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Rapid Ratings Launches Global Web Service

12 June 2002

Rapid Ratings Launches Global Web Service To Rate Companies

Editor’s Summary

- Launch of global credit rating service

- Service developed and built in New Zealand

- Anticipates financial distress or failure in advance of other indicators such as share price movements

- Uses web-based high-end technology

- Scientific approach using financial data only

- Vast database spanning 25 years with over 200,000 companies from more than a dozen countries and 25 industry categories

- Targets banks, fund managers, large creditors, brokers, investment advisors and finance companies

- Subsidiary of ASX listed Collection House Limited (CLH)

A global web service for rating companies developed and built in New Zealand was launched today by Rapid Ratings, a subsidiary of ASX listed Collection House (CLH), one of Australia’s top 200 companies.

The software behind the service was developed in New Zealand by Rapid Ratings Managing Director Dr Patrick Caragata.

Rapid Ratings’ system takes a scientific approach to company financials based on econometric modelling and a large international database with more than 200,000 companies, and more than 25 years of data from 25 industries in more than a dozen countries.

Its software can anticipate financial distress or failure between 1 and 5 years in advance. Rapid Ratings predicted the collapse of HIH Insurance 5 years in advance, Enron 4 years in advance, One.Tel 2 years in advance, and the financial distress of Air New Zealand 4 years in advance. These reports are available on the new website

Managing Director, Dr Patrick Caragata, stated “We have positioned Rapid Ratings in the global market to rate, in a matter of minutes or a few hours depending on the volume of demand, all the corporate investments of each investment fund, and the entire commercial lending portfolio of each bank and large creditor.” The web service can be used to assess any company: listed, unlisted, large, medium or small, as long as the income statement and balance sheet for one or more years is available.

The traditional rating agencies have concentrated on rating only about a tenth of a percent of registered companies, most of which were large listed companies. Rapid Ratings has focussed on capturing opportunities within the balance of the un-rated market, as well as those currently rated companies. Dr Caragata said that the web service was “infinitely scalable, and that, down the road, Rapid Ratings would extend its current wholesale service to the retail market.”

Dr Caragata also stated “Rapid Ratings is a new generation rating agency using high technology to meet the growing demand for instant financial risk assessments of companies.” Some of the pressure for this new rating technology stems from the emergence of new international standards affecting the internal risk modelling and capital reserves of banks globally (the Basle II process under the auspices of the Bank for International Settlements).

Additional pressure arises from concerns in the market that investment advisors, analysts and brokers either have conflicts of interests or other constraints that affect their objectivity, or they do not have the right tools to take a more scientific approach to investment. Dr Caragata noted that Rapid Ratings’ web service was designed to take advantage of these emerging opportunities.

The launch is the culmination of 10 years of software design and development and 10 months of website development. The service uses state of the art software and hardware with a capacity to produce reports on 40,000 companies per day. The web service developer is Wellington based Sytec Resources, while the website host is DMZ Global, an Internet security specialist and a Sytec subsidiary. Mediasculpt of New Zealand developed the data engine and graphics development was undertaken is by Spinning-Planet (USA/New Zealand). Technology partners are Sun Microsystems and Oracle.

Rapid Rating’s clients include the National Bank of New Zealand, a wholly - owned subsidiary of Lloyds TSB Group plc in the UK.

“The major focus of activity in the next 12 months will be on developing opportunities in the Australian and New Zealand markets,” said Dr Caragata, “but international opportunities are already being explored with key partners.” Further announcements are expected in the next few months with respect to strategic alliances and new contracts.

Dr Caragata is a Canadian and New Zealand citizen with a background in resource economics, banking, investment analysis, financial analysis, taxation and software development. He is the author of five books, including Business Early Warning Systems: Corporate Governance for the New Millennium, (Butterworths NZ, 2000). He currently divides his time between Australia and New Zealand

This announcement has no relationship to the Collection House Limited ASX release dated 28/5/2002 entitled “Collection House Limited investigates establishment of Consumer Credit Bureau to target fraud prevention”

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