, Webedia’s minority
interests for Webedia, the Desseigne family for Groupe Lucien Barrière and the loan agreements (notably
Fimalac’s syndicated credit facility and the North Colonnade Ltd. refinancing), there are no significant
contracts that could have a material impact on the Company, its assets or its business.
26
“Culture & Diversité” Foundation
CHAPITRE 2 “CULTURE & DIVERSITÉ” FOUNDATION
Created in 2006 by Marc Ladreit de Lacharrière, Chairman and Chief Executive Officer of Fimalac, the “Culture
& Diversité” corporate foundation is guided by the conviction that one of society’s major challenges is to
broaden equal access to cultural references and artistic practices. Its mission is to facilitate access to arts and
culture for young people from schools in disadvantaged neighborhoods.
More than 17,000 students from some 170 public schools in France have participated in the programs organized
by the Foundation and its partners.
The Foundation develops its initiatives with the support of a Steering Committee comprised of prominent
stakeholders who are either active in culture and education or involved in combating social inequality. With the
help of its partners, the Foundation creates and deploys long-term, targeted programs to incorporate art and
culture into the curriculum at schools in underprivileged areas.
Excellence programs: The Foundation’s programs are designed with help from leading arts and culture partners
whose high standards of excellence guarantee the programs’ quality and rigor.
Experimental programs: The Foundation and its partners develop programs to meet specific needs, working
closely with leaders in France’s public education system, with the constant aim of ensuring that their initiatives
are relevant and effective.
Long-term programs: The “Culture & Diversité” Foundation is resolutely committed to a long-term approach.
Every program is supported by a partnership that remains in effect for several years so that the participating
students can be monitored over time.
Programs recognized by the authorities: The Foundation has signed a partnership agreement with the French
Ministries of National Education and Culture & Communication. This agreement recognizes the legitimacy of the
outreach methods adopted by the Foundation and attests to the authorities’ support of its initiatives.
The Foundation implements art and culture programs with a focus on two main objectives: social cohesion and
equal opportunity.
Social cohesion
Seven cultural awareness and artistic expression programs in support of social cohesion have been set up in
primary and secondary schools in disadvantaged neighborhoods, helping to instill shared cultural references
among young people, encourage their personal fulfillment and teach them to live together in society. The
programs allow participants to discover cultural works, meet artists and find out about cultural institutions, while
attending cultural appreciation courses and art workshops. In addition, to encourage primary and secondary
school students to experience culture, the Foundation is working with the French Ministries of National
Education and Culture & Communication to create an “Artistic and Cultural Boldness Award”, to be presented
by the President of France.
Developing creativity, in partnership with La Source (a non-profit created and chaired by Gérard Garouste) since
2006.
27
The aim of this program is to give secondary school students from disadvantaged neighborhoods in the Paris
region access to introductory training in the visual and performing arts.
Discovering the theatre and acting, in partnership with Théâtre du Rond-Point (a Paris theatre directed by JeanMichel Ribes) since 2006.The purpose of this program is to introduce disadvantaged public high school students
to the performing arts through theatre outings and drama lessons, thereby giving them broader exposure to
cultural reference works while enhancing oral expression, self-confidence and team spirit.
Sharing the image, in partnership with Le Bal (a non-profit chaired by Raymond Depardon) since 2008.
This program’s objective is to help young people to develop a critical eye and learn to interpret images. Led by
volunteers outside of school hours, the program is designed for 15 to 16 year-old students from public high
schools in disadvantaged neighborhoods that offer a variety of general and professional training courses related to
images.
The Culture & Diversité Improvisation Awards, sponsored by Jamel Debbouze and organized in partnership
with Déclic Théâtre since 2010.
The Improvisation Awards are designed to give middle school students in disadvantaged neighborhoods
(currently from eight French schools in Bordeaux, Lille, Rochefort and Trappes) the opportunity to practice the
art of theatre improvisation in workshops and competitions. Theatre improvisation fosters creativity, imagination
and artistic sensitivity, and also contributes to language and general knowledge acquisition. It builds the players’
self-confidence and sense of accomplishment, sharpens their listening skills and attentiveness to rules, and
promotes mutual respect and ability to function as a group.
Opening up to symphonic music, in partnership with Orchestre Colonne (directed by Laurent Petitgirard) since
2010.
This program’s goal is to raise awareness of orchestral instruments and symphonic music among children from
primary schools in underprivileged neighborhoods.
Getting started with contemporary dance, in partnership with Center Chorégraphique National de Grenoble
(directed by Jean-Claude Gallotta) since 2012.
This program aims to provide an introduction to contemporary dance to primary and middle school students from
disadvantaged neighborhoods, as well as to interested teenagers from the city of Grenoble.
“I like my heritage!” competition, in partnership with Fondation du Patrimoine since 2013.
This program is designed to raise awareness among primary school students about their local cultural heritage.
The “I like my heritage!” competition invites classes from schools in rural or disadvantaged areas to choose a
building, monument or other heritage object in their environment that is in need of restoration and submit a report
to explain why their project should be funded.
Artistic and Cultural Boldness Award
The product of a three-part alliance between the French Ministries of Education and Culture & Communication
and the “Culture & Diversité” Foundation, the Artistic and Cultural Boldness Award reflects the government’s
determination to make arts and culture education a priority. In line with the French President’s wish to reaffirm
the importance of broad access to culture, the award is granted to exemplary arts and culture education projects
supported by partnerships established between a school, a cultural institution and a local government authority. In
each school district, three finalists are selected for projects that successfully meet the award’s specific
requirements (target a student population without immediate access to the arts, sustainably include the project in
the school program and provide exposure to both artists and works of art). Three winners are then named by a
jury of professionals. Each receives an award crafted by the students of La Source and a donation ranging from
€5,000 to €10,000.
Equal opportunity
28
Ten equal opportunity programs have been set up to give young people from schools in disadvantaged
neighborhoods greater access to prestigious cultural education institutions. Based on an innovative, three-stage
method, the programs have been jointly organized with the Foundation’s partner schools. They are designed to
inform high school students about schools of excellence and the career opportunities that they make possible; to
prepare the most motivated students for the competitive entrance exams organized by partner schools during
Equal Opportunity open houses; and to support students once they are accepted to the partner schools through a
combination of scholarships, tutoring and job market entry assistance.
Equal Opportunity at Ecole du Louvre, in partnership with Ecole du Louvre since 2006.
Equal Opportunity at Fine Arts Colleges, in partnership since 2007 with:
Ecole Nationale Supérieure des Beaux-Arts de Paris (ENSBA), Ecole Nationale Supérieure des Arts Décoratifs
(Ecole des Arts Décos), ENSCI-Les Ateliers and Ecole Nationale Supérieure d’Arts de Paris Cergy (ENSAPC),
the National Association for Public Art College Preparatory Classes (APPEA) and the public education
authorities for Créteil, Paris and Versailles.
Equal Opportunity at Fémis, in partnership with Fémis since 2008.
Equal Opportunity in Architecture School, in partnership since 2009 with the Ecoles Nationales Supérieurs
d’Architecture (ENSA) of Bordeaux, Grenoble, Lille, Marne-la-Vallée, Normandy, Paris-Val de Seine and
Strasbourg.
Equal Opportunity at Institut National du Patrimoine, in partnership since 2010 with:
Institut National du Patrimoine,
Ecole du Louvre,
Ecole Nationale des Chartes.
Equal Opportunity in Artistic Professions, in partnership since 2010 with UNESCO for students of:
Ecole Supérieure d’Arts Appliqués (ESAA) Boulle,
ESAA Duperée,
Ecole Estienne,
Ecole Nationale Supérieure des Arts Appliqués et Métiers d’Art (ENSAAMA) Olivier de Serres,
La Source professional high school,
International training institutes and centers.
Equal Opportunity in Journalism School, in partnership since 2010 with:
The Equal Opportunity preparatory class at ESJ Lille,
The 13 journalism training programs recognized by the profession.
Equal Opportunity in Applied Art School, at the initiative of and in partnership with Paris City Hall since 2011,
and in partnership with:
Ecole Supérieure d’Arts Appliqués (ESAA) Boulle,
ESAA Duperée,
Ecole Estienne.
29
Equal Opportunity in Design School, in partnership since 2012 with:
Ecole des Arts Décos, l’ENSCI-Les Ateliers, Haute Ecole des Arts du Rhin, Ecole Supérieure d’Art et de Design
(ESAD) in Orléans, Reims and Saint-Etienne, the National Association for Public Art College Preparatory
Classes (APPEA),and the education authorities for Créteil, Paris and Versailles.
Equal Opportunity at Ecole Nationale Supérieure Louis-Lumière, in partnership with Ecole Nationale
Supérieure Louis-Lumière since 2012.
30
Risk Factors
CHAPITRE 3 RISK FACTORS
The risk factors described in this section concern the fully consolidated companies and Fitch Group, which is
50%-owned and controlled jointly. This section also includes a discussion of relevant material risk exposures
of Groupe Lucien Barrière and the other companies not controlled by Fimalac and accounted for the equity
method.
To the best of the Company’s knowledge, there are no risks not covered by provisions that could have a
material adverse effect on the financial position or results of the Company, the Group or its main associates.
All of the provisions carried in the balance sheet comply with the applicable accounting standards dealing with
the treatment of liabilities.
3.1. –
LIQUIDITY RISK
Based on the results of a specific liquidity risk analysis performed during the period, the Company considers
that it has sufficient liquid assets to meet its upcoming payment obligations.
Inception date
Fimalac
Confirmed lines of credit(1)
Amount drawn down at December 31,
2013
Undrawn amount (Fimalac)
July 2013
Expiry date
January 2016
In millions of
currency units
In € millions
€240.9
€240.9
€(50.0)
€(50.0)
€190.9
€190.9
See Note 5.21 to the consolidated financial statements – Off-balance sheet commitments.
Allociné
Drawn down credit lines
Webedia
Drawn down credit lines
Total Allociné/Webedia
Fitch Group
Confirmed line of credit*
Amount drawn down at December 31,
2013
July 2014
€1.2
€1.2
July 2015
€0.6
€0.6
December 2015
May 2016
€0.5
€0.6
€2.9
€0.5
€0.6
€2.9
July 2018
$200.0
€145.0
$(115.0)
€(83.4)
May 2012
Undrawn amount (Fitch Group)
$85.0
€61.6
€1 = $1.3194
* Five-year facility repayable in full on the expiry date. The facility amount was increased to $400 million in January 2014.
(1) Fimalac syndicated line of credit. An addendum signed on July 16, 2013 increased the facility to €250 million for a period of three
years, with an option to extend the agreement for a further one to two years. Since then, the facility amount has been reduce d to €240.9
million.
31
Risk Factors
The facility agreements do not include any rating triggers. However, they do include acceleration clauses based
on the following hard covenants:

Fimalac’s facility (€240.9 million)
Consolidated net debt/Equity < 0.5
Net cash flow/Debt service > 1.10
These ratios were met in 2013.

Fitch Group’s facility ($200 million)
1) Leverage ratio
Consolidated debt/EBITDA < 3.0
2)
Interest coverage ratio
EBITDA/Interest expense > 3.5
These ratios were met in 2013.

Fitch Group’s private placement notes ($150 million)
Leverage ratio
Consolidated net debt/EBITDA < 2.0
Given the Fitch Group’s net cash position at December 31, 2013, the leverage ratio was not applicable.
3.2. –
MARKET RISKS (CURRENCY AND INTEREST RATE RISKS)
3.2.1. – CURRENCY RISK
The main currency risks arise from intra-group fund transfers and treasury transactions. These risks are hedged
when the amounts involved are material.
The Group uses the following instruments to manage its currency risk:
 Forward purchases and sales of foreign currencies
 Purchases and sales of currency options.
32
Risk Factors
Sensitivity to changes in exchange rates at December 31, 2013
(in millions of currency units)
Total
converted
into €
USD
GBP
BRL
TRY
CHF
Money market securities issues
Bank borrowings
Intra-group borrowings
11.3
Sub-total Financial liabilities
11.3
0.0
0.0
17.6
12.2
7.3
15.4
2.0
7.2
15.4
2.0
7.2
Marketable securities
Cash
Intra-group loans
131.9
Sub-total Financial assets
149.5
12.2
110.0
117.3
0.0
0.0
0.0
Net currency position before hedging
138.3
12.2
117.3
(15.4)
(2.0)
(7.2)
Forward currency purchases
Forward currency sales
(131.9)
(110.0)
Net hedging position
Net currency position after hedging, expressed in the
currency concerned
(131.9)
0.0
(110.0)
0.0
0.0
0.0
6.4
12.2
7.3
(15.4)
(2.0)
(7.2)
Exchange rates: €/$ 1.3791 - €/£ 0.8337 – €/BRL 3.2576 - €/TRY 2.9605 - €/CHF 1.2276
(in € millions)
+/- 0.30
Sensitivity to a 1% change in exchange rates
Impact on profit
Impact on equity
Not material
3.2.2. – INTEREST RATE RISK
Group policy consists of hedging the risk of changes in interest rates. These risks are managed using the
following instruments:


Interest rate swaps
Forward rate agreements (FRAs), collars and caps
33
Risk Factors
Sensitivity to changes in interest rates at
December 31, 2013
Euro
position
(€m)
101.7
Total (€m)
101.7
GBP
position
GBP
position **
CAD
position **
Bank borrowings and other debt
178.0
49.1
107.5
Total financial liabilities
Marketable securities excluding shares
279.7
9.4
150.8
9.4
107.5
Cash
34.1
25.3
7.3
Bonds
10.6
10.6
Total financial assets
54.1
45.3
7.3
0.0
0.0
(225.6)
(105.5)
(100.2)
0.0
0.0
Net position before hedging (floating rate)
0.0
0.0
0.0
0.0
Hedging instruments
Swaps
96.0
80.0
Caps
Hedging position (fixed rate)
Net position after hedging
96.0
0.0
80.0
0.0
0.0
(129.6)
(105.5)
(20.2)
0.0
0.0
Exchange rates: €/$ 1.3791 - €/£ 0.8337
(in € millions)
+/- 1.3
Sensitivity to a 100-bp increase or decrease in interest rates
Impact on profit
Impact on equity
Not material
3.2.3. – EQUITIES RISK
Part of the Group’s available cash is invested in assets that are exposed to the risk of changes in stock market
prices, mainly European markets. These assets break down as follows:
(in € millions)
Listed shares (CAC 40)
Equity funds
Structured equity products
Total
Unrealised
gain (loss)
Cost
Market value at
December 31, 2013
Market value at
December 31, 2012
5.0
(2.4)
2.6
2.4
13.6
1.1
14.7
1.5
-
-
-
2.7
18.6
(1.3)
17.3
6.6
A 5% change in prices on European stock markets would have a €0.9 million impact on consolidated profit.
The analysis takes into account the full value of structured equity products due in particular to their maturity.
The Group also holds Fimalac shares acquired under the buyback program. In the consolidated financial
statements, these shares are reported as a deduction from equity at cost, under “Treasury stock”, with the result
that changes in the Fimalac share price have no impact on consolidated profit.
34
Risk Factors
In the Company's financial statements, the shares are recorded as an asset, as follows:
Long-term investments
Total
Number of shares
1,661,703
275,657
1,937,360
Cost (€m)
61.2
9.3
70.5
Based on the closing Fimalac share price on the last trading day in December 2013 (€46.40), the total market
value of these shares was €89.9 million.
The cost of shares recorded under “Long-term investments” in the Company's financial statements was greater
than their market value at December 31, 2013. However, as the shares were intended to be cancelled, no
provision for impairment was recorded at that date, in line with Recommendation No. 98-D of the CNC
Emerging Issues Committee (Comité d’Urgence).
The Fimalac shares recorded under “Marketable securities” in the Company's financial statements include
shares held for allocation under stock option and share grant plans, and shares bought back under the liquidity
contract. Their market value based on the closing Fimalac share price on the last trading day in December 2013
(€46.40) was €12.8 million. Based on their carrying amount of €12.5 million in the Company’s financial
statements, determined using the average share price for December 2013, a 5% fall in the share price would
have a €0.6 million negative impact on the Company’s profit.
3.3. –
CUSTOMER RISK
3.3.1. – FITCH GROUP
Fitch Group’s largest customer accounted for around 1.9% of total billings for the year ended December 31,
2013, the top five customers for around 7.4% and the top ten for around 12.3%.
Average payment terms are around 57 days. Fitch does not securitize its receivables.
3.3.2. – GROUPE LUCIEN BARRIÈRE
Customer risk at Groupe Lucien Barrière is directly influenced by business cycles, weather conditions and
changes in the French and international economic environments. In a difficult, turbulent and unpredictable
economy, but also in poor weather, consumers and guests may forgo, sharply reduce or postpone their leisure
spending.
To broaden its customer base, Groupe Lucien Barrière is focusing on expanding its presence in the Meetings,
Incentives, Conferences, and Exhibitions (MICE) segment, alongside the individual guest segment. In addition,
the company has developed a new centralized booking system. Individual guests visit hotels primarily at
weekends and during holiday periods, while MICE guests stay more during the week, at all periods in the year.
The risk in the casino business is limited due to the large number of customers.
3.3.3. – LIVE ENTERTAINMENT PRODUCTION AND ENTERTAINMENT VENUE MANAGEMENT
In the live entertainment production business, customer risk associated with ticket sales is low. Similarly,
advances in the areas of ticket controls and security features have considerably reduced the risks associated
with counterfeit tickets.
35
Risk Factors
At Vega, the Group considers that the contractual measures taken by the company have reduced its exposure to
customer default risk. In any event, this risk is not particularly material in relation to the size of the Group as a
whole.
3.3.4. – DIGITAL SEGMENT
A significant proportion of revenue generated by the Group's digital businesses comes from the sale of
advertising space and is directly influenced by the business cycle.
The Digital segment’s main customers are major French and international groups that purchase advertising
space either directly or through well-known international media-buying agencies. The credit risk associated
with these customers is limited.
The Digital segment also includes other non-advertising-related businesses, such as e-commerce. These
businesses’ customer bases are made up of a large number of small and medium-sized retailers for which the
default risk is assessed at each period-end in order to record any necessary provisions.
3.4. –
RISKS ASSOCIATED WITH OFF-BALANCE SHEET COMMITMENTS
Off-balance sheet commitments given in the ordinary course of business
(in € millions)
Guarantees given
Future minimum lease payments under non-cancellable leases
Other commitments given
Total
September 30,
2011
15.0
0.8
9.3
25.1
December 31, 2012 December 31, 2013
14.3
7.9
22.2
20.7
10.5
31.2
“Other commitments given” in the above table mainly concern the Fimalac stock options outstanding at the
period-end.
Other commitments
Other off-balance sheet commitments amounted to €72.5 million at December 31, 2013 and concerned the
seller's warranty given to the buyers of Algorithmics.
Contractual obligations and commitments
Contractual obligations
(in € millions)
Long-term debt
(see Note 5.12 to the consolidated financial
statements)
Obligations under finance leases
Total
n.a.
Within 1 year
n.a.
Payments due
In 1 to 5 years
n.a.
Beyond 5 years
n.a.
n.a.
n.a.
n.a.
n.a.
Operating leases
(see Note 5.21 to the consolidated financial
statements)
Total
11.1
1 .1
5.6
4.4
11.1
1 .1
5.6
4.4
(in € millions)
Total
Within 1 year
Payments due
In 1 to 5 years
Beyond 5 years
36
Risk Factors
Surety bonds
Sellers warranties
million)
(Algorithmics:
Total
€72.5
7.4
-
-
7.4
72.5
-
72.5
79.9
-
72.5
7.4
To the best of Fimalac’s knowledge, there are no other off-balance sheet commitments that have recently had
or could have a material impact on the financial condition or profitability of Fimalac and/or the Group.
Commitments arising from the sale of Algorithmics
When Algorithmics was sold in October 2011, Fimalac gave a seller’s warranty to the buyer, IBM, covering
any breaches of the company’s representations and warranties or other commitments as well as any predivestment tax liabilities.
The warranty expires as follows:
 Representations and warranties (other than those concerning intellectual property): 24 months after the
transaction completion date. This warranty has expired.
 Representations and warranties related to intellectual property: 48 months after the transaction
completion date.
 Tax liabilities and other claims: legal statute of limitations. The legal statute of limitations (under New
York State law) is six years; however, it may be interrupted or suspended in many different
circumstances and there are numerous exceptions, notably in the event of fraud.
Fimalac’s liability under the warranty is limited as follows (except as regards claims for tax liabilities):
 Limit for aggregate claims related to representations and warranties (including specific intellectual
property representations and warranties): $100 million.
 Limit per claim related to representations and warranties (except those concerning intellectual property):
10% of the sale price.
 Tax liabilities: no limit, but any tax provisions carried in the completion balance sheet will be deducted
from the amount payable under the warranty.
As of the date this document was published, no claims had been received under the seller’s warranty and no
provisions had been recorded for any such claims.
3.5. –
LEGAL RISKS
3.5.1. – FITCH GROUP
In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was signed into
United States federal law. The stated aim of the law is to promote the financial stability of the United States by
improving accountability and transparency in the financial system. The Act includes a range of provisions
intended to improve rating agency governance, accountability and performance and requires the U.S.
Securities and Exchange Commission (SEC) to adopt a number of new rules and conduct a number of studies
concerning rating agencies. The SEC has already adopted and implemented many of the rules and conducted
several studies required by the Act. Others remain forthcoming. While the enacted rules have not had a
material adverse impact on Fitch Group’s business or financial condition, it is too early to predict what impact
the Dodd-Frank Act will have once all of the outstanding rule proposals and studies are completed.
37
Risk Factors
Since various government bodies within the US, including the US Congress and the SEC, continue to review
the causes and effects of the global financial crisis that began in 2007, and the efficacy of the statutes and
regulations that were implemented in response, it is possible that additional new laws or rules and/or
requirements will be applied to rating agencies as a consequence of these reviews, especially in the area of
structured finance. Fitch Group is unable to predict what new measures will be implemented, if any, as a result
of these on-going reviews.
IOSCO
Fitch understands that the International Organization of Securities Commissions (IOSCO) is continuing to
encourage consistent global standards for the oversight of credit rating agencies and to assess whether any
additional guidance on best practices for credit rating agencies is necessary. IOSCO recently issued a
consultation paper on setting up supervisory colleges to oversee global credit rating agencies, with a view to
facilitating information sharing. Fitch also understands that
IOSCO is currently reviewing its CRA Code of Conduct, and that, as a result, IOSCO may amend this.
In addition, various national and supra-national regulators have suggested that ratings should be removed from
regulations, to the extent practical.
Although it is not possible to predict the outcome of any of these activities or proposals, Fitch currently does
not believe that any of these initiatives will have a material adverse impact on its business or financial
condition.
European Union
In June 2013, the EU Parliament approved a series of changes (CRA 3) to the 2009 Regulation (EC) No.
1060/2009 of the European Parliament and of the Council concerning rating agencies (EU Regulation). The
main changes introduced by CRA 3 were as follows: (i) increased requirements with respect to sovereign and
sub-sovereign ratings; (ii) decreased reliance on ratings in EU regulation and by EU institutions; (iii)
restrictions on cross-shareholdings and ratings of entities in whom certain CRA shareholders have material
interests; and (iv) EU-wide liability standards for CRAs. Fitch Ratings currently does not believe that any of
these changes will have a material adverse impact on its business or financial condition.
Other jurisdictions
Fitch Ratings maintains regular contact with the regulatory authorities in other regions, while cooperating with
financial supervisory bodies in compliance with local laws and regulations. Fitch Ratings has received
recognition as an external credit assessment institution (a so-called ECAI), where applicable, in all major
jurisdictions. Most of the major jurisdictions are considering, are introducing or have introduced, more formal
recognition and/or regulation of rating agencies. Fitch Ratings maintains a cooperative dialogue with the
regulatory authorities in these jurisdictions. Although it is not possible to predict the outcome definitively,
Fitch Ratings currently does not believe that any new regulations will have a material adverse impact on its
business or financial condition.
38
Risk Factors
Litigation and investigations
Fitch Ratings has been the subject of a variety of investigations initiated by various U.S. federal and state
authorities into the business of credit rating agencies and the role of credit rating agencies in the financial
crisis. Almost all of the investigations have been wound down with no material adverse impact on the business
or financial condition of Fitch Ratings. Fitch Ratings does not believe that any of the on-going investigations
will have a material adverse impact on its business or financial condition.
While Fitch Ratings has successfully concluded a significant number of litigations over the past few years
arising out of the financial crisis, Fitch Ratings remains involved in certain federal and state civil litigations in
the United States following from the financial crisis. Most of these concern Fitch Ratings credit opinions on
RMBSs and CDOs. Fitch Ratings believes that it has substantial defenses to the allegations of the civil
complaints brought against it and is defending itself vigorously.
Certain subsidiaries of Fitch Ratings located outside of the United States have also been the subject of
government investigation and have been involved in on-going litigation. In June 2012, the Chilean regulatory
body, the Superintendencia de Valores y Seguros, assessed a fine against the Fitch Ratings subsidiary in Chile
in a ratings related matter arising out of the failure of a Chilean retailer. The fine was subsequently halved by
the Chilean court. The matter is now on appeal. In Italy, two of Fitch Ratings’ employees, and its Italian
subsidiary, have been accused of market manipulation by an Italian prosecutor. Fitch Ratings believes all of
these allegations of criminal conduct are wholly without merit, and that it has substantial defenses. A public
prosecutor acting on behalf of Italy's national audit office (Corte dei conti) in Latium notified Fitch of his
intention to initiate legal proceedings against Fitch and two other rating agencies for the alleged damage
caused to the Italian state due to their knowingly downgrading Italian sovereign debt without justification.
Fitch considers that its Italian subsidiary and analysts acted in full compliance with the law and is actively
organizing
its defense. Fitch Ratings is also defending ratings-related litigation in Argentina, Italy and Korea. Fitch
Ratings does not believe that these on-going matters will have a material adverse impact on its business or
financial condition.
3.5.2. – OTHER LEGAL RISKS
Seller’s warranties
Warranty given to the buyers of Beissbarth (a subsidiary of Facom Tools divested in September 2005)
This warranty has now expired, except in respect of outstanding tax claims. A €0.7 million provision is carried
in the consolidated balance sheet at December 31, 2013 in respect of these claims.
Warranty given to the buyers of Facom Tools (divested on January 1, 2006)
The warranty was capped at €82 million and was ineffective for aggregate environmental claims of less than
€5 million and aggregate other claims of less than €2 million. Taking into account the payments already made
and the duration of the warranties given when the company was sold, a provision of €2.3 million is carried in
the consolidated balance sheet at December 31, 2013 to cover the estimated remaining risks arising from the
claims received.
Claims and litigation
Goom has filed suit against Fimalac and Fimalac Développement with the Paris Commercial Court, claiming
damages for the two companies' alleged failure to honor their undertakings in connection with discussions for
the possible acquisition of Virgin Radio. Fimalac and Fimalac Développement consider that they have serious
arguments for their defense against this manifestly unreasonable claim.
39
Risk Factors
Change of control clauses
Fimalac’s current syndicated credit agreement includes change of control clauses that concern the parent company, as
issuer, but not any of its subsidiaries.
Note that Fimalac and Hearst are required to maintain control over Fitch Group on a 50.1% basis, either
separately or in concert, under the agreements relating to Fitch Group’s external financing facilities, i.e. the
August 2011 private placement and the May 2012 syndicated credit facility.
Failure to comply with these change of control clauses could result in outstanding borrowings under these
facilities becoming immediately repayable.
3.6. –
INDUSTRIAL AND ENVIRONMENTAL RISKS
Potential environmental risks – corresponding mainly to pollution resulting from past activities – are evaluated
on a case-by-case basis, as new information emerges, by internal and/or external specialists as well as in the
course of environmental audits which are regularly performed at the highest risk sites.
More detailed information is provided in the “Environmental Report” above.
3.7. –
OTHER RISKS
3.7.1. – RISKS AFFECTING THE INDUSTRIES IN WHICH THE GROUP OPERATES
The Group’s main businesses operate in highly competitive environments. Competitors may be powerful
international groups (such as Standard & Poor’s and Moody’s in the rating segment) or small companies
(live entertainment organizers and operators of entertainment venues, hotels and casinos). Competitive
challenges may include price-cutting by rivals seeking to expand market share, and the introduction of new
products, services and technological innovations.
3.7.2. – RISKS ASSOCIATED WITH VEGA’S BUSINESS (ENTERTAINMENT VENUE MANAGEMENT)
The main risks associated with Vega’s business are (i) the risk of venue management contracts not being
renewed, (ii) the risk of a contract’s financial terms being revised, particularly in the case of contracts to
operate publicly-owned venues which generally include a clause requiring the operator to continue
executing the contract even following the occurrence of an unforeseeable adverse event or circumstance,
(iii) the risk of shows being cancelled, leading to a loss of expected revenue, and (iv) the inherent health and
safety risks of operating facilities open to the public, such as swimming pools.
3.7.3. – RISKS ASSOCIATED WITH THE LIVE ENTERTAINMENT PRODUCTION BUSINESS
The main risks associated with the live entertainment production business conducted by Gilbert Coullier
Productions, Auguri Productions and K-Wet, which are all 40%-owed by the Group, concern (i) the cyclical
nature of their businesses, which depend on the number of tours organized and the number of spectators they
attract, and (ii) the risk of tours being cancelled by the performer after the Group has incurred costs or paid
an advance to the performer, although this risk is attenuated by the purchase of specific insurance cover.
40
Risk Factors
3.7.4. – RISKS ASSOCIATED WITH GROUPE LUCIEN BARRIÈRE’S BUSINESS
The Group owns 40% of Groupe Lucien Barrière, which is therefore accounted for by the equity method in
Fimalac’s consolidated financial statements.
Groupe Lucien Barrière operates in an environment that gives rise to many risks, some of which are beyond
its control.
The following is a description of the main risks associated with Groupe Lucien Barrière’s casino and hotel
businesses.
The businesses are particularly sensitive to business cycles, weather conditions and changes in the French
and international economy environments. In a difficult, turbulent and unpredictable economy, consumers
may forgo, sharply reduce or postpone their leisure spending.
Groupe Lucien Barrière, which has a long-standing presence in the casino and hotel sectors, is also faced
with moves to deregulate the online gaming industry and open it up to competition. In France, Act no. 2010476 of May 12, 2010 allows companies that have been licensed by the online gaming authority, Arjel, to
offer online certain pooled games based on luck and expertise.
In addition, its casino business is faced with competition from companies that have a monopoly over certain
types of games such as lotteries, preventing it from competing against them in their own markets, as well as
from new operators particularly in the online gaming sector. The financial viability of Groupe Lucien
Barrière’s casinos could be adversely affected by the opening of new casinos in the same catchment area.
The luxury hotel market is also highly competitive, particularly the MICE segment.
As the casino business depends on obtaining concessions or gaming licenses, the cancellation, non-renewal,
curtailment or modification of any such concession or license or the introduction of more restrictive tax or
other regulations could have an adverse impact on Groupe Lucien Barrière’s business and financial
condition.
As Groupe Lucien Barrière has a large number of employees, any strikes or other forms of industrial action
or unrest could disrupt its business and that of its subsidiaries.
Lastly, because Groupe Lucien Barrière’s business involves the handling of large quantities of cash, it is
exposed to the risk of fraud, embezzlement or cheating on the part of employees and third parties. In
addition, it may be exposed to counterparty risk if it has to pay out substantial winnings to customers.
Concerning the hotel business, despite the major capital spending programs implemented in recent years, the
hotel base still includes certain historical assets that may require significant renovation and maintenance
work or significant alterations to comply with new standards.
In addition, since its hotels are open to the public, Groupe Lucien Barrière is required to comply with many
health and safety regulations. Any health and safety incident could adversely affect the company’s
reputation and earnings.
41
Risk Factors
3.7.5. – RISK ASSOCIATED WITH THE DIGITAL BUSINESSES
The companies making up the Digital segment operate in a competitive environment. Competition in the
online advertising market makes it very difficult to predict future price trends and there is a risk of prices
falling as supply increasingly outstrips demand.
The Group’s digital businesses also involve considerable investment in research and development, to drive the
process of continuous innovation required to remain competitive in a fast-changing market. Technical
expertise and the ability to grow audience by deploying innovative services represent critical success factors in
the face of competition from new market participants and new services.
The Digital segment is heavily dependent on online business drivers, in particular search engines and organic
search results. Changes in search engine algorithms could have a serious adverse impact on the Group's
audience.
Lastly, despite all the resources deployed by the Group to guarantee the sites’ reliability and security, there is a
risk of malicious damage to the computer systems and security breaches, potentially leading to site downtime
with an adverse effect on their financial performance.
3.8. – LIENS OR MORTGAGES ON FIMALAC’S ASSETS
Through its indirect subsidiary North Colonnade Ltd, Fimalac has granted a mortgage on its London office
building as security for the financing obtained in December 2013 from an insurance company.
3.9. – INSURANCE
Fimalac purchases insurance cover from independent insurers and uses customary insurance policies to
protect against property losses, business interruption, third-party liability, and the liability of corporate
officers and executives. The total amounts of insurance cover are as follows:
Type of risk
Property & casualty and business interruption
Third-party liability
Management liability
Total
Insured amounts (in € millions)
692
117
25
834
Premiums (in €)
408,325
85,823
150,000
644,148
Fitch Group, which is accounted for by the equity method, purchases its own insurance cover to protect against
similar risks.
Management considers that its insurance cover is adequate.
42
Risk Factors
3.10. – REAL ESTATE MARKET RISKS
Due to the nature of its real estate activities, particularly through North Colonnade Ltd, Fimalac is exposed to
fluctuations in the Paris and London property markets. Aside from the building at 97, rue de Lille, which
houses the Group’s corporate functions, all of the properties in the Company’s portfolio are let (see section
1.8). A contraction in the real estate market would lead to a reassessment of the value of the properties owned
by the Group (see Note 5.3 to the consolidated financial statements concerning the building owned by North
Colonnade Ltd) and by Groupe Lucien Barrière, and to corresponding writedowns that could have an adverse
impact on the Group’s results.
43
Management’s Discussion and Analysis
CHAPITRE 4 MANAGEMENT'S DISCUSSION AND ANALYSIS
4.1. –
MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED FINANCIAL
STATEMENTS
The fiscal year-end was moved to December 31 from September 30 by decision of the February 14, 2012
Shareholders’ Meeting, with the result that fiscal 2012 exceptionally covered the 15-month period from
October 1, 2011 to December 31, 2012.
Fiscal 2013 covered the 12-month period from January 1 to December 31, corresponding to the calendar year.
Pro forma statements for the twelve months from January 1 to December 31, 2012 have been prepared to
facilitate comparisons. The key pro forma data are presented in Note 2.3 to the consolidated financial
statements for the year ended December 31, 2013.
A - SIGNIFICANT EVENTS OF THE YEAR
1) Financial services (Fitch Group)
Fitch Group sold its Algorithmics subsidiary on October 20, 2011 and Fimalac sold a further 10% of Fitch
Group to Hearst on April 11, 2012. Following this latter transaction, which reduced Fimalac’s interest to 50%,
Fitch Group is now controlled jointly by Fimalac and Hearst and is therefore accounted for by the equity
method.
As shown in the table below, which is presented on a 100% basis, Fitch turned in a very good 2013
performance:
(in € millions)
(*)
(**)
(***)
2012
(12 months)*
2013
(12 months)
% change
(reported)
% change
(like-for-like)**
Revenue
654.4
740.0
+ 13.1%
+ 12.5%
EBITDA ***
249.1
299.7
+ 20.3%
+ 22.2%
Recurring operating profit
211.5
250.4
+ 18.4%
+ 21.8%
Pro forma figures.
Based on a comparable scope of consolidation and at constant exchange rates.
EBITDA = Earnings before interest, taxes, depreciation and amortization.
In January 2013, Fitch acquired 7city, a leading provider of learning and development solutions for the
financial services industry. The acquisition was decided in response to the credit analyst training needs
expressed by market participants. Based in London with offices in New York, Singapore and Dubai, 7city has
more than 150 employees. It forms the backbone of Fitch's third international-scale business line, Fitch
Learning.
44
Fitch enjoyed sustained growth throughout fiscal 2013. Consolidated revenue totaled €740.1 million versus
€654.4 million in 2012, representing an increase of 13.1% as reported and 12.5% like-for-like.
The ratings business, Fitch Ratings, grew by a strong 13.7% like-for-like to €567.6 million, lifted by even
faster growth in the Corporates segment. Fitch Solutions, which markets subscription-based research services
that are increasingly popular among investors and financial institutions, also performed well, with revenue up
12.4% like-for-like at €113.8 million. Fitch Learning, a new business developed since the start of 2013,
contributed €32.9 million in revenue, while Fitch’s other operations contributed €25.8 million in 2013.
Europe-Middle East-Africa (EMEA) was the fastest growing region, with revenue up 17.7% like-for-like, and
growth remained strong in North America with a healthy 10.1% like-for-like increase.
This robust performance was supported by good cost discipline, leading to an even sharper increase in
operating results for 2013, with EBITDA up 22.2% like-for-like to €299.7 million.
A significant post-balance sheet event (see Recent Developments) was Fitch Group’s acquisition, on March
13, 2014, of all outstanding shares in Business Monitor International (BMI), a widely recognized provider of
country risk analysis and industry research specializing in emerging and frontier markets.
2) Luxury hotel and leisure businesses
Since March 2011, Fimalac Développement has owned 40% of Groupe Lucien Barrière, which is accounted
for by the equity method in Fimalac’s consolidated financial statements. The Group also holds a 10% stake in
Société Fermière du Casino Municipal de Cannes.
Groupe Lucien Barrière is the leading casino operator in France and Switzerland, with a total of 37
establishments. Most of these are in France, led by its Enghien-les-Bains casino near Paris. In Switzerland, its
flagship is the Montreux casino.
Groupe Lucien Barrière is also a major operator of luxury hotels, with 15 properties and their bars and
restaurants, under such outstanding brands as Barrière and Fouquet’s.
In a persistently difficult economic environment, Groupe Lucien Barrière’s revenue was only slightly down on
pro forma 2012, at €1,055.7 million before gambling taxes versus €1,095 million, and EBITDA held up well at
€140.2 million versus €151.1 million.
This resilient performance confirmed the robustness of Groupe Lucien Barrière’s fundamentals. Margins were
kept at a satisfactory level thanks to various management measures, the ramp-up of the Group's recently
opened hotels (Cairo and Toulouse in 2007, Port Leucate and Blotzheim in 2008, Lille in 2010 and the
Ribeauvillé Resort in 2012) and sustained investment.
Groupe Lucien Barrière has an October 31 year-end. Fimalac’s 40% share of its profit recognized in the
consolidated income statement amounted to €10.9 million for the period up to October 31, 2013.
3) On-going diversification in entertainment
In 2010, Fimalac decided to diversify into the entertainment industry. Today, it ranks among the French
leaders in this field, in both live entertainment production and venue management.
The process began when Fimalac joined forces with Gilbert Coullier, one of France’s leading live
entertainment organizers, by acquiring a 40% stake in Gilbert Coullier Productions. The following year, in
45
2011, a 40% interest was acquired in Auguri Productions, alongside Charles Bensmaine. More recently, in
2013 Fimalac Développement acquired 40% of K-Wet Productions, headed by Michel Lumbroso, to complete
the three-year diversification process.
Today, the artist portfolio comprises the leading, internationally renowned French-speaking singers, as well as
younger singers with great potential. It also includes well-known French-speaking comedians.
Recognizing the strategic benefits of combining content with its method of delivery, in 2010 Fimalac also
acquired a controlling interest in Vega, France’s leading entertainment venue operator. Through Vega, Fimalac
now manages around thirty venues, including the Zenith in Paris and multi-purpose facilities in many other
French cities.
Several bolt-on partnerships were created in 2013, for example, to acquire the Le Comédia theatre business
and to launch a number of musical shows such as “Robin des Bois” and “Mugler Folies”.
In 2013, the Entertainment segment generated aggregate revenue of over €150 million. However, because
several of the entities are accounted for by the equity method, its contribution to Fimalac’s reported
consolidated revenue was €40.2 million
4) Creation of a leading digital media and news group
In July 2013, Fimalac signed all of the agreements required to acquire control of Webedia, TFco (Terrafemina
website and various consulting businesses) and Allociné.
Webedia manages leading theme websites, such as purepeople.com and puremedia.com. Already established in
consulting, outsourced content creation and web community management for brands and companies, it will
exploit the industry inroads made by TFco and strengthen its presence among female demographics by
leveraging Terrafemina’s expertise. Allociné is France’s number one news media group in the cinema and TVseries segment
As of December 31, 2013, Fimalac held 65.2% of the recently merged Webedia/TFco group, which in turn
owns all outstanding shares in Allociné. The acquisition prices and the put and call options allowing Fimalac
to increase its stake in the coming years are presented in the notes to the consolidated financial statements and
in other sections of this document.
In December 2013, Webedia acquired a controlling interest in Groupe Confidentielles (owner of the 750g
recipe website) and Exponaute (a cultural events website). Since the year-end, it has also acquired Diwanee
and Melberries (see Recent Developments).
Through these acquisitions, Fimalac has created France’s seventh largest digital media group – with 17.2
million discrete visitors in February 2014 – and become the leader in entertainment and leisure information. As
a result, Fimalac will operate seamlessly across the media and entertainment value chain and intends to speed
its growth in this area, both in France and internationally.
The companies acquired since July 2013 in the digital media and news sector have all been fully consolidated
as from their respective acquisition dates. Their combined contribution to 2013 consolidated revenue amounted
to €21.4 million.
46
5) Real Estate Activities
The Group owns an office building in the prestigious Canary Wharf financial district of London through its
North Colonnade Ltd subsidiary that is 80%-owned indirectly by Fimalac Développement. Up until 2013, just
under 40% of the building’s roughly 33,000-square meter floor space was let, mainly to Fitch Ratings.
Fimalac’s marketing strategy for the remaining floors consisted of looking outside the Group for a first-class
tenant with a strong capital base capable of leasing all of the vacant space on a long-term basis. This goal was
met with the signature in early August 2013 of a lease with KPMG for all of the remaining space.
Fully let under long-term leases, the building will provide Fimalac with a secure revenue stream over many
years. The building is carried in Fimalac’s consolidated balance sheet at December 31, 2013 for a net amount
of €258.8 million (£215.8 million).
With the occupancy rate at 100%, North Colonnade Ltd was able to refinance part of its debt with a major
insurance group, through an £80 million (€96 million), 7-year bullet loan obtained in December 2013.
B - CONSOLIDATED RESULTS
These comments concern results for the twelve months from January 1 to December 31, 2013.
Since 2012, changes in the scope of consolidation and use of the equity method to account for Fitch Group
have led to a significant change in the presentation of the consolidated financial statements.
Following the sale of a further 10% of Fitch Group to Hearst on April 11, 2012, Fitch Group has been jointly
controlled on a 50/50 basis by Fimalac and Hearst and has therefore been accounted for by the equity method
in Fimalac’s consolidated financial statements as from the transaction date.
The main fully consolidated companies are now North Colonnade, Vega, the new digital media and news
companies, the parent company Fimalac and Fimalac Développement.
Fiscal 2012 covered the fifteen months from October 1, 2011 to December 31, 2012 following the change in
the Group's year-end. Attributable profit for this period was an exceptionally high
€197.8 million, due to the inclusion of the €90.7 million net gain realized on the sale of Algorithmics in
October 2011 and the €81.2 million net gain realized on the sale of 10% of Fitch Group in April 2012, partly
offset by the impairment charge recognized on the building owned by North Colonnade Ltd which had a oneoff net negative impact of €24.4 million.
Following the change of fiscal year-end to December 31 from September 30, and to facilitate comparisons
between accounting periods, pro forma figures are presented for the period January 1-December 31, 2012.
Attributable net profit for that period amounted to €108.6 million, after taking into account the €81.2 million
net
gain
realized
on
the
sale
of
10%
of
Fitch
Group
and
the
€24.4 million impairment charge recognized on the North Colonnade building. Adjusted for these two nonrecurring items, net profit attributable to equity holders of the parent for the 12-month period from January 1 to
December 31, 2012 came to €51.8 million.
As reflected in the table below, profit attributable to equity holders of the parent for 2013 amounted to €79
million and did not include any material non-recurring items. This represented a 52.5% increase over 2012 pro
forma recurring profit of €51.8 million, as follows:
47
(in € millions)
2012*
(12 months)
Net loss from fully consolidated companies
2013
(12 months)
(19.0)
(11.3)
Fimalac’s share of Fitch Group profit for the period
60.6
78.1
Fimalac’s share of the profits of other associates
10.2
12.2
Profit attributable to equity holders of Fimalac,
excluding non-recurring items
51.8
79.0
Net gain on the sale of 10% of Fitch Group (April 2012)
81.2
Impairment of property and equipment
(24.4)
Profit attributable to equity holders of Fimalac
108.6
(*)
+ 52.5%
79.0
Pro forma data.
The healthy profit reported in 2013 largely reflects the excellent performance delivered by Fitch, which is
accounted for by the equity method.
The contribution of 40%-owned Groupe Lucien Barrière, which is also accounted for by the equity method,
came to €10.9 million in 2013.
C – CONSOLIDATED NET DEBT
Movements in the Group’s net debt (borrowings less cash and cash equivalents) may be analyzed as follows by
company:
(in € millions)
December 31, 2012
December 31, 2013
Net cash position: positive amount
Net debt position: negative amount
North Colonnade
Loan from Fimalac (80%)
Loan from Hearst (20%)
Private refinancing
Cash and cash equivalents
(205)
(51)
7
(249)
(132)
(33)
(96)
9
(252)
205
(77)
128
(121)
132
(204)
(72)
(324)
__
Parent company and fully-consolidated subsidiaries
Loan to North Colonnade
Net debt
Consolidated net debt*
(*) Including financial instruments and financial assets at fair value through profit or loss
The increase in consolidated net debt in 2013 primarily reflected the financing of acquisitions in the digital
media and news sector and the entertainment sector. The put option on minority interests in digital media and
news companies has been recognized in debt, for €61 million, in accordance with IFRS.
Fitch Group, which is not included in the above table as it is accounted for by the equity method, had a net
cash position of €53 million at December 31, 2013.
48
The following table reconciles net debt (€324 million) at December 31, 2013 to the detailed disclosures in the
notes to the consolidated balance sheet at that date:
December 31, 2013 (in € millions)
Long-term debt
Short-term debt
Financial assets at fair value through
profit or loss
Other
(245)
(154)
44
28
Total net debt
(324)
Notes 5.12/5.12.3
Notes 5.12/5.12.3
Note 5.10
Note 5.6
3
Note 5.9
4.2. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE COMPANY FINANCIAL
STATEMENTS
The fiscal period that ended on December 31, 2012 exceptionally covered 15 months.
Fimalac’s main recurring source of revenue consists of dividends and loan interest received from subsidiaries.
Dividend income for 2013 amounted to €82.7 million, including €68.3 million from Fimalac Services
Financiers, €1.1 million from Financière Portefoin and €3.6 million from Mercialys and a €13.4 million special
dividend
from
Financière
Allociné.
The
decline
compared
with
the
€193.8 million received in fiscal 2012 was due to payment in that year of special dividends by Fimalac
Services Financiers following the divestment of Algorithmics and the sale of shares in Fitch Group. Income
from loans and receivables fell to €2.6 million, mainly reflecting the sharp decline in interest rates over the
period.
Recurring expenses during the year chiefly corresponded to operating expenses for a total of
€11.5 million, in line with the annual budget. Interest expense amounted to €8.8 million. This was significantly
below the fiscal 2012 figure because it no longer included the cost of interest rate hedges. The final effects of
the interest rate hedges set up in 2008 were offset by a €6.8 million provision reversal.
Recurring profit for the year amounted to €80.5 million versus €160.5 million in fiscal 2012, including the
reversal of a €17.8 million provision for impairment of shares in Fimalac Développement following the
company’s good financial performance, lifted by the dividends paid by Groupe Lucien Barrière and SFCMC.
No material new provisions for impairment of investments in subsidiaries or affiliates were recorded during the
year.
Non-recurring items represented net income of €3.4 million, corresponding for the most part to provision
reversals.
In light of the above, after taking into account an income tax benefit of €0.2 million net of the 3% tax on
distributed earnings for €1.5 million, net profit for 2013 amounted to €84.0 million, compared with €162.0
million for fiscal 2012.
49
Trend Information
CHAPITRE 5 TREND INFORMATION
5.1. –
1)
RECENT DEVELOPMENTS
Fitch acquires Business Monitor International
On March 13, 2014 Fitch Group acquired all outstanding shares in Business Monitor International (BMI), a
provider of country risk analysis and industry research specializing in emerging and frontier markets.
BMI has approximately 300 employees and is based in London with additional offices in New York,
Singapore, and Pretoria. Subscribers to BMI’s products include multinationals, governments, financial
institutions, academia, investment funds and research centers in more than 160 countries. Integrating country
risk, industry analysis and financial markets, BMI produces detailed qualitative analyses and reports covering
200 countries and 24 industry verticals.
2)
Post-balance sheet Webedia acquisitions
a) Diwanee
In March 2014, Webedia acquired a majority interest in Diwanee, a creator of digital media content that
operates in the Middle East.
b) Melberries
In February 2014 Webedia acquired Melberries, a French multi-channel network with expertise in copyright
management and video promotion, optimization and monetization.
5.2. –
OUTLOOK FOR FISCAL 2014
The outlook for the Group’s financial services businesses is presented above in the section on Fitch.
The outlook for Groupe Lucien Barrière’s casino and hotel businesses will continue to depend largely on
French and international economic conditions and consumer behaviors.
At the level of the Fimalac Group, operations will be strengthened and expanded in the new digital business,
both in France and internationally.
In the entertainment businesses, both show production and entertainment venue management are expected to
capitalize on a larger portfolio of artists and events already scheduled into the 2014 calendar. Trois S is
expected to speed the creation of synergies in this area during the year.
50
Trend Information
5.3. – FINANCIAL CALENDAR
Annual Shareholders’ Meeting: June 17, 2014 at 3:00 p.m. at Pavillon Gabriel in Paris
Ex-dividend date: June 20, 2014
Dividend payment date: from June 25, 2014
Board meeting to approve the interim results: September 11, 2014.
51
Financial Information
CHAPITRE 6 FINANCIAL INFORMATION
6.1. –
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
Consolidated Balance Sheet at December 31, 2013 ....................................................................................... 55
Consolidated Balance Sheet at December 31, 2013 ....................................................................................... 56
Consolidated Income Statement, Year ended December 31, 2013.................................................................. 57
Consolidated Statement of Comprehensive Income, ...................................................................................... 58
Year ended December 31, 2013 .................................................................................................................... 58
Consolidated Statement of Changes in Equity ............................................................................................... 59
Consolidated Statement of Cash Flows ......................................................................................................... 62
NOTE 1 1.1. -
GENERAL INFORMATION .................................................................................................. 63
Significant events........................................................................................................................ 64
1.1.1. - Acquisition of 7city by Fitch ................................................................................................ 64
1.1.2. - Signature of a lease on the vacant units in the London building............................................. 64
1.1.3. - Acquisition of Webedia, Allociné, Groupe Confidentielles ................................................... 64
1.1.4. - Development of the Entertainment activities ......................................................................... 64
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ................................................. 65
2.1. -
Options applied on first-time adoption of IFRS ........................................................................... 65
2.2. -
Financial statement presentation .................................................................................................. 65
2.3. -
Financial statement presentation – Impact of the change of year-end ........................................... 67
2.4. -
Basis of consolidation ................................................................................................................. 67
2.4.1. - Scope of consolidation ......................................................................................................... 67
2.4.2. - Consolidation policies .......................................................................................................... 68
2.4.3. - Segment information ............................................................................................................ 69
2.4.4. - Foreign currency translation ................................................................................................. 70
2.4.5. - Property, plant and equipment .............................................................................................. 71
2.4.6. - Intangible assets ................................................................................................................... 71
52
2.4.7. - Impairment tests ................................................................................................................... 72
2.4.8. - Financial assets .................................................................................................................... 73
2.4.9. - Trade receivables ................................................................................................................. 74
2.4.10. - Cash and cash equivalents .................................................................................................... 74
2.4.11. - Share capital ........................................................................................................................ 74
2.4.12. - Debt ..................................................................................................................................... 75
2.4.13. - Deferred tax ......................................................................................................................... 75
2.4.14. - Employee benefits ................................................................................................................ 75
2.4.15. - Provisions ............................................................................................................................ 77
2.4.16. - Revenue recognition ............................................................................................................. 77
2.4.17. - Leases .................................................................................................................................. 79
2.4.18. - Dividends ............................................................................................................................. 79
2.4.19. - Assets and liabilities held for sale and discontinued operations ............................................. 80
2.4.20. - Earnings per share ................................................................................................................ 80
2.4.21. - Other operating income and expenses, net ............................................................................ 80
2.4.22. - Use of estimates ................................................................................................................... 80
NOTE 3 -
CONSOLIDATED COMPANIES ........................................................................................... 81
3.1. -
Changes in scope of consolidation ............................................................................................... 81
3.2. -
LIST OF CONSOLIDATED COMPANIES ................................................................................ 84
NOTE 4 -
FINANCIAL RISKS ............................................................................................................... 89
4.1. -
Currency risk .............................................................................................................................. 89
4.2. -
Interest rate risk .......................................................................................................................... 91
4.3. -
Liquidity risk .............................................................................................................................. 92
4.4. -
Characteristics of subsidiaries’ debt (excluding Fitch) ................................................................. 92
4.5. -
Characteristics of Fitch debt ........................................................................................................ 93
4.6. -
Characteristics of confirmed lines of credit .................................................................................. 93
4.7. -
Risks arising from debt covenants ............................................................................................... 94
4.8. -
Maturities of financial instruments (undiscounted) ...................................................................... 95
4.9. -
Credit risk ................................................................................................................................... 96
4.10. -
Equities risk .............................................................................................................................. 96
4.11. -
Accounting treatment of derivative financial instruments and hedging
transactions .......................................................................................................................... 97
NOTE 5 -
NOTES TO THE BALANCE SHEET AND INCOME STATEMENT AND OTHER
INFORMATION.................................................................................................................. 98
5.1. -
Goodwill on fully consolidated companies .................................................................................. 98
5.2. -
Intangible assets .......................................................................................................................... 99
5.3. -
Property, plant and equipment ................................................................................................... 100
53
5.4. -
Investments in associates .......................................................................................................... 103
5.5. -
Additional information concerning Fitch Group ........................................................................ 104
5.5.1. - Summary financial statements of Fitch Group .................................................................... 104
5.5.2. - Fitch Group goodwill ......................................................................................................... 104
5.5.3. - Associates accounted for by the equity method at the level of Fitch Group ......................... 105
5.5.4. - Fitch Group segment information ....................................................................................... 106
5.6. -
Financial assets ......................................................................................................................... 107
5.7. -
Derivative instruments .............................................................................................................. 108
5.8. -
Trade receivables ...................................................................................................................... 108
5.9. -
Other receivables ...................................................................................................................... 109
5.10. -
Cash and cash equivalents ....................................................................................................... 109
5.11. -
Deferred taxes ......................................................................................................................... 110
5.12. -
Long- and short-term debt ....................................................................................................... 110
5.12.1. - Bank borrowings ................................................................................................................ 111
5.12.2. - Changes in bank borrowings .............................................................................................. 111
5.12.3. - Other long- and short-term debt .......................................................................................... 112
5.13. -
Pension and other employee benefit obligations ...................................................................... 112
5.13.1. - Pension plans ..................................................................................................................... 112
5.13.2. - Stock options ..................................................................................................................... 113
5.13.3. - Free shares ......................................................................................................................... 114
5.13.4. - “BSPCE” warrants ............................................................................................................. 114
5.14. -
Provisions ............................................................................................................................... 115
5.15. -
Other liabilities ....................................................................................................................... 116
5.16. -
Employee benefits expense ..................................................................................................... 116
5.17. -
Finance costs and other financial income and expenses, net ..................................................... 117
5.18. -
Income tax expense................................................................................................................. 117
5.19. -
Information by business segment ............................................................................................ 119
5.19.1. - Results by business segment ............................................................................................... 119
5.20. -
Information by geographical segment ...................................................................................... 120
5.20.1. - Revenue by geographical segment ...................................................................................... 120
5.20.2. - Assets by geographical segment ......................................................................................... 121
5.21. -
Off-balance sheet commitments .............................................................................................. 122
5.22. -
Earnings per share................................................................................................................... 123
5.23. -
Dividends ............................................................................................................................... 123
5.24. -
Related party transactions ....................................................................................................... 123
5.25. -
Income statement – Fitch Group net profit .............................................................................. 124
5.26. -
Income statement – Income from discontinued operations ....................................................... 124
5.27. -
Subsequent events ................................................................................................................... 125
54
F. Marc de Lacharrière (Fimalac) Group
Consolidated Balance Sheet at December 31, 2013
ASSETS
(in € millions)
Notes
December
31, 2013
December
31, 2012
NON-CURRENT ASSETS
Goodwill
5.1
149.9
8.5
Intangible assets
5.2
29.1
6.8
Property, plant and equipment
5.3
297.5
291.2
Investments in associates
5.4
504.4
473.6
Non-current financial assets
5.6
116.2
114.8
Deferred tax assets
5.11
30.4
25.7
-
-
1,127.5
920.6
0.3
-
Other non-current assets
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Inventories
Trade receivables
5.8
43.0
12.2
Other receivables
5.9
27.8
14.5
Current financial assets
5.6
28.0
6.7
5.10
43.6
70.1
142.7
103.5
TOTAL CURRENT ASSETS
Assets held for sale
0.6
TOTAL ASSETS
1,270.8
The accompanying notes form an integral part of the consolidated financial statements.
55
1,024.1
Consolidated Balance Sheet at December 31, 2013
EQUITY AND LIABILITIES
December 31,
2013
December 31,
2012
126.9
126.9
8.4
8.4
Treasury stock
(72.3)
(48.6)
Translation reserves
(30.6)
(40.0)
Retained earnings
668.4
508.5
Profit for the year
79.0
197.8
Other comprehensive income
(1.7)
19.1
Total comprehensive income
77.3
216.9
778.1
772.1
1.9
4.8
780.0
776.9
(in € millions)
Notes
EQUITY
Share capital
Additional paid-in capital
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
NON-CONTROLLING INTERESTS
TOTAL EQUITY
NON-CURRENT LIABILITIES
Pension and other employee benefit obligations
5.13
5.1
2.7
Long-term provisions
5.14
8.1
10.0
Long-term debt
5.12
245.5
101.7
Deferred tax liabilities
5.11
9.0
7.5
Other non-current liabilities
0.4
TOTAL NON-CURRENT LIABILITIES
268.1
121.9
2.1
153.6
24.2
42.2
1.9
98.2
7.2
18.0
222.1
125.3
CURRENT LIABILITIES
Short-term provisions
Short-term debt
Trade payables
Other current liabilities
5.14
5.12
5.15
TOTAL CURRENT LIABILITIES
0.6
Liabilities held for sale
TOTAL EQUITY AND LIABILITIES
1,270.8
56
1,024.1
Consolidated Income Statement, Year ended December 31, 2013
(in € millions)
Notes
5.19.1/2
0.1
Revenue
Other income
Employee benefits expense
Purchases used in the generation of revenue and
external charges
Taxes other than on income
Depreciation and amortization
Charges to/reversals of provisions, net
Other recurring operating income and expenses, net
42.5
15.7
(17.1)
(53.8)
(2.8)
(7.9)
(0.9)
0.1
(40.4)
(1.6)
(7.8)
(0.6)
5.19.1
(14.3)
(9.3)
5.19.1
(2.7)
(31.5)
5.19.1
(17.0)
(40.8)
9.9
4.2
(9.4)
(20.3)
5.17
5.17
5.18
5.4
0.5
5.9
(3.3)
12.2
(16.1)
0.6
(9.4)
10.3
5.4
78.1
42.2
5.19.1
5.19.1
Other operating income and expenses, net
OPERATING LOSS
Income and expenses from cash and cash equivalents
and currency and interest rate hedges, net
Interest expense on bank borrowings
Finance costs, net
Other financial income and expenses, net
Income tax expense
Share of profit of associates (excluding Fitch)
Share of Fitch profit accounted for by the equity method
(period after the change of consolidation method)
Fitch net profit (period up to the change of consolidation
method)
Net capital gain on the disposal of 10% of Fitch
Net profit/(loss) from discontinued operations (Algorithmics)
2012
(15 months)
67.8
17.3
(34.1)
5.16
RECURRING OPERATING LOSS
2013
(12 months)
5.25
5.26
PROFIT FOR THE PERIOD
54.5
(0.2)
76.2
Attributable to equity holders of the parent
Attributable to non-controlling interests
Earnings per share
Basic earnings per share
Diluted earnings per share
Earnings per share from continuing operations (including Fitch)
Basic earnings per share
Diluted earnings per share
Earnings/(loss) per share from discontinued operations
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
270.0
79.0
(2.8)
197.8
72.2
2.90
2.90
7.17
7.17
2.90
2.90
0.94
0.94
-
6.23
6.23
5.22
57
81.2
147.5
Consolidated Statement of Comprehensive Income,
Year ended December 31, 2013
2013
(12 months)
(in € millions)
Profit for the period
Other comprehensive income – gains and losses recognized
directly in equity, net of tax
Exchange differences on translating foreign operations
Valuation gains and losses on financial assets
Gains and losses on cash flow hedges
Actuarial gains and losses
Total other comprehensive income, before tax
Income tax
Total other comprehensive income, net of tax*
Total comprehensive income
* Of which, other comprehensive income that may be subsequently reclassified to profit
2012
(15 months)
79.0
197.8
(10.2)
4.5
1.0
0.8
(3.9)
2.2
77.3
77.3
77.3
(2.9)
74.4
9.4
3.3
7.4
(1.7)
58
20.1
(1.0)
216.9
216.9
216.9
72.7
289.6
19.1
Consolidated Statement of Changes in Equity
At December 31, 2013, the Company’s share capital was made up of 28,830,000 ordinary shares, each with a par value of
€4.40 and all fully paid.
Movements in share capital during the year
(number of shares)
Share capital at December 31, 2012
Canceled shares
Share capital at December 31, 2013
28,830,000
28,830,000
59
Changes in equity, fiscal year ended December 31, 2012
Share capital
Additional
paid-in capital
Retained
earnings
Translation
reserve
Valuation
gains and
losses on
financial assets
Gains and
losses on cash
flow hedges
Treasury stock
Equity
attributable to
equity holders
(37,1)
598.8
(11,5)
(5.5)
0.0
Noncontrolling
interests
Total equity
(in € millions)
Equity at September 30, 2011
126.9
8.4
Issue of share capital
Purchases and sales of treasury stock
Cancellations of treasury stock
548.7
(40.0)
0.0
(8.1)
6,0
Cancellation of gains and losses on sales of treasury stock
and transaction costs
Dividends
189,5
788,3
0.0
(5.5)
60
0.3
(41.4)
0.3
(41.4)
Fair value of stock options recognized in profit
0.4
0.4
Other
4.2
4.2
0.1
4.3
197.8
197.8
72.2
270.0
19.1
(1.6)
0.5
(197.8)
19.6
(199.4)
772.1
4.8
776.9
Changes in scope of consolidation
Equity at December 31, 2012
9.4
1.3
8.4
(1.6)
126.9
8.4
714.4
(30.6)
1.3
(0.3)
(48.6)
(59,7)
0,3
(101.1)
0.4
Changes in equity, fiscal year ended December 31, 2013
Share capital
Additional
paid-in capital
Retained
earnings
Translation
reserve
Valuation
gains and
losses on
financial assets
Gains and
losses on cash
flow hedges
Treasury stock
Equity
attributable to
equity holders
Noncontrolling
interests
Total equity
(in € millions)
126.9
8.4
714.4
(30.6)
1.3
0.3
Issue of share capital
Purchases and sales of treasury stock
Cancellations of treasury stock
61
Cancellation of gains and losses on sales of treasury stock
and transaction costs
Dividends
Fair value of stock options recognized in profit
772.1
(23.7)
(23.7)
0.0
0.5
(49.0)
0.5
Other
(0.5)
79.0
(48.6)
126.9
8.4
744.9
0.9
(10.2)
6.3
1.6
(40.8)
7.6
2.8
(72.3)
4.8
776.9
0.0
(23.7)
0.5
(49.0)
0.5
(0.1)
0.5
(49.1)
0.5
0.4
0.1
0.5
79.0
(2.8)
76.2
(1.7)
0.0
(0.1)
(1.8)
0.0
1.9
780.0
778.1
Consolidated Statement of Cash Flows
(in € millions)
2013
(12 months)
2012
(15 months)
76.2
270.0
(54.5)
(147.5)
39.9
(4.4)
(82.0)
(52.5)
- Fitch net profit (1)
- Net (profit)/loss from discontinued operations (2)
+/- Depreciation, amortization and provision expense, net
-/+ Other non-cash (income) and expenses, net
-/+ Disposal (gains) and losses, net
+/- Share of (profit)/loss of associates
- Dividends received from non-consolidated companies
Cash flow after finance costs, net and income tax expense
+ Finance costs, net
+/- Income tax expense (benefit)
Cash flow before finance costs, net and income tax expense
- Income taxes paid
+ Change in operating working capital
0.2
7.5
(7.9)
(1.6)
(90.3)
(0.2)
(16.1)
2.8
3.3
(10.0)
(2.6)
(1.2)
NET CASH FROM/(USED IN) OPERATING ACTIVITIES
(31.0)
21.3
9.4
(0.3)
(8.3)
(1.5)
(13.8)
(10.1)
(22)
0.1
(125.1)
8.4
0.2
(3.9)
0.1
(45.5)
139.2
(1.6)
(224.6)
114.5
(0.3)
(22.1)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of intangible assets and property, plant and equipment
Proceeds from disposals of intangible assets and property, plant and equipment
Purchases of non-current financial assets (net of cash acquired)
Proceeds from disposals of non-current financial assets
Change in loans and receivables and financial assets at fair value through profit (A)
Effect of changes in scope of consolidation
Dividends received from Fitch, associates and non-consolidated companies
Other movements
NET CASH FROM/(USED IN) INVESTING ACTIVITIES
62.1
(0.1)
(76.4)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchases and sales of treasury stock, net
Dividends paid
Proceeds from new borrowings
Repayments of borrowings
Interest paid, net
(5.5)
(43.0)
50.1
(122.4)
(20.8)
NET CASH FROM/(USED IN) FINANCING ACTIVITIES
(23.2)
(49.0)
102.6
(22.1)
(4.6)
3.7
Effect of changes in foreign exchange rates and other
NET (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
4.0
(82.5)
(18.6)
(10.2)
(184.0)
165.6
CASH AND CASH EQUIVALENTS AT END OF PERIOD (Note 5.10) (*)
(101.1)
(18.6)
(141.6)
The accompanying notes form an integral part of the consolidated financial statements
(*) Cash and cash equivalents in the cash flow statement are defined as cash and cash equivalents less short-term bank loans and bank overdrafts (see
Note 5.10). Changes in cash and cash equivalents do not include changes in financial assets classified as held for trading, which are recorded separately in
the cash flow statement (A).
Following the October 20, 2011 sale of Algorithmics and the April 11, 2012 sale of 10% of Fitch Group, these entities were classified as discontinued
operations in fiscal 2012.
(1) Fitch Group’s net profit (€54.5 million) is discussed in Note 5.25.
(2) The net gain from discontinued operations in 2012 corresponds in full to the gain on the sale of Algorithmics (see Note 5.26). Because Fitch Group was
accounted for by the equity method throughout 2013, its cash flows are not included in the statement of cash flows for that year.
62
NOTE N° 1 - GENERAL INFORMATION
The Group's parent company, F. Marc de Lacharrière (Fimalac), does not conduct any business on its own
behalf. It controls the capital of a number of operating subsidiaries and is actively involved in determining their
strategies.
It also manages the Group companies.
The Group has five operating segments based on the definition in IFRS 8 – Operating Segments:
 Financial Services, represented by Fitch Group which has three business lines:



Credit ratings, conducted through Fitch Ratings.
Data and analytics, conducted through Fitch Solutions, whose product offerings include Fitch’s research
delivery, risk and performance analytics, surveillance tools, structured finance workflow solutions, and
pricing and valuation services.
Financial training and professional development conducted through Fitch Learning.

Luxury Hotels & Leisure, comprising a 40% interest in Groupe Lucien Barrière.

Entertainment, consisting mainly of Vega, France's leading entertainment venue operator, and Gilbert
Coullier Productions, Auguri and K-Wet Productions, all of which are 40%-owned.

Digital, a new operating segment created in 2013 mainly through the acquisition of Webedia, Allociné and
Tfco.
 Real Estate, represented by North Colonnade Ltd, owner of the Canary Wharf building in London, and by
SCI 101, owner of the building at 101 rue de Lille, Paris 7.
Prior to December 31, 2012, the Luxury Hotels & Leisure and Entertainment business lines were combined
within the Diversified Activities operating segment. Comparative data has been restated in Note 5.19 to present
the equity interest in Groupe Lucien Barrière under Luxury Hotels & Leisure, as this business line is now
tracked separately.
The Group’s operations are conducted primarily in France, the United States, the United Kingdom, the other
European Union countries, Asia and Latin America.
Fimalac is organized as a société anonyme (public limited company) governed by the laws of France. Its
registered office is located in Paris and its shares are traded on the NYSE Euronext Paris stock exchange.
These consolidated financial statements were approved by the Board of Directors on April 3, 2014.
63
1.1. -
SIGNIFICANT EVENTS
1.1.1. - ACQUISITION OF 7CITY BY FITCH
In January 2013, Fitch Group acquired the entire capital of 7City, a London-based leading provider of learning and
development solutions for the financial services industry, for $145 million. This activity was combined with Fitch
Training to form a third business line known as Fitch Learning. 7City was fully consolidated by Fitch Group as
from the date of acquisition.
1.1.2. - SIGNATURE OF A LEASE ON THE VACANT UNITS IN THE LONDON BUILDING
In August 2013, all of the vacant units in the Canary Wharf building in London were let by North Colonnade
Ltd to an international audit and consulting firm under a long-term lease. The lease will provide the Group with
a secure, recurring revenue stream over a long period.
1.1.3. - ACQUISITION OF WEBEDIA, ALLOCINÉ, GROUPE CONFIDENTIELLES
Since June 2013, Fimalac has been building a Digital business around two significant acquisitions, Webedia and
Financière Allociné. Ninety-eight percent of Groupe Allociné was acquired on July 12, followed by 38.8% of
Webedia on July 26. The Financière Allociné shares were then contributed to Webedia on December 20, giving
Fimalac 65.2% of the Webedia group – including Allociné – at that date.
In December 2013, Webedia acquired a controlling interest in Groupe Confidentielles (owner of the 750g recipe
website) and Exponaute (a cultural events website).
These entities, which now constitute the Group’s new Digital activities, have been fully consolidated in the
balance sheet at December 31, 2013. Their results have been consolidated from their respective acquisition
dates, as the terms of the shareholders’ pacts and the membership of the governance and senior management
structures enable Fimalac to govern their financial and operating policies.
1.1.4. - DEVELOPMENT OF THE ENTERTAINMENT ACTIVITIES
Fimalac Développement, a wholly-owned subsidiary of Fimalac, acquired 40% of K-Wet and Pomme
Productions and set up various partnerships with the aim of the strengthening the Entertainment activities, for a
total cost of €10.5 million. Fimalac exercises significant influence or joint control over the newly acquired
entities, and the Entertainment activities have therefore been accounted for by the equity method in the
consolidated financial statements at December 31, 2013.
64
NOTE N° 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1. -
OPTIONS APPLIED ON FIRST-TIME ADOPTION OF IFRS
When the Group adopted IFRS for the first time in 2005, it applied the following optional exemptions and
mandatory exceptions provided for under IFRS 1, First-time Adoption of International Financial Reporting
Standards:

Cumulative translation adjustments arising on the translation of financial statements of foreign operations:
the Group elected to reset to zero cumulative translation differences recorded in equity.

Business combinations prior to January 1, 2004: the Group elected not to restate business combinations
carried out before the IFRS transition date (January 1, 2004). As a result, business combinations carried out
before January 1, 2004 were not restated in the opening IFRS balance sheet.

Property, plant and equipment: the Group opted not to measure these assets at fair value in the opening IFRS
balance sheet.

Employee benefits: the Group elected to recognize in equity at the transition date all previously
unrecognized cumulative actuarial gains and losses.

Share-based payments: the Group applied IFRS 2, Share-based Payment, for stock options granted after
November 7, 2002 which had not vested at December 31, 2004.
2.2. -
FINANCIAL STATEMENT PRESENTATION
In accordance with European Commission regulation EC 1606/2002 of July 19, 2002, the consolidated financial
statements of the Fimalac Group for the 15 months ended December 31, 2013 have been prepared in accordance
with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), as
adopted by the European Union. These standards can be viewed on the European Commission website at
http://ec.europa.eu/internal market/accounting/ias/index_en.htm#adopted-commission
The IASs and IFRSs adopted by the European Union correspond to those published by the International
Accounting Standards Board (IASB) as of December 31, 2013.
Standards and interpretations
New standards, interpretations and amendments to existing standards applicable in 2013:
The accounting methods applied are the same as those used to prepare the financial statements for the fiscal year
ended December 31, 2012, except for the application of the new standards and interpretations described below.
The consolidated financial statements have been prepared using the historical cost convention, except for items
measured using the fair value model as described in these notes.
The new standards, interpretations and amendments to existing standards that are applicable as from 2013 (see
below) have no material impact on the consolidated financial statements.
65






Amendment to IAS 1 – Presentation of other comprehensive income
Amendments to IAS 12 – Deferred tax: Recovery of Underlying Assets, which supersedes SIC 21 –
Recovery of Revalued Non-Depreciable Assets
Amendment t o IAS 19 – Employee Benefits
Amendments to IFRS 1 – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters
Amendments to IFRS 7 – Disclosures: Offsetting Financial Assets and Financial Liabilities
IFRS 13 – Fair Value Measurement.
Standards and interpretations adopted by the European Union as of December 31, 2012 that may be early
adopted in consolidated financial statements for the period commencing on January 1, 2013:








IAS 27 revised – Separate Financial Statements: applicable in periods beginning on or after January 1,
2014.
IAS 28 revised – Investments in Associates and Joint Ventures: applicable in periods beginning on or
after January 1, 2014.
IAS 32 – Offsetting Financial Assets and Financial Liabilities: applicable in periods beginning on or
IFRS 10 – Consolidated Financial Statements: amendments applicable in periods beginning on or after
January 1, 2014.
IFRS 11 – Joint Arrangements: amendments applicable in periods beginning on or after January 1,
2014.
IFRS 12 – Disclosure of Interests in other Entities: amendments applicable in periods beginning on or
Amendment to IAS 36 – Recoverable Amount Disclosures for Non- Financial Assets
Amendment to IAS 39 – Novation of Derivatives and Continuation of Hedge Accounting
These new standards, amendments and interpretations have not been early-adopted in the consolidated financial
statements at December 31, 2013. Fimalac does not expect their application to have a material impact on its
financial statements.
New standards published by the IASB but not yet adopted for use in the European Union:



Amendments to IAS 19 – Defined Benefit Plans: Employee Contributions, applicable in periods
beginning on or after July 1, 2014.
IFRIC 21 – Levies, applicable in periods beginning on or after January 1, 2014.
IFRS 9 – Financial instruments, Classification and Measurement of Financial Assets and Liabilities.
Fimalac does not expect the application of these new or amended standards to have a material impact on its
financial statements.
66
2.3. -
FINANCIAL STATEMENT PRESENTATION – IMPACT OF THE CHANGE OF YEAR-END
At the Annual Meeting on February 14, 2012, the shareholders voted to change the Group’s fiscal year-end to
December 31. Fiscal 2012 was therefore a transition year and covered the 15-month period from October 1,
2011 to December 31, 2012. For information purposes, a pro forma income statement has been prepared
corresponding to the period from January 1, 2012 to December 31, 2012 (presented below).
Pro forma consolidated income statement for the period January 1, 2012 to December 31, 2012
(in € millions)
Revenue
Other income and expenses, net
Depreciation, amortization and provision expense, net
Recurring operating loss
Other operating income and expenses, net
Operating loss
Finance costs and other financial income and expenses, net
Income tax expense
Share of profit of associates (excluding Fitch)
Share of Fitch profit accounted for by the equity method (period after the change of consolidation method)
Fitch net profit (period up to the change of consolidation method)
2.4. -
Twelve months ended
December 31, 2012
33
(34.3)
(5.8)
(7.1)
(30.7)
(37.8)
(5.6)
(6.6)
10.2
42.2
30.6
81.2
114.2
5.6
108.6
BASIS OF CONSOLIDATION
2.4.1. - SCOPE OF CONSOLIDATION
The consolidated financial statements include the financial statements of the parent company and of the entities
controlled directly or indirectly by the parent (“the subsidiaries”). Control is the power to govern the financial
and operating policies of an entity so as to obtain benefits from its activities. It is presumed to exist when the
parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity.
Subsidiaries are fully consolidated.
Entities that are jointly controlled, directly or indirectly, with a limited number of other shareholders are
accounted for by the equity method.
Associates, defined as entities over which the parent company exercises significant influence, are also accounted
for by the equity method.
All consolidated companies have a December 31 year-end except for Groupe Lucien Barrière which has been
consolidated on the basis of financial statements for the year ended October 31, 2013. The scope of
consolidation is presented in Note 3.2.
67
2.4.2. - CONSOLIDATION POLICIES
(I) Fully consolidated companies
The Group accounts for business combinations using the purchase method. Under this method, the assets
acquired and liabilities assumed are measured at their acquisition-date fair value.
Companies acquired or divested during the year are consolidated from the acquisition date or up to the
divestment date.
Accordingly, the profits or losses of subsidiaries acquired or divested during the period are included in the
consolidated income statement from the acquisition date or up to the date when control is lost.
Where necessary, the financial statements of subsidiaries acquired during the period are restated to comply with
Group accounting policies.
All intra-group balances and transactions are eliminated in consolidation.
Application of IFRS 3 (revised) and the amendment to IAS 27 from October 1, 2009 mainly affected the
accounting treatment of acquisitions and divestments resulting in the acquisition or loss of control. In particular:
 In the case of an acquisition leading to a transfer of control, the acquisition-related costs are recognized
as expenses.
 Contingent consideration is initially recognized and measured at fair value, with subsequent changes in
fair value recognized in profit or loss when the contingent consideration constitutes a liability.
 In the case of a transaction leading to the acquisition (or loss) of control, the gain or loss arising from
remeasurement at fair value of any previously held interest (or retained interest) is recognized in profit
or loss.
 In the case of an acquisition leading to a transfer of control, non-controlling (i.e. minority) interests are
recognized and measured either as their proportionate interest in the net identifiable assets of the
investee (partial goodwill method) or at fair value plus a share of goodwill calculated on the same
basis (full goodwill method). The choice of method is made on a transaction-by-transaction basis.
Acquisitions or disposals of interests in controlled companies that do not lead to the acquisition or loss of
control are accounted for as transfers between equity attributable to equity holders of the parent and noncontrolling interests, without any impact on profit or loss.
Goodwill
Goodwill arising on a business combination corresponds to the excess of the acquisition-date fair value of the
consideration transferred plus the amount of any non-controlling interests, measured either as their proportionate
interest in the acquiree’s net identifiable assets or at fair value, over the acquisition-date net fair value of the
acquiree’s identifiable assets, liabilities and contingent liabilities.
Goodwill arising on acquisition of a subsidiary is reported on a separate line of the balance sheet. It is measured
in the currency of the acquiree and translated into euros at the period-end exchange rate. Impairment tests are
performed at the level of the cash-generating unit to which the goodwill belongs.
68
The Group defines cash-generating units as corresponding to its operating segments. Goodwill is recognized as
an asset and is not amortized, but is tested for impairment annually and whenever there is an indication that its
carrying amount may not be recovered. Impairment losses on goodwill are not reversible.
When a subsidiary is sold, the related goodwill is reclassified to the income statement and taken into account in
the calculation of the disposal gain or loss.
Negative goodwill
When goodwill calculated by the above method represents a negative amount, it is recognized directly in profit
or loss without allocating any portion of the amount to non-controlling interests.
(ii) Investments in associates and joint ventures
Investments in associates and joint ventures are initially recognized at cost.
They are subsequently accounted for by the equity method. Goodwill arising on acquisition of associates and
joint ventures is included in the carrying amount of the investment. When the associate or joint venture is sold,
the related goodwill is reclassified to the income statement and taken into account in the calculation of the
disposal gain or loss.
The profits, assets and liabilities of associates and joint ventures are accounted for by the equity method. In the
case of loss-making companies, if the Group’s share of the losses is equal to or exceeds its investment in the
associate or joint venture, recognition of its share of further losses is discontinued, except when it has incurred
legal or constructive obligations or made payments on behalf of the associate or joint venture. The investment in
an associate or joint venture is the carrying amount of the investment under the equity method plus the amount
of any long-term items that, in substance, form part of the Group’s net investment in the entity concerned.
Profits and losses resulting from transactions with associates and joint ventures are eliminated pro rata to the
Group’s interest in the entity concerned, except for any losses that reflect an impairment of value of the asset
sold in the transaction.
The accounting policies applied by associates and joint ventures for local statutory reporting purposes are
modified, where necessary, to comply with Group accounting policies.
2.4.3. - SEGMENT INFORMATION
Business and geographical operating segments have been identified based on the Group’s internal organizational
and management structure and its system of internal financial reporting to the Board of Directors and the Chief
Executive Officer.
The Group has five operating segments:
 Financial Services, comprising the businesses of Fitch Ratings, Fitch Solutions and Fitch Learning
 Luxury Hotels & Leisure
 Entertainment
 Digital
 Real Estate
Amounts not allocated to the operating segments correspond to headquarters expenses.
69
The Group’s geographical segments, except for the Financial Services operating segment, are as follows:
 France
 Other European Union countries
 Latin America
 Other countries
The Financial Services operating segment (Fitch Group) is broken down into the following geographical
segments:
 North America
 Latin America
 Europe, the Middle East & Africa (EMEA)
 Asia
2.4.4. - FOREIGN CURRENCY TRANSLATION
2.4.4.1. -
PRESENTATION CURRENCY
The financial statements of Group subsidiaries are drawn up in their functional currency, corresponding to the
currency of the primary economic environment in which they operate.
The consolidated financial statements are presented in euros, corresponding to Fimalac's functional and
presentation currency.
2.4.4.2. -
RECOGNITION OF FOREIGN CURRENCY TRANSACTIONS IN THE ACCOUNTS OF
INDIVIDUAL GROUP COMPANIES
Non-current assets purchased in foreign currencies are converted into the functional currency at the exchange
rate on the transaction date.
Receivables and payables denominated in foreign currencies are converted at the exchange rate on the balance
sheet date. The resulting exchange gains and losses are recognized in operating profit or in other financial
income and expenses, depending on the nature of the underlying receivable or payable, except for those gains
and losses arising from conversion of monetary items forming part of the Group’s net investment in a foreign
operation which are recognized in equity under “Translation reserve”.
2.4.4.3. -
TRANSLATION OF THE FINANCIAL STATEMENTS OF FOREIGN SUBSIDIARIES
The assets and liabilities of foreign subsidiaries are translated into euros at the exchange rate of the subsidiary's
functional currency on the balance sheet date, and their income and expenses are translated at the average rate
for the year. The resulting exchange differences are initially recognized in equity and are reclassified into profit
or loss on disposal of the subsidiary.
Goodwill and fair value adjustments recorded on acquisition of a foreign subsidiary are considered as forming
part of the subsidiary’s assets and liabilities. They are therefore recognized in the subsidiary’s functional
currency and translated at the closing exchange rate.
Exchange gains and losses arising from changes in exchange rates used to translate the net assets of a foreign
subsidiary, long-term financing of the Group’s net investment in the subsidiary and the subsidiary’s net profit
are recognized in equity.
70
2.4.5. - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are measured at cost less accumulated depreciation and any accumulated
impairment losses.
The buildings at 97 and 101 rue de Lille, Paris 7 are measured at cost as they house the headquarters of certain
French subsidiaries. The London office building is also measured at cost, as allowed under IAS 40.
The carrying amount of qualifying assets includes borrowing costs. Qualifying assets are buildings purchased
prior to completion that take a substantial period of time to get ready for their intended use. Capitalization of
borrowing costs ceases when the building concerned becomes available for its intended use.
Subsequent costs of replacing certain parts of items of property, plant and equipment and compliance costs are
added to the carrying amount of the item to which they relate and depreciated over that item’s remaining useful
life. Day-to-day servicing and maintenance costs are recognized as an expense as incurred.
Depreciation is calculated on a straight-line basis to write off the assets’ carrying amount over their estimated
useful lives. The main useful lives applied by the Group are as follows:
o
o
o
o
Buildings: 10 to 60 years
Fixtures and fittings: 5 to 15 years
Vehicles and equipment: 4 to 5 years
Office furniture and equipment: 3 to 10 years
Useful lives are reviewed at each year-end.
Assets held under finance leases are depreciated over their estimated useful lives in the same way as assets
owned outright, or over the lease term where this is shorter.
When the recoverable amount of an item of property, plant and equipment is less than its carrying amount, a
provision for impairment is recorded for the difference. Gains and losses realized on disposal of items of
property, plant and equipment – corresponding to the difference between the disposal proceeds and the item’s
carrying amount – are recognized in the income statement under “Other operating income and expenses, net”.
2.4.6. - INTANGIBLE ASSETS
Intangible assets are measured at cost. Their recoverable amount is reviewed at regular intervals to determine
whether there is any indication that it may be less than their carrying amount. If any such indication exists, an
impairment test is performed and any identified impairment loss is recorded in the income statement under
“Recurring operating expense”, except when the loss is considered unusual or represents a very significant
amount. In this latter case, the loss is recorded under "Other operating income and expenses, net".
Intangible assets are amortized over the following useful lives:
o Trademarks: 10 to 15 years
o Licenses and software: 1 to 3 years
o Contractual customer relationships: 3 to 10 years
o Patents: 3 to 12 years.
2.4.6.1. -
PURCHASED TRADEMARKS AND TRADEMARKS ACQUIRED IN BUSINESS COMBINATIONS
Trademarks are stated at cost less accumulated amortization and accumulated impairment losses, if any.
Trademarks acquired in business combinations are measured at fair value.
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Amortization is calculated on a straight-line basis to write off the assets’ carrying amount over their estimated
useful lives, starting from the date when they are put into service.
Trademarks qualified as having an indefinite useful life are not amortized but are tested for impairment at each
year-end or whenever there is an indication that their recoverable amount may be less than their carrying
amount.
2.4.6.2. -
LICENSES
Licenses are stated at cost less accumulated amortization and any accumulated impairment losses.
Amortization is calculated on a straight-line basis to write off the assets’ carrying amount over their estimated
useful lives, starting from the date when they are put into service.
2.4.6.3. -
SOFTWARE
Purchased software is recognized as an intangible asset at cost and amortized over its estimated useful life.
Software maintenance costs are recognized as an expense as incurred.
The directly attributable costs of developing identifiable software that is controlled by the Group and expected
to generate future economic benefits over more than one year are recognized as an asset in cases where the
criteria listed in IAS 38 are met.
Directly attributable costs include employee benefit costs for the employees who developed the software and an
appropriate portion of development overheads. Software development costs recognized as an asset are amortized
over the software's estimated useful life.
2.4.6.4. -
RESEARCH AND DEVELOPMENT COSTS
Research costs are recognized as an expense for the period in which they are incurred.
Identifiable intangible assets arising from the development phase of an internal project are recognized in the
balance sheet when the recognition criteria specified in IAS 38 are fulfilled.
Capitalized development costs are amortized on a straight-line basis over their estimated useful lives.
Development costs that do not qualify for recognition as an asset are recorded as an expense for the period in
which they are incurred.
2.4.7. - IMPAIRMENT TESTS
Assets with indefinite useful lives are not amortized but are tested for impairment at each year-end and when
there is an indication that they may be impaired.
Amortizable and depreciable assets are tested for impairment when there is an indication that their carrying
amount may exceed their recoverable amount and an impairment loss is recognized where necessary. The
recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.
If it is not possible to separately determine the recoverable amount of an individual asset, the calculation is
performed at the level of the cash-generating unit to which the asset belongs.
72
The recoverable amount of impaired non-financial assets other than goodwill is reviewed at each period-end,
and all or part of the provision for impairment is reversed where appropriate.
2.4.8. - FINANCIAL ASSETS
Financial assets are classified in four categories:
2.4.8.1. -
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
This category comprises assets held for trading and other assets designated upon initial recognition as financial
assets at fair value through profit or loss.
A financial instrument is qualified as held for trading when it has been acquired principally for the purpose of
selling it in the near term.
Derivative instruments are included in this category, except when they qualify for hedge accounting.
Financial assets in this category are measured at fair value and the aggregate net gain or loss arising from
changes in fair value is recognized in profit or loss.
They are classified as current assets when they are held for trading or are intended to be sold within twelve
months of the period-end.
2.4.8.2. -
LOANS AND RECEIVABLES
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and are not being held for sale. They are measured at amortized cost, determined
using the effective interest method, less any provision for impairment. They are classified as current assets,
except when they fall due more than twelve months after the period-end.
2.4.8.3. -
HELD-TO-MATURITY INVESTMENTS
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and a
fixed maturity that an entity has the positive intention and ability to hold to maturity. They are measured at
amortized cost, determined using the effective interest method.
2.4.8.4. -
AVAILABLE-FOR-SALE FINANCIAL ASSETS
Available-for-sale financial assets are those non-derivative financial assets that are designated as available for
sale or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at
fair value through profit or loss. They are classified as non-current assets, except when they are intended to be
sold within twelve months of the period-end.
Financial assets in this category are measured at fair value and the gains and losses arising from changes in fair
value are recognized in equity. When an asset is derecognized or has suffered an other than temporary
impairment, the cumulative gain or loss previously recognized in equity is reclassified into profit or loss.
The amount of the cumulative loss that is removed from equity and recognized in profit as explained above
corresponds to the difference between the acquisition cost (net of any principal repayments and amortization)
and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss.
73
Financial assets are initially recognized at fair value plus, in the case of a financial asset not at fair value thr ough
profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset.
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset (or part
of the financial asset) expire, or when the Group waives or transfers its contractual rights and no longer retains
substantially all the risks and rewards of ownership of the asset.
At each period-end, the Group assesses whether there is objective evidence that the recoverable amount of a
financial asset or group of financial assets represents less than their carrying amount. If such evidence exists, the
recoverable amount of the asset or group of assets is measured and an impairment loss is recognized where
appropriate, based on the category of asset concerned.
Fair value measurement
The fair value of derivatives and other financial instruments traded on a stock exchange or other active market is
measured based on quoted prices for identical assets and liabilities at the fiscal year end. These correspond to
Level 1 inputs in the “fair value hierarchy” defined under IFRS 7.
The fair value of over-the-counter derivatives and other financial instruments that are not traded on an active
market is determined using inputs other than quoted prices included within Level 1 that are observable either
directly (i.e., as prices) or indirectly (i.e., derived from prices). These correspond to Level 2 inputs in the “fair
value hierarchy” defined under IFRS 7.
The fair value of financial instruments for which observable inputs are not available are measured using
unobservable inputs (i.e., the Group’s internal data). These correspond to Level 3 inputs in the “fair value
hierarchy” defined under IFRS 7.
2.4.9. - TRADE RECEIVABLES
Trade receivables are measured at cost – corresponding to their nominal amount – when they are due within one
year and the impact of discounting would not be material. They are measured at amortized cost, determined by
the effective interest method, when they are due beyond one year and the impact of discounting is material.
An impairment loss is recognized when there is objective evidence that the carrying amount of a receivable may
not be recovered in accordance with the terms of the underlying contract.
2.4.10. -
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand, demand deposits and investments in money market securities.
They are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in
value. Cash equivalents are measured at fair value through profit or loss.
2.4.11. -
SHARE CAPITAL
Share capital consists exclusively of ordinary shares; the Group has not issued any preference shares.
The cost of equity-settled transactions is recorded as a deduction from equity, net of any related income tax
benefit.
Treasury shares are also recorded as a deduction from equity, until they are cancelled, re-issued or sold.
74
No profit or loss is recorded in the income statement on the purchase, sale, issue or cancellation of Fimalac
equity instruments.
2.4.12. -
DEBT
2.4.12.1. -
BANK BORROWINGS
Borrowings are initially recognized at fair value, corresponding to the cash proceeds received, net of direct
issuing costs. They are subsequently measured at amortized cost, determined using the effective interest method.
The difference between the cash proceeds received, net of direct issuing costs, and the amount payable to
extinguish the debt is recognized in profit over the life of the debt using the effective interest method.
Borrowings are classified as current liabilities except when the Group has an unconditional right to defer
repayment for more than twelve months beyond the period-end, in which case they are classified as non-current
liabilities.
2.4.12.2. -
NON-CONTROLLING INTEREST PUTS
In accordance with IAS 32, put options granted to non-controlling shareholders of subsidiaries are recognized as
non-current liabilities. An equivalent amount is recorded as a deduction from equity attributable to noncontrolling interests to the extent possible and any excess is deducted from equity attributable to equity holders
of the parent. The liability is remeasured at each period end at the present value of the option exercise price.
2.4.13. -
DEFERRED TAX
Deferred taxes are recognized for all temporary differences between the carrying amount of assets and liabilities
and their tax base, using the liability method. This method consists of adjusting deferred taxes recognized in
prior periods based on the enacted tax rates applicable in future periods.
Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that
taxable profit will be available against which the deductible temporary difference can be utilized.
Deferred tax liabilities are recognized for all taxable temporary differences associated with investments in
subsidiaries, associates and joint ventures, except to the extent that the parent, investor or venturer is able to
control the timing of the reversal of the temporary difference and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred tax assets and deferred tax liabilities are offset if, and only if, subsidiaries have a legally enforceable
right to set off current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to
income taxes levied in the same period by the same taxation authority.
2.4.14. -
EMPLOYEE BENEFITS
2.4.14.1. -
POST-EMPLOYMENT BENEFITS
The Fimalac Group participates in pension plans for employees in its host countries, in accordance with local
laws and practices. They include various compulsory plans funded by a combination of employee and employer
contributions. The related pension funds are managed by independent organizations and Group companies have
no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay
all benefits relating to employee service in the current and prior periods.
75
Group employees in certain countries are entitled to additional benefits in the form of a pension or a lump sum
paid on retirement. The main countries concerned are the United States, France and the United Kingdom.
In the United States, employees are covered by a defined contribution plan set up by Fitch Ratings, Inc. Under
the plan terms, qualifying employees are entitled to pay part of their salary into the plan and are eligible for tax
relief on their contributions. The company may choose to make a matching payment equal to a predetermined
percentage of employee contributions. These matching payments are also exempt from personal income tax. The
plan also includes a profit-sharing formula that entitles qualifying employees to receive additional employer
contributions, based on the company’s profits. In the United Kingdom, Fitch Ratings Ltd. operates a similar
contributory defined contribution plan for employees.
Upon retirement, former Group employees receive a pension under their local statutory scheme. They may also
receive benefits funded directly by certain French and foreign companies in the Group.
In France, Group employees receive a termination benefit calculated by reference to their years of service with
the company according to a formula specified in the applicable collective bargaining agreement.
The Group’s obligation for the payment of pensions and other post-employment benefits is determined based on
employees' projected final salaries and specific economic assumptions for each country. They may be funded by
a separate entity, with a provision recorded in the balance sheet for the unfunded obligation.
A defined benefit plan is a post-employment benefit plan under which fixed contributions paid into a separate
entity (a fund) do not relieve the company of its legal or constructive obligation to pay further contributions if
the fund does not hold sufficient assets to pay the benefits due. The Group’s net projected benefit obligation
under defined benefit plans corresponds to the present value of expected future payments required to settle the
obligation resulting from employee service in the current and prior periods.
Actuarial gains and losses result from changes in the actuarial assumptions applied to estimate the projected
benefit obligation and related plan assets, experience adjustments (i.e. the effects of differences between the
previous actuarial assumptions and what has actually occurred), and legislative changes. They are recognized
immediately in other comprehensive income.
In line with the amendment to IAS 19 applicable from January 1, 2013, past service costs arising from plan
amendments are recognized immediately in profit or loss.
Share-based payments
Stock options and free shares are granted to employees in exchange for services rendered.
The services received as consideration for the options and free shares are recognized as an expense over the
vesting period with a corresponding adjustment to equity. The amount recognized for stock options is
determined using the Black & Scholes option pricing model.
Vesting conditions other than market conditions are taken into account in the assumptions used to estimate the
probable number of options that will become exercisable. These estimates are reviewed at each period-end.
“BSPCE” warrants
“BSPCE” (founder share) warrants are granted periodically to the officers and employees of Webedia. The
warrants correspond to cash-settled share-based payment transactions due to the existence of put and call options
on the shares obtainable upon exercise of the warrants. The cost of the warrants is therefore recognized in
employee benefits expense as the employee services are rendered.
Incentive plan costs
76
In 2009, Fitch Group set up an incentive plan indexed to the group’s EBITDA performance over a rolling threeyear period. The plan falls within the scope of IAS 19.
2.4.15. -
PROVISIONS
A provision is recognized when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
In the normal course of business, Fimalac and its subsidiaries may be involved in disputes and proceedings
relating to labor, tax or regulatory issues (such as competition law). Each potential or incurred risk is carefully
analyzed and provisions are recorded where appropriate, calculated based on the recommendations of the
Group’s technical experts and legal counsel.
Restructuring provisions are recorded when the Group has a detailed formal plan for the restructuring and has
notified those affected by the plan.
Environmental provisions
The Group owned in the past manufacturing sites that may be recognized as being contaminated, and it may
have a legal or constructive obligation to carry out clean-up work at these sites.
Analyzes and estimates have been prepared by the Group, with the assistance of qualified experts, to determine
the probability, timing and amount of the corresponding outflow of resources embodying economic benefits.
Appropriate provisions have been recorded in the balance sheet.
The provisions are discounted at rates that reflect current market assessments of the time value of money and the
risks specific to the liability. Discounting adjustments to provisions are recorded under "Other financial income
and expenses, net".
2.4.16. -
REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration received, net of taxes and discounts.
Revenue from the sale of services is recognized by reference to the stage of completion of the transaction at the
balance sheet date. Interest income from interest-bearing instruments is recognized using the effective interest
method.
Dividends on equities held as investments are recognized when the shareholder's right to receive payment is
established.
Webedia Group (Digital activities)
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of
any trade discounts or volume rebates.
Revenue from the sale of services is recognized by reference to the stage of completion of the transaction at the
end of the reporting period. The stage of completion is determined by reference to the work performed.
Revenue from the sale of advertising space on behalf of websites not owned by the Webedia group corresponds
to the net commission received by Webedia.
77
The Webedia group’s revenue is derived from:

Contracts for the sale or barter of advertising space on websites and mobile apps:
o
For sale contracts completed at the period-end:
These contracts concern the display of advertising banners on the Group’s French or foreign
websites for a fixed period of time. Their value depends mainly on the number of page views
requested by the advertiser. The revenue recognized in the income statement therefore corresponds
to the contract value negotiated up front, adjusted if appropriate based on the actual number of page
views.
o
For sale contracts in progress at the period-end, recognized revenue corresponds to the prorated
portion of the initial contract value.
o
In accordance with SIC 31, revenue from advertising services provided in barter transactions
(exchanges of website banners and of banners for logos) is recognized only if the exchanged
services are not considered as being similar (i.e., notably, the format and the type of site should be
different) and their fair value can be reliably measured by reference to similar non-barter
transactions. Barter transactions that fulfill these two conditions are recognized in revenue in
accordance with the same principle as for sale contracts. As the Group does not yet have the tools
to objectively demonstrate the dissimilarity between the exchanged website banners, no revenue is
recognized for barter transactions in the consolidated financial statements prepared in accordance
with IFRS. For barter transactions involving the display of advertising banners in exchange for
print advertising or website content, revenue from the services provided by Group entities is
recognized for the amounts billed.

Contracts for the supply of content about movies, actors, etc. published on Webedia sites in the form of
fact sheets that the Group’s partners (web portals in particular) display on their own site under their own
brand.

The Shopping activity. This revenue corresponds to the pay-per-click commission received when an
Internet user decides to join a Pure Shopping advertiser’s site. It is recognized when the Internet user is
recorded in the Group’s information system as having moved from the Pure Shopping site to the
advertiser’s site.

The development of platforms on behalf of advertisers. This revenue is recognized when the platform is
delivered. Subsequent editorial and technical management fees are recognized on a monthly basis.
Other revenues include commissions received from commercial service providers that organize cinema ticket
sales on the Allociné site in France, and DVD sale and rental revenues.
Vega (Entertainment activities)
Vega primarily derives its revenue from the rental of concert halls and sports venues, mainly to event promoters.
This revenue is recognized when the event takes place.
78
Fitch Ratings (credit rating activities), Fitch Solutions (data and analytics tools) and Fitch Learning
(professional training and learning solutions)
Fitch primarily derives its revenue from sales of:
 Credit rating services (Fitch Ratings) and training services (Fitch Learning)
 Subscriptions to data and analytics services (Fitch Solutions).
Revenue from credit rating services
 Revenue from these services includes securities rating fees, credit watch fees, and relationship fees,
corresponding to contractual fees from credit rating services.

Securities rating revenue is recognized when the rating is awarded and the issuer is billed. For contracts
that include clauses providing for compensation if a rating project is cancelled, the related revenue is
only recognized when it is certain it will be received.

Credit watch fees are recognized when the service is rendered, irrespective of when the fees are billed.
Any revenue billed in advance is deferred and recognized over the average life of the financial
instrument that is being monitored. A revenue accrual is booked for any services rendered during the
period but not billed as of the balance sheet date.

Relationship fees are recognized when the service is performed. They generally cover yearly, halfyearly or quarterly periods and are therefore deferred and recognized over the life of the contract
concerned.
Revenue from training services
This revenue is recognized when the service is performed.
Revenue from subscriptions to data and analytics services
This revenue is billed when the subscription is purchased. It is deferred and recognized over the subscription
period, which does not exceed one year.
2.4.17. -
LEASES
Leases are classified as finance leases if they transfer substantially all the risks and rewards incidental to
ownership to the lessee. All other leases are classified as operating leases.
Finance leases are recognized in non-current assets and measured at an amount equal to the fair value of the
leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of
the lease.
The corresponding debt towards the lessor is recognized in liabilities under "Finance lease liabilities". The
finance charge, corresponding to the difference between the total lease obligation and the fair value of the leased
asset, is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability.
Lease payments under operating leases are recognized as an expense on a straight-line basis over the lease term.
2.4.18. -
DIVIDENDS
Dividends distributed to shareholders are recognized as a liability in the consolidated financial statements when
they are approved.
79
2.4.19. -
ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS
Assets and liabilities that are available for immediate sale and whose carrying amount will be recovered
principally through a sale transaction are classified as “Assets and liabilities held for sale” when the sale is
highly probable. When several assets are intended to be sold in a single transaction, the assets and related
liabilities are treated as a disposal group.
Assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair
value less costs to sell.
A deferred tax asset or liability is recognized on the difference between the carrying amount of the held-for-sale
assets in the consolidated balance sheet and their tax base.
Assets and liabilities held for sale or related to discontinued operations are reported on separate lines of the
balance sheet. Income and expenses related to assets and liabilities held for sale continue to be reported on the
appropriate lines of the consolidated income statement. The profit or loss generated by assets and liabilities
corresponding to discontinued operations is reported on a separate line of the income statement, when the
definition of discontinued operations is met. Once they are classified as held for sale, property, plant and
equipment and intangible assets cease to be depreciated or amortized and no new impairment losses are
recognized.
2.4.20. -
EARNINGS PER SHARE
Basic earnings per share are calculated by dividing profit from continuing operations attributable to ordinary
equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the
period, after deducting treasury shares.
To calculate diluted earnings per share, profit attributable to ordinary equity holders of the parent entity and the
weighted average number of ordinary shares outstanding are adjusted for the effects of dilutive instruments such
as stock options and stock warrants.
2.4.21. -
OTHER OPERATING INCOME AND EXPENSES, NET
Other operating income and expenses mainly comprise any disposal gains and losses; significant or unusual
impairment losses on property, plant and equipment or intangible assets; unusual restructuring costs; movements
in provisions for claims and litigation, warranty provisions and environmental provisions that represent very
significant amounts, and acquisition-related items.
2.4.22. -
USE OF ESTIMATES
The preparation of financial statements requires the use of estimates and assumptions that may have an impact
on the reported amounts of assets and liabilities at the balance sheet date and of profit for the period. These
estimates take into account economic data that may change over time and include a degree of uncertainty. The
main estimates concern impairment tests of assets, short- and long-term provisions and employee benefit
obligations.
80
NOTE N° 3 - CONSOLIDATED COMPANIES
3.1. -
CHANGES IN SCOPE OF CONSOLIDATION
Acquisitions for the period
% interest
acquired
Subsidiary
Digital activities
Groupe Webedia *
Acquisitions by Groupe Webedia
Groupe Allociné
Groupe Confidentielles
Exponaute
Acquisition
date
Cost
(in € milions)
65.2%
July 2013
36.6
100.0%
61.5%
100.0%
July 2013
December 2013
December 2013
68.3
6.0
0.3
* Fimalac initially acquired a 38.8% stake in Webedia, on July 26, 2013. The Allociné group was acquired by Fimalac on July 12, 2013.
It was transferred to Webedia on December 20, 2013 in exchange for shares, leading to an increase in Fimalac's interest in Webedia to
65.2%.
Since July 2013, Fimalac has been building a Digital business around two significant acquisitions, Webedia and
Financière Allociné. Ninety-eight percent of the Allociné group was acquired on July 12 (subsequently
increased to 100%), followed by 38.8% of Webedia on July 26. The Financière Allociné shares were then
contributed to Webedia on December 20, giving Fimalac 65.2% of the Webedia group – including Allociné – at
that date.
Webedia manages leading theme websites, such as Purepeople.com, Purestyle.com and Puremedias.com Tfco,
which was immediately merged into Webedia on the acquisition date, has expanded the Group's consulting base
and strengthened its presence among female demographics by leveraging Terrafemina’s expertise. Allociné is
France’s number one news media group in the cinema and TV-series segment.
Groupe Webedia, which was 65.2%-owned by Fimalac at December 31, 2013, was fully consolidated from the
date of acquisition, as the terms of the shareholders’ pact and the membership of the governance and senior
management structures enabled Fimalac to govern its financial and operating policies.
The total acquisition cost of the Digital activities was €111.2 million, including contingent consideration of an
estimated €4.5 million.
Put and call options have been exchanged between Fimalac and the other shareholders on Webedia shares, and
between Webedia and other shareholders on Groupe Confidentielles shares. The liability corresponding to the
non-controlling interest puts amounts to €60.7 million based on the discounted present value of the estimated
exercise price. It has been recognized in debt and as a deduction from non-controlling interests in equity. A
liability has also been recognized for the "BSPCE” warrants granted to officers and employees of Webedia that
were potentially exercisable on the transaction date. The acquisition-date discounted present value of the
warrants was €1.5 million.
Fimalac decided to measure non-controlling interests in Webedia and Groupe Confidentielles using the fair
value model (full goodwill method). The goodwill recognized on these acquisition by the above method
amounted to €141.2 million.
81
The Webedia and Allociné goodwill (excluding Groupe Confidentielles) was determined as follows:
In € millions
104.9
53.8
158.7
21.6
15.6
(5.3)
31.9
(1.5)
128.3
Webedia/Allociné goodwill
Acquisition price
Fair value of non-controlling interests
Total
Consolidated net assets acquired
Identified trademarks
Deferred taxes on trademarks
Adjusted net assets acquired (100%)
“BSCPE” warrants granted prior to the acquisition
Full goodwill
Concerning Webedia and Allociné, the identifiable assets and liabilities acquired were allocated after the
following main fair value adjustments:
Recognition of the Allociné France trademark (fair value: €10.8 million), Allociné Germany trademark (fair
value: €0.5 million) and Allociné Brazil trademark (fair value: €1.3 million). These trademarks are being
amortized over 15 years.
Recognition of the Groupe Webedia trademarks (fair value: €3 million), amortized over 10 years.
Deferred tax liabilities recorded upon recognition of these trademarks amounted to €5.3 million.
Fimalac chose to apply the full goodwill method and therefore recognized non-controlling interests at fair value.
On this basis, goodwill recognized on the acquisitions - as measured by the full goodwill method - amounted to
€141.2 million.
Groupe Confidentielles goodwill was calculated as follows:
In € millions
6.0
6.9
12.9
0.2
12.7
Groupe Confidentielles goodwill
Acquisition price
Fair value of non-controlling interests
Total
Consolidated net assets acquired
Full goodwill
The purchase price allocation for Groupe Confidentielles will be completed within twelve months of the
acquisition date in December 2013.
82
To facilitate comparisons, the condensed consolidated income statement presented below shows the Group's
revenue and results excluding the Digital activities:
(In € millions)
Revenue
Other income and other expenses
Depreciation, amortization and provisions
Recurring operating loss
Other income and expenses, net
Operating loss
Income tax expense
Share of profits of associates
Fitch net profit (period up to the change of consolidation method)
Net Profit
Profit attributable to equity holders of the parent
83
2013 (Pro forma
12 months excluding
Groupe Webedia)
46.4
(50.9)
(7.8)
(12.3)
1.4
(10.9)
6.4
(4.9)
90.3
80.9
(0.3)
81.2
2012 (Pro forma
12 months)
33.0
(34.3)
(5.8)
(7.1)
(30.7)
(37.8)
(5.6)
(6.6)
52.4
30.6
81.2
114.2
5.6
108.6
3.2. -
LIST OF CONSOLIDATED COMPANIES
84
Full = Full consolidation method
Equity = Equity method
85
86
87
88
NOTE N° 4 - FINANCIAL RISKS
Financial risk factors
In the normal course of business, the Group is exposed to certain currency, interest rate, liquidity, credit and
equities risks. The Group uses derivatives to manage its interest rate and currency risks, and generally
invests its cash reserves in low-risk instruments with diversified maturities.
4.1. -
CURRENCY RISK
The main currency risks arise from intra-group fund transfers and treasury transactions. These risks are
hedged when the amounts involved are material.
The Group uses the following instruments to hedge its currency risk:
 Forward purchases and sales of foreign currencies
 Purchases and sales of currency options
Total
converted
into €
USD
GBP
BRL
TRY
CHF
Bank borrowings
11.3
11.3
0.0
0.0
17.6
12.2
7.3
15.4
2.0
7.2
15.4
2.0
7.2
Cash
Intra-group loans
131.9
149.5
12.2
110.0
117.3
0.0
0.0
0.0
138.3
12.2
117.3
(15.4)
(2.0)
(7.2)
(131.9)
(110.0)
Net currency position after hedging, expressed in the
currency concerned
(131.9)
0.0
(110.0)
0.0
0.0
0.0
6.4
12.2
7.3
(15.4)
(2.0)
(7.2)
Exchange rates: €1= $ 1.3791 - €1= £ 0.8337 – €1=BRL 3.2576 - €1=TRY 2.9605 - €1=CHF 1.2276
(in € millions)
Impact on profit
+/- 0,30
Impact on equity
Not material
89
CHF
USD
GBP
Trade and other payables
Bank borrowings
5.9
5.9
0.0
0.0
Total liabilities
5.9
0.0
0.0
Trade and other receivables
Cash
23.8
Intra-group loans
167.4
0.0
23.8
167.4
Total assets
0.0
23.8
167.4
(5.9)
23.8
167.4
(167.4)
Drawdowns on lines of credit
Net currency position after hedging, expressed in the currency concerned
0.0
0.0
(167.4)
(5.9)
23.8
0.0
Exchange rates: €1 = $1.31940 - €1 = £0.81610
(in € millions)
Impact on profit
+/- 0.18
Impact on equity
Not material
Impact of changes in exchange rates on 2013 earnings metrics
A 10% increase or decrease in the US dollar exchange rate would lead to:
 A 9.9% (€7.8 million) increase or decrease in attributable profit.
A 10% increase or decrease in the sterling exchange rate would lead to:
 A 0.9% (€0.6 million) increase or decrease in revenue
 A 1.0% (€0.2 million) increase or decrease in operating profit
 A 4.4% (€0.3 million) increase or decrease in net finance costs
 A 0.3% (€0.2 million) increase or decrease in attributable profit.
90
4.2. -
INTEREST RATE RISK
Group policy consists of hedging the risk of changes in interest rates. The following instruments are used to
hedge interest rate risks:


Interest rate swaps
Forward rate agreements (FRAs), collars and caps
Sensitivity to changes in interest rates at December 31, 2013
Total (€m)
EUR Position GBP Position
101.7
178.0
49.1
107.5
279.7
9.4
150.8
9.4
107.5
Cash
34.1
25.3
7.3
Bonds
10.6
10.6
54.1
45.3
7.3
(225.6)
(105.5)
(100.2)
101.7
Hedging instruments
Swaps
Caps
96.0
96.0
0.0
80.0
(129.6)
(105.5)
(20.2)
Net position after hedging (=floating rate)
80.0
Exchange rates: €1 = $1.3791 - €1 = £0.8337
(in € millions)
+/-1.3
Impact on profit
Impact on equity
Not material
91
Sensitivity to changes in interest rates at December 31, 2012
Total
(€m)
EUR
position
58.0
58.0
131.8
80.5
189.8
138.5
37.0
37.0
Cash
33.1
25.8
70.1
62.8
(119.7)
309.3
Hedging instruments
Swaps
Caps
USD
position**
GBP
position **
CAD position
**
41.8
0.0
41.8
0.0
6.0
0.0
0.0
6.0
0.0
(75.7)
0.0
(35.8)
0.0
150.0
0.0
130.0
0.0
24.5
20.0
333.8
150.0
0.0
150.0
0.0
Net position after hedging (= floating rate)
214.1
74.3
0.0
114.2
0.0
**Foreign currency amounts converted into euros at the following rates:
€1 = $1.31940
€1 = £0.81610
(in € millions)
Sensitivity to a 100-bps increase or decrease in interest rates
Annualized impact on finance costs of a 100-bps increase or decrease in
interest rates across the yield curve
2.1
Impact on equity
4.3. -
Not material
LIQUIDITY RISK
Managing liquidity risk involves selecting liquid instruments traded in an active market and obtaining
financing via confirmed credit facilities. To keep pace with the Group’s strong growth momentum,
Corporate Treasury ensures that financing is constantly available in the form of confirmed credit facilities
that can be drawn on at any time.
4.4. -
CHARACTERISTICS OF SUBSIDIARIES’ DEBT (EXCLUDING FITCH)
(in € millions)
Money market securities issues*
Fixed or
floating rate
Total
in €m
Due within
1 year
Due in
1-5
years
Due beyond
5 years
Floating
101.8
101.8
Drawdowns of confirmed lines of credit
Floating
153.1
7.1
50.0
Fixed
2.0
0.9
1.1
256.9
109.8
51.1
Bank borrowings
Total outstanding debt
* Commercial paper backed by undrawn confirmed lines of credit for the same amount (see Note 4.6).
(1) Partial refinancing of North Colonnade debt (see Note 5.3).
92
96.0
96.0
4.5. -
CHARACTERISTICS OF FITCH DEBT
Fixed or
floating rate
Bank borrowings
Drawdowns of confirmed lines
of credit
Private placement notes
Total
in €m
Floating
83.4
Fixed
108.8
Total outstanding debt
Due in
1-5
years
Due
beyond 5
years
83.4
108.8
192.2
Undrawn confirmed lines of credit
4.6. -
Due within
1 year
0.0
83.4
61.6
108.8
61.6
CHARACTERISTICS OF CONFIRMED LINES OF CREDIT
Inception date
Fimalac
Confirmed lines of credit (1)
Amount drawn down at December 31, 2013
July 2013
Expiry
date
January 2016
In millions of
currency units
In € millions
€240.9
€(50.0)
€190.9
See Note 5.21 – Off-balance
sheet commitments
Undrawn amount: Fimalac
Allociné
July 2014
July 2015
240.9
(50.0)
190.9
€1.2
€0.6
1.2
0.6
€0.5
€0.6
2.9
0.5
0.6
2.9
Webedia
December
2015
May 2016
Total Allociné/Webedia
Fitch Group
Confirmed line of credit *
May 2012
July 2018
$200.0
Drawdowns at December 31, 2013
$(115.0)
Undrawn amount: Fitch Group
$85.0
Exchange rate : €1 = 1.3791
* Five-year facility repayable in full on the expiry date. The facility amount was increased to $400 million
in January 2014.
145.0
(83.4)
61.6
(1) Fimalac syndicated line of credit
An addendum signed on July 16, 2013 increased the facility to €250 million for a period of three years, with an option
to extend the agreement for a further one to two years. Since then, the facility amount has been reduced to €240.9
million.
93
4.7. -
RISKS ARISING FROM DEBT COVENANTS
The facility agreements do not include any rating triggers. However, the borrower is expected to comply
with the following hard covenants:

Fimalac’s facilities (€240.9 million)
Consolidated net debt/Equity < 0.5
Net cash flow/Debt service > 1.10
These ratios were complied with in 2013.


Fitch Group’s facility ($200 million)
3)
Leverage ratio
Consolidated debt/EBITDA < 3.0
4)
Interest coverage ratio
EBITDA/Interest expense > 3.5
These ratios were complied with in 2013.


Fitch Group’s private placement notes ($150 million)
Leverage ratio
Consolidated net debt/EBITDA < 2.0x
As Fitch Group had a net cash position at December 31, 2013, the leverage ratio was not applicable.
94
4.8. -
MATURITIES OF FINANCIAL INSTRUMENTS (UNDISCOUNTED)
December 31, 2013
Cash flows
Carrying
amount at
December 31,
2013
(in € millions)
Within 1
year
In 1 to 5 years
Beyond
5 years
DERIVATIVES
Assets
. Derivatives qualifying for hedge accounting
0.6
0.6
. Derivatives not qualifying for hedge accounting
Liabilities
0.2
0.2
OTHER FINANCIAL INSTRUMENTS
Assets
. Non-current financial assets
115.6
. Current financial assets
28.0
. Other non-current assets
0.0
55.1
60.5
116.3
129.2
28.0
. Trade receivables
43.0
43.0
. Cash and cash equivalents
43.6
43.6
Liabilities
. Long-term debt
245.5
. Short-term debt
153.4
. Other non-current liabilities
153.4
0.4
. Trade payables
Total
95
0.4
24.2
24.2
(192.9)
(63.2)
(61.6)
(68.1)
Cash flows
Carrying amount
at December 31,
2012
(in € millions)
Within 1
year
In 1 to 5 years
Beyond
5 years
DERIVATIVES
Assets
0.1
0.1
0.7
0.7
6.1
6.1
Liabilities
OTHER FINANCIAL INSTRUMENTS
Assets
. Non-current financial assets
114.8
. Current financial assets
6.7
. Other non-current assets
0.0
65.7
49.1
6.7
. Trade receivables
12.2
12.2
. Cash and cash equivalents
70.1
70.1
Liabilities
. Long-term debt
101.7
. Short-term debt
0.0
. Other non-current liabilities
101.7
7.2
7.2
. Trade payables
91.4
91.4
Total
(3.2)
(16.3)
4.9. -
(36.0)
49.1
CREDIT RISK
Policies are implemented to ensure that services are provided solely to customers with a good credit record.
Derivative and other cash management transactions are entered into with recognized counterparties. The
Group's exposure to credit risk with any single financial institution is capped using risk management tools.
4.10. - EQUITIES RISK
Part of the Group’s available cash is invested in assets that are exposed to the risk of changes in stock
market prices, mainly European markets. These assets break down as follows:
(in € millions)
Listed shares (CAC 40)
Equity funds
Structured equity products
Total
Unrealized gain Market value at December Market value at December
(loss)
31, 2013
30, 2012
Cost
5.0
(2.4)
2.6
2.4
13.6
1.1
14.7
1.5
-
-
-
2.7
18.6
(1.3)
17.3
6.6
96
4.11. - ACCOUNTING TREATMENT OF DERIVATIVE FINANCIAL INSTRUMENTS AND
HEDGING TRANSACTIONS
Derivative instruments are classified as financial assets and liabilities at fair value through profit or loss,
except when they qualify for hedge accounting.
Instruments classified as financial assets and liabilities at fair value through profit or loss are measured at
fair value and the aggregate net gain or loss arising from changes in fair value is recognized in profit or
loss.
Financial instruments qualify for hedge accounting when the hedging relationship, the risk management
objective and the strategy for undertaking the hedge are formally designated and documented.
The hedge’s effectiveness in achieving offsetting changes in fair value or cash flows attributable to the
hedged risk is assessed throughout the financial reporting periods for which the hedge is designated. A
hedge is considered to be highly effective when offsetting changes in fair value or cash flows are in the
range of 80 to 125%.
There are three types of hedging relationship:

Fair value hedge: a hedge of the exposure to changes in fair value of a recognized asset or liability or
an unrecognized firm commitment that is attributable to a particular risk. Changes in the fair value of
the hedging instrument and the hedged item are recognized in profit. No derivative instruments used by
the Group are designated as fair value hedges.

Cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular
risk associated with a recognized asset or liability (such as all or some future interest payments on
floating rate debt) or a highly probable forecast transaction. The portion of the gain or loss on the
hedging instrument that is determined to be an effective hedge is recognized directly in equity and the
ineffective portion is recognized in profit or loss.
The amount recognized directly in equity is reclassified into profit in the same period or periods during
which the hedged item affects profit (for example, when the highly probably planned transaction takes
place). However, when the planned transaction leads to the recognition of a non-financial asset (such as
inventory) or non-financial liability, the cumulative gains and losses recognized directly in equity are
included in the carrying amount of the asset or liability.

Hedge of a net investment in a foreign operation: the accounting treatment is the same as for a cash
flow hedge. The effective portion of the gain or loss on the hedging instrument recognized directly in
equity is reclassified into profit on disposal of the foreign operation.
Currency options may be used by the Group to hedge its net investment in Fitch Group in the United
States.
Further details of the derivatives recognized in the consolidated financial statements are provided in
Note 5.7.
97
Fair value estimates
Fair values are determined based on available information, including prices quoted on an active market and
prices of recent similar transactions, as well as through the use of a valuation technique to establish what
the transaction price would have been on the measurement date.
NOTE N° 5 - NOTES TO THE BALANCE SHEET AND
STATEMENT AND OTHER INFORMATION
INCOME
(in € millions)
5.1. -
GOODWILL ON FULLY CONSOLIDATED COMPANIES
Goodwill at December 31, 2012 and December 31, 2013 may be analyzed as follows:
Cash-generating units/Subsidiaries
(in € millions)
Cost at September 30, 2011
Change in scope of consolidation – Fitch
accounted for by the equity method (1)
Additions
Disposals
Translation adjustments
Reclassifications
Cost at December 31, 2012
Impairment at September 30, 2011
accounted for by the equity method (1)
Impairment losses for the period
Disposals
Other
Impairment at December 31, 2012
Net goodwill at December 31, 2012
Change in scope of consolidation
Additions (2)
Disposals
Reclassifications
Impairment losses for the period
Disposals
Other
Net goodwill at December 31, 2013
Fitch Ratings
(credit ratings)
661.6
Entertainment
activities
Digital
activities
8.5
Holding
companies
0.4
670.5
0.4
0.4
(661.6)
0.0
0.0
0.0
0.0
8.9
35.1
(661.6)
0.0
34.7
8.5
0.0
0.0
0.0
(34.7)
0.0
0.0
0.0
8.5
8.5
0.0
0.0
0.0
0.4
0.0
0.4
141.4
0.0
8.5
0.0
141.4
0.0
0.4
0.4
0.0
0.0
0.0
8.5
0.0
141.4
0.4
0.0
(1) Change resulting from the use of the equity method to account for Fitch Group following the sale of an additional 10% int erest.
(2) Including goodwill of €141.2 million recognized on acquisition of Webedia/Allociné/Groupe Confidentielles/Exponaute (Note 3.1)
98
TOTAL
(34.7)
0.0
0.0
0.0
0.0
0.4
8.5
8.9
0.0
141.4
0.0
0.0
0.0
150.3
0.4
0.0
0.0
0.0
0.0
0.0
0.4
149.9
Goodwill is not amortized but is tested annually for impairment, in accordance with IAS 36 and IAS 38.
5.2. -
INTANGIBLE ASSETS
Intangible assets may be analyzed as follows:
(in € millions)
Patents, licenses and other rights
Trademarks
Contractual customer relationships
Payments on account
Net at
December 31, 2013
7.4
14.8
6.8
0.1
Net at
December 31, 2012
6.8
29.1
6.8
Total
Intangible assets – costs
Patents, licenses,
intellectual
property
Contractual
customer
relationships
Trademarks
Purchased
goodwill
Other
Payments
on account
Total
(in € millions)
Change in scope of
consolidation – Fitch
accounted for by the equity
method
Additions
Disposals
Reclassifications
Change
in
scope
of
consolidation (1)
Additions
Disposals
Reclassifications
15.5
12.3
24.1
51.9
(6.8)
0.1
(12.3)
(24.1)
8.8
0.0
(43.2)
0.1
0.0
0.0
0.0
8.8
3.4
0.5
(0.2)
12.5
0.0
0.0
0.0
15.4
3.8
4.4
15.4
(1) Webedia/Allociné trademarks (see Note 3.1 – Changes in scope of consolidation)
99
8.2
0.0
0.0
0.1
0.0
0.1
22.6
5.0
0.0
0.0
(0.2)
36.2
Intangible assets – amortization
Patents, licenses,
intellectual
property
(in € millions)
Accumulated amortization at September 30,
2011
accounted for by the equity method
Increase
Decrease
Reclassifications
Accumulated amortization at December
31, 2012
Increase
Decrease
Reclassifications
Accumulated amortization at December
31, 2013
Contractual
customer
relationships
Trademarks
Purchased
goodwill
Other
Total
7.9
10.6
8.3
26.8
(6.8)
0.9
(10.6)
(8.3)
(25.7)
0.9
0.0
0.0
0.0
2.0
2.9
0.2
0.0
0.0
2.0
4.2
0.9
0.0
0.0
0.0
5.1
0.0
0.0
7.1
0.0
0.6
1.3
0.1
0.6
1.4
Amortization for the period is recorded in the income statement under “Depreciation and amortization expense”.
Impairment losses, where applicable, are recorded under “Other operating income and expenses, net”.
Research and development costs of €2.5 million for the year concerned Webedia and Allociné, and were recorded
directly in expenses.
5.3. -
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment may be analyzed as follows:
(in € millions)
Land
Buildings
Machinery and equipment
Other
Finance leases
Assets under construction
Payments on account
Total
100
Net at
December 31, 2013
Net at
December 31, 2012
152.5
117.1
4.9
10.5
155.6
123.4
4.8
7.0
5.1
7.4
297.5
0.4
291.2
Property, plant and equipment - Cost
Land
(in € millions)
Change in scope of consolidation –
Fitch accounted for by the equity
method
Buildings
227.4
138.7
(0.9)
(4.1)
Additions
Machinery
and equipment
1.8
0.1
Disposals
Reclassifications
6.9
239.9
138.0
Finance
leases
Assets under
construction
80.3
4.2
(62.0)
(4.2)
2.3
Payments
on account
0.0
(71.2)
1.5
3.8
(0.1)
(0.2)
(0.2)
(0.5)
6.8
(3.2)
0.0
0.4
19.2
3.8
Additions
0.6
4.6
Disposals
(0.2)
(1.9)
20.7
0.0
0.4
0.0
407.5
4.7
7.3
17.2
4.6
(2.1)
Reclassifications
454.7
0.7
10.0
0.8
TOTAL
1.5
(3.6)
13.4
Other
0.0
(4.9)
(3.1)
235.0
134.9
(0.3)
11.2
25.4
0.0
5.1
0.1
(8.2)
7.4
419.0
Finance leases correspond to several leases representing non-material amounts.
Property, plant and equipment – Depreciation and impairment
(in € millions)
Accumulated depreciation and impairment
at
September 30, 2011
Change in scope of consolidation – Fitch accounted
for by the equity method
Increase
Impairment losses
Disposals
Reclassifications
Accumulated depreciation and impairment at
December 31, 2012
Increase
Impairment losses
Disposals
Reclassifications
Accumulated depreciation and impairment at
December 31, 2013
Land
50.6
Buildings
Machinery
and
equipment
Other
Finance
leases
13.2
1.4
48.2
3.4
116.8
(0.4)
1.7
(37.9)
1.8
(3.4)
3.9
(41.7)
7.4
30.6
(0.2)
0.0
3.4
0.0
116.3
2.3
6.3
0.0
(1.3)
(0.1)
(2.0)
0.0
121.5
30.6
(0.1)
0.0
3.1
0.2
84.3
14.7
3.8
(1.7)
(0.7)
(0.1)
82.6
17.7
101
TOTAL
(0.1)
0.1
5.2
0.4
1.0
12.1
1.9
1.5
(0.3)
(1.0)
0.6
(0.2)
6.3
14.9
Canary Wharf building
This building is measured using the cost model. At December 31, 2013, its carrying amount (net of
accumulated depreciation and impairment) was €258.8 million, of which €142.4 million for the land and
€116.4 million for the building, fixtures and fittings. These amounts may be analyzed as follows:
Carrying amount of the Canary Wharf building
Acquisition
cost
( in £ millions )
Land
Capitalized
borrowing costs
173.2
Building
Total in £
14.4
Accumulated
Carrying amount
depreciation
at December 31,
and impairment
2013
187.6
68.8
118.8
Cost
100.0
7.4
107.4
10.4
97.0
273.2
21.8
295.0
79.2
215.8
Total in €
258.8
The building’s estimated value in use was updated at December 31, 2013 taking into account i) Fimalac’s
ability and intention to hold the asset over a long period; ii) the quality of the building and its prime
location; and iii) the terms of the lease signed in August 2013 with an international audit and consulting
firm (see Significant Events).
In particular, the valuation took into account the rent-free period granted under the latest lease, a projected
yield over the life of the property ranging from 5.10% to 5.50% and a discount rate of between 5.75% and
6.20%. The leases include clearly defined escalation clauses.
The base value calculated using a terminal yield of 5.10% and a discount rate of 5.75%, is £217.4 million
(€260.8 million). Its sensitivity to changes in the terminal yield and the discount rate can be summarized as
follows:

Based on an unchanged discount rate (5.75%), a 15-point decrease in the terminal yield would
reduce the base value by £4.5 million (€5.4 million) and a 15-point increase would increase the
base value by £4.3 million (€5.1 million).

Based on an unchanged terminal yield (5.10%), a 15-point increase in the discount rate would
reduce the base value by £2.6 million (€3.1 million) and a 15-point decrease would increase the
base value by £2.5 million (€3.0 million).
In connection with the replacement of part of the financing for the property by a loan from an insurance
company, a separate independent valuation was obtained in December 2013 at the insurance company’s
request (see Note 4.4).
The valuation-date fair value, including a discount for the rent-free period granted under the latest lease, is
in the range of £202 million to £210 million (€242 million to €252 million). The future fair value, after the
rent-free period has elapsed and assuming all the leases are rolled over with the current tenants, is estimated
at £235 million to £243 million (€282 million to €291 million).
Depreciation for the period is recorded in the income statement under “Depreciation and amortization
expense”. Impairment losses are recorded under “Other operating income and expenses, net”.
102
5.4. -
INVESTMENTS IN ASSOCIATES
Investments in associates break down as follows:
Fitch Group
50.0%
275.7
345.9
o/w share of
profit for the
period
78.1
Groupe Lucien Barrière (1)
40.0%
207.6
208.1
10.9
Gilbert Coullier Productions
40.0%
7.2
5.3
1.0
Auguri Productions
40.0%
2.3
1.8
0.1
Kwet, Pomme Productions
40.0%
2.3
1.7
0.1
Talent Group (Webedia subsidiaries)
34.0%
0.9
Deb Jam, Le Comedy Club
50.0%
8.4
8.3
-
504.4
571.1
90.3
(in € millions)
% interest
Equity in net
assets
o/w goodwill
0.1
(1) Measurement of Groupe Lucien Barrière goodwill
The 40% stake in Groupe Lucien Barrière was acquired in March 2011 for €186 million. This amount reflected
an implicit multiple of 6.6x EBITDA as reported for fiscal 2010, less net debt at the fiscal year-end.
At December 31, 2013, after taking in account the reduction in net debt since the acquisition date, application of
this multiple to 2013 EBITDA – which was slightly higher than the fiscal 2010 figure – valued the stake in
Groupe Lucien Barrière at an amount above its book value. This result was corroborated by applying the
discounted cash flows (DCF) method, using cash flow projections aligned with earnings projections. Based on
three-year earnings and cash flow projections, the fair value of the stake in Groupe Lucien Barrière was above its
book value. Sensitivity tests were nevertheless conducted, using relatively high discount rates of up to 10%-12%
and a terminal value calculated by discounting future cash flows to perpetuity at a 1% growth rate. These tests
confirmed that the Groupe Lucien Barrière goodwill was not impaired.
The following table shows key figures for the main associates, none of which are listed.
Total
assets
(in € millions)
Fitch Group
Groupe Lucien Barrière
(1)
Gilbert Coullier Productions
(1)
Total liabilities
Total revenue
Net profit
1,276.4
722.1
740.0
156.3
1,541.7
693.6
1,055.7
17.3
36.9
33.9
66.3
2.0
Corresponding to the estimated consolidated financial statements of Groupe Lucien Barrière for the period from November 1,
2012 to October 31, 2013.
The change in the carrying amount of investments in associates may be analyzed as follows:
473.6
11.1
Dividends paid
(62.1)
Translation adjustments and other
(8.5)
Share of profit for the period
90.3
504.4
103
5.5. -
ADDITIONAL INFORMATION CONCERNING FITCH GROUP
5.5.1. - SUMMARY FINANCIAL STATEMENTS OF FITCH GROUP
At December 31,
2012
890.3
774.9
o/w goodwill
676.4
634.5
Current assets
386.0
387.7
(in € millions)
BALANCE SHEET – ASSETS
Non-current assets
o/w cash and cash equivalents
250.7
238.0
1,276.3
1 ,162.6
Equity
554.2
526.9
Non-current liabilities
361.2
356.6
192.2
216.0
360.9
279.1
6.0
2.8
1 ,276.3
1 ,162.6
TOTAL ASSETS
BALANCE SHEET – EQUITY AND LIABILITIES
o/w long-term debt
Current liabilities
o/w short-term debt
TOTAL EQUITY AND LIABILITIES
2013
(12 months)
2012
(12 months,
pro forma)
Revenue
740.0
654.4
Operating profit
252.0
211.1
(9.6)
(8.8)
153.0
125.3
(in € millions)
INCOME STATEMENT
Profit attributable to equity holders of the parent
5.5.2. - FITCH GROUP GOODWILL
Financial Services Sector – Fitch
Group
(in € millions)
Net at December 31, 2012
634.5
Change in scope of consolidation (acquisition of 7City)
71.2
Disposals
-
Impairment losses
-
(29.3)
Net at December 31, 2013
676.4
Measurement of Fitch Group goodwill
At each fiscal year-end, Fimalac tests Fitch Group goodwill for impairment, by comparing the carrying
amount of the Fitch Group cash-generating unit (CGU) with the recoverable amount, defined as being the
higher of value in use and fair value less costs to sell.
104
Fair value less costs to sell is the amount obtainable from the sale of an asset or cash-generating unit in an
arm’s length transaction between knowledgeable, willing parties, less the costs of disposal. It is determined
based on market data such as stock market prices, comparisons with similar listed companies, or the value
attributed to similar assets or companies in recent transactions.
For the purpose of determining the fair value of Fitch Group, the most meaningful basis for comparison –
which was used to negotiate the sales of Fitch Group shares in 2006, 2009 and 2012 – is Fitch’s listed
competitor Moody’s. This is also the comparative commonly used by financial analysts who follow
Fimalac. Application of Moody’s multiples to Fitch Group values the CGU at an amount above its book
value.
Value in use is determined by the discounted cash flows (DCF) method, using cash flow projections that
are aligned with earnings projections.
Fitch Group’s value in use calculated on the basis of three-year earnings and cash flow projections is also
greater than its book value. Sensitivity tests were nonetheless conducted, using relatively high discount
rates of up to 10% and a terminal value calculated by discounting future cash flows to perpetuity at a 2%
growth rate. These tests confirmed that the Fitch Group goodwill was not impaired.
5.5.3. - ASSOCIATES ACCOUNTED FOR BY THE EQUITY METHOD AT THE LEVEL OF FITCH GROUP
Analysis of Fitch Group’s main investments in associates:
Equity in net
assets
% interest
(in € millions)
China Lianhe Credit Rating Co Ltd
49.0%
Korea Asset Pricing Ltd
33.6%
o/w goodwill
o/w share of
profit for the
period
15.9
6.8
5.1
3.9
0.4
0.7
19.8
7.3
5.7
Assets, liabilities, revenue and profit of the main associates:
(in € millions)
China Lianhe Credit Rating Co Ltd
Korea Asset Pricing Ltd
Total
assets
Total liabilities
Total revenue
for the period
Profit for the
period
39.5
7.1
20.8
10.8
14.2
2.7
10.0
2.0
105
5.5.4. - FITCH GROUP SEGMENT INFORMATION
5.5.4.1. -
NUMBER OF EMPLOYEES BY GEOGRAPHICAL SEGMENT
At December 31,
2013
United States
Latin America
Europe, Middle East, Africa
Asia
Total employees
5.5.4.2. -
At December 31,
2012
At December 31,
2013
At December 31,
2012
845
257
717
626
821
258
729
579
857
240
737
650
820
253
739
582
2,445
2 ,387
2,484
2,394
REVENUE BY BUSINESS SEGMENT
106
Financial Services
FITCH RATINGS
FITCH SOLUTIONS
FITCH LEARNING
Other
Other
TOTAL
2013
2013
2012
(pro forma
12 months)
2013
2012
(pro forma
12 months)
2013
2012
(pro forma
12 months)
2013
(in € millions)
Revenue
2012
(pro forma
12 months)
2012
(pro forma
12 months)
567.6
516.5
113.8
105.0
32.9
7.3
25.7
25.6
740.0
654.4
Total revenue
567.6
516.5
113.8
105.0
32.9
7.3
25.7
25.6
740.0
654.4
5.5.4.3. -
REVENUE BY GEOGRAPHIC SEGMENT BASED ON CUSTOMER LOCATION
2013
2012
(pro forma
12 months)
North America
299.7
277.1
Latin America
60.1
56.9
286.2
231.0
(in € millions)
Europe, Middle East, Africa
Asia
94.0
89.4
Total
740.0
654.4
5.6. -
FINANCIAL ASSETS
Loans &
advances Deposits
Held-tomaturity
investments
Available-forsale financial
assets (1)
Other financial
instruments derivatives
TOTAL
(2)
(in € millions)
NON-CURRENT FINANCIAL ASSETS
Additions
Disposals
Fair value adjustments at December 31, 2012
Recognized in profit
Recognized in equity
Fair value adjustments at December 31,
2013
CARRYING AMOUNT AT JANUARY 1,
2013
CARRYING AMOUNT AT DECEMBER
31, 2013
CURRENT FINANCIAL ASSETS
Additions
Disposals
Fair value adjustments at December 31, 2012
Recognized in profit
Recognized in equity
Fair value adjustments at December 31,
2013
CARRYING AMOUNT AT JANUARY 1,
2013
CARRYING AMOUNT AT DECEMBER
31, 2013
(1)
Financial
assets at fair
value through
profit or loss
2.5
0.9
0.4
3.8
(2.3)
0.0
0.0
0.0
125.4
1.4
(5.7)
0.2
121.3
(10.8)
(0.9)
4.5
0.0
0.6
127.9
2.3
(5.7)
0.6
125.1
(13.1)
(0.9)
5.1
0.6
(8.9)
0.0
0.0
(2.3)
0.0
(7.2)
0.2
0.0
114.6
0.0
0.0
114.8
1.5
0.0
114.1
0.0
0.6
0.0
0.0
0.0
0.1
0.0
0.0
0.0
0.0
0.0
0.0
9.3
19.6
28.9
(2.7)
1.8
(0.1)
116.2
0.0
9.4
19.6
0.0
29.0
(2.7)
1.7
0.0
0.1
0.0
0.0
0.0
(0.9)
(0.1)
(1.0)
0.0
0.0
0.0
6.6
0.1
6.7
0.0
0.0
0.0
28.0
0.0
28.0
Available-for-sale financial assets
Available-for-sale financial assets break down as follows:
(in € millions)
Carrying amount
Mercialys (**)
Société Fermière du Casino Municipal de Cannes (*)
Venture capital funds (FCPR) (*) (1)
Nextradio TV (**)
Other
42.1
35.0
11.1
23.1
2.8
% interest
3.00%
10.00%
6.86%
Total available-for-sale financial assets
114.1
** Measured at fair value based on Level 1 inputs
** Measured at fair value based on Level 3 inputs
(1) €11.1 million invested in private equity funds with no known maturities. Of the total, €10.0 million had effectively been paid
into the funds as of December 31, 2013 and the remaining €1.1 million was recorded in debt (see Note 5.12.3).
107
(2)
Financial assets at fair value through profit or loss
The Group’s policy is to obtain maximum returns from these investments, while ensuring that the bulk of
the portfolio offers a certain degree of liquidity. At December 31, 2012, financial assets at fair value
through profit or loss amounted to €28.0 million and consisted mainly of CAC 40 stocks and SICAV and
FCP mutual funds.
5.7. -
DERIVATIVE INSTRUMENTS
NOTIONAL AMOUNT
Total
Due
within 1
year
Due in 1
to 5
years
Fair value adjustments
Due
beyond
5 years
(in € millions)
Cash flow hedges
Hedges of net investments in foreign
operations
Fair value at
December 31,
2012
Through
profit
Through
equity
Fair value
at
December
31, 2013
Translation
adjustments
and other
0.0
0.0
0.0
0.0
Fair value hedges
131.9
. Loans in GBP
. Loans in USD
Derivatives
qualifying
for
hedge
accounting
. Interest rate swaps (hedges of pound
sterling-denominated debt)
Derivatives not qualifying for hedge
accounting
. Structured interest rate derivatives
(corridors)
. Interest rate swaps (hedges of pound
sterling-denominated debt)
. Interest rate swaps (hedges of eurodenominated debt)
131.9
0.1
(0.3)
(0.2)
0.0
96.0
96.0
Total derivative instruments, net
(0.7)
1.3
0.6
(0.8)
0.8
0.0
(2.5)
2.5
0.0
(2.8)
2.8
0.0
(6.7)
5.8
1.3
0.0
0.4
The fair value of derivatives is determined based on Level 2 inputs as defined in IFRS 7.
5.8. -
TRADE RECEIVABLES
Trade receivables may be analyzed as follows:
(in € millions)
Movements for the period
No trade receivables are due beyond one year.
108
Gross
Provision
Net
12.4
26.4
5.3
(0.1)
44.0
(0.2)
(0.5)
(0.3)
12.2
25.9
5.0
(0.1)
43.0
(1.0)
5.9. -
OTHER RECEIVABLES
Other receivables may be analyzed as follows:
Prepaid taxes
and employee
benefits expense
Sundry
receivables
Prepaid expenses
and other
Total other
receivables
(in € millions)
Translation adjustments and reclassifications
8.5
11.5
(5.1)
14.9
6.0
2.4
4.1
(1.2)
11.3
0.0
0.7
(0.1)
1.0
1.6
14.5
14.6
(1.1)
r
27.8
5.10. - CASH AND CASH EQUIVALENTS
Cash and cash equivalents may be analyzed as follows:
Cash and accrued
interest
(in € millions)
33.2
4.7
(3.5)
(0.2)
34.2
Cash equivalents
36.9
4.7
(32.2)
9.4
Total
70.1
9.4
(35.7)
(0.2)
43.6
In the statement of cash flows, net cash and cash equivalents at the beginning and end of the period break
down as follows:
Cash and cash
equivalents
Bank overdrafts
(in € millions)
70.1
9.4
(35.7)
(0.2)
43.6
109
(30.7)
Revolving shortterm bank loans
and commercial
paper facilities
(12.2)
(58.0)
(0.2)
(43.6)
(42.9)
(101.8)
Net
(18.6)
9.2
(91.5)
(0.2)
(101.1)
5.11. - DEFERRED TAXES
Movements in deferred taxes break down as follows:
December 31,
2012
Changes in scope
of consolidation
Differences
arising
from
remeasurement of non-current
assets
Reserves
(9.0)
7.5
(4.7)
Provisions and pension and other
employee benefit obligations
Tax loss carryforwards
Other
TOTAL
4.2
17.8
(2.3)
18.2
0.1
3.7
(0.1)
(1.0)
Movements
recognized in
equity
Movements
recognized in
profit
Translation
adjustments
and other
December
31, 2013
(in € millions)
2.2
(0.6)
0.1
2.5
2.6
(1.2)
1.3
(0.3)
1.4
0.2
0.2
(11.3)
6.9
3.2
22.8
(0.2)
21.4
Deferred tax assets are recognized for tax loss carryforwards when it is probable that sufficient taxable
profit will be available to permit their recovery.
Unrecognized deferred tax assets at December 31, 2013 totaled €61.9 million and primarily corresponded
to the net tax loss carryforwards of the French tax group and Fimalac Développement.
5.12. - LONG- AND SHORT-TERM DEBT
Long- and short-term debt breaks down as follows:
(in € millions)
Long-term debt
Bank borrowings
Other long-term debt
Total long-term debt
Short-term debt
Bank borrowings
Other short-term debt
Total short-term debt
110
December 31, 2013
December 31, 2012
147.7
97.8
245.5
50.3
51.4
101.7
152.3
1.3
153.6
89.6
8.6
98.2
5.12.1. -
BANK BORROWINGS
December 31, 2013
December 31, 2012
147.7
50.3
Revolving commercial paper facilities
-
-
Finance lease liabilities
-
-
Accrued interest
-
-
147.7
50.3
7.4
-
101.8
58.0
-
-
42.9
30.7
(in € millions)
LONG-TERM
Bank borrowings*
Total long-term bank borrowings
SHORT-TERM
Bank borrowings*
Revolving commercial paper facilities
Bank overdrafts
Accrued interest
Total short-term bank borrowings

0.2
0.9
152.3
89.6
Of which €96 million corresponding to the North Colonnade loan from Axa and €50 million corresponding to the Fimalac syndicat ed
loan.
5.12.2. -
CHANGES IN BANK BORROWINGS
(in € millions)
December 31,
2012
Changes in scope
of consolidation
Movements for
the period
Reclassifications
Translation
adjustment
December 31,
2013
Bank borrowings
50.3
3.6
93.3
-1.2
1.7
147.7
Total long-term
Bank borrowings and
accrued interest
Revolving commercial
paper facilities
50.3
3.6
93.3
-1.2
1.7
147.7
0.9
1.8
3.7
1.2
58.0
0.2
43.6
101.8
Bank overdrafts
30.7
12.2
42.9
Total short-term
89.6
2.0
59.5
1.2
7.6
0.0
152.3
At December 31, 2013, part of the Group’s borrowings under revolving commercial paper facilities was reclassified as
long-term debt due to the facilities’ maturities and the Group’s intention to roll over borrowings under these facilities.
111
5.12.3. -
OTHER LONG- AND SHORT-TERM DEBT
December 31, 2013
December 31, 2012
Other
97.8
51.4
Total other long-term debt
97.8
51.4
SHORT-TERM
Derivative instruments
0.2
6.8
Other
1.1
1.8
Total other short-term debt
1.3
8.6
(in € millions)
LONG-TERM
Detail
(in € millions)
Long-term
North Colonnade loan (from Hearst)
Deposits received
Contingent consideration, Webedia shares
NCI puts (Webedia acquisition)
December 31, 2013
December 31, 2012
33.0
0.2
3.9
60.7
97.8
51.3
0.1
1.1
0.2
1.3
1.8
6.8
8.6
Short-term
Private equity funds: uncalled capital commitments
51.4
The difference between the fair value of long- and short-term debt at December 31, 2013 and the carrying amount was
not material.
5.13. - PENSION AND OTHER EMPLOYEE BENEFIT OBLIGATIONS
Overview of pension and other employee benefit obligations:
December 31,
2013
(in € millions)
Defined benefit pension plans
“BSPCE” warrant plans
Total at December 31, 2013
5.13.1. -
December 31, 2012
3.0
2.1
5.1
PENSION PLANS
Pension and other long-term employee benefit obligations break down as follows:
Defined benefit plan
obligations
(in € millions)
Actuarial gains and losses
Movement for the period
2.7
0.3
0.1
(0.1)
3.0
112
2.7
2.7
Commitments to former senior executives (mainly concerning holding companies)
The liability recognized in the balance sheet for the unfunded pension plan covering former Group
executives amounted to €2.1 million at December 31, 2013. The liability is adjusted each year based on
the estimated benefit payment period and a 2.25% annual increase in benefits.
Length-of-service awards payable to employees on retirement
This mainly concerns the French companies in the Group. The awards are paid in a lump sum when the
employee retires. They are funded by the Group. At December 31, 2013, the Group’s liability for length-ofservice awards amounted to €0.9 million.
The main assumptions applied are as follows:
o Discount rate: 3.20%
o Annual rate of salary increases: 3 %
5.13.2. -
STOCK OPTIONS
Overview of stock option plans
2011 plan
Type of options
Grant date
Start of exercise period
Expiry of exercise period
Exercise price
Number of options granted
Vesting condition: continued presence within the Group
except in the case of retirement, disability or death
except in the case of redundancy or unfair dismissal
Number of options outstanding at December 31, 2012
Options granted during the period
Options exercised during the period
Options canceled during the period
Number of options outstanding at December 31, 2013
Purchase options
February 4, 2011
February 4, 2011
February 4, 2016
€31.95
200,250
Yes
No
199,000
(1,550)
197,450
Number of options exercisable at December 31, 2013
Fair value per option at the grant date
197,450
€6.28
The exercise price is equal to the average of the opening prices for Fimalac shares over the twenty trading
days preceding the grant date, without any discount.
IFRS 2 is applied to all plans set up after November 7, 2002. The Group has no contractual or constructive
obligation to buy back the shares acquired by grantees on exercise of stock options or to settle the options
in cash.
(in € millions)
Cost of stock options recognized in operating profit
2013
(12 months)
2012
( 15 months)
0.2
0.4
The fair value of stock options was determined using the Black & Scholes option pricing model, based on the
following assumptions:



Risk-free interest rate: 4 to 5-year OAT rate
Implicit share price volatility: 18% to 26%
Remaining life of the options: between 1,460 and 1,800 days.
113
5.13.3. -
FREE SHARES
In 2011, Fimalac initiated a policy of granting free shares to certain officers and managers of the Company
and its subsidiaries.
Details of the free share plans are presented below:
Number of shares granted
Board Meeting of March 26, 2013
Fair value at the grant
date
Cost recognized in 2013
(in €m)
€36.23
36,600
0.3
The shares are subject to a three-year vesting period followed by a three-year lock-up.
The Group has no contractual or constructive obligation to buy back the shares or to settle the rights in
cash.
5.13.4. -
“BSPCE” WARRANTS
Webedia has set up various plans providing for the grant of “BSPCE” founder share warrants to officers
and employees of the Company with put and call options on the shares obtained on exercise of the warrants.
The warrants correspond to cash-settled share-based payment transactions and their cost is therefore
recognized as the corresponding employee services are rendered. The cost recognized in 2013 was €0.6
million.
Details of the “BSPCE” warrant plans are presented below:
Grant date
2008-2 Plan
2011-1 Plan
2011-2 Plan
2011-3 Plan
Ex-Tfco Plan
Ex-Tfco Plan
2013-1 Plan
2013-2 Plan
October 29, 2008
July 11, 2011
February 15, 2011
December 22, 2011
June 9, 2011
June 1, 2012
July 26, 2013
December 19, 2013
114
End of exercise period
October 29, 2018
July 11, 2021
February 15, 2021
December 22, 2021
June 9, 2016
June 1, 2017
July 26, 2023
December 19, 2023
Exercise price
€90.10
€137.30
€137.30
€137.30
€150.00
€150.00
€401.30
€401.30
Number of
warrants
granted
259
128
816
2,720
2,313
1,887
23,250
22,976
5.14. - PROVISIONS
Movements in provisions may be analyzed as follows:
(1) Provisions for environmental risks
Provisions for environmental risks in the above table amounted to €1.8 million before discounting at
December 31, 2013. However, when adjusted to include the environmental risks covered by provisions for
seller’s warranties, the actual total is €3.6 million.
(2) Provisions for seller’s warranties
Provisions for seller’s warranties on businesses sold in prior years totaled €4.0 million before discounting at
December 31, 2013.
Fimalac’s management considers that these provisions adequately cover the Group’s exposure to
environmental, employee-related, tax and other risks. To the best of management’s knowledge, at
December 31, 2013 there were no other risks that could have a material adverse effect on the financial
position of the Company or the Group.
Other litigation
Goom has filed suit against Fimalac and Fimalac Développement with the Paris Commercial Court,
claiming damages for the two companies' alleged failure to honor their undertakings in connection with
discussions for the possible acquisition of Virgin Radio. Fimalac and Fimalac Développement consider that
they have serious arguments for their defense against this manifestly unreasonable claim.
Fitch Group (accounted for by the equity method)
Fitch Group is the subject of investigations initiated by the U.S. federal and state authorities into the credit
rating industry and its role in the financial crisis. In addition, the Group is involved in various civil
proceedings in the United States and also in other countries.
At this stage, Fitch Group considers that it has substantial defenses to the allegations made against it and
therefore does not believe that any of the investigations or proceedings currently in progress will have a
material adverse impact on its business or financial condition.
115
5.15. - OTHER LIABILITIES
Other liabilities may be analyzed as follows:
Accrued employee
benefits expenses
Accrued taxes
Other accrued
liabilities and
payables
Deferred income
Total
(in € millions)
. Changes in scope of consolidation
. Movements for the period
. Translation adjustments and other
2.2
5.9
0.7
(0.2)
8.6
2.8
7.9
4.9
0.1
15.7
8.8
10.9
(5.6)
(1.4)
12.7
4.2
0.8
0.2
5.2
18.0
25.5
0.2
(1.5)
42.2
5.16. - EMPLOYEE BENEFITS EXPENSE
Employee benefits expense may be analyzed as follows:
2013
(12 months)
2012
(15 months)
(in € millions)
Employee benefits expense including termination benefits
Stock options and free share grants
“BSPCE” warrant plan costs
Defined benefit plan costs
Payroll taxes
Total
24.4
0.5
0.6
(0.1)
8.7
34.1
11.5
0.4
0.2
5.0
17.1
The figures below for 2013 only concern fully consolidated companies; they do not include Fitch Group
employee numbers, which are discussed in Note 5.5.4.
Number of employees by category:
2013
2012
December 31, 2013
December 31, 2012
Managers
283
77
293
79
Supervisors, technicians and administrative staff
538
143
578
158
Production staff
Total
4
3
4
6
825
223
875
243
The increase at December 31, 2013 corresponds primarily to the 415 employees of Webedia/Allociné.
116
Number of employees by geographical segment:
2013
2012
December 31, 2013
December 31,
2012
752
222
800
240
1
1
14
2
France
United Kingdom
1
12
Latin America
55
55
Other countries
5
5
Total by geographical segment
825
1
223
875
243
5.17. - FINANCE COSTS AND OTHER FINANCIAL INCOME AND EXPENSES, NET
This item can be analyzed as follows:
2013
(12 months)
(in € millions)
Income from cash and cash equivalents and valuation gains and losses on financial assets at
fair value through profit or loss
Gains/(losses) on interest rate hedges of cash and cash equivalents and debt
Translation adjustments to cash and cash equivalents
Interest expense on bank borrowings
Other finance costs
Finance costs, net
Gains/(losses) on financial receivables
Discounting adjustments
Movements in provisions for impairment of other financial assets
Gains and losses on disposals of shares in non-consolidated companies
Other financial income and expenses
5.18. - INCOME TAX EXPENSE
2013
(12 months)
2012
(15 months)
(in € millions)
Current taxes
Deferred taxes
4.7
(1.4)
6.0
3.4
3.3
9.4
Total income tax expense
117
2012
(15 months)
2.3
7.1
0.5
(9.4)
5.2
(1.0)
(20.3)
0.5
(16.1)
4.8
(0.2)
(0.9)
2.3
(0.1)
0.7
(0.5)
(1.6)
0.9
1.1
5.9
0.6
The difference between actual income tax expense and theoretical income tax determined by applying the
standard tax rate can be explained as follows:
Profit from continuing operations
2013
(12 months)
(in € millions)
Profit/(loss) before tax (before share of profit of associates
and profit from discontinued operations)
Tax at standard rate
Actual income tax
Difference
2012
(15 months)
(10.8)
(3.7)
3.3
7.0
24.9
8.6
9.4
0.8
Differences due to foreign tax rates
0.1
2.4
Other temporary differences
0.8
4.6
Permanent differences*
Difference
6.1
7.0
(6.2)
0.8
34.43%
(*)
2013
Including taxes on dividend income (surtax on distributed income, expense add-back, withholding taxes).
2012
Including the impact of withholding tax on Fitch Group dividends, a provision for withholding tax on Fitch Group’s
potentially distributable reserves and the effect of applying a different tax rate to the capital gain on the disposal of
10% of Fitch.
118
5.19. - INFORMATION BY BUSINESS SEGMENT
5.19.1. -
RESULTS BY BUSINESS SEGMENT
The following table presents information by business segment:
119
Fitch Group results are presented in Note 5.5.
5.20. - INFORMATION BY GEOGRAPHICAL SEGMENT
5.20.1. -
REVENUE BY GEOGRAPHICAL SEGMENT
Revenue by location of customer:
(in € millions)
2013
(12 months)
France
2012
(15 months)
58.3
34.4
United Kingdom
6.2
7.6
1.6
United States
0.3
South America
0.8
Other countries
0.6
0.5
Total revenue
67.8
42.5
120
5.20.2. -
ASSETS BY GEOGRAPHICAL SEGMENT
* Including Real Estate segment assets corresponding to the North Colonnade building (see Note 5.3).
In 2013, no single customer accounted for more than 10% of total revenue.
(1) In 2013, these two lines have been combined under “United States”. The amount corresponds solely to Fitch Group, accounted for by the equity method
121
5.21. - OFF-BALANCE SHEET COMMITMENTS
Off-balance sheet commitments are as follows:
(in € millions)
Commitments given
Guarantees given*
Other
Debt collateral
Mortgage on the London building**
Total commitments given
Commitments received
Other commitments received***
Total commitments received
(1) Including Fimalac unused lines of credit
December 31, 2013
(1)
December 31, 2012
93.2
90.1
10.5
7.9
258.8
362.5
98.0
202.8
202.8
190.9
100.0
100.0
100.0
* When Algorithmics was sold on October 20, 2011, Fimalac gave a seller’s warranty to the buyer, IBM.
Aggregate payments under the warranty are capped at $100 million (€72.5 million) except for tax claims.
** Mortgage granted as security for the £80 million (€96 million) loan obtained from Axa in connection with the partial refinancing of North Colonnade
Ltd's debt.
*** In connection with the Webedia and Allociné acquisitions, the sellers made representations and warranties for amounts of up to €1.9 million and €10
million respectively. Concerning Allociné, for the representations and warranties considered by the parties as essential, the sellers could each be required
to pay an amount equal to their share of the sale price.
Commitments under operating leases
Future minimum payments under non-cancelable operating leases – mainly concerning commercial and office
premises – are as follows:
(in € millions)
December 31, 2013
Due within 1 year
Due in 1 to 5 years
Due beyond 5 years
Total
1.1
5.6
4.4
11.1
Other commitments
The Group has a call option on 20% of the capital of Kwet. If the option is exercised, the Group will be
required to purchase the remaining 40% of the company’s capital, raising its interest to 100%.
Seller’s warranties have been received from the former owners of Kwet, Pomme Production, Le Comedy Club
and Deb Jam, for an aggregate maximum of €1.2 million.
122
5.22. - EARNINGS PER SHARE
Basic earnings per share are calculated by dividing profit attributable to equity holders of the parent by the
weighted average number of ordinary shares outstanding during the period.
Profit attributable to equity holders of the parent (in € thousands)
Weighted average number of ordinary shares
Basic earnings per share (in €)
Profit from continuing operations attributable to equity holders of the parent (in €
thousands)
Basic earnings from continuing operations per share (in €)
Profit from discontinued operations attributable to equity holders of the parent (in
€ thousands)
Basic earnings from discontinued operations per share (in €)
2013
2012
79,008
197,779
27,259,538
27,585,374
2.90
7.17
79,008
25,930
27,259,538
27,585,374
2.90
0.94
0
171,849
27,259,538
27,585,374
0.00
6.23
To calculate diluted earnings per share, profit attributable to equity holders of the parent and the weighted
average number of ordinary shares outstanding are adjusted for the effects of dilutive potential ordinary shares.
At December 31, 2013 and December 31, 2012, there were no dilutive potential ordinary shares. Diluted
earnings per share were therefore the same as basic earnings per share.
5.23. - DIVIDENDS
The fiscal 2012 dividend paid in 2013 amounted to €1.80 per share (including a special dividend of €0.30). At
the Annual Shareholders’ Meeting of June 17, 2014 shareholders will be asked to approve a dividend of €1.90
per share for 2013.
5.24. - RELATED PARTY TRANSACTIONS
The total compensation paid or payable to the directors and officers of Fimalac in respect of 2013 is as follows:
(in € millions)
Short-term benefits
(excluding payroll
taxes)
5.1
Post-employment
benefits
Share-based
payments (stock
options)
None
0.3
Directors’ fees
0.5
Agreements with Groupe Marc de Lacharrière
Royalty-free trademark agreement for the use of the Fimalac name.
Cash management agreement with Revue des Deux Mondes
The current account advance to Revue des Deux Mondes at December 31, 2013 and interest received and paid
during the year were not material.
123
Strategic advisory agreement with Fitch
In April 2012, a strategic advisory agreement was signed with Fitch providing for the payment of an annual fee
of $0.6 million. The amount recorded in the 2013 accounts for this agreement was €0.5 million.
Intra-group receivables and payables
o
o
o
o
Pôle Nord/Kwet Productions: current account advance of €3.0 million
Trois S/Auguri: €0.8 million receivable arising in the normal course of business
Trois S/Gilbert Coullier Productions: €1.2 million receivable arising in the normal course of business
Gilbert Coullier Productions/Trois S: €0.2 million payable arising in the normal course of business
Intra-group revenue and expenses
o
o
o
o
o
North Colonnade Ltd./Fitch Group: rent totaling €5.2 million
FCBS/Fitch Group: management fees totaling €1.9 million
Fimalac/Groupe Lucien Barrière: management fees totaling €0.5 million
Trois S/Gilbert Coullier Productions: management fees totaling €0.9 million
Trois S/Auguri Productions: management fees totaling €0.2 million
5.25. - INCOME STATEMENT – FITCH GROUP NET PROFIT
To make the income statement easier to understand, particularly the effect of the divestment of a further 10%
stake in Fitch Group on April 11, 2012, Fitch Group net profit for fiscal 2012 has been presented on two
separate lines in the consolidated income statement:


The share in Fitch Group net profit for the period from the transaction date until December 31, 2012,
as accounted for by the equity method, in an amount of €42.2 million.
Fitch Group net profit for the period from October 1, 2011 to April 11, 2012 (transaction date), which
has been reported on a separate line in accordance with IFRS 5. This amount can be analyzed as
follows:
2012
(15 months)
(in € millions)
Revenue
286.6
Operating profit
87.2
o/w depreciation, amortization and provision expense
(7.7)
Finance costs, net
(6.1)
1.2
Share of profit of associates
3.0
Profit before tax
85.3
Income tax
(30.8)
TOTAL FITCH GROUP NET PROFIT
54.5
5.26. - INCOME STATEMENT – INCOME FROM DISCONTINUED OPERATIONS
Algorithmics, a wholly-owned subsidiary of Fitch Group, was sold on October 20, 2011. Consequently, in
accordance with IFRS 5, in the fiscal 2012 consolidated income statement, the business’s loss is reported on
the line “Net profit/(loss) from discontinued operations” along with the capital gain on its disposal.
124
2012
(15 months)
5.6
(6.5)
0.0
0.1
(in € millions)
Revenue
Operating loss
o/w depreciation, amortization and provision expense
Finance costs, net
Share of profit of associates
Net loss from discontinued operations before tax
Income tax
Net loss from discontinued operations
Net capital gain
Net profit from discontinued operations
Net profit from discontinued operations attributable to equity holders of the parent
0.1
(6.3)
0.8
(5.5)
153.0
147.5
56.8
90.7
5.27. - SUBSEQUENT EVENTS
On March 13, 2014, Fitch Group acquired all outstanding shares in Business Monitor International (BMI), a
widely recognized provider of country risk analysis and industry research specializing in emerging and frontier
markets.
125
6.2. –
STATUTORY AUDITORS' FEES
Fees (excluding VAT) paid by the Group to the statutory auditors and the members of their networks
Fiscal 2013 (12 months)
(in € thousands)
PricewaterhouseCoopers
Audit
Fiscal 2012 (15 months)
Cagnat & Associés
PricewaterhouseCoopers Audit
Cagnat & Associés
126
Audit
Statutory and contractual audits
Fimalac
French subsidiaries
Foreign subsidiaries
456
320
103
33
225
101
124
-
2,625
250
16
2,359
181
105
76
-
Other audit-related services
Fimalac
Subsidiaries
Audit fees
456
225
220
70
150
2,844
60
34
26
241
Other services provided to fully consolidated subsidiaries
Legal and tax advice
IT services
Internal audit services
Other
Fees for other services
TOTAL
100%
456
100%
100%
225
100%
100%
2,844
100%
100%
241
100%
The fees paid by Fitch Group amounted to €2,004 thousand for fiscal 2013 (12 months) and €2,477 thousand for fiscal 2012 (15 months).
Audit-related services for fiscal 2012 correspond to procedures performed in connection with the issuance of the auditors’ limited review report on the condensed
interim consolidated financial statements for the period from October 1, 2011 to September 30, 2012.
6.3. –
REPORT OF THE STATUTORY AUDITORS ON THE CONSOLIDATED FINANCIAL
STATEMENTS
This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided solely for the
convenience of English-speaking readers. The Statutory Auditors’ report includes information specifically required by French law in
all audit reports, whether qualified or not, and this is presented below in the opinion on the consolidated financial statements. This
information includes an explanatory paragraph discussing the Statutory Auditors’ assessments of certain significant accounting and
auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the consolidated financial
statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of
the consolidated financial statements. This report should be read in conjunction with, and construed in accordance with, French law
and professional auditing standards applicable in France.
To the shareholders,
In compliance with the assignment entrusted to us by the Annual General Meeting, we hereby report to you, for
the year ended December 31, 2013, on:
-
Our audit of the accompanying consolidated financial statements of Fimalac
The justification of our assessments
The specific verification required by law.
The consolidated financial statements have been approved by the Board of Directors. Our role is to express an
opinion on these financial statements based on our audit.
I. Opinion on the consolidated financial statements
We conducted our audit in accordance with the professional standards applicable in France. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement. An audit includes examining, on a test basis or using
other selection methods, evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and significant estimates made, as
well as evaluating the overall financial statement presentation. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
In our opinion, the consolidated financial statements present fairly the results of operations for the year ended
December 31, 2013 and the financial position and assets of the consolidated entities at that date, in accordance
with the IASs and IFRSs adopted by the European Union.
Without qualifying our conclusions as expressed above, we draw your attention to Note 5.25, which describes the
impact of the sale of 10% of Fitch Group on the presentation of the consolidated financial statements.
II – Justification of our assessments
In accordance with the requirements of article L.823-9 of the French Commercial Code (Code de Commerce)
relating to the justification of our assessments, we draw your attention to the following matters:
-
At each year-end, the Group tests goodwill and assets with an indefinite useful life for impairment and
assesses whether there is any indication that the value of non-current assets has been impaired, using
the methods described in Notes 2.4.2, 2.4.5 to 2.4.7, 5.1 to 5.4 and 5.5.2. We reviewed the impairment
testing methods used and checked that the information disclosed in the above-mentioned notes was
appropriate.
127
-
The Group records provisions for the estimated cost of certain contingencies, as explained in Notes
2.4.15 and 5.14. We assessed the data and assumptions underlying these estimates and reviewed the
Group's calculations. As part of our assessment of these estimates, we ensured that the assumptions
used and ensuing valuations were reasonable.
The assessments were made in the context of our audit of the consolidated financial statements, taken as a
whole, and therefore contributed to the formation of the opinion expressed in the first part of this report.
III – Specific verification
We also performed the specific verification of the information given in the Group management report as
required by law and in accordance with the professional standards applicable in France.
We have no observations to make concerning the fairness of this information and its consistency with the
consolidated financial statements.
Neuilly-sur-Seine and Paris, April 25, 2014
The Statutory Auditors
Cagnat & Associés
Jean-Christophe Georghiou
Pierre Mercadal Frédéric Drougard
128
6.4. –
COMPANY FINANCIAL STATEMENTS
CONTENTS
NOTE N° 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................................ 134
1.1. -
Significant events of the year.............................................................................................. 134
1.2. -
Intangible assets and property and equipment ..................................................................... 135
1.3. -
Non-current financial assets ............................................................................................... 135
1.4. -
Receivables and payables ................................................................................................... 136
1.5. -
Marketable securities.......................................................................................................... 136
1.6. -
Foreign currency transactions ............................................................................................. 136
1.7. -
Provisions for liabilities and charges................................................................................... 136
1.8. -
Prepaid expenses and deferred income................................................................................ 136
1.9. -
Deferred charges ................................................................................................................ 136
1.10. -
Tax consolidation ............................................................................................................... 136
1.11. -
Litigation ........................................................................................................................... 137
NOTE N° 2 -
NON-CURRENT ASSETS ................................................................................................ 138
2.1. -
Movements in non-current assets ........................................................................................ 138
2.2. -
Amortization and depreciation ............................................................................................ 138
2.3. -
Provisions for impairment in value ..................................................................................... 138
NOTE N° 3 -
ACCOUNTS RECEIVABLE ............................................................................................. 139
NOTE N° 4 -
MARKETABLE SECURITIES.......................................................................................... 139
NOTE N° 5 -
PREPAID EXPENSES....................................................................................................... 139
NOTE N° 6 -
EQUITY ............................................................................................................................ 140
6.1. -
Share capital ...................................................................................................................... 140
6.2. -
Additional paid-in capital and reserves ............................................................................... 140
6.3. -
Stock option and free share plans ....................................................................................... 140
NOTE N° 7 -
PROVISIONS FOR LIABILITIES AND CHARGES ......................................................... 141
NOTE N° 8 -
LIABILITIES .................................................................................................................... 141
NOTE N° 9 -
OPERATING REVENUE AND EXPENSES ..................................................................... 142
NOTE N° 10 - NON-RECURRING INCOME AND EXPENSES.............................................................. 143
NOTE N° 11 - INCOME TAX .................................................................................................................. 143
11.1. -
Income tax analysis ............................................................................................................ 143
11.2. -
Unrecognized deferred taxes .............................................................................................. 144
129
NOTE N° 12 - RELATED PARTY TRANSACTIONS ............................................................................. 144
NOTE N° 13 - OFF-BALANCE SHEET COMMITMENTS...................................................................... 145
NOTE N° 14 - MANAGEMENT COMPENSATION ................................................................................ 145
NOTE N° 15 - SUBSEQUENT EVENTS .................................................................................................. 145
NOTE N° 16 - SUBSIDIARIES AND AFFILIATES ................................................................................. 146
130
BALANCE SHEET AT DECEMBER 31, 2013
ASSETS
December 31, 2013
December 31, 2012
(in € thousands)
(in € thousands)
Depreciation,
amortization
& provisions
Cost
Net
Net
NON-CURRENT ASSETS
Property and equipment
. Land
. Buildings
. Other
133
1,400
782
1,323
688
133
77
94
133
83
56
2,315
2,011
304
272
841,456
21,070
116,897
2,377
-
112,196
1,973
2,377
-
729,260
21,070
114,924
-
606,861
27,118
97,887
-
Sub-total
981,800
116,546
865,254
731,866
TOTAL NON-CURRENT ASSETS (I)
984,115
118,557
865,558
732,138
178,947
13,006
302
132
305
1,778
-
178,642
11,228
302
132
238,299
9,251
68
87
192,387
2,083
190,304
247,705
1,496
-
-
1,496
-
959
-
1,177,998
120,640
1,057,358
980,802
Sub-total
. Investments in subsidiaries and affiliates
. Advances to subsidiaries and affiliates
. Other long-term investments
. Loans
. Other
CURRENT ASSETS
Accounts receivable
Cash
Prepaid expenses
TOTAL CURRENT ASSETS (II)
DEFERRED CHARGES
CONVERSION LOSSES
TOTAL ASSETS (I+II)
131
BALANCE SHEET AT DECEMBER 31, 2013
EQUITY AND LIABILITIES
December 31, 2013
December 31, 2012
(in € thousands)
EQUITY
Share capital
Additional paid-in capital
Reserves:
. Legal reserve
. Other reserves
Retained earnings
Untaxed provisions
TOTAL EQUITY (I)
PROVISIONS FOR LIABILITIES AND CHARGES
TOTAL PROVISIONS (II)
126,852
8,456
126,852
8,456
16,679
74,789
358,003
83,976
16,679
69,272
250,600
161,962
136
136
668,891
633,957
9,125
16,956
194,605
177,345
1,616
5,776
-
139,557
186,156
868
3,308
-
379,342
329,889
-
-
1,057,358
980,802
LIABILITIES
Bank borrowings
Other borrowings
Accrued taxes and employee benefits expense
Other liabilities
Deferred income
TOTAL LIABILITIES (III)
CONVERSION GAINS
TOTAL EQUITY AND LIABILITIES (I+II+III)
132
INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2013
2013
(12 months)
2012
(15 months)
(in € thousands)
OPERATING REVENUE
Real estate revenues
Other revenue
Reversals of provisions for liabilities and charges
Reversals of provisions for impairment
6
2,040
84
2,130
8
2,246
107
2,361
240
1,844
8,900
490
11,474
(9,344)
209
2,173
9,833
342
12,557
(10,196)
86,364
2,555
553
1,111
17,873
7,174
115,630
193,780
5,228
659
1,312
6,987
472
208,438
NET FINANCIAL INCOME
8,826
14,076
4
722
2,200
25,828
89,802
13,340
1,206
134
20,619
2,481
37,780
170,658
RECURRING PROFIT BEFORE TAX
80,458
160,462
697
3,399
10
15
181
1,274
4,096
1,480
260
476
1,541
181
-
NET NON-RECURRING INCOME/(EXPENSE)
736
3,360
1,722
(242)
INCOME TAX
PROFIT FOR THE PERIOD
158
83,976
1,742
161,962
TOTAL OPERATING REVENUE
OPERATING EXPENSES
Taxes other than on income
Employee benefits expense
Other expenses
Depreciation and amortization
Charges to provisions for impairment
Charges to provisions for liabilities and charges
TOTAL OPERATING EXPENSES
OPERATING LOSS
FINANCIAL INCOME
Income from portfolio securities
Income from loans and receivables
Net gains on disposals of marketable securities
Other financial income
Reversals of provisions for impairment of financial assets
TOTAL FINANCIAL INCOME
FINANCIAL EXPENSES
Finance costs
Other financial expenses
Net losses on disposals of marketable securities
Charges to provisions for impairment of financial assets
TOTAL FINANCIAL EXPENSES
NON-RECURRING INCOME
Income on revenue transactions
Gains on disposals of investments
Reversals of provisions for impairment of investments
TOTAL NON-RECURRING INCOME
NON-RECURRING EXPENSES
Expenses on revenue transactions
Losses on disposals of investments
TOTAL NON-RECURRING EXPENSES
133
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2013
NOTE N° 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's financial statements for the year ended December 31, 2013 have been prepared in accordance
with French generally accepted accounting principles, including the principles of prudence, consistency and
segregation of accounting periods, on a going concern basis.
However, the presentation of the income statement differs in some respects from that prescribed in the French
general chart of accounts. The main differences are as follows:
-
The proceeds from the disposal of investments have been netted off against the investments’
carrying amount, to show the net gain or loss, rather than presenting the disposal proceeds under
income and the carrying amount of the investments as an expense.
-
Reversals of provisions for impairment in value of investments in subsidiaries and affiliates and of
investments sold during the period are qualified as non-recurring income and not as operating
income, in line with the accounting classification of the related disposal gains or losses.
Information in the notes is presented in thousands of euros, unless otherwise specified.
At the Annual Meeting on February 14, 2012, the shareholders voted to change the Group’s fiscal year-end to
December 31. Fiscal 2012 was therefore a transition year and covered the 15-month period from October 1,
2011 to December 31, 2012. This makes the 2013 financial statements difficult to compare with those from the
previous fiscal period.
1.1. - SIGNIFICANT EVENTS OF THE YEAR
Business developments:
-
Under the share buyback program authorized by the Annual Shareholders’ Meetings of February 14,
2012 and June 11, 2013, the Company bought back €23.5 million worth of Fimalac shares (excluding
purchases under the liquidity contract), representing 2.05% of the Company’s current capital.
-
The Company acquired Financière Allociné for €66.9 million and Webedia for €37.3 million.
Financière Allociné’s assets and liabilities were subsequently contributed to Webedia, raising
Fimalac’s interest in Webedia to 65.2% at December 31, 2013.
-
The Company’s syndicated facility was increased to €250 million and its term was extended by three
years starting July 16, 2013, with two one-year extension options. At December 31, 2013, €50 million
had been borrowed under the facility.
-
North Colonnade Ltd used the proceeds from an £80 million loan obtained from an insurance company
to repay £57 million on the loan granted to it by the Company.
134
Events impacting results for the year:
-
The Company was paid €68.3 million in dividends by its subsidiary Fimalac Services Financiers,
corresponding to substantially all of the dividends received from Fitch Group in 2013 plus an
additional amount of Fitch Group dividends for 2012.
-
€17.8 million was reversed from the provision for impairment of Fimalac Développement shares, in
view of the subsidiary’s solid financial performance.
1.2. - INTANGIBLE ASSETS AND PROPERTY AND EQUIPMENT
Intangible assets and property and equipment are stated at cost, with the exception of assets acquired before
December 31, 1976, which are stated at revalued cost. Amortization and depreciation are calculated over the
following periods:
- Software: 1 year, straight-line
- Buildings: 20 years, straight-line
- Equipment: 5 to 10 years, reducing balance
- Fixtures and fittings, office furniture: 10 years, straight-line
- Vehicles and office equipment: 5 years, straight-line or, where permitted, reducing balance
These depreciation/amortization periods correspond to the useful lives of the assets concerned, in accordance
with standards CRC 2002-10 and CRC 2004-06 relating to assets.
1.3. - NON-CURRENT FINANCIAL ASSETS
Non-current financial assets are stated at the lower of cost and market value. The cost of assets acquired before
December 31, 1976 corresponds to their revalued cost. Non-current financial assets are divided into three
categories as follows:
-
Investments in subsidiaries and affiliates, which correspond to investments in companies in which
Fimalac owns at least 10% of the capital and/or exercises significant influence. Provisions for
impairment in value of these investments are determined based on the Company’s equity in the
underlying net assets (or revalued net assets), investment yield, earnings yield and the investee’s growth
potential.
-
Advances to subsidiaries and affiliates, for which provisions for impairment in value are determined
based on the financial position of the companies concerned.
-
Other long-term investments, corresponding to investments in companies in which Fimalac owns less
than 10% of the capital and/or does not exercise any influence. A provision for impairment in value is
recorded if:
o
the average December share price is less than cost, in the case of listed securities, or
o
if the probable realizable value is less than cost, in the case of unlisted securities.
This category also includes treasury shares held for purposes other than for allocation (i) on exercise of
stock options; (ii) to free share grants; and (iii) to the liquidity contract. In accordance with
recommendation no. 98D issued by the CNC Emerging Issues Task Force (Comité d’Urgence), no
provisions for impairment in value are recorded on these shares.
135
1.4. - RECEIVABLES AND PAYABLES
Receivables and payables are stated at their nominal value. Provision is made when the fair value of
receivables is less than their carrying amount.
Receivables and payables denominated in foreign currency are converted at the year-end exchange rate or the
hedging rate, where applicable.
1.5. - MARKETABLE SECURITIES
A provision is recorded for unlisted securities when their value in use is less than cost.
For other securities, a provision for impairment in value is recorded only in respect of securities for which the
average stock market price for the last month of the fiscal year, in the case of listed securities, or the net asset
value at the fiscal year-end, in the case of pooled investment vehicles, is less than cost.
1.6. - FOREIGN CURRENCY TRANSACTIONS
Income and expenses in foreign currencies are converted into euros at the exchange rate prevailing on the
transaction date. Balance sheet items are converted at the year-end rate or at the hedging rate where applicable.
The resulting exchange gains and losses are recognized in the balance sheet under “Conversion losses” or
“Conversion gains”. A provision is recorded for unrealized conversion losses that cannot be offset.
1.7. - PROVISIONS FOR LIABILITIES AND CHARGES
Provisions for liabilities and charges are primarily recorded to cover the potential adverse impacts for the
Company of contractual commitments such as (i) seller’s warranties granted on the disposal of subsidiaries, (ii)
retirement benefit obligations, (iii) financial instrument costs, (iv) legal obligations such as the requirement to
clean up former manufacturing sites, and (v) claims and litigation.
1.8. - PREPAID EXPENSES AND DEFERRED INCOME
Prepaid expenses correspond to expenses relating to future periods that are paid during the year.
Deferred income corresponds to income relating to future periods that has been received during the year or in
previous years.
1.9. - DEFERRED CHARGES
Deferred charges consist of debt issuance costs and are amortized over the life of the debt.
1.10. -
TAX CONSOLIDATION
A tax group was set up as of January 1, 1997 between Fimalac and certain French subsidiaries. Companies
divested during the year are removed from the tax group and eligible French companies acquired during the
year are added.
136
Under the group relief agreement, each company in the tax group accounts for taxes as if it was taxed on a
stand-alone basis. As head of the tax group, the Company benefits immediately from any tax savings arising
from utilization of the tax losses of subsidiaries in the tax group and is required to pass on those savings to the
subsidiaries concerned when they return to profit.
1.11. -
LITIGATION
Goom has filed suit against Fimalac and Fimalac Développement with the Paris Commercial Court,
claiming damages for the two companies' alleged failure to honor their undertakings in connection
with discussions for the possible acquisition of Virgin Radio. Fimalac and Fimalac Développement
consider that that they have serious arguments for their defense against this manifestly
unreasonable claim.
137
NOTE N° 2 -
NON-CURRENT ASSETS
2.1. - MOVEMENTS IN NON-CURRENT ASSETS
Cost
at Jan. 1, 2013
Transfers and
cancellations
Additions
Disposals
132
1,400
900
2
2,434
-
-
-
-
48
(169)
2,313
736,172
27,118
99,860
2,377
-
-
173,101
9,352
22,055
-
(67,817)
(15,400)
(5,018)
-
841,456
21,070
116,897
2,377
-
865,527
-
204,508
(88,235)
981,800
204,556
(88,404)
984,113
Property and equipment
. Land
. Buildings and improvements
. Other property and equipment
. Assets under construction
Sub-total
. Other long-term investments (1)
. Loans
. Other
Sub-total
TOTAL
2
(2)
867,961
0
48
-
Cost
at Dec. 31,
2013
132
1,400
781
(169)
-
-
(1) The “Additions” column includes €22,055 thousand for the acquisition of 554,934 Fimalac shares.
2.2. - AMORTIZATION AND DEPRECIATION
Intangible assets
Buildings and improvements
Other property and equipment
TOTAL
Balance
at Jan. 1, 2013
Mergers and
transfers
Increase
-
-
-
1,317
846
2,163
-
Decrease
6
10
16
-
Balance
at Dec. 31,
2013
(169)
1,323
687
(169)
2,010
2.3. - PROVISIONS FOR IMPAIRMENT IN VALUE
Balance
at Jan. 1, 2013
Investments in subsidiaries and affiliates
Advances to subsidiaries and affiliates
Other long-term investments
Loans
TOTAL
Mergers and
transfers
129,311
1,973
2,377
-
133,661
-
138
Increase
Decrease
Balance
at Dec. 31,
2013
722
(17,837)
-
112,196
1,973
2,377
722
(17,837)
116,546
-
NOTE N° 3 -
ACCOUNTS RECEIVABLE
Analysis by maturity
Gross
Non-current assets
. Loans (1)
. Deposits
Current assets
. Trade receivables
. Receivables from Group companies
. Prepaid and recoverable taxes (2)
. Other receivables
21,070
2,377
TOTAL
Due within
1 year
Due beyond
1 year
21,070
-
-
1,294
175,138
1,636
879
251
143,267
471
879
202,394
165,938
2,377
1,043
31,871
1,165
36,456
(1) Corresponding to a loan to a company that is in the process of liquidation, which has been written down in full.
(2) The portion due beyond one year corresponds to Italian tax credits that are offset by a provision for liabilities.
Sterling-denominated short-term loans granted to North Colonnade Ltd totaled £110,000 thousand at
December 31, 2013. Currency risks on these loans are hedged by forward sales of currencies.
Most of the Company’s loans and advances are at floating rates of interest. A 100-basis point increase or
decrease in interest rates would have the effect of increasing or reducing financial income by €1.4 million
based on loans outstanding at December 31, 2013.
NOTE N° 4 -
MARKETABLE SECURITIES
See also “LIST OF INVESTMENTS”
Marketable securities at December 31, 2013 included 275,657 Fimalac shares, representing 0.96% of the
Company’s capital, acquired at a total cost of €9.2 million. Of these shares, 234,050 were being held for
allocation on the exercise/vesting of stock options and free shares granted to certain executives and other
employees, and 38,107 had been earmarked for liquidity contract transactions. The market value of these
shares – based on the average share price for December 2013 or, if lower, the exercise/vesting price under
stock option or free share plans – was €9.8 million at December 31, 2013.
NOTE N° 5 -
PREPAID EXPENSES
Prepaid expenses correspond to interest paid in advance on commercial paper for €94 thousand and prepaid
operating expenses for the remainder.
139
NOTE N° 6 -
EQUITY
6.1. - SHARE CAPITAL
At December 31, 2013, the Company's capital amounted to €126,852 thousand, divided into 28,830,000
ordinary shares with a par value of €4.40.
At the year-end, the Company held 1,937,360 shares acquired under share buyback programs, the latest of
which was authorized by the Annual Shareholders’ Meeting of June 11, 2013. These shares represent
6.72% of the capital.
6.2. - ADDITIONAL PAID-IN CAPITAL AND RESERVES
The “Treasury shares reserve" account was raised to €46,798 thousand in 2013 from €41,281 thousand,
reflecting an increase of €5,517 thousand, pursuant to the fourth resolution of the Annual Shareholders’
Meeting of June 11, 2013.
Changes in the “Retained earnings” account reflect the payment of a total dividend of €49,042 thousand,
pursuant to the fourth resolution of the Annual Shareholders’ Meeting of June 11, 2013, the €2,852
thousand in dividends on treasury shares credited to the account, and the increase in the “Treasury shares
reserve” referred to above.
6.3. - STOCK OPTION AND FREE SHARE PLANS
The Company has granted options to purchase existing shares to certain executives and other employees.
The status of the stock option plans at December 31, 2013 was as follows:
Grantor
FIMALAC
Date of
of Board meeting
Exercise period
Number of options
outstanding
Exercise price
February 4, 2011
by tranche up to February 4, 2016
197,450
€31.95
Total number of options (each exercisable for one Fimalac share)
197,450
A total of 1,550 options were exercised during the year.
On March 26, 2013, the Board of Directors used the authorization given by the Annual Shareholders’
Meeting of February 4, 2011 to grant 36,600 free shares – to be allocated from the Company’s treasury
shares – to certain officers and employees of the Company. The shares will vest after a period of three
years, provided that the beneficiaries are still employed by the Group on the vesting date, and will then be
subject to a three-year lock-up.
140
NOTE N° 7 -
PROVISIONS FOR LIABILITIES AND CHARGES
Type of provision
At
Jan. 1, 2013
Mergers and
transfers
Increase
1,418
-
-
(84)
3,874
395
2,930
8,339
-
476
2,349
(86)
(14)
(125)
(7,173)
16,956
-
2,825
(7,482)
Decrease
Decrease
(utilized provisions)
(non-utilized
provisions)
At
Dec. 31, 2013
Provisions for liabilities and charges
. Pensions (1)
. Decontamination of formerly leased
manufacturing sites
. Industry risks
. Seller’s warranties
. Other (2)
-
1,334
(2,892)
(282)
(3,174)
(1) Provisions for pensions concern pension benefits payable to former Group executives.
(2) The increase in “Other” provisions during the year includes provisions recognized for contingencies related to (i) losses
on shares held in subsidiaries and (ii) free share plans. Decreases in this item primarily correspond to reversals of
provisions for losses on interest rate swaps.
NOTE N° 8 -
LIABILITIES
Total
Liabilities
Due within
1 year
Due between
1 and 5 years
Due beyond
5 years
Bank borrowings
. Bank loans
. Bank overdrafts
. Accrued interest
151,680
42,870
55
101,680
42,870
55
-
-
Other borrowings
. Other loans
. Advances from Group companies
177,345
177,345
-
-
Accrued taxes and employee benefits expense
1,616
1,616
-
-
Other liabilities
5,776
1,951
3,825
-
379,342
325,517
53,825
-
TOTAL
50,000
Bank loans comprise commercial paper in the amount of €101.7 million, and €50 million in drawdowns
on a €240.9 million credit facility that expires in July 2016 (with two one-year extension options).
141
896
381
2,999
3,515
9,125
The facility agreement does not include any rating triggers. However, it does include acceleration clauses
based on the following ratios:
* Consolidated net debt/consolidated equity < 0.50
* Recurring operating profit plus dividends received, less dividends paid/debt servicing > 1.10
Both of these ratios were met at December 31, 2013.
The Company’s borrowings bear interest at floating rates. A 100-basis point increase or decrease in
interest rates would have the effect of increasing or reducing finance costs by €3.7 million.
NOTE N° 9 -
OPERATING REVENUE AND EXPENSES
Operating revenue – including fees for strategic advice provided to subsidiaries – amounted to €2,130
thousand in 2013 compared with €2,361 thousand in the period ended December 31, 2012.
Operating expenses, including €1,012 thousand in debt issuance costs reclassified through an expense
transfer account, amounted to €11,474 thousand versus €12,557 thousand for fiscal 2012.
Fimalac ended 2013 with an operating loss of €9,344 thousand compared with a €10,196 thousand
operating loss for fiscal 2012.
Financial income contracted from €208,438 thousand in fiscal 2012 to €115,630 thousand in 2013,
primarily due to a decrease in income from portfolio securities, which in fiscal 2012 included the special
dividend received from Fimalac Services Financiers following the sale of 10% of Fitch Group Inc. and
Algorithmics. Income from loans and receivables was also lower in 2013, decreasing from €5,228
thousand to €2,555 thousand as a result of the continuing decline in interest rates.
Income from portfolio securities breaks down as follows:
INCOME FROM PORTFOLIO SECURITIES
Fimalac Services Financiers
Financière Portefoin
Financière Allociné
Long-term investments
2013
(12 months)
2012
(15 months)
68,277
1,072
13,354
3,661
-
193,383
393
4
-
86,364
193,780
Fitch Group, Inc. dividends are paid to Fimalac Services Financiers, which passes on almost the entire
amount to Fimalac in the form of a dividend.
Finance costs fell to €8,826 thousand from €13,340 thousand in fiscal 2012, mainly reflecting lower
interest rates and the fact that the Company no longer had any floating-to-fixed rate swaps.
Charges to provisions for impairment of financial assets totaled €722 thousand in 2013 versus €20,619
thousand for fiscal 2012. In fiscal 2012, the shares held by the Company in Fimalac Développement were
written down to reflect the impairment in value of the Canary Wharf building, which is owned by Fimalac
Développement’s 80%-held subsidiary, North Colonnade Ltd.
142
In view of the above, net financial income for the year came to €89,802 thousand compared with
€170,658 thousand in fiscal 2012.
Recurring profit before tax stood at €80,458 thousand, versus €160,462 thousand for the fifteen months of
fiscal 2012.
NOTE N° 10 -
NON-RECURRING INCOME AND EXPENSES
The Company recorded net non-recurring income of €3,360 thousand in 2013.
Non-recurring income consisted mainly of €3,399 thousand in reversals of provisions for liabilities and
charges, including €407 thousand reversed from provisions for seller’s warranties and €2,984 thousand
from provisions for former manufacturing site clean-up costs.
Non-recurring expenses mainly corresponded to payments made under seller’s warranties and to
payments for former manufacturing site clean-up costs, which were almost fully offset by provision
reversals.
NOTE N° 11 11.1. -
INCOME TAX
INCOME TAX ANALYSIS
Profit
Recurring profit
Tax at 33.33%
Non-recurring items
Tax at 33.33%
Profit before tax
Income tax
83,818
158
76,697
158
3,761
Total
83,976
76,855
3,761
A 3.3% surtax is levied in France on top of the standard tax rate.
The tax benefit on recurring profit corresponds to group relief.
143
Tax at 33.33%
Tax at 0%
3,100
-
200
-
3,100
260
11.2. -
UNRECOGNIZED DEFERRED TAXES
Assets
Liabilities
Type of temporary difference
UNRECOGNIZED DEFERRED TAX ASSETS
Income taxed in current period, not yet accounted for
. Unrealized gains on pooled investment vehicles
-
-
Charges for the period, deductible in subsequent periods
. “Contribution sociale de solidarité” surtax
-
-
UNRECOGNIZED DEFERRED TAX LIABILITIES
Rollover relief
. Gain on the sale of Engelhard CLAL
604
As head of the tax group, Fimalac has tax loss carryforwards amounting to €107,020 thousand.
NOTE N° 12 -
RELATED PARTY TRANSACTIONS
Balance sheet
Assets
. Other non-current financial assets
. Other receivables
. Borrowings
Liabilities
729,260
21,070
174,838
177,344
Income statement
Expenses
. Real estate and other revenues
. Income from subsidiaries and affiliates and other long-term investments
. Income from loans and receivables
. Reversals of provisions for impairment of securities
. Reversals of provisions for liabilities
. Transfer of financial expenses
. Other external charges
. Interest expense
. Other financial expenses
. Charges to provisions for impairment of investments
. Charges to provisions for liabilities
. Non-recurring income and expenses
144
Income
986
82,703
2,555
17,837
405
864
5,773
421
13,354
722
1,335
260
NOTE N° 13 -
OFF-BALANCE SHEET COMMITMENTS
Commitments received
Confirmed, undrawn lines of credit
190,863
Commitments given
. Guarantees in favor of other Group companies
. Put options granted on shares in subsidiaries and affiliates
. Other commitments
13,692
95,500
17,525
Foreign currency transactions
. Forward sales of GBP
131,686
Interest rate hedges
-
In connection with its acquisition of Webedia, the Company granted put options on the Webedia shares (i)
held by minority interests and (ii) issued on the exercise of founders warrants granted to Webedia officers
and employees. The estimated value of these put options is included on the line “Put options granted on
shares in subsidiaries and affiliates”.
The former owners of Financière Allociné and Webedia have granted the Company seller’s warranties
totaling €11.9 million.
No material off-balance sheet commitments have been omitted from the above tables, in accordance with
French generally accepted accounting principles.
NOTE N° 14 -
MANAGEMENT COMPENSATION
Board of Directors
Corporate officers
NOTE N° 15 -
158
466
SUBSEQUENT EVENTS
Fitch Group Inc. has acquired the entire capital of Business Monitor International (BMI), and Webrdia
has taken control of Melberries and Diwanee.
145
NOTE N° 16 -
SUBSIDIARIES AND AFFILIATES
Company
Share capital
Reserves
% interest
Carrying amount of
investment
Cost
Outstanding
loans and
advances
from Fimalac
Guarantees
provided by
Fimalac
2013 revenue or
net financial
income
2013 profit
(loss)
Dividends
paid to
Fimalac in
2013
Net
Investments with a carrying amount in excess of 1% of
Fimalac’s capital
1) Subsidiaries (at least 50%-owned)
146
FIMALAC SERVICES FINANCIERS SC
97 rue de Lille – 75007 Paris
202,652
3,172
99.98%
202,602
202,602
-
-
54,492
(*)
52,820
68,277
FIMALAC DÉVELOPPEMENT SA
9 rue du Laboratoire – L1911 Luxembourg
322,600
(11,841)
99.99%
390,000
318,585
21,070
-
10,630
(*)
10,190
-
FINANCIÈRE BOULOGNE TECHNOLOGIES SARL
29,212
4,207
99.99%
69,214
33,419
-
-
30
(*)
14
-
FINANCIÈRE PORTEFOIN SAS
32,171
37,568
99.99%
69,246
69,246
-
-
111
(*)
(43)
383
90,815
65.22%
104,193
104,193
1,216
WEBEDIA SA
3 avenue Hoche – 75008 Paris
7,656
16,751
1,072
(6,778)
2) Affiliates (10% to 50%-owned)
Other subsidiaries and affiliates:
1) Subsidiaries not included in Section A
French subsidiaries
Foreign subsidiaries
2) Affiliates not included in Section A
French affiliates
Foreign affiliates
-
-
-
2,854
-
-
-
3,348
-
-
-
-
-
-
(*) Including financial income (excluding provision reversals).
-
LIST OF INVESTMENTS
Number of
shares
Carrying amount
(in € thousands)
1) PRINCIPAL INVESTMENTS
I)
Investments in subsidiaries and affiliates
Listed
Unlisted
F.C.B.S GIE
FIMALAC DÉVELOPPEMENT
FIMALAC INFORMATION
FIMALAC SERVICES FINANCIERS
FINANCIÈRE BOULOGNE TECHNOLOGIES
FINANCIÈRE PORTEFOIN
REVUE DES DEUX MONDES
SEFI
WEBEDIA
-
4,999,998
4,032,499
900
2,026,015
1,825,745
3,574,568
7,271,634
9,999
249,700
762
318,585
40
202,602
33,419
69,246
412
2
104,193
729,261
1,661,703
121,312
2,760,685
61,247
294
41,410
100,000
50
50,000
137,806
22,000
77,100
7,975
2,280
868
658
192
SUB-TOTAL
II)
Other long-term investments
Listed
FIMALAC
EOS IMAGING
MERCIALYS
Unlisted
FCPR LFPI CROISSANCE
AXA SECUNDARY FUND
FCPR WHITE STONE III
BIOSPACE LAB
THE ECONOMIST
LE MONDE PRESSE
SUB-TOTAL
III)
114,924
Listed
FIMALAC (1)
Money market funds
Unlisted
Specialized funds
275,657
9,242
1,143
842
SUB-TOTAL
11,227
TOTAL
855,412
2) SECURITIES WITH A CARRYING AMOUNT OF LESS THAN €15 THOUSAND
TOTAL CARRYING AMOUNT
(1) Net of provisions for impairment in the amount of €1 thousand.
147
855,412
6.5. –
REPORT OF THE STATUTORY AUDITORS ON THE COMPANY
FINANCIAL STATEMENTS
This is a free translation into English of the Statutory Auditors’ report issued in the French language and is
provided solely for the convenience of English-speaking readers. The Statutory Auditors’ report includes
information specifically required by French law in all audit reports, whether qualified or not, and this is presented
below in the opinion on the financial statements. This information includes an explanatory paragraph discussing
the Statutory Auditors’ assessments of certain significant accounting matters. These assessments were considered
for the purpose of issuing an audit opinion on the financial statements taken as a whole and not to provide
separate assurance on individual account captions or on information taken outside of the financial statements.
This report, together with the Statutory Auditors’ report addressing financial and accounting information in the
Chairman’s report on internal control, should be read in conjunction with, and construed in accordance with,
French law and professional auditing standards applicable in France.
In compliance with the assignment entrusted to us by the Annual Shareholders’ Meeting, we
hereby report to you, for the year ended December 31, 2013, on:
-
our audit of the accompanying financial statements of Fimalac;
the justification of our assessments;
the specific verifications and information required by law.
These financial statements have been approved by the Board of Directors. Our role is to
express an opinion on these financial statements based on our audit.
I – Opinion on the financial statements
We conducted our audit in accordance with the professional standards applicable in France.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement. An audit includes
examining, on a test basis or using other selection methods, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made, as well as evaluating the overall financial
statement presentation. We believe that the information gathered during our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements present fairly the results of operations for the year
ended December 31, 2013 and the financial position and assets of the Company at that date,
in accordance with French generally accepted accounting principles.
II – Justification of our assessments
In accordance with the requirements of article L.823-9 of the French Commercial Code (Code
de Commerce) relating to the justification of our assessments, we draw your attention to the
following matters:
-
Note 1.3 to the financial statements presents the rules and methods used for
recognizing and measuring non-current financial assets. As part of our assessment of
the accounting rules and principles and measurement methods applied by the
Company, we verified that these rules and methods were appropriate and had been
applied correctly.
-
The Company records provisions to cover the estimated cost of certain contingencies,
as described in Notes 1.7, 1.11 and 7 to the financial statements. Our procedures
consisted of assessing the data and assumptions underlying these estimates and
reviewing the calculations carried out by Fimalac. As part of our assessment of these
148
estimates, we ensured that the assumptions used and ensuing valuations were
reasonable.
The assessments were made in the context of our audit of the financial statements, taken as a
whole, and therefore contributed to the formation of the opinion expressed in the first part of
this report.
III – Specific verifications and information
We have also performed the specific verifications required by law in accordance with
professional standards applicable in France.
We have no observations concerning the fairness of the information given in the Directors’
report and the documents sent to the shareholders on the financial position and financial
statements and its consistency with those financial statements.
Regarding the disclosures provided in accordance with article L.225-102-1 of the French
Commercial Code on the compensation and benefits paid and commitments given to
executive directors, we have examined their consistency with the financial statements or with
the data used to prepare said financial statements and, where applicable, with the information
gathered by your Company from the companies it controls or that control it. Based on these
procedures, in our opinion, these disclosures are true and fair.
In accordance with the law, we have verified that full information concerning acquisitions of
investments and controlling interests and the identity of shareholders (or holders of voting
rights) is disclosed in the Directors’ report.
In accordance with the law, we hereby inform you that the Directors’ report does not include
all of the information on corporate social responsibility provided for in article L. 225-102-1 of
the French Commercial Code.
Cagnat & Associés
Pierre Mercadal - Frédéric Drougard
149
6.6. –
STATUTORY AUDITORS’ SPECIAL REPORT ON RELATED PARTY
AGREEMENTS
This is a free translation into English of the Statutory Auditors’ report issued in the French
language and is provided solely for the convenience of English-speaking readers. This report
should be read in conjunction with, and construed in accordance with, French law and
professional auditing standards applicable in France.
In our capacity as Statutory Auditors of Fimalac, we hereby present our report to shareholders
on related party agreements.
Our responsibility is to report to shareholders, based on the information provided, about the
main terms and conditions of agreements that have been disclosed to us or that we discovered
during our audit, without commenting on their relevance or substance or seeking to identify
any undisclosed agreements. Under the provisions of article R.225-31 of the French
Commercial Code (Code de Commerce), it is the responsibility of shareholders to determine
whether the agreements are appropriate and should be approved.
In addition, it is our responsibility to report to shareholders, in accordance with article R.22531 of the French Commercial Code, on any agreements approved by shareholders that were in
effect during the fiscal year.
We have performed all of the procedures that we considered necessary in accordance with the
professional standards applicable in France. Those standards require that we carry out the
necessary procedures to verify the consistency of the information disclosed to us with the
source documents.
AGREEMENTS SUBMITTED TO THE ANNUAL SHAREHOLDERS’ MEETING FOR APPROVAL
Agreements authorized during the year
In compliance with article L.225-40 of the French Commercial Code, we were informed of
the following agreements authorized by the Board of Directors during the year.
-
With Financière Allociné
Person concerned:
- Véronique Morali – director until April 3, 2014
At its meeting on September 13, 2013, the Board of Directors authorized Financière
Allociné and any of its subsidiaries to sign up to the Fimalac Group cash pooling
agreement, under which advances to and from the cash pool managed by the Company
carry interest at market rates.
At December 31, 2013, the balance of cash advances granted to Financière Allociné
under the agreement was €2,624,061.92 and the corresponding interest income recorded
by the Company during the year amounted to €7,907.45.
150
Agreements authorized after the year-end
We were informed of the following agreement authorized by the Board of Directors after the
year-end:
-
With Groupe Marc de Lacharrière and Silmer
Persons concerned:
- Marc Ladreit de Lacharrière – Chairman and Chief Executive Officer
- Jérémie Ladreit de Lacharrière – director
- Eléonore Ladreit de Lacharrière – director
- Pascal Castres Saint-Martin – director
At its meeting on April 3, 2014, having noted that certain shareholders might want to
sell their shares back to the Company, the Board gave the Company a one-year
authorization to buy back shares in small blocks to avoid depressing the share price. Up
to 1,100,000 shares may be bought back under this authorization, with each purchase to
be carried out at the price quoted for the Company’s shares on the buyback date.
Agreements not authorized in advance
In accordance with articles L.225-42 and L.823-12 of the French Commercial Code,
shareholders are informed that the following agreement was not authorized in advance by the
Board of Directors. We are required to inform shareholders of the circumstances that resulted
in the authorization procedure not being followed:
-
With Webedia
Persons concerned:
- Marc Ladreit de Lacharrière – Chairman and Chief Executive Officer
- Véronique Morali – director until April 3, 2014
- Thierry Moulonguet – director
On December 2, 2013, Webedia signed up to the cash pooling agreement, under which
advances to and from the cash pool managed by the Company carry interest at market
rates.
At December 31, 2013, the balance of cash advances granted to Webedia under the cash
pooling agreement was €7,655,545.61 and the corresponding interest income recorded
by the Company during the year amounted to €5,545.61.
Webedia’s signature of the agreement was not authorized in advance by the Board of
Directors due to an oversight. Consequently, it was authorized retrospectively by the
Board at its meeting on April 3, 2014.
151
Agreements approved in prior years
a) Agreements that remained in force in 2013
In accordance with article R.225-30 of the French Commercial Code, we were informed of
the following agreements approved by shareholders in prior years that remained in force in
2013.
-
With Groupe Marc de Lacharrière
The trademark sub-licensing agreement permitting the Company to adopt its corporate
name remained in force during 2013. No fees are paid under this sub-license.
-
With FCBS GIE (intercompany partnership)
The Company is a member of the FCBS intercompany partnership, the purpose of
which is to develop and enhance the business and results of the partners. The related
fee paid by the Company for 2013 totaled €4,486,419 (excluding VAT).
-
With Fitch Group Inc.
Fimalac signed an agreement for the provision of strategic advice to Fitch Group Inc. as
from April 11, 2012, in exchange for an annual fee of $640,000.
The corresponding income recognized in the Company’s accounts represented
€481,132.72.
-
With direct and indirect subsidiaries
A cash pooling agreement under which advances to and from the cash pool managed
by the Company carry interest at market rates.
The balances outstanding at December 31, 2013 were as follows:
Outstanding balance
Borrowings
€
€
€
€
€
€
€
£
FIMALAC SERVICES FINANCIERS
FINANCIERE PORTEFOIN
FINANCIERE BOULOGNE TECHNOLOGIES
S.I.F.M.P.
FIMALAC INFORMATION
VEGA
FITCH RATINGS LTD.
152
71,238,865.48
71,953,664.19
33,334,830.24
748,235.21
0.00
252.99
68,885.95
0.00
Net interest
paid
101,560.42
66,168.51
30,359.09
703.38
17.40
528.10
34.57
187,240.58
Outstanding balance
110,000,000.00
31,870,723.40
21,069,869.67
0.00
249,215.34
0.00
Loans
NORTH COLONNADE
SEFI SNC
FIMALAC DEVELOPPEMENT
FIMALAC INFORMATION
VEGA
£
€
€
€
€
€
Net interest received
1,842,570.36
0.00
351,967.38
3,759.59
617.16
648.47
b) Agreements that remained in force but were not applied in 2013
In addition, we were informed of the following agreement approved by shareholders in prior
years that remained in force but was not applied during 2013.
-
With Groupe Marc de Lacharrière and Silmer
At its meeting on March 26, 2013, having noted that certain shareholders might want to
sell their shares back to the Company, the Board gave the Company a one-year
authorization to buy back shares in small blocks to avoid depressing the share price. Up
to 1,100,000 shares may be bought back under this authorization, with each purchase to
be carried out at the price quoted for the Company’s shares on the buyback date.
The authorization was not used in 2013.
Cagnat & Associés
Pierre Mercadal - Frédéric Drougard
153
Corporate Governance
CHAPITRE 7 7.1. –
CORPORATE GOVERNANCE
SENIOR MANAGEMENT STRUCTURE
French company law (article L.225-51-1 of the Commercial Code) stipulates that a société anonyme is
managed either by the Chairman of the Board of Directors or by another individual appointed by the Board,
who has the title of Chief Executive Officer (Directeur Général).
Marc Ladreit de Lacharrière has been appointed by the Board to serve as Chairman of the Board of Directors
and Chief Executive Officer for the duration of his term of office as a director.
7.2. –
CHAIRMAN'S REPORT (ARTICLE L. 225-37 OF THE FRENCH COMMERCIAL CODE)
AND REPORT OF THE AUDITORS ON THE CHAIRMAN'S REPORT
7.2.1. – CHAIRMAN'S REPORT
(Approved by the Board of Directors at its meeting of April 3, 2014)
Introduction
Fimalac refers in part to the French corporate governance code for listed companies incorporating the AFEP
and MEDEF reports of October 2003, their January 2007 and October 2008 recommendations on executive
directors' compensation and their April 2010 recommendation on increasing boardroom diversity by having
more women directors.
The corporate governance code may be consulted at Fimalac's registered office.
I. – Members of the Board of Directors, preparation and organization of Board meetings
The Board of Directors’ internal rules were adopted on December 18, 2001, and amended on various
subsequent occasions. A copy of the current version is presented as an appendix to this report.
A. – Members of the Board of Directors
Directors are elected for renewable four-year terms. In accordance with the Board of Directors' internal rules,
each director must hold at least 450 Fimalac shares, acquired no later than 18 months after the date of his or
her election to the Board for the first time.
The Board of Directors currently has 14 members:
-
Marc Ladreit de Lacharrière, Chairman and Chief Executive Officer
Pierre Blayau
Pascal Castres Saint-Martin
David Dautresme (who is stepping down from the Board at the upcoming Annual Shareholders’
Meeting on June 17, having reached the age limit for serving as a director specified in the bylaws)
154
-
Bernard de Lattre, who was appointed as a director by the Board on April 3, 2014 to fill the seat left
vacant by Véronique Morali’s resignation
Jérémie Ladreit de Lacharrière
Eléonore Ladreit de Lacharrière
Philippe Lagayette, senior independent director
Thierry Moulonguet
Jean-Charles Naouri
Etienne Pflimlin
Bernard Pierre
Thomas Piquemal
Groupe Marc de Lacharrière, corporate director represented by Eléonore Ladreit de Lacharrière
Véronique Morali stepped down from the Board on April 3, 2014 and was replaced by Bernard de Lattre.
The membership of the Board is structured to enable the Group to fully leverage both the experience and the
independence of its directors.
The corporate governance code states that a director is deemed to be independent when he or she has no
relationship of any kind with the company, its group or the management of either that is such as to color his or
her judgment. Six of the directors – Pascal Castres Saint-Martin, David Dautresme, Philippe Lagayette,
Etienne Pflimlin, Thierry Moulonguet and Thomas Piquemal – were qualified as independent directors in
2013. At its meeting of March 26, 2013, based on the recommendation of the Selection, Nominations and
Remunerations Committee, the Board of Directors stated that Pascal Castres Saint-Martin could still be
considered an independent director despite having been a Board member for more than twelve years in light of
his expertise and great experience and in the absence of compensation other than attendance fees. On April 3,
2014, the Board of Directors reiterated its decision concerning Pascal Castres Saint-Martin and came to the
same decision concerning Pierre Blayau.
At the upcoming Annual Shareholders' Meeting on June 17, shareholders will be asked to elect two new
directors, Bérangère Veron and Clarisse Lacape (both daughters of Marc Ladreit de Lacharrière) and to ratify
the appointment as a director of Bernard de Lattre, decided by the Board at its meeting on April 3, 2014. The
decision to propose Mrs. Veron and Mrs. Lacape for election as directors was made by the Board of Directors
on April 3, 2014 based on the recommendation of the Selection, Nominations and Remunerations Committee.
If they are elected by shareholders, Fimalac will have three women directors and a female permanent
representative of a corporate director, together representing 26.6% of the Board's membership.
The Company does not have any directors elected by employees.
At its meeting of May 27, 2009, the Board of Directors designated Philippe Lagayette as Senior Independent
Director for the duration of his term on the Board, based on the recommendation of the Selection, Nominations
and Remunerations Committee.
In this capacity, he advises and makes proposals and recommendations to the Chairman and Chief Executive
Officer, as well as to the chairmen of the different Committees of the Board. He chairs Board meetings in the
absence of the Chairman and Chief Executive Officer, and in the event of the Chairman and Chief Executive
Officer's death or incapacity he would take over as acting Chairman and Chief Executive Officer.
There are also two non-voting directors (censeurs) on Fimalac's Board, both of whom are independent:
 René Barbier de La Serre
 Henri Lachmann
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They are called to all Board meetings and may take part in Board discussions but only in a consultative
capacity.
Non-voting directors are elected for a two-year term.
René Barbier de La Serre informed the Board of Directors and the Chairman that, for personal reasons, he
would not be standing for re-election as a non-voting director at the Board meeting to be held on June 17, 2014
B. – Preparation and organization of Board meetings
1. –
Frequency of Board meetings
The Board of Directors meets at least four times a year, and more frequently if necessary in the interests of the
Company. In 2013, five meetings were held, on March 26, May 17, June 11, July 9 and September 13, with an
average attendance rate of 80%.
2. – Committees of the Board
The Board of Directors has an Audit Committee and a Selection, Nomination and Remunerations Committee.
These Committees have drawn up their own internal rules, which were approved by the Board of Directors on
October 6, 2003.
a) Audit Committee
The members of the Audit Committee are Bernard Pierre, the Committee chairman, and Pierre Blayau
(appointed by the Board on June 11, 2013), David Dautresme, Philippe Lagayette and Thomas Piquemal, who
are independent directors. David Dautresme will step down from the Committee at the close of the upcoming
Annual Shareholders' Meeting on June 17.
The Committee’s role is to give an opinion to the Board on the financial statements of the Company and the
Group and it therefore meets at least twice a year prior to the Board’ review of the interim and annual financial
statements. The Committee reviews the financial statements as a whole, the accounting principles and policies
applied, the external audit scope, the companies included in or excluded from the scope of consolidation,
material risks and off-balance sheet commitments, and any financial, accounting or risk management issues.
Any acquisition of a direct or indirect interest in an existing or future holding company established in a low tax
country or tax haven must be disclosed in advance to the Audit Committee, whatever the amount invested. If
appropriate, the Audit Committee immediately notifies the Board of the proposed transaction. Additionally, the
Audit Committee reports to the Board of Directors each year on the transactions submitted for its review
during the year. The Audit Committee has not been informed of any such transaction and, to the best of
Fimalac's knowledge, no Group companies hold any direct or indirect interests in any holding companies based
in low tax countries or tax havens.
The Committee met twice in the year ended December 31, 2013, on March 19 and September 4, with an
average attendance rate of 90%.
156
b) Selection, Nominations and Remunerations Committee
In 2013, the members of the Selection, Nomination and Remunerations Committee were Pascal Castres SaintMartin (an independent director and the Committee chairman), Jean-Charles Naouri (a director), Thierry
Moulonguet (an independent director), Edouard de Royère (an independent non-voting director, until June 11,
2013) and Philippe Lagayette (an independent director, from March 26, 2013).
Bernard de Lattre was appointed to the Committee on April 3, 2014.
The Committee's terms of reference are described in the Board of Directors' internal rules.
In 2013, the Committee's chairman consulted the other members once, on March 19, with a 100% response
rate.
C. – Assessment of Board performance
The next assessment of the Board of Directors' performance will be carried out in 2014, based on a
questionnaire sent by the Secretary of the Board to each director and non-voting director.
II. –
Restrictions on the powers of the Chief Executive Officer as determined by the Board of
Directors
The restrictions on the powers of the Chief Executive Officer, as determined by the Board of Directors, are
specified in article I of the Board of Directors' internal rules.
In compliance with the law, the Board of Directors has established rules governing the powers of the Chairman
and Chief Executive Officer to issue guarantees. At its meeting of March 26, 2013, the Board of Directors
renewed the annual authorization given to the Chairman and Chief Executive Officer to issue guarantees
representing up to a maximum of €30 million. This authorization was renewed for a further one-year period at
the Board meeting of April 3, 2014.
III. – Principles and rules decided by the Board of Directors for determining executive directors’
individual compensation packages
The compensation payable to executive directors (Marc Ladreit de Lacharrière, Chairman and Chief Executive
Officer, and Véronique Morali) is determined by the Board of Directors based on the recommendation of the
Selection, Nominations and Remunerations Committee. Compensation paid by the Fitch sub-group is also
discussed within the Fitch Group Remunerations Committee.
157
A. - Chairman and Chief Executive Officer’s compensation package
1) Compensation paid/due in France (Fimalac) – 2013
Marc Ladreit de Lacharrière’s compensation package is determined by the Board of Directors, based on the
recommendation of the Selection, Nominations and Remunerations Committee. Mr. Ladreit de Lacharrière is
not a member of this Committee and does not take part in the Board’s vote on his compensation package.
(i) Retainer
For a number of years, Mr. Ladreit de Lacharrière was paid a €1,300,000 annual retainer by Fimalac.
However, in 2012 he asked the Selection, Nominations and Remunerations Committee to reduce this amount
by 30% to €910,000 per year, effective February 1, 2012. At his request, the same reduction was applied in
2013.
In addition, since February 1, 2012, only half of this reduced amount (€455,000 per year) represents a retainer
based on the usual definition. Payment of the other half (€455,000 per year) is deferred for three years and is
contingent upon Fimalac meeting the three-year average growth target for adjusted recurring operating profit
set by the Board. By definition, the deferred contingent compensation for 2012 had not yet vested as of end2013. The same rule was applied in 2013 at Mr. Ladreit de Lacharrière’s request.
Consequently, the retainer received by Marc Ladreit de Lacharrière in 2013 from Fimalac amounted to
€455,000.
(ii) Long-term incentive
Since 2012, Marc Ladreit de Lacharrière may also receive a long-term incentive based on average growth in
adjusted recurring operating profit over three years. Payment of the incentive is deferred to the end of this
three-year period.Mr. Ladreit de Lacharrière did not receive any long-term incentive for 2013 because the
performance measurement period was still in progress at the year-end and the incentive is not payable until the
end of that period.
2) Compensation paid/due in the United States (Fitch Group) – 2013
As Chairman of Fitch Group and of its Strategy Committee, Marc Ladreit de Lacharrière is paid a retainer and
a bonus, in line with local market practices.
The bonus is based on Fitch Group's operating results. It rose sharply in 2013, following the strong 22.2% likefor-like growth in Fitch Group’s EBITDA.
Senior executive compensation proposals are submitted in the first instance to the Fitch Group Remunerations
and Nominations Committee chaired by Frank Bennack, Executive Vice-Chairman of Hearst Corporation, and
are then presented to the Board of Directors of Fitch Group for approval. Mr. Ladreit de Lacharrière does not
take part in either the Committee’s discussion or the Board’s vote on his compensation package.
The compensation package approved by the Board of Fitch Group is then referred up to the Fimalac Selection,
Nominations and Remunerations Committee and presented to the Fimalac Board of Directors for ratification.
Mr Ladreit de Lacharrière does not take part in the vote.
158
(i) Retainer
The annual retainer paid to Marc Ladreit de la Charrière by Fitch Group has amounted to $500,000 since 2001.
(ii) Bonus
As Chairman of Fitch Group and of its Strategy Committee, Marc Ladreit de Lacharrière receives a bonus
based on year-on-year growth in Fitch Group’s consolidated EBITDA. This performance criterion has
remained unchanged since the bonus system was introduced in 2001.
The bonus payable to Marc Ladreit de Lacharrière for 2013, calculated according to the above criteria, was set
at $2,900,000 (2012: $2,000,000).
B. – Compensation payable to Véronique Morali
Véronique Morali, a director of Fimalac, receives compensation from Fimalac and its subsidiaries, and also
from Fitch Group in the United States.
1) Compensation paid/due by Fimalac and its subsidiaries – 2013
Véronique Morali is Chairman of the Managing Board of Webedia and Chairman of Fimalac Développement.
Her compensation package is determined by the Fimalac Board of Directors, based on the recommendation of
the Selection, Nominations and Remunerations Committee. She is not a member of the Selection, Nominations
and Remunerations Committee and does not participate in the Board’s vote on her compensation.
(i) Retainer
In France, Véronique Morali was paid a €51,739 retainer by Webedia for the period from July 26, 2013,
corresponding to an annual retainer of €120,000.
She also received €168,257 from FCBS GIE, following a reduction in the annual retainer to €100,000 from
€220,000 previously, with effect from July 26, 2013.
In all, retainers paid to Véronique Morali by Fimalac and its subsidiaries in 2013 totaled €219,996.
(ii) Bonus
Véronique Morali did not receive any bonus in 2013.
(iii) Other information
In 2013, Véronique Morali received directors’ fees of €100,000 from Fimalac Développement and €31,000
from Fimalac.
She also received benefits in kind valued at €4,725.
The Supervisory Board of Webedia awarded to Véronique Morali, in her capacity as Chairman of the
company’s Managing Board, 7,750 “BSPCE” warrants exercisable for 7,750 shares at a price of €401.30, plus
a further 2,600 “BSPCE” warrants exercisable for 2,600 shares at the same price of €401.30.
159
Véronique Morali is Vice Chairman of Fitch Group.
In this capacity, she receives a retainer and a bonus that are submitted in the first instance to the Fitch Group
Remunerations and Nominations Committee, and are then presented to the Board of Directors of Fitch Group
for approval. Ms. Morali does not take part in the Board’s vote.
The compensation package approved by the Board of Fitch Group is referred to the Fimalac Selection,
Ms. Morali does not take part in the vote.
(i) Retainer
In 2013, Véronique Morali was paid an annual retainer of $175,000 by Fitch Group, unchanged for several
years.
(ii) Bonus
Since 2007, Véronique Morali has been eligible for a performance-related bonus based on year-on-year growth
in Fitch Group's EBITDA. EBITDA rose sharply in 2013 and her bonus for that year therefore increased to
$620,000 from $450,000 in 2012.
In 2013, Véronique Morali also received an annual housing allowance from Fitch Group of $36,000,
unchanged from prior years.
IV. – Specific procedures for shareholder participation at general meetings
The procedures for shareholder participation at general meetings are governed by French law and article 28 of
the Company's bylaws.
V. – Disclosures required under article L.225-100-3 of the French Commercial Code
The disclosures required under article L. 225-100-3 of the French Commercial Code are presented in the Board
of Directors' report, in the section relating to information about the Company's capital.
VI. – Internal control and risk management procedures
A. – Fimalac Group internal control objectives
The Fimalac Group’s internal control procedures are designed to obtain assurance that:
 All management actions and transactions conform to the Group’s overall strategy, as decided by the
Board of Directors, and comply with the applicable laws and regulations, as well as with the Group’s
internal standards, rules and corporate values.
160
 The behavior of Group employees complies with the above requirements, and the financial
information submitted to the Board of Directors and disclosed to shareholders and other external
parties is fairly stated.
The aims of the internal control system include protecting and safeguarding the Group's assets, as well as
preventing and minimizing the risks of error and fraud. However, no internal control system can provide
absolute assurance that risks of error and fraud have been completely eliminated or brought under control.
In accordance with the reference framework (Cadre de Référence) published on October 31, 2006 by the
French securities regulator (AMF) and the related guidelines concerning financial and accounting information
presented by listed companies, Fimalac considers that its internal control system generally contributes to the
control over its activities, to the efficiency of its operations and to the efficient utilisation of its resources.
These procedures will be applied progressively to Webedia and Financière Allociné in line with the Group’s
policy of including newly acquired companies in the internal control system.
During 2013, internal control procedures were strengthened at fully and jointly controlled subsidiaries,
particularly Fitch Group (jointly controlled) and VegaEllipse (fully controlled). The same applied to Groupe
Lucien Barrière. As Fimalac only exercises significant influence over the strategy and financial performance of
its associates, responsibility for the operational control of these companies lies primarily with their
management bodies. However, wherever appropriate, the Company has set up Strategy and Finance
Committees in agreement with the majority shareholders of the companies concerned. An Audit and Risks
Committee has been st up for Webedia, chaired by a director of Fimalac (Thierry Moulonguet). In principle,
Fimalac controls the strategy and financial performance of its controlled subsidiaries.
The Auditors have issued a report on the section of this report describing the procedures for the preparation
and processing of financial and accounting information. This discussion therefore focuses on the procedures
concerning financial and accounting information prepared for shareholders.
B. – An internal control system tailored to the Group’s specific organization structure
The organization of the Fimalac Group's internal control system mirrors its management organization:
Embedded controls – Each function in each subsidiary is responsible for defining an internal control system
that enhances the execution of transactions, protects the business’s assets and contributes to managing the risks
associated with the business. Decentralization of the accounting and finance functions strengthens the
accountability of the subsidiaries’ chief executives and chief financial officers for the reliability of financial
data.
A full set of delegations of authority – Management of the Fimalac Group is based on an extensive system of
delegations of authority, backed by controls to ensure that these delegations are not exceeded. The aim is to
make each manager accountable for the implementation of Group and subsidiary-level policies, as well as for
the execution of the decisions and strategies of the Board of Directors, and for compliance with local laws and
regulations.
The principle of segregation of tasks – This principle applies mainly to the segregation of operating and
finance functions. Most Group units have their own finance function, which is responsible for management
reporting and contributes to measuring performance as well as providing assurance about the reliability of
information. Fimalac’s consolidation department performs controls and consistency tests on financial and
accounting data, using computerized reporting applications and procedures.
161
The Chairman of the Fimalac Board of Directors also acts as Chief Executive Officer, with responsibility for
managing the Group. The bylaws do not contain any clauses restricting the powers of the Chairman, who is
nevertheless bound by the Board of Directors’ internal rules.
The main internal control structures are as follows:
 The Boards of Directors/Supervisory Boards of the subsidiaries and main associates – The Board of
Directors of the subsidiary or associate determines the company’s strategy and oversees its
implementation, or in companies with a two-tier governance structure, the Supervisory Board oversees
management of the business by the Management Board. The Board reviews all issues concerning the
company's efficient operation and makes related decisions, in line with the powers vested in the
directors pursuant to company law. The Board of Directors/Supervisory Board performs all controls
and procedures that it considers necessary. Before each meeting, the directors/Supervisory Board
members – who generally include representatives of Fimalac – receive all the information required to
enable them to exercise their judgment and they also have the right to obtain any and all other
documents that they consider useful. In addition, Finance and Strategy Committees have been set up
by the Group where appropriate to regularly monitor these entities.
 The Fimalac Audit Committee is responsible for informing the Fimalac Board of Directors of its
opinion on the annual and interim financial statements. The Audit Committee reviews the financial
statements and the accounting policies applied, and examines the scope of consolidation. The
Committee ensures that it is informed of all material risks and off-balance sheet commitments. It
obtains assurance that auditor independence rules are complied with.
 Group Budget Control – The Budget Control Department monitors actual performance compared to
the budget, financial forecasts and cash forecasts. It also ensures that financial reporting procedures
followed by the Group’s subsidiaries are appropriate.
 The Group Finance Department monitors interest rate, liquidity and other financial risks, investments
of the Group’s available cash, accounting principles, procedures for preparing financial statements,
results forecasts and the estimates necessary for preparing the financial statements. Key metrics, such
as actual and forecast cash positions, exposure to interest rates and subsidiary performance indicators,
are reviewed regularly to enable the necessary measures to be taken to limit the Company’s exposure
to these risks.
The accounting rules issued by the individual subsidiaries ensure that financial information for each subsidiary
is fairly stated. The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards since January 1, 2005. The consolidation packages sent to Fimalac by the
subsidiaries are prepared in accordance with IFRS based on an accounting manual drawn up by Fimalac.
Fimalac’s accounting and finance teams are responsible for preparing the Company and Group financial
statements under the supervision of the Chairman and Chief Executive Officer. Budget and monthly reporting
procedures are used by Fimalac to help it to oversee the subsidiaries’ operations. Based on the reporting
packages submitted by each of the subsidiaries, Fimalac’s accounting and finance teams prepare quarterly
financial information as well as the interim and annual consolidated financial statements in accordance with
IFRS. New consolidation software has been acquired by Fimalac to facilitate the consolidation process.
Although they are not part of the internal control system, during their audit and as required by their
professional standards, the external auditors review the accounting and internal control systems that have an
impact on the representations underlying the financial statements. They assess whether the financial statements
have been prepared in accordance with generally accepted accounting principles in order to obtain assurance
162
that Fimalac’s financial information complies with the true and fair view principle. They present an annual and
half-yearly summary of their audit findings to the Group Finance Department and the Audit Committee,
thereby reinforcing Fimalac’s internal control system. Wherever possible, the subsidiaries are audited by the
local offices of the Group auditors, to guarantee a consistent approach.
C. – Continuous implementation of internal control
Control processes are managed and implemented on a continuous basis. The adequacy of controls and any
action to address risks more effectively are verified in real time.
The budget process – The Group has set up a decentralized, bottom-up budget process designed to increase the
accountability of the subsidiaries’ chief executives for meeting budget objectives. This process represents the
cornerstone of the system used to measure the performance of the Group’s subsidiaries (mainly at the level of
the Fitch, Vega, 3S and Webedia/Financière Allociné sub-groups) and of Groupe Lucien Barrière.
Information and approval system – The management and financial reporting systems are backed by
applications that generate daily cash reports, as well as requests for approval of investment and divestment
projects, requests for loan guarantees and banking or customs signature authority.
Fimalac has set up or negotiated with its subsidiaries and associates methods that enable them to obtain, on a
timely basis, the reliable information they need to fulfill their responsibilities. They include:
 Internal information systems, such as computer applications.
 Documents relating to the various cross-functional committees, their meetings and the decisions made.
 Internal communication of management data, such as internal reporting documents concerning the
monitoring of subsidiaries, cash reserves and management accounting.
 Monthly reporting data for the Group’s main sub-groups and associates when available.
Procedure for listing and monitoring off-balance sheet commitments – Material contracts entered into by
Fimalac are reviewed as required by the legal team to identify the commitments involved. The Group Finance
Department is consulted whenever its contribution is deemed necessary.
D. - Control procedures of the main sub-groups
1. – Fitch Group, Fitch Ratings, Fitch Solutions and Fitch Learning
For the Fitch sub-group, Fimalac fulfills its oversight duty by obtaining and utilizing the following
information:
 Budgets discussed and approved prior to the start of the fiscal year.
 A “newsflash” issued at the beginning of each month, showing the revenues generated by the various
ratings segments, analyzed by major geographic segment.
 Monthly income statements, with budget-actual comparisons and explanations of the main variances.
 Monthly cash reports.
 Detailed monthly employee data.
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 Investment project status reports, including a discussion of how the projects fit in with the overall
strategy established by the Board of Directors.
Some information system adjustments have been made over the years as part of the drive to fine-tune analytic
resources for Fitch Ratings, Fitch Solutions, Fitch Learning and Fimalac managers. In particular, in addition to
the standard financial reporting system, a “like-for-like” reporting system has been developed to automatically
eliminate the effects of changes in exchange rates and changes in the scope of consolidation, so as to enable
management to monitor underlying fluctuations more effectively in a volatile exchange rate environment. The
principles and policies described in this section will be rolled out to Business Monitoring International, which
was acquired by Fitch Group in March 2014.
At Fitch Ratings, particular attention is paid at corporate level and at the level of the individual units to factors
that could have a material impact on the financial statements, with significant input from the Auditors. These
factors include:
 Revenue recognition rules, particularly deferred recognition.
 Employee compensation and incentive policies.
 Computations of current and deferred taxes, which are made more complex by Fitch Ratings’
increasingly international business base and the use of group relief systems.
 Legal and regulatory matters.
Each unit within the sub-group submits a detailed reporting package comprising an income statement, a
balance sheet and a business analysis. Detailed instructions and reporting deadlines are issued for the
preparation of half-yearly reports.
The packages are reviewed by a central team that monitors the accounting treatment of transactions throughout
the year, generates eliminations and consolidation adjustments, and validates the highest risk items. Group
controllers make regular visits to the operating units to monitor performance, review procedures, participate in
hard-close meetings and address any one-off issues.
Strategic and operational meetings are also regularly organized, notably by the Strategy Committee, in
accordance with the management agreement signed by the parties responsible for managing the sub-group.
An Audit Committee was set up in late 2012 within Fitch Group, the parent company of Fitch Ratings and
Fitch Solutions. The Committee is made up of one representative each from Fimalac and Hearst and is tasked
with reviewing Fitch Group's financial statements. A Remunerations and Nominations Committee has also
been established, comprising one representative each from Fimalac and Hearst.
2. – Groupe Lucien Barrière
Since acquiring a 40% stake in Groupe Lucien Barrière, Fimalac has been working to establish a reporting
system similar to those used with its other subsidiaries and associates. The following information is reported:
 Budgets discussed and approved prior to the start of the fiscal year.
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 Monthly income statements for each activity, with budget-actual comparisons and explanations of the
main variances.
 Monthly cash reports.
 Investment project status reports, including a discussion of how the projects fit in with the overall
strategy established by the Board of Directors.
Strategic and operational meetings are also regularly organized, notably by the Strategy Committee or the
Finance and Audit Committee.
3. – Entertainment Segment (live entertainment production, venue management, ticketing solutions, etc.)
For the Entertainment segment, separate Group reporting systems have been set up for wholly-owned
subsidiaries (Vega, 3S, Ellipse) and other entities. Within wholly-owned subsidiaries, periodic meetings are
organized with the management team, and reporting packages are regularly sent to Fimalac, enabling the
Company to have a steady flow of detailed information on the subsidiaries’ operations and commitments.
The regular flow of information from the other entities (Gilbert Coullier Productions, Auguri Productions, KWet Productions, DebJam and Le Comedy Club) is assured via the different committees set up within these
companies and Fimalac’s close relations with their management.
4. – Digital Segment (Webedia/Financière Allociné, Groupe Confidentielles, etc.)
Since Fimalac became a shareholder of Webedia, it has been gradually setting up a Group reporting system for
the sub-group (which includes the Financière Allociné and Groupe Confidentielles entities) that is comparable
to those used by its historical businesses. The 2014 budget prepared last February takes into account the
synergies expected within this new business segment that is in the process of being set up. As the business
grows and is developed, it will become necessary to deploy the same internal control procedures in each of
these companies, with certain adjustments to take into account their respective sizes and the specific features of
their activities. For example, plans are being made to establish a single system for reporting advertising
revenue generated by all the entities making up the Digital segment before the end of the current year.
Strategic and operational meetings are also regularly organized, notably by the Strategy and Finance
Committees. The Finance Committee is made up of Webedia line managers and its Finance Director, and of
representatives of Fimalac’s Finance, Legal or Internal Control Departments. The Committee meets at least
once a month. Strategy Committee members include the members of Webedia’s Management Board and
Fimalac’s Chairman and Chief Executive Officer.
An Audit and Risks Committee has also been set up, chaired by a member of the Fimalac Board (Thierry
Moulonguet).
5. – Fimalac (parent company)
Regular assessments are made of the Company’s exposure to risks relating to warranties and litigation as well
as to broad financial risks. The assessments are submitted to the Audit Committee for review. Risk information
is submitted by the accounting and finance teams, mainly in the subsidiaries’ reporting packages, or by the
legal or administrative teams, as appropriate. Once identified, risks are measured internally and, where
necessary, are discussed among the different Fimalac units concerned. At Fimalac’s discretion, external
advisors are retained to make their own risk assessment and provide expertise on any specific concerns. When
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necessary, Fimalac also calls on its subsidiaries’ internal teams or their advisors to evaluate the risks that have
been brought to its attention through the reporting system. Depending on the type of risks concerned and the
amounts involved, the information may be reported to executive management who, after discussing these risks
with Fimalac’s legal, accounting and finance teams and its advisors, decide whether or not to set aside a
provision or take any other action to protect the Company’s interests.
Fimalac’s main risk exposures are discussed in the “Risk Factors” section of the Board of Directors’ report.
These correspond primarily to risks associated with the subsidiaries’ business activities.
As short-term investments and debt are centralized for the most part at the level of the parent company and the
intermediate holding companies, increased vigilance is necessary over cash and debt management processes.
A Finance Committee meets regularly at Fimalac’s headquarters to review detailed cash reports and make
necessary decisions regarding short-term investments and banking relationships.
Paris, April 3, 2014
__________________________
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BOARD OF DIRECTORS' INTERNAL RULES
I. – Role and responsibilities of the Board of Directors
The directors and non-voting directors shall each contribute their business skills and experience.
They have a duty of vigilance and shall freely exercise their judgment in all matters. They shall participate
independently in the decisions or work of the Board of Directors and, where applicable, the Committees of the
Board, according to their personal judgment of the issues.
In addition to the matters that fall within the competence of the Board of Directors pursuant to the applicable
laws and regulations, which include determining the Company’s strategy and exercising oversight of the
Company’s activities, the Board shall be responsible for approving transactions that may have a material
impact on the Group’s structure, including acquisitions and divestments for a net amount in excess of €75
million, as well as transactions or agreements giving rise to a material commitment for the Company or the
Group. The Board shall also be responsible for approving the reports of the Audit Committee and the
Selection, Nominations and Remunerations Committee.
Any acquisition of a direct or indirect interest in a newly-formed or existing holding company incorporated in
a low tax country or a tax haven must be disclosed in advance to the Audit Committee, whatever the amount of
the proposed investment. If appropriate, the Audit Committee shall immediately notify the Board of the
transaction. Additionally, the Audit Committee shall report to the Board of Directors each year on the
transactions submitted for its review during the year.
II. – Board practices
A. – Calling Board meetings
Meetings of the Board of Directors shall be called by the Chairman.
If the Chairman is prevented from calling a Board meeting, the meeting may be called by the Vice-Chairman if
one has been appointed.
If the Board has not met for over two months, or in an emergency, a group of directors representing at least
one-third of the Board members may call a Board meeting with a specific agenda.
In accordance with the law and the Company’s bylaws, Board meetings may be called by any appropriate
method, including orally. Notice of meeting may be sent or given to directors by the Secretary of the Board.
Except in special circumstances, notice of meeting shall be sent at least eight days prior to each meeting. The
notice of meeting shall stipulate the meeting venue, which may be the Company’s headquarters or any other
location.
B. – Information given to directors and non-voting directors
At the time of his or her election and during his or her term of office, each director or non-voting director shall
receive any training that he or she considers necessary to fulfill his or her duties. Such training will be
organized, proposed and paid for by the Company.
The Company shall regularly give all of the directors and non-voting directors any and all relevant
information, favorable or otherwise, including articles published in the press and analysts’ research reports.
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The directors and non-voting directors shall ensure that they have all information that they consider essential to
permit the Board of Directors to fulfill its role and responsibilities. They must ask for any such information
that is not given to them. Requests for such information shall be made to the Chairman and Chief Executive
Officer, who shall be required to give to each member of the Board of Directors any and all documents and
information needed to permit them to fulfill their role and responsibilities.
C. – Meetings of the Board of Directors
The Board of Directors shall meet as regularly as necessary in the interests of the Company. At least four
meetings shall be held each year.
The dates of the following year’s meetings shall be set at the latest during the final meeting of the previous
year, other than for special meetings.
Whenever necessary, the Board of Directors may invite non-Board members to attend its meetings, including
line managers concerned by the issues discussed by the Board.
D. – Participation by videoconference or conference call
As allowed by the applicable laws and regulations, directors who participate in Board meetings by means of
videoconferencing or conference call facilities shall be considered as being present for the purpose of
calculating the quorum and voting majority, provided that the said facilities enable the directors to be properly
identified and guarantee their effective participation.
Participation by videoconference or conference call shall not be allowed, however, at meetings called to
approve the financial statements of the Company and the Group, or to draw up the Board of Directors’
management report on the activities of the Company and the Group.
E. – Minutes
Other than in exceptional circumstances, a draft of the minutes of the last Board meeting shall be sent to the
directors and non-voting directors at the latest with the notice of the following meeting.
The minutes shall list the names of any directors who took part in the proceedings by videoconference or
conference call. Where appropriate, they shall also describe any technical incidents during the videoconference
or conference call that disrupted the proceedings.
At each location other than the meeting venue, the director participating by videoconference or conference call
shall sign a loose attendance sheet for him or herself and for any director that he or she is representing by
proxy. The Secretary of the Board shall attach said sheet to the attendance register and shall obtain any
available evidence of the director’s participation by videoconference or conference call.
III. – Committees of the Board
Article R. 225-29 of the French Commercial Code and the final paragraph of article 24 of the bylaws authorize
the Board of Directors to set up committees responsible for making recommendations to the Board on specific
matters. These committees represent an extension of the Board. Their members shall be appointed by the
Board and may or may not be directors.
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The Board of Directors set up an Audit Committee and a Remunerations and Stock Options Committee. The
latter committee’s remit was extended on October 6, 2003 to include nominations, and its name was changed
to the Selection, Nominations and Remunerations Committee.
A. – Audit Committee
The Audit Committee shall have at least three members, all of whom shall be independent directors,
recognized as such according to the independence criteria set forth in the Sarbanes-Oxley Act. All of the
members of the Audit Committee shall be competent in financial or accounting matters.
The Audit Committee shall draw up its own rules, describing its remit and rules of procedure. These rules shall
be submitted for approval to the Board of Directors, which shall have sole responsibility for determining the
Committee’s broad remit.
The Audit Committee’s reports to the Board of Directors shall be sufficiently detailed to ensure that the Board
is fully informed. Each director and non-voting director shall receive a copy of the Committee’s minutes.
B. – Selection, Nominations and Remunerations Committee
The Selection, Nominations and Remunerations Committee shall have at least two members, who shall be
either directors or non-voting directors. The Chairman and Chief Executive Officer shall attend meetings of the
Committee at which selection and nomination issues are discussed.
The Selection, Nominations and Remunerations Committee shall draw up its own rules, describing its remit
and rules of procedure. These rules shall be submitted for approval to the Board of Directors, which shall have
sole responsibility for determining the Committee’s broad remit.
For selection and nomination issues, the Committee shall make recommendations to the Board of Directors
concerning the membership of the Board, the search for potential candidates for election to the Board and the
desirability of proposing sitting directors for re-election.
For remuneration issues, the Committee shall make recommendations to the Board concerning executive
directors’ compensation and stock option grants. The Committee shall be informed of the general
compensation and benefits policies of the Company and its subsidiaries, as well as of the compensation and
benefits awarded to the Chairmen of the main subsidiaries, and shall be entitled to obtain all information that it
considers necessary in this regard. The Committee shall draw up a presentation document for the Board of
Directors.
Effective from May 22, 2007, no golden parachutes or top hat pensions may be granted to executive directors.
However, in exceptional circumstances, the Selection, Nominations and Remunerations Committee shall meet
to review the matter and submit a report to the Board of Directors, which shall have the sole authority to waive
or uphold this rule on a case-by-case basis.
The Selection, Nominations and Remunerations Committee’s reports to the Board of Directors shall be
sufficiently detailed to ensure that the Board is fully informed. Each director and non-voting director shall
receive a copy of the Committee’s minutes.
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IV. – Duties of the directors and non-voting directors
A. – General principle
Each director and non-voting director shall be familiar with the Company's bylaws, the rules applicable to
French joint stock corporations (sociétés anonymes) administered by a Board of Directors, and the rules
governing the possession and use of insider information.
B. – Protecting the Company’s interests
The directors shall act in all circumstances in the Company's interests.
Directors shall notify the Board of Directors of any actual or potential conflicts of interests and shall refrain
from taking part in any decisions where such a conflict exists or may exist.
C. – Duty of diligence
The directors and non-voting directors shall devote the necessary time and attention to their duties.
They shall limit the number of directorships held in order to have sufficient free time to devote to the business
of the Board.
They shall undertake to participate in all Board meetings, if necessary by videoconference or conference call,
unless they have serious and valid reasons for being absent, to participate in all Shareholders’ Meetings to the
extent possible, and to participate in all meetings of Committees of the Board of which they are members.
D. – Duty of discretion and confidentiality
The directors and non-voting directors shall not comment personally, outside meetings of the Board, on the
matters discussed during Board meetings. All communications to third parties outside the Company shall be
issued in the name of the Board of Directors as a whole, generally in the form of press releases intended to
inform the public.
Each director and non-voting director shall be bound by a duty of confidentiality that extends beyond the duty
of discretion provided for in the fifth paragraph of article L.225-37 of the French Commercial Code (Code de
Commerce), covering all information obtained in his or her capacity as director or non-voting director that is
not publicly available.
Any director or non-voting director who fails to comply with the duty of discretion provided for in article
L.225-37 of the French Commercial Code will be required to resign. If he or she does not resign, a resolution
will be presented at the next Shareholders’ Meeting to remove said director or non-voting director from office.
E. – Stock market ethics
1. – Principles
Individual directors, permanent representatives of corporate directors and non-voting directors shall comply
with the provisions of article L.465-1 of the French Monetary and Financial Code (Code Monétaire et
Financier) and articles 621-1 to 622-2 of the General Regulations of the Autorité des Marchés Financiers
(AMF) with respect to all insider information that comes into their possession in the course of their duties.
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Each director, permanent representative of a corporate director and non-voting director shall be personally
responsible for assessing whether any information that comes into their possession qualifies as insider
information, determining whether said information may or may not be used or disclosed to any other party, and
whether or not he or she may validly carry out transactions in the Company’s shares, directly or indirectly, on
the strength of said information.
2. – Negative windows
Directors and non-voting directors are prohibited from carrying out any transactions in the Company’s shares
during the period preceding the publication of inside information and it is recommended that they also refrain
from carrying out any such transactions during the fifteen days preceding the announcement of the Company’s
annual and interim results.
3. – Obligation to report transactions in the Company’s shares
In accordance with article L.621-18-2 of the French Monetary and Financial Code (Code Monétaire et
Financier), directors, non-voting directors and permanent representatives of corporate directors or non-voting
directors are required to report within five trading days to the AMF and to the Secretary of the Board of
Directors any transactions in Fimalac shares carried out either directly or by persons with whom they have
close personal ties.
F. – Minimum shareholding requirements
Each director must hold at least 450 shares of the Company, no later than 18 months after the date of his or her
election to the Board for the first time.
V. – Remuneration of the directors and non-voting directors
The total fees will be determined by the Annual Shareholders’ Meeting and allocated among directors and nonvoting directors at the Board's discretion.
Part of the total shall be allocated among all of the directors and non-voting directors and part shall be used to
pay an additional fee to directors and non-voting directors who are members of the Committees of the Board.
A portion of the fee will be fixed and a portion will vary depending on the individual’s attendance record at
Board Meetings held during the year concerned.
VI. – Assessment of Board performance
Part of at least one Board meeting per year shall be devoted to reviewing the Board's performance. In addition,
a formal assessment shall be drawn up at least once every three years. The assessment may be conducted by an
independent director, with the assistance of an outside advisor. Shareholders shall be informed every year, in
the Annual Report, of the results of the performance assessment and of any action taken as a result thereof.
VII. – Amendments to the internal rules
These internal rules may be amended by decision of the Board of Directors.
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7.2.2. – REPORT OF THE AUDITORS ON THE CHAIRMAN'S REPORT
In our capacity as Statutory Auditors of Fimalac and in application of article L.225-235 of the French
Commercial Code (Code de Commerce), we present below our report on the report prepared by the Chairman
of Fimalac in application of article L.225-37 of said Code for the year ended December 31, 2013.
The Chairman is required to prepare a report describing the internal control and risk management procedures
implemented within the Company and providing the corporate governance and other information required by
article L.225-37 of the French Commercial Code, and to submit this report to the Board of Directors for
approval.
Our responsibility is to report to shareholders our comments on the information contained in the Chairman’s
report concerning the internal control and risk management procedures related to the preparation and
processing of accounting and financial information.
Our responsibility also includes certifying that the Chairman’s report contains the other information required
by article L.225-37 of the French Commercial Code, but does not include verifying the fairness of such
information.
We conducted our work in accordance with the professional guidelines applicable in France.
Information concerning the internal control and risk management procedures related to the preparation
and processing of accounting and financial information
Our professional standards require that we perform procedures to assess the fairness of the information given
in the Chairman’s report about internal control and risk management procedures related to the preparation and
processing of accounting and financial information. These procedures include:
-
Reviewing the internal control and risk management procedures related to the preparation and processing
of the accounting and financial data underlying the information provided in the Chairman’s report.
-
Reviewing the work underpinning the information given in the Chairman’s report and existing documents.
-
Determining whether the Chairman’s report includes appropriate disclosures about any major weaknesses
in internal control procedures related to the preparation and processing of accounting and financial
information that we may have observed during our review.
Based on our procedures, we have no matters to report concerning the information about the Company’s
internal control and risk management procedures related to the preparation and processing of accounting and
financial information, as contained in the report of the Chairman of the Board of Directors prepared in
accordance with article L.225-37 of the French Commercial Code.
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Other information
We also certify that the report contains all of the other information required by article 225-37 of the French
Commercial Code.
Cagnat & Associés
Pierre Mercadal Frédéric Drougard
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7.3. –
INFORMATION ABOUT DIRECTORS AND NON-VOTING DIRECTORS
All of the members of the Board of Directors are of French nationality.
Marc Ladreit de Lacharrière, Chairman and Chief Executive Officer
Business address: 97 rue de Lille, 75007 Paris, France
Born on November 6, 1940; aged 73
First elected: June 14, 1990 as director and April 21, 1993 as Chairman
Re-elected: February 14, 2012
Current term expires at the close of the 2016 Annual Shareholders’ Meeting
Number of shares held directly at December 31, 2013: 450
Biographical details
After graduating from Ecole Nationale d’Administration, Marc Ladreit de Lacharrière began his career with
Banque de Suez et de l'Union des Mines, which merged with Banque de l'Indochine to form Indosuez. In 1976,
when he held the position of Investment Banking Director, he left Indosuez to join L’Oréal as Chief Financial
Officer, rising to the position of Vice-Chairman and Deputy Chief Executive Officer.
In March 1991, he left L’Oréal to set up his own company, Fimalac.
Other directorships and executive positions held in 2013
Member of the Institut de France (Academy of Fine Arts)
Chairman of the Board of Directors of:
 Fitch Group (United States)
 Agence France-Museums
Chairman of the Management Board of:
 Groupe Marc de Lacharrière
Chairman of the Supervisory Board of:
 Webedia
Director of:
 L’Oréal*
 Casino*
 Gilbert Coullier Productions (SAS)
 Groupe Lucien Barrière (SAS)
 Renault*
 Société Fermière du Casino Municipal de Cannes (SFCMC)*
* listed companies
Permanent representative of Fimalac on the Board of:
 NextRadioTv
Honorary Chairman of:
 Comité National des Conseillers du Commerce Extérieur de la France
Legal Manager of:
 Fimalac Participations Sàrl (Luxembourg)
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Member of the Board of the following philanthropic organizations:
 Fondation Culture & Diversité
 Conseil Artistique des Musées Nationaux
 Fondation des Sciences Politiques
 Fonds de dotation Abbaye de Lubilhac
Other directorships and executive positions held during the last five years
Chairman of:
 Fitch Ratings (United States)
Director of:
 Algorithmics (Canada)
Legal Manager of:
 Fimalac Participations
Member of the Board of the following philanthropic organizations:
 Fondation Bettencourt Schueller
 L’Oréal Corporate Foundation
 Musée des Arts Décoratifs
Additional information
Marc Ladreit de Lacharrière is the first cousin of Bernard Pierre, a director of Fimalac.
***
Véronique Morali, director
Chairman of Fimalac Développement, Vice-Chairman of Fitch Group and Chairman of the Management Board
of Webedia
Business address: 97 rue de Lille – 75007 Paris, France
Born on September 12, 1958; aged 55
First elected: April 24, 2001
Number of shares held at December 31, 2013: 24,786
After graduating from Ecole Nationale d’Administration, Véronique Morali joined the French civil service
(Inspection Générale des Finances) in 1986. She left the civil service in 1990 to join Fimalac, where she
successively held the positions of Manager, Special Projects, Deputy Chief Operating Officer, and Chief
Operating Officer and member of the Board. Since October 1, 2007, she has been Chairman of Fimalac
Développement and Vice-Chairman of Fitch Group.
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Chairman of:
 Fimalac Développement (Luxembourg)
 Wefcos
Chairman of the Management Board of:
 Webedia
Director and Vice-Chairman of:
 Fitch Group, Inc. (United States)
Director of:
 Coca-Cola Enterprises Inc.*
 Fitch, Inc. (United States)
 Financière Allociné
* listed company
Member of the Supervisory Board of:
 Compagnie Financière Edmond de Rothschild Banque
 Edmond de Rothschild SA
 Publicis Group*
* listed company
Permanent representative of Fimalac Développement on the Board of:
 Groupe Lucien Barrière (SAS)
Member of the following committees/boards of non-profit organizations:
 Association Force Femmes (founding Chairman)
 Association Terrafemina (founding Chairman)
 Elle Corporate Foundation
 French American Foundation
 Etablissement public de la Réunion des musées nationaux et du Grand Palais des Champs-Elysées
(Rmn Gp)
Legal Manager of:
 Fimalac Services Financiers
 Fimalac Tech Info
Chairman of:
 TF Co (formerly Femmes Associées SAS)
Chief Operating Officer of:
 Fimalac
Director of:
 Algorithmics
 Fitch Risk Management
 Havas
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Chairman of the Commission du Dialogue Economique (Medef)
Member of the Ernst & Young Strategy Committee
Le Siècle (member of the Board of Directors)
Representative of Multi Market Services France Holding on the Shareholder Committee of Wefcos SAS
(France)
***
Pierre Blayau, director and member of the Audit Committee
Chairman of the Supervisory Board of Areva
Business address: Areva, 1 place Jean Millier, 92084 Paris La Défense, France
Born on December 14, 1950; aged 63
First elected: June 11, 2013
Number of shares held at December 31, 2013: 450
A graduate of École Normale Supérieure de St Cloud, École Nationale d’Administration and IEP de Paris,
Pierre Blayau began his career with the French civil service (Inspection Générale des Finances) in 1978, before
moving to the Saint-Gobain Group in 1982 to take up the position of Corporate Planning Director.
Between 1984 and 1993, he successively held the positions of Chief Financial Officer, Chief Executive Officer
and Chairman and Chief Executive Officer of the Pont-à-Mousson Group. Chairman of the Pinault-Printemps
Group from 1993 to 1995, he also served as Chairman of FNAC and La Redoute from 1994. In 1996, he was
named Chairman of the Moulinex Group, a position he held until 2000 when Moulinex merged with Brandt.
In January 2001, he took up the position of Chairman and Chief Executive Officer of Geodis, and in May
2008, following SNCF’s takeover of Geodis, he was appointed to head the new SNCF Geodis (Transport and
Logistics) Division.
He became Chairman of the Areva Supervisory Board on June 24, 2013.
 Areva
Chief Executive Officer of:
 SNCF Geodis (until June 30, 2013)
 Geodis (until June 25, 2013)
 Erwewa Holding (until July 23, 2013)
 Transport et Logistique Partenaires (until June 25, 2013)
 European TK’Blue Agency
 Société de Transports de Véhicules Automobiles – STVA (until June 25, 2013)
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Chairman of:
 Harbour Conseils (SAS)
Director of:
 Geodis (until June 25, 2013)
 Geodis Holding Italia (until June 28, 2013)
 Erwewa Holding (until July 23, 2013)
 Société d’Edition de Canal Plus
 Transports Bernis
 Transport et Logistique Partenaires (until June 25, 2013)
 Société de Transports de Véhicules Automobiles – STVA (until June 25, 2013)
Member of the Investment Committee
 Arkea Capital Partenaire
Advisor to the Chairman of SNCF
Chairman and Chief Executive Officer of:
 Geodis
 Financière Erwewa SA (Switzerland)
Chairman of:
 Geodis Freight Forwarding (SAS)
 Transport Ferroviaire Holding
 Société de Transports de Véhicules Automobiles – STVA
 Société de Transports de Véhicules Automobiles – STVA
Director of:
 Transports Bernis
Member of the Managing Board:
 Geodis Freight Forwarding (SAS)
Chairman of the Human Resources Committee:
***
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Pascal Castres Saint-Martin, director and Chairman of Fimalac’s Selection, Nominations and Remunerations
Committee
Born on April 12, 1936; aged 78
Pascal Castres Saint-Martin is a graduate of the HEC business school.
Between 1962 and 1979, he held various management positions with Banque Générale Industrielle La Hénin
(renamed Banque Indosuez).
In 1979, he joined L’Oréal as Legal Director. He subsequently held the positions of Chief Financial Officer
and General Counsel, Vice-President responsible for General Management and Administration, and deputy
Chief Executive Officer. He retired in 1999.
Vice-Chairman of the Supervisory Board of:
Director of:
 Fitch Ratings Ltd
***
David Dautresme, director and member of the Audit Committee
Born on January 5, 1934; aged 80
1958-1960 :
1960-1962 :
1962-1966 :
1966-1967 :
1967-1968 :
1968-1982 :
1982-1986 :
1986-2000 :
2001-2008 :
2006-2008 :
Since 2001:
Officer in charge of Algerian Affairs
Student at Ecole Nationale d'Administration
Auditor, then Advisor with the Cour des Comptes (National Audit Office)
Controller, Caisse des Dépôts et Consignations
Member of the staff of Michel Debré, Minister of the Economy and Finance
Under Director, Deputy Director, Director, deputy Chief Executive Officer, Crédit
Lyonnais
Chairman and Chief Executive Officer, Crédit du Nord
Managing Partner, Lazard Frères et Cie
Senior Advisor, Lazard Frères et Cie
Senior Advisor, Barclays Capital France
Legal Manager, DD Finance
179
Legal Manager of:
 DD Finance
Member of the Comité d’Expertise Financière des Engagements Nucléaires (CEFEN)
Member of the Investment Committee of EDF Invest
Chairman of:
 Parande Développement (Euris Group)
Vice-Chairman of the Board of Directors and Chairman of the Audit Committee of:
 Club Méditerranée*
* listed company
 Club Mediterranée
Chairman of:
 Crédit Agricole Lazard Financial Products Ltd (UK)
Director of:
 AXA Investment Managers
 Casino
 Immobilière Marseillaise
 Rue Impériale
 AXA
 Casino SA
 Club Mediterranée
Non-voting director of:
 Eurazeo
 Lazard Frères Banque
Permanent representative of Lazard SA on the Board and subsequently director of:
 Lazard Frères Banque
Managing Partner of:
 Lazard Frères
 Lazard Frères & Cie
 Maison Lazard & Cie
 Parténa
Chairman of the Audit Committee of:
 AXA
***
180
Eléonore Ladreit de Lacharrière, director
Executive Officer of the Culture & Diversité Foundation
Born on October 12, 1979; aged 34
First elected: February 9, 2010
Recommended for re-election when her current term expires at the June 17, 2014 Annual Shareholders’
Meeting
A graduate of Paris Dauphine University and ESSEC business school, Eléonore Ladreit de Lacharrière began
her career in India working for an NGO specialized in micro-credit programs for the poor. Since returning to
France, she has headed Fimalac’s Culture & Diversité Foundation, which was created in 2006 by Marc Ladreit
de Lacharrière to set up cultural programs that foster social integration and equal opportunity for children
attending schools in disadvantaged neighborhoods.
Member of the Management Board of:
Executive Officer of:
 Culture & Diversité Foundation
Chairman of:
 Musée Rodin
Director of:
 Centre Français des Fonds et des Fondations
 Fondation Kenza
 Fondation Léopold Bellan
 Fonds Philanthropie
Permanent representative of Groupe Marc de Lacharrière on the Board of:
 Fimalac
Director of:
 Fimalac Développement (Luxembourg)
Eléonore Ladreit de Lacharrière is the daughter of Marc Ladreit de Lacharrière.
***
181
Jérémie Ladreit de Lacharrière, director
Born on June 25, 1977; aged 36
Recommended for re-election when his current term expires at the June 17, 2014 Annual Shareholders’
Meeting
After graduating from Paris Dauphine University and the EPITA Graduate School of Computer Science,
Jérémie Ladreit de Lacharrière joined Microsoft in 2000 as Technical Account Manager in charge of
integrating partner systems into the MSN Shopping platform. In 2003, he was appointed Technical Products
Manager for MSN and, in 2006, he joined the International Products team to head the Windows Live project.
He became Vice President at Vega in 2011.
Member of the Management Board of:
Permanent representative of Groupe Marc de Lacharrière on the Board of Directors of:
 Vega
Co-manager of:
 Pôle Nord Evènements
Director of:
 Looneo
 Maxichèque
Jérémie Ladreit de Lacharrière is the son of Marc Ladreit de Lacharrière.
***
Philippe Lagayette, senior independent director, member of the Audit Committee and the Selection,
Nominations and Remunerations Committee
Born on June 16, 1943; aged 70
First elected: May 23, 2003
182
Philippe Lagayette is a graduate of Ecole Polytechnique and Ecole Nationale d’Administration.
1970:
French civil servant (Inspection Générale des Finances)
1974:
Member of the Treasury department of the French Ministry of the Economy and Finance
1980:
Under Director in the French Treasury Department
1981:
Director in the staff of the French Minister of the Economy and Finance
1984:
Deputy Governor of Banque de France
1992-1997:
Chief Executive Officer of Caisse des Dépôts et Consignations
From July 20, 1998 to August 31, 2008, Philippe Lagayette ran JP Morgan’s operations in France, as Chairman
and Chief Executive Officer of JP Morgan et Cie SA, the French subsidiary of the JP Morgan Chase Group.
From September 1, 2008 to January 31, 2010, he was Vice-Chairman of JP Morgan for the Europe/Middle
East/Africa (EMEA) region.
He is Chairman of Institut des Hautes Etudes Scientifiques (research in mathematics and theoretical physics),
the Fondation de Coopération Scientifique pour la Recherche sur la Maladie d’Alzheimer (a French
Alzheimer’s research foundation) and the Fondation de France.
Senior Advisor:
 Barclays Capital (France)
Chairman of:
 PL Conseils
Director of:
 Kering (ex PPR)*
 Renault*
* listed companies
Positions held in non-profit organizations
Chairman of:
 Fondation de France
 Institut des Hautes Etudes Scientifiques
 Fondation de Coopération Scientifique pour la Recherche sur la Maladie d’Alzheimer et les Maladies
Apparentées
Chairman of:
 French American Foundation
 JP Morgan France
Vice Chairman of:
 Barclays Capital (France)
Vice Chairman of:
 JP Morgan for the Europe/Middle East/Africa region
Director of:
 JP Morgan & Cie SA
183
Thierry Moulonguet, director and member of the Selection, Nominations and Remunerations Committee
Born on February 27, 1951: aged 63
Meeting
Thierry Moulonguet is a graduate of Institut d’Etudes Politiques de Paris (IEP) and of Ecole Nationale
d’Administration (ENA) (class of 1976).
Between 1976 and 1979, he worked in the Budget department of the French Ministry of the Economy and
Finance.
From 1979 to 1981, he served in the Aquitaine regional government’s economic development unit.
Returning to the Ministry of the Economy and Finance from 1981 to 1986, he worked in the Treasury
department’s enterprise financing unit before heading the multilateral development assistance unit.
He then joined the Commission Nationale de la Communication et des Libertés in 1986, where he headed the
economic and financial analysis department until 1987.
Between 1988 and 1990, he served as chief of staff for Bernard Kouchner, France’s Secretary of State for
Humanitarian Action at the time.
Renault, 1991-1999
 Vice President, Group Financial Relations, 1991-1996
 Vice President, Capital Expenditures Controller, 1996-1999
Nissan (Tokyo), 1999-2003
 Executive Vice President, Chief Financial Officer, member of the Executive Committee and the Board
of Directors
Renault, January 2004-April 2011
 Executive Vice President and Chief Financial Officer, also in charge of Information Systems from
2004 to 2006 and of the Regional Management Committee for the Americas from 2006 to 2008
 Member of the Executive Committee
 Member of the Boards of Directors of RCI Banque and Renault Retail Group
 Chairman of the Nominations Committee of Volvo AB
 Revue des Deux Mondes
 Webedia
Director of:
 Fimalac Développement
 Fitch Ratings Ltd
 Fitch Group, Inc.
 Groupe Lucien Barriere
 HSBC France
 HSBC Europe
 Valeo
184
Director of:
 Avtovaz
 RCI Banque
 Renault Retail Group
 Ssangyong
Executive Vice President and Chief Financial Officer of:
 Renault
Legal Manager of:
 Conseil TM (now dissolved)
Chairman of the Nominations Committee of Volvo AB
***
Jean-Charles Naouri, director and member of the Selection, Nominations and Remunerations Committee
Chairman of Euris – Chairman and Chief Executive Officer of Casino, Guichard-Perrachon
Business address: 83, rue du Faubourg Saint Honoré, 75008 Paris, France
Born on March 8, 1949; aged 65
Meeting
Jean-Charles Naouri is a graduate of Ecole Normale Supérieure (science major) and Ecole Nationale
d’Administration. He also studied at Harvard University. He began his career with the French Treasury
Department, as Inspecteur des Finances. In 1982 he was appointed director in the staff of the French Minister
of Social Affairs and National Solidarity and in 1984 took on the post of director in the staff of the French
Minister of the Economy, Finance and the Budget. In 1987, he created Euris, which became the controlling
shareholder of Rallye in 1991 and Casino in 1998. Jean-Charles Naouri has been Chairman and Chief
Executive Officer of Casino since March 2005.
Chairman of:
 Euris (SAS)
 Casino, Guichard Perrachon*
* listed company
Chairman and Chief Executive Officer, then Chairman of the Supervisory Board of:
 Monoprix
185
 Companhia Brasileira de Distribuicao (CBD)*
 Rallye*
 Wilkes Participaçoes
* listed companies
 Monoprix
Member of the Advisory Committee of:
 Banque de France
Chairman/Honorary Chairman/Vice-Chairman of the following philanthropic organizations:
 Promotion des Talents (Chairman)
 Fondation Euris (Chairman)
 Institut d'Expertise et de Prospective de l'Ecole Normale Supérieure (Honorary Chairman and director)
 Fondation Casino (Vice-Chairman)
 Finatis SA
Director of:
 Natixis*
* listed company
 Natixis*
* listed company
Legal Manager of:
 SCI Penthièvre Seine
 SCI Penthièvre Neuilly
Vice Chairman of:
 Fondation Euris
Jean-Charles Naouri is Chairman and Chief Executive Officer of Casino, a company rated by Fitch Ratings.
***
Etienne Pflimlin, director
Chairman of Crédit Mutuel until October 14, 2010
Business address: 88/90, rue Cardinet, 75017 Paris, France
Born on October 16, 1941; aged 72
Meeting
186
A graduate of Ecole Polytechnique and Ecole Nationale d’Administration, honorary advisor to the Cour des
Comptes (National Audit Office), Etienne Pflimlin is Honorary Chairman of Crédit Mutuel Centre Est Europe
and Banque Fédérative du Crédit Mutuel à Strasbourg and Honorary National Chairman of Crédit Mutuel.
 Banque Fédérative du Crédit Mutuel
 Caisse Centrale du Crédit Mutuel
 Caisse Fédérale de Crédit Mutuel
 Confédération Nationale du Crédit Mutuel
 Fédération du Crédit Mutuel Centre Est Europe
 Société d’Etudes et de Réalisation pour les Equipements Collectifs – Soderec
Chairman of:
 Le Monde Entreprises
Honorary Chairman and director of:
 Caisse de Crédit Mutuel Strasbourg Esplanade
 Editions Coprur
 Le Monde et Partenaires Associés
 Crédit Industriel et Commercial
 Société Alsacienne de Publications “L’Alsace”
Director of:
 Assurances du Crédit Mutuel Vie et IARD
 Assurances du Crédit Mutuel Vie-SFM
 Financière du Crédit Mutuel
 Foncière ACM
 EBRA
 Groupe des Assurances du Crédit Mutuel
 Société Française d’Edition de Journaux et d’Imprimés Commerciaux “L’Alsace”
 Le Monde SA
 Société Editrice du Monde
Permanent representative of Caisse Centrale du Crédit Mutuel on the Board of:
 Crédit Mutuel CIC Asset Management
187
Permanent representative of Banque Fédérative du Crédit Mutuel on the Board of:
 Crédit Mutuel Finance (renamed CM-CIC AM)
Permanent representative of Fédération du Crédit Mutuel Centre Est Europe on the Boards of:
 Euro Information
 Sofedis
Permanent representative of CIC on the Boards of:
 Banque Scalbert Dupont
 CIC Est
 Crédit Industriel de l’Ouest
 Crédit Industriel d’Alsace et de Lorraine
 Crédit Industriel de Normandie
 Société Bordelaise de CIC
Member of the Management Committee of:
 EBRA
***
Bernard Pierre, director and Chairman of the Audit Committee
Chairman of the Supervisory Board of Fremapi
Business address: 28/30, rue Fernand Pelloutier, 92110 Clichy, France
Born on January 9, 1939; aged 75
Re-elected: June 11, 2013
After graduating from Ecole Polytechnique, Bernard Pierre began his career with the Direction Technique des
Armements Terrestres, the government army weapons development and manufacturing agency, where he held
positions in the areas of both engineering and manufacturing.
In 1973, he joined the Alcatel-Alsthom Group where he held management positions in various subsidiaries,
including Chairman and CEO of Saft (batteries) and Alcatel Câbles (underground and underwater power and
telecommunications cables).
He subsequently joined the Group management team, with responsibility for technical, industrial and
international operations.
He left Alcatel-Alsthom in 1996 to become Chairman and CEO of the Franco-American joint venture
Engelhard-Clal.
 Semp SA (Spain)
 Fremapi
188
Director of:
 Holdec MP
 UGE
 CETH 2
Chairman of:
 Platecxis SA
 Orbitec
Director of:
 Orbitec
 Platecxis (Spain)
 SPTI SA
Bernard Pierre is the first cousin of Marc Ladreit de Lacharrière, Fimalac’s Chairman and Chief Executive
Officer.
***
Thomas Piquemal, director and member of the Audit Committee
Group Senior Executive Vice President, Finance for EDF
Business address: 22-30, avenue de Wagram, 75008 Paris, France
Born on May 13, 1969; aged 44
Meeting
A graduate of ESSEC Business School, Thomas Piquemal started his career in 1991 at accounting firm Arthur
Andersen. In 1995, he joined the Mergers and Acquisitions Department of Lazard Frères, becoming a
Managing Partner of the bank five years later. At the end of 2008, he took on responsibility for the strategic
partnership between Lazard and the US-based investment fund Apollo. On January 19, 2009, he joined Veolia
Environnement as Senior Executive Vice President, Finance, and member of the Executive Committee. In
February 2010, he joined EDF as Group Senior Executive Vice President, Finance.
Group Senior Executive Vice President, Finance of:
 EDF*
* listed company
189
Director of:
 Dalkia International
 EDF Energy Holdings Ltd
 EDF Energies Nouvelles
 EDF International
 Edison SpA
 EDF Trading
 Dalkia SAS
 ERDF
 RTE EDF Transport
Chairman of:
 VEES
 VE Service Ré
 Veolia Environnement Informations et Technologies
Member of:
 LAZ-MD Holdings LLC
 LFCM Holdings LLC
Director of:
 EDF Energies Nouvelles
 EDF Energy UK
 EDF Trading Ltd
 Transalpina di Energia
 Veolia Propreté
 Veolia Transport
 Veolia PP Finance
 Veetra
 Veolia Environnement North America Operations
 Veolia Environmental Services UK
 Veolia Environnement UK
 Veolia Environmental Services Holdings
 A&B de Dalkia
 Dalkia France
 Dalkia SAS
 EnBW AG
 Eolfi
 Compagnie Générale des Eaux – Veolia Eau
Chief Operating Officer (United States) of:
 EDF International
190
René Barbier de La Serre, non-voting director
Business address: 47, rue du Faubourg Saint Honoré, 75008 Paris, France
Born on July 3, 1940; aged 73
René Barbier de la Serre is a graduate of Ecole Polytechnique, Manufactures de l’Etat engineering school and
Institut d’Etudes Politiques de Paris (IEP). He began his career in 1963 with Banque de l’Union Européenne,
first as an advisor and then as deputy director . In 1973, he moved to Crédit Commercial de France, where he
held a variety of positions including Vice-Chairman and Chief Executive Officer, Financial Services (19931999) and Advisor to the Chairman (1999-2000). During the same period, he was also Chairman of Conseil
des Bourses de Valeurs (1994-1996) and then of Conseil des Marchés Financiers (1996-1998), the French
securities regulator.
 Compagnie Financière Edmond de Rothschild Banque
Director of:
 Edmond de Rothschild SA
Director of:
 Aluthea SAS
 Edmond de Rothschild Holding (Switzerland)
Director of:
 Nord Est
 PPR
 Sanofi-Aventis
Chief Executive Officer of:
 Harwanne Compagnie de Participations Industrielles et Financières SA (Switzerland)
 Edmond de Rothschild Corporate Finance
 Schneider Electric SA
Member of the Supervisory Committee of:
 Financière Vivaldi
***
191
Henri Lachmann, non-voting director
Chairman of the Supervisory Board of Schneider Electric SA
Business address: 35, rue Joseph Monier, 92500 Rueil Malmaison, France
Born on September 13, 1938; aged 75
First elected: December 3, 2002
Graduate of Ecole des Hautes Etudes Commerciales (1961)
French chartered accountant
1963 :
Auditor then Audit Manager, Arthur Andersen
1970 :
Director, Business Plans and Budgets, then Chief Executive Officer, Compagnie
Industrielle et Financière de Pompey
1976 :
Chief Operating Officer of Forges de Strasbourg, a subsidiary of Pompey
1983-1998 :
Chairman and Chief Executive Officer of Forges de Strasbourg and Chief Operating
Officer of Pompey
1999 :
Chairman and Chief Executive Officer of Schneider Electric SA
Since 2006:
Chairman of the Supervisory Board of Schneider Electric SA
Vice-Chairman of the Board of Directors and lead director of:
 Schneider Electric SA*
* listed company
 The Marie Lannelongue Surgical Center
Vice-Chairman and Treasurer of:
 Institut Montaigne
Director of:
 Carmat
 Planet Finance
 Culture & Diversité Foundation
 Fondation Entreprendre
 Groupe Norbert Dentressangle*
 Vivendi*
* listed company
Chairman of Institut Télémaque
 Schneider Electric SA*
* listed company
192
Director of:
 Mutuelles AXA
 Ansa
 AXA
President of the Civil Law Initiative (Fondation pour le droit continental)
Member of the Conseil des Prélèvements Obligatoires
Member of the Steering Committee of Institut de l’Entreprise
***
Groupe Marc de Lacharrière, director
A joint-stock company (société anonyme) with a Management Board and a Supervisory Board
Address: 11 bis, rue Casimir Périer, 75007 Paris, France
Date of incorporation: February 6, 1985
Number of shares held at December 31, 2013: 22,881,193
Groupe Marc de Lacharrière is a holding and management company owned and controlled by Marc Ladreit de
Lacharrière.
***
To the best of the Company’s knowledge, in the last five years, none of the current members of the Board of
Directors has been:
 Convicted of any fraudulent offences.
 Associated with any bankruptcies, receiverships or liquidations.
 Subject to any official public incrimination and/or sanction by statutory or regulatory authorities
(including designated professional bodies).
 Disqualified by a court from acting as a member of the administrative, management or supervisory
bodies of an issuer or from acting in the management or conduct of the affairs of any issuer.
As far as the Company is aware, other than as explained in this section and in the “Directors’ interests” section
below, there are no:
 Conflicts of interests between the duties to Fimalac of the members of the Board of Directors and their
private interests and/or other duties.
 Service contracts between any member of the Board of Directors and Fimalac or any of its subsidiaries
providing for the payment of termination benefits.
193
7.4. –
DIRECTORS' INTERESTS
7.4.1. – DIRECTORS’ INDIVIDUAL COMPENSATION PACKAGES
Summary of compensation paid and stock options and performance shares granted to Marc Ladreit de
Lacharrière, sole executive director of Fimalac
1) Compensation paid/due in France (Fimalac) – 2013
Marc Ladreit de Lacharrière’s compensation package is determined by the Board of Directors, based on the
recommendation of the Selection, Nominations and Remunerations Committee. Mr. Ladreit de Lacharrière is
not a member of this Committee and does not take part in the Board’s vote on his compensation package.
(i) Retainer
For a number of years, Mr. Ladreit de Lacharrière was paid an annual retainer of €1,300,000 by Fimalac.
However, in 2012 he asked the Selection, Nominations and Remunerations Committee to reduce this amount
by 30% to €910,000 per year, effective February 1, 2012. At his request, the same reduction was applied in
2013.
In addition, since February 1, 2012, only half of this reduced amount (€455,000 per year) represents a retainer
based on the usual definition. Payment of the other half (€455,000 per year) is deferred for three years and is
contingent upon Fimalac meeting the three-year average growth target for adjusted recurring operating profit
set by the Board. By definition, the deferred contingent compensation for 2012 had not yet vested as of end2013. The same rule applied in 2013 at Mr. Ladreit de Lacharrière’s request.
Consequently, the retainer paid to Marc Ladreit de Lacharrière in 2013 by Fimalac amounted to €455,000.
(ii) Long-term incentive
Since 2012, Marc Ladreit de Lacharrière may also receive a long-term incentive based on average growth in
adjusted recurring operating profit over three years. Payment of the incentive is deferred to the end of this
three-year period.
Mr. Ladreit de Lacharrière did not receive any long-term incentive for 2013 because the performance
measurement period was still in progress at the year-end and the incentive is not payable until the end of that
period.
As Chairman of Fitch Group and of its Strategy Committee, Marc Ladreit de Lacharrière is paid a retainer and
a bonus, in line with local market practices.
The bonus is based on Fitch Group's operating results. It rose sharply in 2013, following the strong 22.2% likefor-like growth in Fitch Group’s EBITDA.
Senior executive compensation proposals are submitted in the first instance to the Fitch Group Remunerations
and Nominations Committee chaired by Frank Bennack, Executive Vice-Chairman of Hearst Corporation, and
are then presented to the Board of Directors of Fitch Group for approval. Mr. Ladreit de Lacharrière does not
take part in either the Committee’s discussion or the Board’s vote on his compensation package.
194
The compensation package approved by the Board of Fitch Group is then referred up to the Fimalac Selection,
Mr Ladreit de Lacharrière does not take part in the vote.
(i) Retainer
The annual retainer paid to Marc Ladreit de la Charrière by Fitch Group has amounted to $500,000 since 2001.
(ii) Bonus
As Chairman of Fitch Group and of its Strategy Committee, Marc Ladreit de Lacharrière receives a bonus
based on year-on-year growth in Fitch Group’s consolidated EBITDA. This performance criterion has
remained unchanged since the bonus system was introduced in 2001.
The bonus payable to Marc Ladreit de Lacharrière for 2013, calculated according to the above criteria, was set
at $2,900,000 (2012: $2,000,000).
3) Other information - 2013
(i) Other compensation
In 2013, Marc Ladreit de Lacharrière received from Fimalac in France €31,000 in directors’ fees and benefits
in kind worth €41,314.
He also received a fixed housing allowance from Fitch, in the amount of $72,000 (unchanged from 2012).
(ii) March 2013 share grants
In view of Marc Ladreit de Lacharrière's role in the Group's strong performance during the fiscal year ended
December 31, 2012, at the Board of Directors’ meeting held on March 26, 2013 the Selection, Nominations
and Remunerations Committee recommended that Marc Ladreit de Lacharrière be granted 20,000 free Fimalac
shares.
The shares are subject to a three-year vesting period as from March 26, 2013, followed by a three-year lock-up.
No further share grants have been made in respect of 2013.
195
Stock options granted by Fimalac to Marc Ladreit de Lacharrière
2011 Plan - Purchase options
February 4, 2011
Date of Shareholders' Meeting
Date of Board Meeting
February 4, 2011
Number of options granted,
200,250
of which to Marc Ladreit de Lacharrière
8,000
Exercise price
Exercise terms
Options exercised in 2013
Options cancelled in 2013
Options outstanding at December 31, 2013
February 4, 2011
February 4, 2016
€31.95
In 3 graduated tranches
0
0
80,000
Pension benefits
At its meeting of November 25, 1982, the Board of Directors approved a top hat pension plan for Fimalac’s
executives, including executive directors. This plan was amended on December 3, 2002.
The purpose of the plan is to guarantee eligible executives (i.e. mainly, executives who have completed at least
ten years’ service) an annual pension of between 30% and 55% of their average annual compensation for their
final three years before retirement. The amount of the pension paid under the plan, less statutory pension
benefits, may not exceed six times the annual ceiling set by the French social security authorities.
Marc Ladreit de Lacharrière became entitled to pension benefits on February 1, 2012 under both the statutory
and top-hat plans.
Stock options granted during the year
None.
Stock options exercised during the year
None
Performance shares granted during the year
None.
Performance shares that became available during the year
None.
Relations between the principal shareholder and Fimalac
The agreement with Groupe Marc de Lacharrière authorizing the Company to use the Fimalac name remained
in force in 2013. The Fimalac name is owned by Marc Ladreit de Lacharrière. As in 2012, no license fee was
paid under this agreement.
196
Groupe Marc de Lacharrière contributes to the Group's central costs which are paid by the FCBS GIE
intercompany partnership, as explained below. Groupe Marc de Lacharrière also plays a role in determining
the Group’s development strategy and related operations. No management fees were paid for these services in
2013 by either Fimalac or its subsidiaries.
197
Changes in the number of Fimalac shares pledged as collateral for bank loans by Groupe Marc de Lacharrière are as follows:
Name of registered shareholder
Beneficiary
Condition for releasing the
pledge
Number of issuer's
shares pledged
% of issuer's share
capital pledged
Pledge start date
Pledge expiry date
December 21, 2012
July 28, 2015
Repayment of the loan
2,007,000
6.96%
Groupe Marc de Lacharrière
Banque Fédérative du
Crédit Mutuel*
CA-CIB
July 26, 2012
July 31, 2013
480,923
1.67%
BNP Paribas
July 24, 2012
July 31, 2015
1,204,239
4.18%
Société Générale
July 15, 2010
July 15, 2014
877,420
3.04%
4,569,582
15.85%
Number of issuer's
shares pledged
% of issuer's share
capital pledged
Total
Name of registered shareholder
Beneficiary
Condition for releasing the
pledge
Pledge start date
Pledge expiry date
December 21, 2012
July 28, 2015
2,007,000
6.96%
Banque Fédérative du
Crédit Mutuel (*)
CA-CIB
July 25, 2013
July 25, 2015
795,756
2.76%
BNP Paribas
July 24, 2012
July 31, 2014
1,204,239
4.18%
Société Générale
July 15, 2010
July 15, 2015
877,420
3.04%
4,884,415
16.94%
Total
(*)
Registered shares held by an authorized custodian.
Pledges of shares as collateral for bank loans will be released only when the loans have been repaid in full.
Information on any employment contracts, supplementary pension plans or commitments made by the
Company on behalf of executive directors
Employment
contract
Yes
Supplementary
pension plan
No
Yes
No
Executive Director
X
X
Compensation for
loss of office
Yes
N
o
Non-compete
indemnity
Yes
X
No
X
***
Véronique Morali, director
Compensation and benefits
Véronique Morali, a director of Fimalac, receives compensation from Fimalac and its subsidiaries, and also
from Fitch Group in the United States.
1) Compensation paid/due by Fimalac and its subsidiaries – 2013
Véronique Morali is Chairman of the Managing Board of Webedia and Chairman of Fimalac Développement.
As explained earlier in this section, her compensation package is determined by the Fimalac Board of
Directors, based on the recommendation of the Selection, Nominations and Remunerations Committee. She is
not a member of the Selection, Nominations and Remunerations Committee and does not participate in the
Board’s vote on her compensation.
(i) Retainers
In France, Véronique Morali was paid a €51,739 retainer by Webedia for the period from July 26, 2013,
corresponding to an annual retainer of €120,000.
She also received €168,257 from FCBS GIE, following a reduction in the annual retainer to €100,000 from
€220,000 previously, with effect from July 26, 2013.
In all, retainers paid to Véronique Morali by Fimalac and its subsidiaries in 2013 totaled €219,996.
(ii) Bonus
Véronique Morali did not receive any bonus in 2013.
In 2013, Véronique Morali received directors’ fees of €100,000 from Fimalac Développement and €31,000
from Fimalac.
She also received benefits in kind valued at €4,725.
199
The Supervisory Board of Webedia awarded to Véronique Morali, in her capacity as Chairman of the
company’s Managing Board, 7,750 “BSPCE” warrants exercisable for 7,750 shares at a price of €401.30, plus
a further 2,600 “BSPCE” warrants exercisable for 2,600 shares at the same price of €401.30.
Véronique Morali is Vice Chairman of Fitch Group.
In this capacity, she receives a retainer and a bonus that are submitted in the first instance to the Fitch Group
Remunerations and Nominations Committee, and are then presented to the Board of Directors of Fitch Group
for approval. Ms. Morali does not take part in the Board’s vote.
The compensation package approved by the Board of Fitch Group is referred up to the Fimalac Selection,
Ms. Morali does not take part in the vote.
(i) Retainer
In 2013, Véronique Morali was paid an annual retainer of $175,000 by Fitch Group, unchanged for several
years.
(ii) Bonus
Since 2007, Véronique Morali has been eligible for a performance-related bonus based on year-on-year growth
in Fitch Group’s EBITDA. EBITDA rose sharply in 2013 and her bonus for that year therefore increased to
$620,000 from $450,000 in 2012.
In 2013, Véronique Morali also received an annual housing allowance from Fitch Group of $36,000,
unchanged from prior years.
Jérémie Ladreit de Lacharrière, director
As a member of the Fimalac Board of directors, Jérémie Ladreit de Lacharrière received directors’ fees of
€31,000 for 2013. He was also paid gross compensation of €18,000 by Pôle Nord Evénements.
Eléonore Ladreit de Lacharrière, director
For 2013, Eléonore Ladreit de Lacharrière received gross compensation of €13,775 paid by the FCBS GIE
intercompany partnership. In addition, as a member of the Fimalac Board of directors, she received directors’
fees of €31,000 for 2013.
Pascal Castres Saint-Martin, independent director
As a member of the Fimalac Board of directors, Pascal Castres Saint-Martin received directors’ fees of
€34,000 for 2013.
200
Thierry Moulonguet, independent director
As a member of their respective Board of Directors, Thierry Moulonguet was paid directors’ fees of €32,500
by Fimalac, €100,000 by Fimalac Développement and €110,000 by Fitch.
Stock options granted during the year
None.
Stock options exercised during the year
None.
Free shares granted during the year
At its meeting of March 26, 2013 the Board of Directors granted 21,600 free shares to eight Group executives
and 20,000 free shares to Fimalac's Chairman and Chief Executive Officer.
No further share grants have been made in respect of 2013.
Free shares that became available during the year
None.
201
Directors’ fees
Fixed
portion (1)
Variable portion
Board of
Directors
Véronique Morali
Pierre Blayau
Pascal Castres Saint-Martin
David Dautresme
Jérémie Ladreit de Lacharrière
Eléonore Ladreit de Lacharrière
Philippe Lagayette
Thierry Moulonguet
Jean-Charles Naouri
Etienne Pflimlin
Bernard Pierre
Thomas Piquemal
René Barbier de La Serre
Henri Lachmann
Groupe Marc de Lacharrière (represented by
Eléonore Ladreit de Lacharrière)
Total
(1)
(2)
(3)
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
7,333
7,333
20,000
20,000
20,000
20,000
20,000
20,000
20,000
20,000
20,000
0
20,000
20,000
20,000
8,889
13,333
11,000
20,000
168,666
282,222
Decided at the Board Meeting of June 11, 2013 and paid in June 2013.
Decided at the Board Meeting of April 3, 2014 and paid in April 2014.
Selection, Nominations and Remunerations Committee.
Audit Committee
SNR Committee
(3)
1,500
3,000
3,000
3,000
1,500
1,500
3,000
3,000
13,500
6,000
Total fees
Special fees
Total variable
portion (2)
20,000
20,000
21,500
23,000
23,000
20,000
20,000
23,000
21,500
1,500
20,000
23,000
23,000
8,889
13,333
31,000
31,000
32,500
34,000
34,000
31,000
31,000
34,000
32,500
12,500
31,000
34,000
34,000
16,222
20,666
20,000
31,000
301,722
470,388
7.4.2. – FUNDING OF CENTRAL SERVICES BY GROUP COMPANIES
An intercompany partnership operates within the Fimalac Group, of which a number of Group companies are
members.
The partnership exists to fund the Group’s central services and provide the resources required to facilitate,
develop and improve the business and results of its members. To this end, the partnership provides services to
Group companies in the areas of administration, finance, accounting, legal affairs, budget conntrol and internal
and external communications as well as acting in an advisory capacity.
The partnership allocates expenses among Group companies at cost, in accordance with the guidelines
established in internal rules accepted by all the companies concerned.
Although this organization is not governed by article L.225-38 (related party agreements) of the French
Commercial Code, Fimalac has elected to include its membership of the intercompany partnership in the scope
of agreements governed by this article, in accordance with the principles of best corporate governance practice.
In 2013, contributions by Fimalac to the intercompany partnership amounted to €4,486,419 excluding VAT.
The cost allocation key used to prepare the 2014 budget was determined by applying the rules set out in the
appendix to the intercompany partnership’s internal rules.
On that basis, Fimalac’s estimated contribution for 2014 will be approximately €3.9 million, plus VAT. This
amount may be adjusted to take into account any amendments to the budget or any changes in the membership
of the intercompany partnership.
7.4.3. – CASH POOLING AGREEMENT
Fimalac operates a cash pooling system on behalf of the majority of Group companies, in the best interests of
all participating entities.
Under this system, Fimalac makes advances to subsidiaries to meet their short-term cash needs, while
subsidiaries with surplus cash loan the amounts in question to Fimalac. Fimalac also negotiates all short-term
bank loans and overdraft facilities and invests surplus cash in interest-bearing instruments.
Although this organization is not governed by article L.225-38 (related party agreements) of the French
Commercial Code, Fimalac has elected to include the cash pooling agreement in the scope of agreements
governed by this article, in accordance with the principles of best corporate governance practice.
203
Outstanding balances under the cash pooling agreement at December 31, 2013 were as follows:
Borrowings by Fimalac
Lender
Fimalac Information
Fimalac Services Financiers
Financière Boulogne Technologies
Financière Portefoin
Revue des Deux Mondes
SIFMP
Vega
Amount
€0
€71,238,865.48
€33,334,830.24
€71,953,664.19
€68,885.95
€748,235.21
€252.99
Net interest paid
€17.40
€101,560.42
€30,359.09
€66,168.51
€34.57
€703.38
€528.10
£0
£187,240.58
Amount
€21,069,869.67
€249,215.34
€2,624,061.92
€0
€31,870,723.40
€0
€7,655,545.61
Net interest received
€351,967.38
€617.16
€7,907.45
€3,759.59
€0
€648.47
€5,545.61
£110,000,000.00
£1,842,570.36
Fitch Ratings Ltd
Loans by Fimalac
Borrower
Fimalac Développement
Fimalac Information
Financière Allociné
Revue des Deux Mondes
Sefi SNC
Vega
Webedia
North Colonnade
7.4.4. – OTHER AGREEMENTS ENTERED INTO IN PRIOR YEARS AND WHICH REMAINED IN FORCE IN
2013
With Groupe Marc de Lacharrière
The trademark sub-licensing agreement allowing the Company to adopt the corporate name Fimalac remained
in force during 2013.
7.4.5. – AGREEMENTS AUTHORIZED DURING THE YEAR
At its meeting of March 26, 2013, the Board of Directors renewed the authorization granted on November 29,
2011 to purchase up to a total of 1,100,000 Fimalac shares from certain shareholders in small blocks. The
authorization was renewed again, on the same terms, on April 3, 2014.
On September 13, 2013, the Board of Directors decided to authorize Financière Allociné and, as applicable, its
subsidiaries, to join the cash pool set up on September 2, 1999.
7.4.6. – LOANS AND GUARANTEES GRANTED TO DIRECTORS
None.
204
7.5. – LIST OF TRANSACTIONS GOVERNED BY ARTICLE L.621-18-2 OF THE FRENCH MONETARY AND FINANCIAL CODE
Person/entity concerned
Security type
Transaction type
Date of
transaction
On/off market
Unit price (in €)
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Jan. 29, 2013
Mar. 27, 2013
Apr. 30, 2013
May 3, 2013
Jul. 29, 2013
Aug. 6, 2013
Aug. 7, 2013
Aug. 8, 2013
Aug. 9, 2013
Aug. 14, 2013
Sept. 16, 2013
Sept. 17, 2013
Sept. 18, 2013
Sept. 20, 2013
Oct. 30, 2013
Dec. 10, 2013
On market
On market
On market
On market
On market
On market
On market
On market
On market
On market
On market
On market
On market
On market
On market
On market
37.07
40.55
40.50
40.17
40.08
41.00
40.85
41.00
41.00
40.70
40.17
40.47
40.52
40.44
45.25
44.35
Transaction amount
(in €)
25,874.86
134,139.40
22,318.26
43,584.45
20,040.00
41,000.00
35,008.45
9,936.00
19,803.00
40,700.00
65,604.14
40,470.00
7,455.68
85,409.28
81,133.25
17,740.00
7.6. –
EMPLOYEE PROFIT-SHARING PLANS
(See note 5.13 to the consolidated financial statements).
7.6.1. – PROFIT-SHARING AND INCENTIVE BONUS AGREEMENTS
None.
7.6.2. – MANAGEMENT STOCK OPTIONS
Options granted/exercised
Options granted by Fimalac or other Group companies to
the ten employees (other than executive directors) who
received the greatest number of options
Options granted by Fimalac or other Group companies
exercised during the year by the ten employees who
exercised the greatest number of options
Price
€
Plan
31.95
2011
None
300
206
General Information About Fimalac and Its Capital
CHAPITRE 8 GENERAL INFORMATION ABOUT FIMALAC AND ITS
CAPITAL
8.1. –
LEGAL INFORMATION
Company name
The Company’s name is F. Marc de Lacharrière (Fimalac).
Registration particulars
Fimalac is registered with the Paris Companies Registry under number 542 044 136. Its APE (business
identifier code) is 6420Z.
Date of incorporation and term
The Company was incorporated on May 9, 1877. Its term expires on December 31, 2034, unless it is wound up
in advance or its term is extended.
Headquarters
The Company’s headquarters are located at 97 rue de Lille, 75007, Paris, France.
Tel.: +33 (0)1 47 53 61 50.
Legal form and governing law
The Company is a French joint stock company (société anonyme) governed by a Board of Directors. It is
subject to French law, notably the provisions of Book II of the French Commercial Code (Code de Commerce).
Corporate purpose (article 2 of the bylaws)
The purpose of the Company is to conduct any and all industrial, commercial, financial, securities and real
estate operations and any and all service activities.
The Company may also acquire interests in any French or foreign company or venture, by forming any French
or foreign company or venture, by purchasing or subscribing to shares, bonds or other securities and rights of
ownership, by participating in mergers or other business combinations or by any other means.
It may also perform any treasury transactions with related companies, as authorized by the applicable
legislation.
207
Fiscal year (article 32 of the bylaws)
Following shareholder approval at the Annual Shareholders’ Meeting of February 14, 2012, the Company’s
fiscal year begins on January 1 and ends on December 31.
Appropriation of profit (articles 33 and 34 of the bylaws)
The Company’s profit or loss for the year corresponds to net revenue for the year less overheads and all other
expenses, including charges to depreciation, amortization, and provisions.
Five percent of profit for each year is credited to the legal reserve until such time as the legal reserve
represents one-tenth of the capital. Further annual transfers are made on the same basis if the legal reserve falls
to below one-tenth of the capital, whatever the reason.
The following amounts are then deducted from the balance of profit for the year, plus retained earnings
brought forward from the prior year and any reserves to be distributed, in the order indicated:
1)
A non-cumulative first dividend in an amount corresponding to 5% of the paid-up value of shares.
2) Any amounts that the Shareholders’ Meeting decides to appropriate to any extraordinary, general or
special reserves or to carry forward, based on the recommendation of the Board of Directors.
Any balance remaining is distributed to shareholders in the form of an additional dividend.
Cash dividends may be paid by check or bank transfer, or by post-office check or transfer or sent to the
shareholder at his, her or its address recorded in the Company’s register. The Shareholders’ Meeting may offer
shareholders the option of receiving all or part of the final dividend or any interim dividend in the form of
shares, subject to compliance with the law.
Shareholders’ Meetings
Notice of Meeting (article 26 of the bylaws)
Shareholders’ Meetings are called and conduct business in accordance with the law. The meetings are held on
the date and at the time and place indicated in the notice of meeting. They may be held outside the town in
which the Company has its headquarters.
Shareholders’ Meetings may be called verbally and without notice if all the shareholders are present or
represented.
Participation (article 28 of the bylaws)
All shareholders may participate in Shareholders’ Meetings in person or by proxy in accordance with the
conditions laid down by law, provided that they present proof of their identity and ownership of shares, as
follows:
208
1) Ownership of registered shares is evidenced by an entry in the shareholders’ name in the share register kept
by the Company or its registrar.
2) Holders of bearer shares are required to file a certificate issued by the bank or broker that keeps their share
account, in accordance with the applicable regulations, stating that sale of the shares has been blocked up to
the date of the meeting.
These formalities must be completed by midnight (CET) on the third business day preceding the meeting.
To be entitled to participate in Shareholders’ Meetings, shareholders must own or represent by proxy at least
one share fully paid up to the extent called.
Shareholders may give proxy to their spouse or to another shareholder.
Quorum – Voting rights (article 30 of the bylaws)
The quorum is calculated at Ordinary and Extraordinary Shareholders’ Meetings on the basis of all shares that
are issued and outstanding, and at Special Shareholders’ Meetings, on the basis of all the shares in the relevant
class, less any shares stripped of voting rights in application of the law.
Each shareholder has a number of voting rights that is proportionate to the par value of the shares held or
represented by proxy, without limitation.
The following shares carry double voting rights:
a)
All fully paid-up shares registered in the name of the same holder for at least two years.
b)
All bonus shares paid up by capitalizing reserves, profit or additional paid-in capital, that are attributed in
respect of registered shares carrying double voting rights.
Double voting rights are automatically stripped from any registered shares that are converted into bearer shares
or sold. However, registered shares are not stripped of double voting rights and the above-mentioned two-year
qualifying period continues to run following the transfer of shares included in the estate of a deceased
shareholder, or in connection with the settlement of the marital estate, or an inter vivos gift to a spouse or a
relative in the direct line of succession.
Postal votes may be cast in accordance with the provisions of the applicable laws and regulations.
Resolutions are adopted by a straight majority of the votes cast by shareholders present or represented by
proxy at Ordinary Shareholders’ Meetings, and by a two-thirds majority of the votes cast by shareholders
present or represented by proxy at Extraordinary Meetings.
Disclosure thresholds (article 9 of the bylaws)
Any shareholder whose direct or indirect interest increases to above or falls below 2% of the Company’s
capital or voting rights is required to inform the Company within fifteen days. In the case of failure to comply
with these disclosure rules, at the request of one or more shareholders holding at least 2% of the Company’s
capital or voting rights, the undisclosed shares will be stripped of voting rights at all shareholders’ meetings
held within two years of the date on which the omission is rectified. The request and the decision of the
Shareholders’ Meeting must be recorded in the minutes of the meeting.
209
This threshold applies in addition to the legal disclosure thresholds specified in article L.233-7-I of the French
Commercial Code and those specified in article 223-37 of the AMF’s General Rules on the disclosure of net
short positions.
8.2. –
INFORMATION ABOUT THE COMPANY’S CAPITAL
8.2.1. – SHARE CAPITAL AT DECEMBER 31, 2013
The Company’s share capital amounted to €126,852,000 at December 31, 2013, divided into 28,830,000 fully
paid up shares with a par value of €4.40, all in the same class.
8.2.2. – SHARE BUYBACKS
8.2.2.1. - Share buybacks in fiscal 2013
At the Shareholders’ Meeting of June 11, 2013, shareholders authorized the Company to buy back shares
representing up to 10% of its issued and outstanding shares. The maximum purchase price for these shares was
set at €60 and the minimum sale price at €30.
Fimalac shares are covered by a liquidity contract signed between Fimalac and Exane on December 23, 2004
and amended on September 30, 2005. This contract complies with the Code of Ethics drawn up by the French
association of investment firms (AFEI).
At December 31, 2013, Fimalac held a total of 1,937,360 shares, representing 6.72% of its share capital
(including treasury shares held under the liquidity contract). These shares were acquired at a cost of €70.50
million.
At the same date, 237,550 shares were held in treasury for allocation upon exercise of outstanding stock
options or share grants and 1,661,703 were held with a view to being cancelled. The remaining 38,107 shares
were being held under the liquidity contract referred to above.
The following transactions were carried out between January 1, 2013 and December 31, 2013:
Type of transaction
Direct purchases under the liquidity contract
Sales under the liquidity contract
Net sales
Transfers upon exercise of stock options
Net movement for the period
Number of shares
690,809
(104,576)
586,233
(1,550)
584,683
During 2013, shares representing 2.40% of the capital (before cancellations) were bought back at a total cost of
€27.5 million, or €39.82 per share. The total cost of shares sold under the liquidity contract and shares
transferred upon exercise of stock options came to €4.3 million, or €41.01 per share.
The Company did not use any derivative instruments during the year.
210
8.2.2.2. - New share buyback program
At its meeting of April 3, 2014, the Board of Directors decided to ask the Company’s shareholders at the
Annual Shareholders’ Meeting of June 17, 2014 to authorize a new share buyback program. If approved, the
maximum per-share purchase price will be set at €90, and the minimum sale price at €30. This minimum sale
price will not, however, apply to transfers of shares resulting from the exercise of stock options.
The maximum number of shares that could be bought back would be set at 2,883,000, corresponding to 10% of
the Company’s current capital. Based on the maximum purchase price of €90 per share, this would represent a
potential maximum investment of €259,470,000.
The Company undertakes never to hold more than 10% of its own capital either directly or indirectly.
Therefore, assuming that the number of shares held in treasury remains at 1,937,630 until the June 17, 2014
Annual Shareholders’ Meeting (representing 6.72% of the Company’s capital as of December 31, 2013), the
Company would only be able to buy back 945,370 shares (representing 3.28% of the capital as of December
31, 2013). Based on the maximum purchase price of €90, this would represent a maximum potential
investment of €85,083,300.
In accordance with the third paragraph of article L.225-210 of the French Commercial Code, the aggregate
value of shares held in treasury may not exceed the amount of the Company’s reserves, excluding the legal
reserve. The treasury shares reserve carried in the Company’s balance sheet at December 31, 2013, which is
available to finance share buybacks, totaled €46,798,202.22.
Purposes of the share buyback program
The purposes of this new share buyback program are as follows, in declining order of priority:
 To allocate shares upon exercise of stock options, in accordance with article L.225-177 of the French
Commercial Code, and/or to make share grants in accordance with articles L.225-197-1 et seq. of said
Code.
 To maintain a liquid secondary market for the Company’s shares under a liquidity contract signed with
an investment firm that complies with a code of conduct approved by the AMF.
 To cancel the acquired shares, subject to adoption of the fourteenth resolution of the Annual
Shareholders’ Meeting of June 17, 2014 (extraordinary resolution).
 To allocate shares on redemption, conversion, exchange or exercise of share equivalents, in
compliance with the applicable regulations.
 To purchase shares to be held and subsequently remitted as payment in connection with external
growth transactions.
Share buyback procedures
The shares may be acquired by any appropriate method, on the open market or otherwise, including through
block purchases as well as through the use of derivative instruments provided that their use does not lead to
significantly greater price volatility.
Duration of the program
Provided that shareholders adopt the corresponding resolution to be presented at the Annual Shareholders’
Meeting of June 17, 2014, the buybacks may be carried out over a period of eighteen months ending on
December 16, 2015.
211
In accordance with article L.225-209 of the French Commercial Code, shares acquired under this program that
are subsequently cancelled may not represent more than 10% of the total shares issued and outstanding in any
twenty-four month period. All such share cancellations are subject to shareholders’ approval of the
corresponding extraordinary resolution of the Annual Shareholders’ Meeting of June 17, 2014.
8.2.3. – STOCK OPTION PLANS
Fimalac stock options
Date of Shareholders’ Meeting
Date of Board Meeting
Number of options granted
of which:
- to directors and officers
- to the top ten employee grantees
2005 Plan
2006/1 Plan
2006/2 Plan
2008 Plan
2011 Plan
June 7, 2005
December 6,
2005
154,250
June 7, 2005
Feb. 3, 2006
June 7, 2005
Oct. 9, 2006
Feb. 12, 2008
Sept. 23, 2008
Feb. 4, 2011
Feb. 4, 2011
1,000
158,850
3,500
200,250
100,000
50,350
December 6,
2005
December 6,
2010
None
1,000
100,000
52,300
None
3,500
110,000
112,000
Feb. 4, 2011
Feb. 3, 2006
Oct. 9, 2006
Sept. 23, 2008
Feb. 3, 2011
Oct. 9, 2011
Sept. 23, 2013
€58.37
In 4 graduated
tranches
0
0
0
€66.64
In 3 graduated
tranches
0
0
0
€51.21
In 3 graduated
tranches
0
3,500
0
Feb. 4, 2016
Exercise price
Exercise terms
Options exercised in 2013
Options cancelled in 2013
Options outstanding at Dec. 31, 2013
€49.20
In 4 graduated
tranches
0
0
0
€31.95
In 3 graduated
tranches
1,550
0
197,450
8.2.4. – SHARE EQUIVALENTS
None.
8.2.5. – AUTHORIZED, UNISSUED CAPITAL
Authorizations to issue shares and share
equivalents
Issue of stock options
Stock grants
Date of Shareholders’
Meeting
Authorized
Feb. 4, 2011
3.5% of the
capital
Feb. 4, 2011
3.5% of the
capital
Par value
Used
Available at Dec. 31,
2013
None
3.5% of the capital
None
3.5% of the capital
The above authorizations concerning stock options and stock grants expire in April and June 2014
respectively.
212
8.2.6. – CHANGES IN CAPITAL OVER THE LAST FIVE YEARS
Transaction type
At Sept. 30, 2008
Fiscal 2009
Fiscal 2010
Fiscal 2011
2012
2013
8.3. –
Change in share
capital (in €)
Canceled shares
-
Change in number
of shares
(9,948,826.80)
-
(2,261,097)
-
Capital at year-end (in
€)
136,800,826.80
136,800,826.80
126,852,000.00
126,852,000.00
126,852,000.00
126,852,000.00
Number of
shares at yearend
31,091,097
31,091,097
28,830,000
28,830,000
28,830,000
28,830,000
SOURCES AND AMOUNTS OF CASH FLOWS
See the consolidated statement of changes in equity.
8.4. –
OWNERSHIP STRUCTURE
Since 1987 the Company has been authorized by its bylaws to request from Euroclear information about the
identity of holders of bearer shares. The Company performs such checks regularly.
The Company is also informed of the identity of its largest shareholders through a combination of legal
measures and provisions of the bylaws which require shareholders to disclose any increase or reduction in the
number of shares or voting rights held to above or below 2% or any multiple thereof (thresholds specified in
the bylaws) or 5%, 10%, 15%, 20%, 25%, 30%, 33%, 50%, 66%, 90% or 95% (thresholds prescribed by law).
213
Capital and voting rights as of September 30, 2011, December 31, 2012 and December 31, 2013
Shareholder
Marc Ladreit de Lacharrière and family
Fimalac Participations
Silmer
Sub-total – Marc Ladreit de Lacharrière
Fimalac (treasury shares and shares held
under the liquidity contract)
Culture & Diversité Foundation
Public
Net cash and cash equivalents
At December 31, 2013 (2)
Number of
%
%
shares
capital
theoretical voting
rights (1)
1,350
0.01%
0.01%
22,881,193
79.36%
83.91%
227,828
0.79%
0.60%
23,109,996
80.16%
84.52%
%
%
capital
theoretical voting
rights (1)
1,350
0.00
0.01%
22,864,346
79.31%
83.79%
227,828
0.79%
0.60%
23,093,524
80.10%
84.40%
Number of
shares
At September 30, 2011
%
%
capital
theoretical voting
rights (1)
151,350
0.52%
0.30%
22,656,439
78.57%
89.21%
227,828
0.79%
0.91%
23,035,617
79.90%
90.43%
Number of
shares
1,937,360
6.72%
5.12%
1,352,677
4.69%
3.57%
1,188,184
4.12%
-
125,000
3,657,269
0.43%
12.69%
0,33%
10.03%
125,000
4,258,799
0.43%
14.77%
0.33%
11.67%
4,606,199
15.98%
9.57%
28,830,000
100.00%
100.00%
28,830,000
100.00%
100.00%
28,830,000
100.00%
100.00%
(1) Qualifying shareholders are granted double voting rights (see section 8.1 – Quorum – Voting rights).
(2) As of December 31, 2013, there were a total of 35,738,822 exercisable voting rights.
To the best of the Company’s knowledge, no other shareholders own – directly or indirectly, or in concert –
more than 2% of the capital or voting rights. There were no shareholders’ pacts in place at December 31, 2013,
except for the pact signed on March 15, 2006 between Fimalac and Hearst Corporation regarding the latter’s
purchase of a stake in Fitch Group. The pact stipulated the conditions according to which Hearst Corporation
may acquire an interest in Fimalac. Following signature of an addendum to the pact on March 13, 2008, Hearst
Corporation may now hold shares in Fimalac and exercise the voting rights associated with those shares,
without the approval of Marc Ladreit de Lacharrière.
Shareholders acting in concert
Marc Ladreit de Lacharrière and family, Groupe Marc de Lacharrière and Silmer held 80.16% of the
Company’s capital and 84.52% of the theoretical voting rights as of December 31, 2013. The concert results
from the controlling interest held by Marc Ladreit de Lacharrière in Fimalac Participations (from 1992 to July
2010), in Fimalac Participations Sàrl (since July 2010) and in Groupe Marc de Lacharrière (since 1989), which
in turn has had a controlling interest in Silmer since 1990.
Measures to safeguard against the abuse of control
Measures to safeguard against any abuse of control include (i) the application of corporate governance rules
and the Board of Directors’ internal rules, and (ii) the inclusion on the Board of independent directors and nonvoting directors.
Shares held by directors and officers
As of December 31, 2013, Fimalac’s directors and officers held 22,932,345 shares, representing approximately
79.54% of the Company’s capital.
Employee share ownership
To the best of the Company’s knowledge, Fimalac employees held less than 1% of the capital at December 31,
2013.
Liens on registered shares
See “Directors’ interests” in Section 7 above.
Factors that could have an impact on a public tender offer for the Company
The Company has no specific system for preventing a public tender offer for its shares, aside from the practice
of granting double voting rights.
Shareholders’ pacts
Shareholders’ pact concerning Fitch Group
Fimalac, Hearst Corporation and Marc Ladreit de Lacharrière signed a shareholders’ pact (the “Pact”) on
March 15, 2006 upon the sale of 20% of Fitch Group to Hearst Corporation, which was amended on March 13,
2008. Pursuant to the Pact, the parties signed an agreement on July 24, 2009 for the sale of an additional 20%
of Fitch Group to Hearst Corporation, raising Hearst’s interest in the company to 40% and lowering Fimalac’s
to 60%. A further agreement was signed on February 8, 2012, raising Hearst’s interest in Fitch Group to 50%
and, on April 11, 2012, the parties to the Pact signed a second amendment thereto.
The Pact sets out the principles and rules governing the sale of Fitch Group shares, the management of the
company and its subsidiaries and the exercise of certain rights.
215
The Pact’s main principles and rules are outlined in the summary below, which is provided for information
purposes only. Further details are provided in the full, original English-language version of the document,
which is available on Fimalac’s website (www.fimalac.com), in the section entitled “Legal documents”.
Principles and rules applicable to the disposal of shares
The Pact stipulates that Fitch Group shares may be sold only in compliance with its terms and conditions.
The Pact gives each party a right of first refusal on any proposed sales to third parties of Fitch Group shares
representing 30% or 50% of the company’s capital.
In certain situations, the majority shareholder owning at least 50% of Fitch Group’s capital may block the
planned transaction if the potential buyer does not have an adequate capital base to support Fitch Group or is
not considered to be a reputable company.
The Pact includes a tag-along clause and a drag-along clause and describes the conditions under which
minority and majority shareholders may exercise their respective rights.
In addition, the Pact details the rights of shareholders in the event that new shares are issued by the company,
and the conditions under which those rights may be exercised.
Main rules governing the management of the company and the exercise of certain rights
The Pact contains various provisions concerning the composition of the company’s Board of Directors and the
election of its members. It stipulates that the number of seats on the Board held by each shareholder shall
depend on that shareholder’s percent interest in the capital.
The Pact lists the types of decisions requiring the approval of a qualified majority. A “qualified majority” is
defined as a majority of the members of the Board of Directors, including the vote of at least one of the
directors representing the minority shareholder (the “Minority Director”). The Pact specifies that as Fimalac
and Hearst each have a 50% stake in Fitch Group they are each entitled to between three and six seats on the
Board (giving them equal representation).
Decisions requiring approval by a qualified majority include:












Material transactions with any of the company’s shareholders, executive directors or their family members.
Changes in the company’s dividend policy agreed between the parties.
Amendments to the company’s bylaws.
Mergers or other transactions having a material impact on the company or one of its subsidiaries.
The sale or transfer of a substantial portion of the company’s assets.
The voluntary or involuntary liquidation of the company, in accordance with applicable bankruptcy,
restructuring and other relevant laws.
Any recapitalization or restructuring likely to have an adverse effect on the minority shareholder’s interest.
Any significant change in the nature of the company’s business or those of its subsidiaries.
Any issues of equity instruments (with some exceptions).
Any borrowing transactions in excess of a certain percentage of consolidated revenue.
Any acquisition in excess of a certain percentage of consolidated revenue.
Any investment in a new business that is expected to generate start-up losses before delivering a return on
investment.
The Pact stipulates that other types of decisions shall be approved by a simple majority of the directors.
Examples include:
 The adoption and adjustment of the budget.
216
 The distribution of cash or stock dividends.
 Capital expenditure not provided for in the budget.
 The determination and withdrawal of the different types of compensation received by the management of
the company and its subsidiaries.
 The signature of any material contract other than in the ordinary course of business of the company and its
subsidiaries or representing a payment commitment of at least $5 million.
 The issuance of debt in excess of $5 million.
 Any other decision submitted for the Board of Directors’ approval in line with the company’s past practices
or that would normally be submitted to the board of directors of a company incorporated in the State of
Delaware.
The Pact describes the special provisions applicable to certain types of acquisitions as well as the dividend
distribution policy. As long as Hearst and Fimalac respectively hold at least 20% and 3% of Fitch Group, each
year the shareholders agree to distribute free cash flow after tax in an amount that the company has reasonably
determined will not be needed to: (i) meet the operating or capital expenditure needs of the company and its
subsidiaries; (ii) service debt; or (iii) finance planned acquisitions.
Lastly, the Pact stipulates that the company will have a pre-emptive right to acquire any interests offered for
sale to its shareholders in companies operating in the financial services industry, according to certain
conditions.
Shareholders’ pact concerning Groupe Lucien Barrière
Following Fimalac’s investment in Groupe Lucien Barrière, Fimalac and Groupe Desseigne-Barrière, together
holding 100% of the capital, signed an agreement to adopt new bylaws for the company, which is a French
limited liability company (société par actions simplifiée). The new bylaws incorporate management and
governance provisions concerning senior management powers and the creation of various committees of the
Board as well as lock-up, right of first offer, tag-along and other provisions applicable to their respective
shareholdings. The bylaws of Groupe Lucien Barrière can be viewed on the French-language version of
Fimalac’s website, www.fimalac.com, under “Relations Investisseurs”, “Documentations financières et
juridiques”, “Documents juridiques”.
Shareholders’ pact with Société Fermière du Casino Municipal de Cannes (SFCMC)
Following its acquisition of 10% of Société Fermière du Casino “Municipal de Cannes (SFCMC), Fimalac
signed a renewable 10-year shareholders pact with Dominique Desseigne on June 29, 2011. In particular, the
pact includes a tag-along and drag-along clause as well as a clause concerning reciprocal rights to information.
Shareholders’ pact with Webedia’s minority shareholders
Following Fimalac’s acquisition of Webedia, a pact was signed with Webedia’s minority shareholders on July
26, 2013 including in particular a tag-along and drag-along clause, provisions for put and call options on the
shares and “BSPCE” warrants, and a clause concerning reciprocal rights to information. The pact also sets out
the corporate governance rules for the company and its subsidiaries. An audit committee has been created,
carrying out its responsibilities in cooperation with and under the oversight of Webedia’s Supervisory Board.
Most of the committee’s members have been appointed by Fimalac. The pact has been entered into for a
renewable period of ten years.
8.5. – MARKET FOR FIMALAC SECURITIES
8.5.1. – LISTINGS
The Company’s shares are listed on NYSE Euronext Paris (Compartment B) as follows:
 Continuous trading market
217
 ISIN code: FR0000037947
 Symbol: FIM
Fimalac shares are eligible for the deferred settlement system (SRD Long Only). They are not listed on any other stock
markets.
8.5.2. – SHARE PERFORMANCE OVER THE LAST 18 MONTHS
Year
Month
October
November
December
January
2013
February
March
April
May
June
July
August
September
October
November
December
January
2014
February
March
Source: NYSE Euronext Paris SA
2012
8.6. –
Number of shares
traded, including offmarket transactions
59,900
43,018
72,911
62,591
119,373
49,484
44,454
147,574
45,912
30,206
42,447
49,017
396,014
35,517
46,610
28,892
25,367
30,497
Value of shares traded,
including off-market
transactions
(in € millions)
1.94
1.44
2.53
2.24
4.50
1.96
1.75
5.84
1.79
1.19
1.69
1.92
15.81
1.64
2.09
1.36
1.29
1.65
High and low prices
High
Low
(in €)
(in €)
34.75
34.55
35.65
37.59
39.00
41.20
40.75
40.51
41.13
40.70
41.00
40.75
45.72
46.91
46.40
49.49
52.55
56.40
31.00
32.75
34.00
34.85
36.85
38.24
38.60
38.72
36.85
36.92
38.35
38.20
39.01
45.55
43.65
45.90
49.07
52.5
DIVIDENDS
8.6.1. – DIVIDENDS PAID OVER THE LAST FIVE YEARS
Dividends approved at the last five Annual Shareholders’ Meetings, held on February 12, 2008, February 10,
2009, February 9, 2010, February 4, 2011 and February 14, 2012 respectively, were as follows:
Fiscal year
Total (in €)
Dividend per share (in €)
2008
2009
2010
2011
2012
46,636,645.50
46,636,645.50
43,245,000.00
43,245,000.00
51,894,000.00
1.50
1.50
1.50
1.50
1.80
At its meeting of April 3, 2014 the Board of Directors decided to recommend at the Annual Shareholders’
Meeting of June 17, 2014 that shareholders approve a dividend of €1.90 per share for 2013.
8.6.2. – STATUTE OF LIMITATIONS FOR DIVIDENDS
Dividends that have not been claimed within five years are time-barred and are paid over to the State.
218
8.7. – FIVE-YEAR FINANCIAL SUMMARY
(In compliance with articles R. 225-81, R. 225-83 and R. 225-101 of the French Commercial Code)
(in €)
DESCRIPTION
I)
Fiscal 2009
Capital at the end of the period
a) Capital
b) Number of shares
c) Number of shares to be issued on the exercise of warrants
d) Number of stock options
II) Results of operations
a) Revenue (excluding VAT)
b) Earnings before tax, depreciation, amortization and provision
expense
c) Income tax (*)
d) Profit for the period
e) Dividends
III) Per share data
a) Earnings after tax, before depreciation, amortization, and
provision expense
b) Profit for the period
c) Dividend
IV) Employee information
a) Number of employees
b) Total payroll
c) Total benefits
(*) Amounts in parentheses correspond to a tax benefit.
(**) Dividend recommended for approval at the Annual Shareholders’ Meeting.
Fiscal 2010
Fiscal 2011
Fiscal 2012
(15 months)
Fiscal 2013
(12 months)
136,800,827
31,091,097
-
126,852,000
28,830,000
-
126,852,000
28,830,000
-
126,852,000
28,830,000
-
126,852,000
28,830,000
-
76,361,977
23,239,997
306,392,683
276,584,728
63,537,417
33,270,586
202,108,809
174,642,127
91,616,833
59,175,874
(215,222)
9,746,192
46,636,646
(192,641)
275,333,466
43,245,000
(979,259)
39,987,911
43,245,000
(1,742,385)
161,961,866
51,894,000
(158,475)
83,975,877
54,777,000 (**)
0.75
9.60
1.19
6.12
2.06
0.31
1.50
9.55
1.50
1.39
1.50
5.62
1.80
2.91
1.90 (**)
1
1,595,473
325,099
1
1,594,567
338,362
1
1,568,989
546,511
1
1,625,977
546,666
1
1,289,532
554,356
Annual Shareholders’ Meeting
CHAPITRE 9 ANNUAL SHAREHOLDERS’ MEETING OF JUNE 17, 2014
9.1. –
REPORT OF THE BOARD OF DIRECTORS ON THE PROPOSED RESOLUTIONS
Approval of the 2013 financial statements (1st and 2nd resolutions)
Shareholders are invited to approve the Board of Directors’ report, the Auditors’ reports and the financial
statements of the Company and the Group for the year ended December 31, 2013.
Auditors’ special report (3rd resolution)
Shareholders are invited to approve the related party agreements and commitments referred to in the Auditors’
special report.
Appropriation of profit (4th resolution)
The Board of Directors recommends that profit for the year be appropriated as follows:
-
-
Amounts available for appropriation
Profit for the year
Retained earnings brought forward from prior years
Total
(in €)
Appropriation
Ordinary dividend provided for in the Company’s bylaws
Additional dividend
Transfer to the treasury shares account
Retained earnings
(in €)
83,975,876.93
358,003,527.49
441,979,404.42
412,562,419.27
6,342,600.00
48,434,400.00
23,692,155.61
363,510,248.81
Total
441,979,404.42
The total dividend will amount to €54,777,000. The net dividend payable on each of the 28,830,000 shares
outstanding and carrying rights to the 2013 dividend will amount to €1.90. The full amount of the dividend
will be eligible for the 40% tax allowance available for French tax resident individuals under article 158-3-2 of
the French Tax Code.
The dividend will be payable from June 25, 2014.
Dividends for the last three fiscal years were as follows (information disclosed in accordance with article 243
bis of the French Tax Code):
Fiscal year
Total dividend (in €)
2010
43,245,000.00
1.50 (*)
2011
43,245,000.00
1.50 (*)
2012
51,894,000.00
1.80 (*)
(*) Qualifying in full for the 40% tax allowance available to French tax resident individuals under article 158-3-2 of the French Tax
Code.
220
Re-election of Eléonore Ladreit de Lacharrière as a director (5th resolution)
Eléonore Ladreit de Lacharrière’s term as a director expires at the close of the Annual Shareholders’ Meeting.
Shareholders are invited to re-elect her for a period of four years, in accordance with the provisions of the
bylaws.
Re-election of Jérémie Ladreit de Lacharrière, Thierry Moulonguet, Jean-Charles Naouri, Etienne
Pflimlin and Thomas Piquemal as directors (6th to 10th resolutions)
The terms as directors of Jérémie Ladreit de Lacharrière, Thierry Moulonguet, Jean-Charles Naouri, Etienne
Pflimlin and Thomas Piquemal expire at the close of the Annual Shareholders’ Meeting. Shareholders are
invited to re-elect them for a period of four years, in accordance with the provisions of the bylaws.
Renewal of the appointment of PricewaterhouseCoopers Audit as Statutory Auditor (11th resolution)
The appointment of PricewaterhouseCoopers Audit as Statutory Auditor expires at the close of the Annual
Shareholders’ Meeting and shareholders are invited to renew its appointment for a period of six years.
Appointment of a Substitute Statutory Auditor (12th and 13th resolutions)
Shareholders are invited to note the expiry at the Annual Shareholders’ Meeting of the appointment of Etienne
Boris as Substitute Statutory Auditor for PricewaterhouseCoopers Audit and to appoint Jean-Baptiste
Deschryver to replace him as Substitute Statutory Auditor.
Election of Clarisse Lacape and Bérangère Veron as directors (14th and 15th resolutions)
Shareholders are invited to elect Clarisse Lacape and Bérangère Véron as directors for a period of four years,
in accordance with the provisions of the bylaws.
Expiry of the term of David Dautresme as a director (16th resolution)
Shareholders are invited to note the expiry of the term as a director of David Dautresme.
Approval of the appointment of Bernard Lattre as a director (17th resolution)
Shareholders are invited to note the resignation of Véronique Morali from her position as a director and to
approve the appointment of Bernard de Lattre to replace her, as decided by the Board of Directors at its
meeting of April 3, 2014.
Directors’ attendance fees (18th resolution)
Having proposed the election of an additional Board member, the Board of Directors proposes increasing the
total attendance fees payable to directors as from 2014 to €503,999.
Authorization to buy back shares (19th resolution)
The Board of Directors is seeking an 18-month authorization to buy back Fimalac shares representing up to
10% of the Company’s capital.
Information about the buyback program is provided in the “General Information” section of the Registration
Document.
221
Authorization to reduce the capital by canceling shares held in treasury (20th resolution)
In connection with the share buyback program, the Board of Directors is seeking an 18-month authorization to
reduce the capital, on one or several occasions, by cancelling all or some of the shares held in treasury. The
number of shares that may be canceled in any given 24-month period would not represent more than 10% of
the capital. Shareholders are also invited to give full powers to the Board of Directors to deduct from reserves,
additional paid-in capital or retained earnings the difference between the purchase price of the shares and their
par value, in an amount not exceeding 10% of the capital reduction.
Authorization to make share grants to employees and officers (21st resolution)
In accordance with articles L.225-197-1 et seq of the French Commercial Code, the Board of
Directors is seeking an authorization to make share grants on one or several occasions to employees
of the Company and related companies, within the meaning of article L.225-197-2 of said Code, and
to corporate officers as defined by law. The grants could be made by allocating shares held in
treasury or by issuing new shares.
The Board of Directors would determine the list of grantees, the terms and conditions of the share
grant plan and any grant criteria, based on the recommendations of the Selection, Nominations and
Remunerations Committee.
The total number of shares granted under this authorization would not represent more than 3.5% of
the Company’s capital at the grant date. The shares would be subject to a vesting period of at least
two years followed by a lock-up period of at least two years.
The Board is seeking full powers to use this authorization, directly or through a duly appointed
representative, and to decide whether to allocate shares held in treasury or to issue new shares.
The authorization is being sought for a period of 38 months from the date of the Annual
Shareholders’ Meeting.
Authorization to carry out an employee rights issue without pre-emptive subscription rights for existing
shareholders (22nd resolution)
According to the French Commercial Code (article L.225-129-6, first paragraph), if a resolution is presented
authorizing the Board to issue shares and share equivalents, then a separate resolution must be presented
authorizing an employee rights issue (governed by the French Labor Code).
The Board of Directors is therefore seeking a 26-month authorization to increase the capital by a maximum
aggregate amount of €10,000 – not including any adjustments to be made in accordance with the law – by
issuing shares or share equivalents to employees who are members of an employee stock ownership plan
(PEE).
Powers (23rd resolution)
The Board of Directors is requesting that full powers be given to carry out all the formalities relating to the
Annual Shareholders’ Meeting.
222
9.2. –
STATUTORY AUDITORS’ REPORTS ON THE EXTRAORDINARY RESOLUTIONS
9.2.1. – STATUTORY AUDITORS’ SPECIAL REPORT ON THE CAPITAL REDUCTION(S) TO BE CARRIED
OUT BY CANCELING TREASURY SHARES
(20th resolution)
This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided
solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in
accordance with, French law and professional auditing standards applicable in France.
In our capacity as Statutory Auditors of Fimalac, and in accordance with article L.225-209 of the French
Commercial Code dealing with capital reductions carried out by canceling treasury shares, we present below
our report setting out our assessment of the underlying reasons for the proposed capital reduction(s) and the
related terms and conditions.
The Board of Directors is seeking an 18-month authorization to cancel shares purchased under the buyback
program in accordance with the aforementioned article of the French Commercial Code. The number of shares
canceled in any 24-month period would not exceed 10% of the Company’s capital.
We have performed all the procedures that we considered necessary in accordance with professional standards
applicable in France. Those standards require that we perform the necessary procedures to assess whether the
underlying reasons for the proposed capital reduction(s) and the related terms and conditions are reasonable
and whether said capital reduction(s) protect the rights of all shareholders equally.
We have no comments to make concerning the underlying reasons for the proposed capital reduction(s) or the
related terms and conditions.
Cagnat & Associés
Pierre Mercadal – Frédéric Drougard
223
9.2.2. – STATUTORY AUDITORS’ SPECIAL REPORT ON THE GRANTING OF NEW OR EXISTING SHARES
(21st resolution)
In our capacity as Statutory Auditors of Fimalac and as required by article L.225-197-1 of the French
Commercial Code, we present below our report on the authorization sought by the Board of Directors to grant
new or existing shares, on one or several occasions, to all or selected employees and corporate officers of the
Company and related companies and groups, within the meaning of article L.225-197-2 of the French
Commercial Code.
As explained in its report, the Board of Directors is seeking a 38-month authorization to make share grants,
either by issuing new shares or allocating shares held in treasury. The Board is responsible for issuing a report
on the program. Our responsibility is to report to shareholders our comments on the information contained in
the said report.
applicable in France. Those procedures included verifying that the proposed terms described in the Board of
Directors’ report comply with the law.
We have no comments to make on the information given in the Board of Directors’ report concerning the
planned share grants.
Cagnat & Associés
224
9.2.3. – STATUTORY AUDITORS’ SPECIAL REPORT ON THE EMPLOYEE RIGHTS ISSUE
(22nd resolution)
In our capacity as Statutory Auditors of Fimalac and as required by articles L.228-92 and L.225-135 et seq. of
the French Commercial Code, we present to you our report on the authorization sought by the Board of
Directors to increase the capital by up to €10,000 by issuing shares and share equivalents to employees or
officers of the Company and related companies and groups (within the meaning of article L.225-180 of the
French Commercial Code) who are members of an Employee Stock Ownership Plan, without pre-emptive
subscription rights for existing shareholders.
The resolution is presented for shareholder approval in compliance with article L.225-129-6 of the French
Commercial Code and article L.3332-18 et seq. of the French Labor Code.
The Board of Directors is asking shareholders for a 26-month authorization to carry out a rights issue on the
basis described in its report, without pre-emptive subscription rights for existing shareholders. The final terms
of any such issue would be decided by the Board of Directors.
The Board is responsible for issuing a report in accordance with articles R.225-113 et seq. of the Commercial
Code. Our responsibility is to express an opinion on the fairness of the financial information taken from the
financial statements, the proposed waiver of pre-emptive subscription rights and certain other information
about the proposed rights issue, as provided in the Board of Directors’ report.
applicable in France. Those procedures consisted of verifying the information on the proposed issue and the
method of determining the issue price of the shares contained in the Board of Directors’ report.
Pending our review of the final terms and conditions of the proposed share issue, we have no comments to
make concerning the method to be used to set the issue price as described in the Board of Directors’ report.
The final terms and conditions of the issue have not yet been fixed and we therefore cannot and do not express
any opinion on them or on the proposal made to shareholders to waive their pre-emptive subscription rights.
As required by article R.225-116 of the French Commercial Code, we will issue a further report if and when
the Board of Directors carries out the proposed rights issue.
Cagnat & Associés
225
9.3. –
TEXT OF THE PROPOSED RESOLUTIONS
The following resolutions will be presented for approval at the Annual Shareholders’ Meeting of June
17, 2014.
ORDINARY RESOLUTIONS
First resolution (Approval of the reports of the Board of Directors and the Auditors and of the consolidated
financial statements for 2013)
The Shareholders’ Meeting, having considered the reports of the Board of Directors and the Auditors and the
consolidated financial statements, approves the transactions referred to in these reports and the consolidated
financial statements for the year ended December 31, 2013 showing attributable profit for the period of
€79 million.
Second resolution (Approval of the reports of the Board of Directors and the Auditors and of the Company’s
financial statements for the year ended December 31, 2013)
The Shareholders’ Meeting, having considered the reports of the Board of Directors and the Auditors and the
Company’s financial statements, approves the transactions referred to in these reports and the financial
statements for the year ended December 31, 2013 showing profit for the period of €83.9 million.
Third resolution (Approval of related party agreements)
The Shareholders’ Meeting, having considered the Auditors’ special report on related party agreements
prepared in accordance with article L.225-40 of the French Commercial Code, approves each of the
agreements referred to therein.
Fourth resolution (Appropriation of profit)
The Shareholders’ Meeting:
1°)
-
-
Approves the recommendation of the Board of Directors concerning the appropriation of profit for 2013,
as follows:
Amounts available for appropriation
Profit for the year
Retained earnings brought forward from prior years
Total
(in €)
Appropriation
Ordinary dividend provided for in the Company’s bylaws
Additional dividend
Transfer to the treasury shares account
Retained earnings
Total
(in €)
83,975,876.93
358,003,527.49
441,979,404.42
412,562,419.27
6,342,600.00
48,434,400.00
23,692,155.61
363,510,248.81
441,979,404.42
226
2°)
Resolves that the net dividend payable on each of the 28,830,000 shares outstanding and carrying rights
to the 2013 dividend will amount to €1.90 and notes that the full amount of the dividend qualifies for the
40% personal income tax allowance available to French tax residents under article 158-3-2 of the French
Tax Code.
3°)
Resolves that the dividend will be payable from June 25, 2014, and that dividends on shares held in
treasury will be credited to retained earnings, following determination by the Board of Directors of the
number of shares concerned.
4°)
Notes, in accordance with article 243 bis of the French Tax Code, that dividends for the last three fiscal
years were as follows:
Fiscal year
Total dividend (in €)
2010
43,245,000.00
1.50 (*)
2011
43,245,000.00
1.50 (*)
2012
51,894,000.00
1.80 (*)
(*) Qualifying in full for the 40% personal income tax allowance available to French tax residents under article 158-3-2 of the French
Tax Code.
Fifth resolution (Re-election of Eléonore Ladreit de Lacharrière as a director)
The Shareholders’ Meeting re-elects Eléonore Ladreit de Lacharrière as a director for a four-year term expiring
at the close of the Annual Shareholders’ Meeting to be called in 2018 to approve the 2017 financial statements.
Sixth resolution (Re-election of Jérémie Ladreit de Lacharrière as a director)
The Shareholders’ Meeting re-elects Jérémie Ladreit de Lacharrière as a director for a four-year term expiring
at the close of the Annual Shareholders’ Meeting to be called in 2018 to approve the 2017 financial statements.
Seventh resolution (Re-election of Thierry Moulonguet as a director)
The Shareholders’ Meeting re-elects Thierry Moulonguet as a director for a four-year term expiring at the
close of the Annual Shareholders’ Meeting to be called in 2018 to approve the 2017 financial statements.
Eighth resolution (Re-election of Jean-Charles Naouri as a director)
The Shareholders’ Meeting re-elects Jean-Charles Naouri as a director for a four-year term expiring at the
close of the Annual Shareholders’ Meeting to be called in 2018 to approve the 2017 financial statements.
227
Ninth resolution (Re-election of Etienne Pflimlin as a director)
The Shareholders’ Meeting re-elects Etienne Pflimlin as a director for a four-year term expiring at the close of
the Annual Shareholders’ Meeting to be called in 2018 to approve the 2017 financial statements.
Tenth resolution (Re-election of Thomas Piquemal as a director)
The Shareholders’ Meeting re-elects Thomas Piquemal as a director for a four-year term expiring at the close
of the Annual Shareholders’ Meeting to be called in 2018 to approve the 2017 financial statements.
Eleventh resolution (Renewal of the appointment of PricewaterhouseCoopers Audit as Statutory Auditor)
The Shareholders’ Meeting renews the appointment of PricewaterhouseCoopers Audit as Statutory Auditor for
a six-year term expiring at the close of the Annual Shareholders’ Meeting to be held in 2020 to approve the
2019 financial statements.
Twelfth resolution (Non-renewal of the appointment of Etienne Boris as Substitute Statutory Auditor)
The Shareholders’ Meeting notes the expiry of the appointment of Etienne Boris as Substitute Statutory
Auditor at the close of this Annual Shareholders’ Meeting.
Thirteenth resolution (Appointment of Jean-Baptiste Deschryver as Substitute Statutory Auditor)
The Shareholders’ Meeting appoints Jean-Baptiste Deschyrver as Substitute Statutory Auditor for
PricewaterhouseCoopers Audit for a six-year term expiring at the close of the Annual Shareholders’ Meeting
to be held in 2020 to approve the 2019 financial statements.
Fourteenth resolution (Election of Clarisse Lacape as a director)
The Shareholders’ Meeting elects Clarisse Lacape as a director for a four-year term expiring at the close of the
Annual Shareholders’ Meeting to be called in 2018 to approve the 2017 financial statements.
Clarisse Lacape has already indicated that she accepts the position of director and that no incompatibility or
legal barrier exists that disqualifies her from carrying out the duties associated with such position.
228
Fifteenth resolution (Election of Bérangère Veron as a director)
The Shareholders’ Meeting elects Bérangère Veron as a director for a four-year term expiring at the close of
the Annual Shareholders’ Meeting to be called in 2018 to approve the 2017 financial statements.
Bérangère Veron has already indicated that she accepts the position of director and that no incompatibility or
legal barrier exists that disqualifies her from carrying out the duties associated with such position.
Sixteenth resolution (Expiry of the term of David Dautresme as a director)
The Shareholders’ Meeting notes that, given the statutory age limit for board members, David Dautresme’s
term as a director expires at the close of the Annual Shareholders’ Meeting.
Seventeenth resolution (Approval of the appointment of Bernard Lattre as a director)
The Shareholders’ Meeting notes the resignation of Véronique Morali from her position as a director and
approves the appointment of Bernard de Lattre to replace her, as decided by the Board of Directors at its
meeting of April 3, 2014.
Bernard de Lattre will serve for the remainder of his predecessor’s term, that is, until the close of the Annual
Shareholders’ Meeting to be called in 2016 to approve the 2015 financial statements.
Eighteenth resolution (Directors’ attendance fees)
The Shareholders’ Meeting sets the aggregate amount of attendance fees payable by the Company to the Board
of Directors at €503,999 for 2014 and each subsequent year until a new resolution is adopted.
Nineteenth resolution (Authorization to buy back shares)
The Shareholders’ Meeting, having considered the report of the Board of Directors:
1°)
In accordance with article L.225-209 of the French Commercial Code, authorizes the Board of Directors
or by delegation the Chairman and Chief Executive Officer to buy back up to 10% of the total number of
shares comprising the Company’s share capital, which for information purposes represented 2,883,000
Fimalac shares at December 31, 2013.
2°)
Sets the maximum purchase price at €90 per share and the minimum sale price at €30. This minimum
sale price will not apply to sales of shares upon exercise of stock options.
3°)
Resolves that this authorization may be used in accordance with the law, inter alia, for the following
purposes:
a)
To allocate shares upon exercise of stock options, in accordance with article L.225-177 of the
French Commercial Code, and/or to make share grants in accordance with articles L.225-197-1 et
seq. of said Code.
229
4°)
b)
To maintain a liquid secondary market for the Company’s shares under a liquidity contract signed
with an investment firm that complies with a code of conduct approved by the AMF.
c)
To cancel the acquired shares, subject to adoption of the 20th resolution of the Annual
Shareholders’ Meeting of June 17, 2014 (extraordinary resolution).
d)
To allocate shares on redemption, conversion, exchange or exercise of share equivalents, in
compliance with the applicable regulations.
e)
To purchase shares to be held and subsequently remitted as payment in connection with external
growth transactions.
Resolves that the shares may be purchased, sold, transferred or exchanged by any appropriate means, on
the open market or otherwise, including through block purchases as well as through the use of derivative
instruments provided that their use does not lead to significantly greater price volatility.
The authorization is also designed to enable the application of any market practices that may come to be
accepted by the AMF and, more generally, the completion of any transactions that comply with the
applicable regulations.
5°)
Resolves that in the case of a bonus share issue paid up by capitalizing reserves, or of a stock split or
reverse stock split, the above number of shares and prices will be adjusted based on the ratio between
the number of shares outstanding before and after the operation.
6°)
Resolves that any dividends payable on Fimalac shares held by the Company under this authorization
will be credited to retained earnings.
7°)
Sets at 18 months the duration of this authorization, which supersedes that given in the eighth resolution
of the Annual Shareholders’ Meeting of June 11, 2013.
EXTRAORDINARY RESOLUTIONS
Twentieth resolution (Authorization to reduce the capital by canceling shares held in treasury)
The Extraordinary Shareholders’ Meeting, having considered the report of the Board of Directors and the
Auditors’ special report:
1°)
Authorizes the Board of Directors, in accordance with article L.225-209 of the French Commercial
Code, to reduce the Company’s capital on one or several occasions by canceling all or some of the
shares held in treasury.
2°)
Gives full powers to the Board of Directors to:
a)
a) Carry out the capital reduction(s) and determine the amount(s) thereof, and set the related terms
and conditions, provided that the number of shares canceled in any 24-month period does not
represent over 10% of the Company’s capital.
b)
Charge the difference between the purchase price of the canceled shares and their par value to any
reserve accounts or to additional paid-in capital.
230
3°)
c)
Amend the bylaws to reflect the new capital and carry out any necessary publication or other
formalities.
d)
Delegate all necessary powers to implement the Board’s decisions.
Sets at 18 months the duration of this authorization, which supersedes that given in the 9th resolution of
the Annual Shareholders’ Meeting of June 11, 2013.
Twenty-first resolution (Authorization to make share grants to employees and officers)
Auditors’ special report, resolves, in accordance with articles L.225-197-1 et seq. of the French Commercial
Code:
1°)
To authorize the Board of Directors to make share grants on one or several occasions to all or selected eligible
employees and officers of the Company and of related companies and groups, within the meaning of article L.225197-2 of the French Commercial Code. The Company may allocate either new shares or existing shares held in
treasury stock to holders of the share grants.
2°)
To authorize the Board of Directors to determine the list of grantees, the terms and conditions of the share grant
plan and any grant criteria, based on the recommendations of the Selection, Nominations and Remunerations
Committee.
3°)
That the total number of shares granted under this authorization may not represent more than 3.5% of the
Company’s capital at the grant date.
4°)
That the share grants will be subject to a vesting period of at least two years from the grant date, and that the shares
acquired will be subject to a lock-up period of at least two years.
5°)
To authorize the Board of Directors to adjust the number of shares if any corporate actions are carried out during
the vesting period, where such an adjustment is necessary in order to preserve the rights of the grantees.
6°)
That this authorization automatically entails the waiver by shareholders of their entitlement to the portion of
reserves, profit or additional paid-in capital that will be capitalized if new shares are issued for these share grants.
7°)
To grant full powers to the Board of Directors – or by delegation to any duly appointed representative where the
law allows – to use this authorization.
8°)
To set at 38 months the duration of this authorization, which supersedes that given in the 19th resolution
of the Annual Shareholders’ Meeting of February 4, 2011.
Twenty-second resolution (Authorization to carry out an employee rights issue without pre-emptive
subscription rights for existing shareholders)
Auditors’ special report, resolves, in accordance with article L.225-129-6-1 of the French Commercial Code:
231
1°)
To authorize the Board of Directors to increase the capital, on one or several occasions, by a maximum aggregate
amount of €10,000 – not including any adjustments to be made in compliance with the law – by issuing shares and
share equivalents to the employees or officers of the Company and any French and foreign related companies,
within the meaning of article L.225-180 of the French Commercial Code, who are members of an employee stock
ownership plan (PEE) set up by the Company.
2°)
To cancel shareholders’ pre-emptive rights to subscribe to these issues.
3°)
That the Board of Directors may decide to issue shares or share equivalents without consideration, provided that
the total resulting benefit as well as any matching contributions by the Company and any price discount do not
exceed the limits set in the applicable laws or regulations.
4°)
That the new shares will not be offered at a price in excess of the average of the opening prices quoted over the 20
trading days preceding the date of the Board decision setting the opening date of the subscription period or at a
discount of more than 20% to this average.
5°)
That the characteristics of any share equivalents issued under this authorization will be determined by the Board of
Directors in accordance with the applicable regulations.
6°)
That the Board of Directors shall have full powers to:
a)
Set the terms of issue of any bonus shares or share equivalents.
b)
Decide on the amount, price and other terms and conditions of issue.
c)
Set the opening and closing dates of the subscription period.
d)
Set the period granted to participants to settle the subscription price of the shares or share equivalents,
within the limits prescribed by law.
Set the retroactive or future cum rights date of the new shares or share equivalents.
e)
7°)
f)
Set the terms and conditions of transactions carried out under this authorization and obtain the quotation of
the new securities on any market.
g)
Place on record the capital increases resulting from the share issues, amend the bylaws to reflect the new
capital, carry out – directly or through a representative – all operations and formalities related to the capital
increase and, at the Board’s discretion, charge the share issuance costs against the related premium and
deduct from the premium the amount necessary to increase the legal reserve to 10% of the new capital after
each issue, carry out all filing and other formalities with any organizations and generally do what is
necessary.
That this authorization shall be given for a period of 26 months and shall supersede that given in the 20th
resolution of the Annual Shareholders’ Meeting of February 4, 2011.
Twenty-third resolution (Powers to carry out formalities)
The Shareholders’ Meeting gives full powers to the bearer of an original or duplicate copy of the minutes of
the present Meeting, or of an extract thereof, to carry out all necessary formalities.
232
Miscellaneous Information
CHAPITRE 10 MISCELLANEOUS INFORMATION
10.1. – STATUTORY AUDITORS
Statutory Auditors
Cagnat & Associés, 14 rue Pelouze, 75008 Paris, France (represented by Pierre Mercadal and Frédéric
Drougard)
Member of Compagnie Régionale des Commissaires aux Comptes de Paris
First appointed: June 11, 1987
Term renewed: February 4, 2011
Term expires: 2017 Annual Shareholders’ Meeting
PricewaterhouseCoopers Audit, 63 rue de Villiers, 92200 Neuilly-sur-Seine, France (represented by JeanChristophe Georghiou)
Member of Compagnie Régionale des Commissaires aux Comptes de Versailles
First appointed: February 12, 2008
Recommended for re-appointment when its current term expires at the June 17, 2014 Annual Shareholders’
Meeting
Substitute Statutory Auditors
Philippe Azencoth, 66 boulevard Malesherbes, 75008 Paris, France
Member of Compagnie Régionale des Commissaires aux Comptes de Paris
Term expires: 2017 Annual Shareholders’ Meeting
Etienne Boris, 63 rue de Villiers, 92200 Neuilly-sur-Seine, France
Member of Compagnie Régionale des Commissaires aux Comptes de Versailles
Recommended for re-appointment when his current term expires at the June 17, 2014 Annual Shareholders’
Meeting
10.2. – INFORMATION POLICY
Name and address of the person responsible for information
Robert Gimenez
Phone:
+33 (0)1 47 53 61 73
Fax:
+33 (0)1 47 53 61 57
Website
www.fimalac.com
233
10.3. – INFORMATION PUBLISHED OR DISCLOSED TO THE PUBLIC SINCE JANUARY 1, 2013
Information published on the Fimalac website
Date
Subject
01/08/2013
Liquidity contract at December 31, 2012
01/08/2013
Information concerning the total number of voting rights and shares at December 31, 2012
01/24/2013
Fitch acquires 7city
01/28/2013
Quarterly revenue – Three months ended December 31, 2012 – Excellent performance by Fitch,
with revenue up 19.7%
02/06/2013
Information concerning the total number of voting rights and shares at January 31, 2013
03/26/2013
Fiscal 2012 results (October 1, 2011 to December 31, 2012)
04/10/2013
Information concerning the total number of voting rights and shares at March 31, 2013
04/29/2013
Fiscal 2012 registration document
04/29/2013
First-quarter 2013 revenue
05/13/2013
Information concerning the total number of voting rights and shares at April 30, 2013
05/16/2013
Annual Shareholders’ Meeting of June 11, 2013
05/17/2013
Exclusive negotiations to acquire a majority stake in the capital of Webedia Group
06/07/2013
Information concerning the total number of voting rights and shares at May 31, 2013
06/17/2013
Report on the Annual Shareholders’ Meeting of June 11, 2013
07/03/2013
Liquidity contract at June 30, 2013
07/04/2013
Information concerning the total number of voting rights and shares at June 30, 2013
07/11/2013
Exclusive talks to acquire Allociné
07/16/20123
Fimalac acquires 98% of Allociné
07/24/2013
First-half 2013 revenue – Sustained growth at Fitch:
Up 19.3% on a reported basis and up 17.4% like-for-like
07/26/2013
Signing of the agreements relating to Webedia
08/05/2013
Fimalac’s office building in London now fully let
08/19/2013
Information concerning the total number of voting rights and shares at July 31, 2013
09/05/2013
Information concerning the total number of voting rights and shares at August 31, 2013
09/13/2013
First-half 2013 results
09/13/2013
Interim report (6 months, ended June 30, 2013)
10/09/2013
Information concerning the total number of voting rights and shares at September 30, 2013
234
Date
Subject
10/23/2013
Revenue for the nine months ended September 30, 2013
10/29/2013
The Fnac and Fimalac Groups are joining forces to develop ticketing solutions and acquire the
company Datasport
11/12/2013
Information concerning the total number of voting rights and shares at October 31, 2013
12/17/2013
Information concerning the total number of voting rights and shares at November 30, 2013
01/10/2014
Information concerning the total number of voting rights and shares at December 31, 2013
01/10/2014
Liquidity contract at December 31, 2013
01/28/2014
Fiscal 2013 revenue
02/12/2014
Information concerning the total number of voting rights and shares at January 31, 2014
03/14/2014
Fitch acquires Business Monitor International
03/24/2014
Information concerning the total number of voting rights and shares at February 28, 2014
04/03/2014
Fiscal 2013 results
Information published in Bulletin des Annonces Légales Obligatoires (BALO)
Date
Subject
05/03/2013
Notice of meeting (AGM)
07/03/2013
Notice of approval of fiscal 2012 financial statements
10.4. – DOCUMENTS ON DISPLAY
During the life of this Annual Report, the bylaws, Statutory Auditors’ reports and financial statements for the
past three years, as well as all reports, letters and other documents, historical financial information relating to
Fimalac and its subsidiaries for the past three years, and valuations and statements prepared by an expert at
Fimalac’s request, and any other documents whose disclosure is required by law, may be consulted at
Fimalac’s headquarters.
235
Cross-Reference List
CHAPITRE 11 CROSS-REFERENCE LIST OF INFORMATION
REQUIRED IN THE ANNUAL REPORT
Not applicable.
236
CSR Index
CHAPITRE 12 CORPORATE SOCIAL AND ENVIRONMENTAL
RESPONSIBILITY INDEX
The index below lists social, environmental and societal responsibility information given in this document in
line with the topics covered by France’s “Grenelle II” environmental legislation. It has been provided in
accordance with the provisions of article L.225-102-1 of the French Commercial Code.
INDEX OF SOCIAL, ENVIRONMENTAL AND SOCIETAL INFORMATION
SOCIAL INFORMATION
a) Employment
b) Organization
work
Information required under French
Section
Scope
decree no. 2012-557
Total workforce by gender, age group 1.9.2 - 1 a) to f) Fimalac,
and region
Vega,
Ellipse,
digital
division
Hires and terminations
1.9.2 - 1 g)
Fimalac,
Vega,
Ellipse,
Digital
Division
Compensation
and
changes
in 1.9.2 - 1 g)
Vega,
compensation
Ellipse
of Organization of the workweek
Absenteeism
c) Labor relations
1.9.2 - 1 g)
Vega,
Ellipse
1.9.2 - 1
introduction
- Fimalac,
Vega,
Ellipse
Vega,
Ellipse
Organization of social dialogue, 1.9.2 - 1 g)
particularly through information and
consultation procedures and bargaining
Overview of
agreements
collective
bargaining --
237
--
Comments and explanations
Reported payroll does not include
the Fimalac holding company.
At the Fimalac holding company,
which is a small entity, the
organization of the workweek is
not subject to any specific
monitoring.
No
collective
bargaining
agreements have been signed by
the Fimalac holding company due
to its small size. At subsidiaries
Vega and Ellipse, statutory
collective bargaining agreements
(“NAO” wage negotiation and
workplace
gender
equality
agreements) are monitored by the
employee relations department.
CSR Index
decree no. 2012-557
d) Occupational health Health and safety conditions at work
and safety
SOCIAL INFORMATION
e) Training
which is a small service provider,
health and safety conditions are
not subject to any specific
monitoring
Overview of the agreements signed with -labor unions or employee representatives
concerning occupational health and
safety
Frequency and severity of work-related 1.9.2 - 1 g)
accidents, occupational diseases
--
No such agreements have been
signed at Fimalac or its
subsidiaries.
Vega,
Ellipse
Policies
training
Vega,
Ellipse
No workplace accidents have been
reported at the Fimalac holding
company.
At Fimalac, training is provided on
a case- by-case, needs basis.
implemented
1.9.2 - 1 g)
Scope
Vega,
Ellipse
concerning 1.9.2 - 1 g)
Total number of training hours
f) Equal opportunity
Section
1.9.2 - 1 g)
Policy implemented and measures taken -to promote gender equality
Vega,
Ellipse
--
Policy implemented and measures taken -to promote the employment and
integration of people with disabilities
--
Policy against discrimination
--
--
g) Promotion of and Respect for freedom of association and -compliance with ILO collective bargaining
conventions
Elimination of discrimination in
employment and occupation
--
Elimination of forced or compulsory
labor
Effective abolition of child labor
238
At the Fimalac holding company
and at its subsidiaries, the human
resources managers work to
combat all forms of workplace
discrimination.
However, the
human resources departments of
Fimalac’s subsidiaries were not
able to provide information on this
topic for 2013. The 2014 report
will contain more detailed
information.
Given that Fimalac and its
subsidiaries Vega and Ellipse are
based in France, this information is
not considered to be necessary in
light of applicable laws and
regulations in France.
CSR Index
ENVIRONMENTAL
Section
decree no. 2012-557
a)
Environmental Organization of the company to take 1.9.2 - 2 b)
environmental concerns into account.
policy
Environmental
assessment
and
certification processes, where applicable.
Scope
INFORMATION
--
Resources dedicated to preventing -environmental risks and pollution
--
Provisions
and
guarantees
for 1.9.3
environmental risks, except where
disclosure could seriously harm the
company’s interests in any pending legal
proceedings
Fimalac
The related provisions correspond
to premises formerly used by the
Fimalac Group
--
This environmental information
was not considered relevant to
Fimalac and its subsidiaries due to
their small size and the nature of
their activities.
Measures to prevent,
eliminate waste
recycle
and 1.9.2 - 2 a)
Measures to mitigate noise pollution and 1.9.2 - 2 a)
all other types of pollution specific to an
activity
c) Sustainable use of Water use and water withdrawals in 1.9.2 - 2 b)
relation to local resources
resources
e)
Protection
biodiversity
Vega,
Ellipse
Employee training and information on -environmental protection
b) Pollution and waste Measures to prevent, reduce and clean -up environmentally harmful emissions
management
and discharges into the air, water and
soil
d) Climate change
Vega,
Ellipse
Vega
Ellipse
Consumption of raw materials and -measures to improve their efficient use
--
Energy consumption and measures taken 1.9.2 - 2 b)
to improve energy efficiency and the use
of renewable energy sources
Vega,
Ellipse
Land use
Greenhouse gas emissions
Measures to adapt to climate change
--
----
of Measures taken to preserve or develop -biodiversity
239
This environmental information
was not considered relevant to
Fimalac and its subsidiaries due to
their small size and the nature of
their activities.
Due to the nature of its activities,
Vega is the only entity in the
Group
concerned
by
this
information.
Due to the nature of its activities,
Ellipse is the only entity in the
Group
concerned
by
this
information.
Due to the nature of their
activities, Vega and Ellipse
consume limited amounts of raw
materials; this information was
therefore not considered relevant.
Due to its size and the nature of its
activities, the Fimalac holding
company is not concerned by this
information.
Due to their size and the nature of
their activities, the Fimalac
holding
company
and
its
subsidiaries are not concerned by
this environmental information.
CSR Index
SOCIETAL
INFORMATION
Section
decree no. 2012-557
a) Regional, economic Impact on employment and local -and social impact of development
the
company’s Impact on local and neighboring -activities
communities
Relations
with
stakeholders, notably
mainstreaming
associations,
educational
institutions,
environmental
associations, consumer
associations
and
neighboring
communities
c) Sub-contracting and
suppliers
d) Fair
practices
Relations
with
individuals
organizations
concerned
by
company’s activities
Partnership and sponsorship programs
or -the
Section 2
Inclusion of social and environmental 1.9.2 - 2 a)
concerns in purchasing policy
Importance of sub-contracting and
integration of corporate social and
environmental
responsibility
in
relationships with suppliers and subcontractors
operating Measures taken to prevent corruption
--
Measures taken to preserve consumer 1.9.2 - 2 b)
health and safety
e) Other measures Other measures taken to promote human -taken to promote rights
human rights
240
Scope
Vega,
Ellipse
Vega,
Ellipse
--
Given the current status of CSR
reporting, this information could
not be supplied by teams at
Fimalac’s subsidiaries.
Fimalac
Vega,
Ellipse
Vega,
Ellipse
internal control measures are in
place to ensure compliance with
applicable laws and regulations.
Vega,
Ellipse
--
Fimalac and its subsidiaries are
committed to upholding human
rights. The “Culture & Diversité”
Foundation promotes access to arts
and culture, which UNESCO
recognizes as a human right.
Auditor’s Report on the CSR Report
CHAPITRE 13 REPORT ON SOCIAL, ENVIRONMENTAL AND
SOCIETAL INFORMATION
Report of one of the Statutory Auditors, appointed as an independent third party, on the social, environmental
and societal information provided in the management report.
This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the
convenience of English-speaking readers. The report should be read in conjunction with, and construed in accordance
with, French law and professional auditing standards applicable in France.
To the Shareholders,
In our capacity as Fimalac’s Statutory Auditor, appointed as an independent third party whose
application for accreditation has been accepted by Cofrac, we hereby report to you on the
consolidated social, environmental and societal information for the year ended December 31, 2013,
presented in the management report (hereinafter the “CSR Information”), in accordance with article
L.225-102-1 of the French Commercial Code (Code de Commerce).
Responsibility of the Company
The Board of Directors is responsible for preparing the Company’s management report including CSR
information in accordance with the provisions of R.225-105-1 of the French Commercial Code and with the
procedures used by the Company (hereinafter the “Guidelines”), summarized in the section of the management
report entitled “Scope of employee, environmental and societal information”.
Independence and quality control
Our independence is defined by regulatory texts, the French code of ethics governing the audit profession and
the provisions of article L.822-11 of the French Commercial Code. We have also implemented a quality
control system comprising documented policies and procedures for ensuring compliance with the codes of
ethics, professional auditing standards and applicable legal and regulatory texts.
Responsibility of the Statutory Auditors
On the basis of our work, it is our responsibility to:
-
Certify that the required CSR Information is presented in the management report or, in the event
that any CSR Information is not presented, that an explanation is provided in accordance with
paragraph 3, article R.225-105 of the French Commercial Code (Statement of completeness of
CSR Information);
-
Express moderate assurance that the CSR Information, taken as a whole, is, in all material
respects, fairly presented in accordance with the Guidelines (Reasoned opinion on the fairness
of the CSR Information);
241
Our work was carried out by a team of six people between December 11, 2013 and April 25, 2014
and took around two weeks. We were assisted in our work by our specialists in corporate social
responsibility.
We performed our work in accordance with the professional auditing standards applicable in France
and with the decree of May 13, 2013 determining the conditions in which the independent third party
performs its engagement.
1. Statement of completeness of CSR Information
We conducted interviews with the relevant heads of department to familiarize ourselves with
sustainable development policy, according to the impact of Fimalac’s activities on employee relations
and the environment, of its social commitments and any action or programs related thereto.
We compared the CSR Information presented in the management report with the list provided for by
article R.225-105-1 of the French Commercial Code.
For any consolidated Information that was not disclosed, we verified that the explanations provided
complied with the provisions of article R.225-105, paragraph 3 of the French Commercial Code.
We ensured that the CSR Information covers the scope of consolidation, i.e. the Company, its
subsidiaries as defined by article L.233-1 and the entities it controls as defined by article L.233-3 of
the French Commercial Code, within the limitations set out in the section of the management report
entitled “Scope of employee, environmental and societal information” and in the related index
provided in section 12.
Based on this work and given the limitations mentioned above, we draw your attention to the
following information that was not presented or accompanied by the explanations required:

Regional, economic and social impact of the Company’s activities in terms of local
development and the impact on local and neighboring communities;

Measures taken to prevent corruption.
2. Reasoned opinion on the fairness of the CSR Information
Nature and scope of our work
We conducted around 10 interviews with people responsible for preparing the CSR Information in
the departments in charge of collecting this information and, where appropriate, the people
responsible for the internal control and risk management procedures, in order to:
-
Assess the suitability of the Guidelines in light of their relevance, completeness, reliability,
impartiality and comprehensibility, and taking good market practice into account when necessary;
-
Verify the implementation of a data-collection, compilation, processing and control procedure that
is designed to produce CSR Information that is exhaustive and consistent, and familiarize
ourselves with the internal control and risk management procedures involved in preparing the
CSR Information.
We determined the nature and scope of our tests and controls according to the nature and
importance of the CSR Information taking into account the Company’s specific characteristics, the
social and environmental challenges of its activities, its sustainable development policy and good
market practice.
242
With regard to the CSR Information that we considered to be the most important:
-
At the level of the consolidating entity Fimalac, we consulted documentary sources and
conducted interviews to substantiate the qualitative information (organization, policy, action); we
carried out analytical procedures on the quantitative information and verified, using sampling
techniques, the calculations and the consolidation of the data; and we verified the data’s
consistency and concordance with the other information in the management report.
-
At the level of a representative sample of sites selected by us 1 by activity, contribution to the
consolidated indicators, location and risk analysis, we conducted interviews to ensure that
procedures are followed correctly and performed tests of details, using sampling techniques, in
order to verify the calculations made and reconcile the data with the supporting documents. The
selected sample represents 100% of headcount.
For the other consolidated CSR Information, we assessed their consistency based on our
understanding of the Company.
Lastly, we assessed the relevance of explanations given for any information that was not disclosed,
either in whole or in part.
We believe that the sampling methods and sample sizes used, based on our professional judgment,
allow us to express moderate assurance; a higher level of assurance would have required us to
carry out more extensive work. Because of the use of sampling techniques and other limitations
intrinsic to the operation of any information and internal control system, we cannot completely rule
out the possibility that a material irregularity has not been detected.
Qualifications
Based on our work, we were unable to obtain assurance as to the fairness of the following information:
- Organization of the Company to take environmental concerns into account;
- Water use;
- Importance of sub-contracting and integration of corporate social and environmental responsibility in
relationships with suppliers and sub-contractors;
- Measures taken to preserve consumer health and safety.
Conclusion
Based on our work and subject to these qualifications, nothing has come to our attention that causes us to
believe that the CSR Information, taken as a whole, is not presented fairly, in all material respects, in
accordance with the Guidelines.
Neuilly-sur-Seine, April 25, 2014
One of the Statutory Auditors
Partner
1
Sylvain Lambert
Partner, Sustainable Development
The entities selected were Vega and Ellipse.
243
Appendix
List of the CSR Information that we considered the most important
Quantitative social information





Total workforce at December 31, 2013, by gender and region
Hires and departures by reason
Hires and departures under permanent contracts
Entertainment Division payroll
Number of training hours
Qualitative social information


Organization of work time
Work-related accidents
Qualitative environmental Information




Organization of the Company to take environmental concerns into account;
Amount of provisions and guarantees for environmental risks
Water use
Energy consumption and measures taken to improve energy efficiency
Qualitative societal information



Partnership and sponsorship programs
Importance of sub-contracting and integration of corporate social and environmental responsibility in
relationships with suppliers and sub-contractors
Measures taken to preserve consumer health and safety
244
F. Mar c de Lachar r ièr e (F ima lac)
“Société anonyme” wit h shar e capita l of €12 6,852,800
Regist er ed off ice: 97 r ue de L ille – 75007 Par is, France
Regist er ed in Par is under no. 542 044 136
Phone: +33 (0 )1 47 53 61 50 – Fax: +33 (0)1 47 53 61 57
www. f ima lac.com

contents - Fimalac

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