Algorithmics
  | Site internet : http://www.algorithmics.com/ |
Algorithmics' offerings, including software, software implementation services, managed services and data content, are designed to address the risk related information and process needs of banks, asset managers, hedge funds and insurance companies.
Algorithmics' portfolio of products provides solutions for advanced market and credit risk analytics, credit risk management, advanced analytics, capital management, operational risk management, and collateral management.
SIGNIFICANT EVENTS
Throughout fiscal 2008, Algorithmics continued to realize the strategic benefits of its 2005 acquisition by Fitch Group and the subsequent investment in product development, service capabilities and extension of geographic reach. Algorithmics continues to expand its customer base, penetrate new market segments, and maintain a strong position in core target markets.
The recent dislocations in global financial markets have reinforced a proactive and holistic approach to risk management among financial institutions. The Securities Industry and Finance Markets Association recently found that the credit crisis is "serving as a catalyst to increase the amount of money invested in technology for risk management initiatives." As regulators and financial institutions address the turmoil in the capital markets, timely and accurate risk information at the enterprise level and across business units, asset classes and risk categories will become even more important.
While the growing focus on proactive and comprehensive risk management and regulation is advancing the opportunities in the marketplace, additional factors are also contributing to the growth of the market. Financial markets firms in emerging market economies such as Brazil, Russia, India, China, and the Gulf region are becoming more competitive and are paying greater attention to regulatory frameworks such as Basel II. The ever increasing volatility of financial markets and complexity of interconnected risks is also contributing to the growing focus on risk management along with additional players in the market such as asset managers and hedge funds, who recognize that proper risk management can not only reduce their risk but contribute to their ability to grow their business.
Algorithmics has extended its customer base to approximately 400 customers located in 41 countries. The company added over 47 new customers in this period, compared with 22 in the previous year. Many solutions saw an increase in the number of new clients as well as an increase in user licenses for existing customers. Outside the traditional customer base, that of major banks, Algorithmics has focused and grown business with asset management firms, hedge funds and insurance companies.
In fiscal 2008, Algorithmics received numerous accolades with leading industry groups. The 2007 Risk Awards, presented by Risk Magazine, headlined "Algorithmics holds dominant position" and awarded Algorithmics first place rankings in a number of product categories. TowerGroup stated in a recent report, "In the collateral management space, Algorithmics services the greatest depth and breadth of clients across a wide geography, giving them a robust portfolio of tools." Celent ranked Algorithmics as a leader for advanced features and technology and depth of client services. In the Chartis RiskTech 100 rankings, Algorithmics was ranked first in both the innovation and functionality categories. Algo Risk Service was recognized by Buy Side Technology magazine as the "best buy-side risk / portfolio analytics product." Algorithmics has also been awarded the "Wholesale & Capital Markets Award for Risk Management" in The Banker magazine's sixth annual Technology Awards.
BUSINESS REVIEW
Algorithmics has started and completed numerous initiatives to strengthen and broaden the portfolio of solutions:
Standard Edition Solutions
For a range of solutions, Algorithmics can now offer customers a quicker implementation approach that involves minimal customization. This suits many clients whose requirements are consistent within the industry and who do not have the need for high degrees of customization.
Collateral Management
The volumes of collateral agreements being managed are increasing and clients want to consolidate the management of collateral agreements for multiple business lines onto a common platform. The re-architecture of the collateral solution supports these requirements and appeals to both high volume global leaders as well as smaller institutions.
Operational Risk Management
The Algo OpVantage software product was also reengineered and is now available either as a customizable implementation or as a standard edition. The standard edition has been implemented successfully at a number of regional institutions.
Asset Management and Hedge Fund Industries
Algorithmics is continuing to successfully address large institutions in this segment and is gaining ground with many smaller companies who have advanced requirements, but are too small or lack the IT or operational infrastructure to support an in-house implementation. Algo Risk Service, which was introduced as a managed service two years ago, is driving deeper market penetration in this sector.
Insurance
Needing to strengthen their risk management practices following the financial market turbulence of 2002 and 2003 and move into compliance with the requirements of Solvency II in Europe, insurance firms represent a key growth opportunity for Algorithmics. Algorithmics' solution provides the capability to bring both assets and liabilities together into one framework which is a key differentiator to other solutions.
Data and Content Services
The Algorithmics data and content services have seen significant market success and subscriber growth in the year. For example, FIRST is a database of external risk loss events that enables financial services organizations to proactively manage operational risk.
FINANCIAL REVIEW
Algorithmics generated revenue of $157.7 million for the twelve months of fiscal 2008, a 13.1% increase from the previous year's revenue of $139.4 million and nearly double the revenue since Fitch's acquisition. After translation into euros, its contribution to consolidated revenue came to €104.9 million compared to €105.1 million in 2007, essentially unchanged on a reported basis and up 8.4% on a like-for-like basis after taking into account the currency effect.
In fiscal 2008, Algorithmics turned a profit on an earnings before interest, taxes, depreciation, and amortization basis. This year's positive EBITDA was €4,9 million compared to a loss of €16.5 million in 2007. This improvement resulted from investment in growing markets and enhanced operating leverage.
The operating loss for the twelve months of fiscal 2008 and fiscal 2007 was $21.9 million and $45.0 million, respectively. Operating loss includes amortization charges of $21.6 million and $22.7 million for the twelve months of 2008 and 2007, respectively. These charges relate to the annual amortization of intellectual property balances associated with the initial acquisition by Fitch Group in 2005.