Thank you for participating in RapidRatings’ financial risk management program together with our shared client. This document provides the authorized individual/parties with information about RapidRatings, this program, the Financial Health Rating (FHR®) and the data required to produce a rating. Please refer to the sections outlined below and alert your designated RapidRatings contact of any questions or concerns.

Contents

Overview and Program Details

RapidRatings & the Financial Health Rating (FHR) ≫

Scope of the Program ≫

Expected Timeline of Program ≫

Private Company Specific Outreach ≫

Selecting the Appropriate Industry Model ≫

Data Requirements for Disclosure

List of Required Line Items and Other Important Information ≫

Incomplete Submissions & Following Up for Clarifying Information ≫

Submitting Unaudited Statements ≫

Special Treatment of Line Items and Rating Exceptions

Providing Special Treatment to Specific Line Items ≫

Inappropriate Entities for a Rating ≫

Alternate Disclosure Options

Providing Financial Information in a Template ≫

Submitting Parent Company Information ≫

Providing a Substitute or Alternate Document for FHR Rating≫

Use of Information

Policy Regarding the Sharing of Information with New Parties ≫

Privacy & Security >>

Overview and Program Details

RapidRatings & the Financial Health Rating (FHR)

RapidRatings is an unbiased, independent firm that rates the financial health of companies on behalf of supply chain and credit risk management professionals. The Financial Health Rating (FHR) is an objective and consistent 0–100 score that quantitatively measures the financial risk an operating entity faces over the next 12 months. Our proprietary algorithm is calibrated by a data set that includes hundreds of thousands of public and private companies’ financial statements across decades. By calculating 68 ratios that are broken down into performance categories and resilience indicators, RapidRatings provides an empirically robust view on financial risk tailored to 24 industry specific models.

Scope of the Program

This request is part of a larger risk management program being implemented across the supply chain and your firm is in no way being singled out for scrutiny. The Financial Health Rating (FHR) is not viewed in a vacuum and assists our clients in systematically assessing hundreds or thousands of counterparties in order to initially identify where financial distress is most likely to occur. This permits a proactive rather than reactive approach and supports dialogue from a neutral starting point before supply chain disruptions occur.

Expected Timeline of Program

RapidRatings is held to timelines set by the client. These can be found in the letter that your firm received introducing RapidRatings and the program. This expected timeline should not exceed 30 days. A designated representative from RapidRatings will be reaching out consistently to address any questions or concerns that you may have.

We understand that you may require time to process the request and compile the necessary information to complete your submission. If this is the case, kindly notify your RapidRatings contact that the request has been received and is currently under review. If possible, provide a date as to when the information will be made available. Provided that the expected date of completion is within the client’s timeline, RapidRatings will place the request on-hold and reach out again once the information is available.

Private Company Specific Outreach

The RapidRatings Member Services Team works exclusively with privately held companies and successfully guides thousands of these companies through this process on an annual basis. We have successfully rated private companies in 83 different countries and are familiar with the differences in accounting standards, unique concerns, and idiosyncrasies that arise when requesting, receiving and processing confidential information from around the world. Do not hesitate to notify your RapidRatings contact of any specific concerns and they will promptly assist you in the matter.

Remember that this is a confidential disclosure between you and our shared client. It has nothing to do whatsoever with any public filing requirements, or lack thereof, that apply to your company.

Selecting the Appropriate Industry Model

The Financial Health Rating is calibrated to 24 industry specific models. The appropriate model is determined by first determining whether the entity in question is a manufacturer, service company, retail or wholesale entity. Once this major split has been made, RapidRatings will then select a more granular subset that most closely relates to the primary economic activity of the supplier that is being rated. To aid with the allocation of industry, please provide a short description of the primary economic activity of your company.

Data Requirements for Disclosure

List of Required Line Items and Other Important Information

The table and the bullet points below provide a short summary of the data requirements when submitting information to RapidRatings. RapidRatings will not be able to provide any ratings guidance unless all of the requirements are met.

• The units (actual, 000’s, millions) and currency are indicated for each provided
• The financial period start and end dates are clearly marked on the Profit & Loss Statement and Statement of Cash
• The balance sheet date exactly matches the fiscal period end date found on the Profit & Loss statements.
• At least 12 months of Profit & Loss Statement information has been provided for which the period end date is within 1 year of the current date. If necessary, this can be done through adding multiple continuous
• The balance sheet
• If your firm is unable to provide a Statement of Cash Flows without incurring significant cost, please clearly inform your RapidRatings contact, as we may be able to proceed.

Incomplete Submissions & Following Up for Clarifying Information

If you provide an incomplete submission, we discover conflicting data, or we require additional clarification, your designated RapidRatings contact will contact you to complete your submission in a timely manner. The FHR is derived entirely from the information provided by the counterparty. As such, no ratings guidance will be provided until sufficient up to date information has been received to generate a robust rating. If prompted for additional information, please provide this information in a timely manner and alert RapidRatings should you expect delays.

Submitting Unaudited Statements

While we prefer that you provide complete and fully audited financial statements, this is not required. Depending on the time of year, up-to-date audited statements are often still in the process of being prepared. In these instances, our ratings methodology is sufficiently robust using unaudited financial information to provide a meaningful and actionable assessment of Financial Health. If a template or general format is needed to provide up to date information, RapidRatings can provide regional and language specific Excel input templates on request.

Special Treatment of Line Items and Rating Exceptions

Providing Special Treatment to Specific Line Items

Occasionally companies may record abnormal, non-recurring transactions or structure their financial statements in a non-standard format. An analyst from RapidRatings will review all line items on these financial statements and allocate each to the appropriate model input. To ensure as accurate a rating as possible, please provide clarification for any items for which RapidRatings should give special consideration. When appropriate, RapidRatings will reclassify specific items within the model. Please note that you should make very specific reference to the relevant fiscal period, amount and line item within the provided financial statements for our team to review and action your request.

Inappropriate Entities for a Rating

The Financial Health Rating (FHR) is not a suitable assessment of risk for all company types. We cannot generally provide ratings guidance for insurers, not-for-profit organizations and certain unconsolidated holding companies. If you suspect that your company is among these, please discuss with your designated RapidRatings contact.

Alternate Disclosure Options

Providing Financial Information in a Template

Counterparties may be unable to provide prepared statements to support this request. If this is the case, RapidRatings has developed several regional and language specific templates for U.S., Chinese, Brazilian, German, French, Italian and Spanish companies and will provide Excel input templates on request. We can, additionally provide a generic Excel template designed for our analysis if your company is outside of these countries.

Submitting Parent Company Information

The client’s introductory letter you received, as well as RapidRatings’ subsequent communications name a specific entity. This is the preferred entity and you should provide financial information at this level of the company. In some instances, RapidRatings can accept financial statements for the parent company.  We can treat a parent company as a suitable proxy, if and only if the provided entity meets the condition of 1.) Being the direct parent AND 2.) Fully owns the subsidiary (requested entity). When providing financial statements for an entity that does not precisely match the requested entity name, please provide a description of how the two entities are related.

Providing a Substitute or Alternate Document for FHR Rating

The Financial Health Rating is based purely on the information found on the financial statements and RapidRatings is unable to accept any other type of documentation as a substitute for a rating. Our methodology allows for our mutual client to take a standardized approach when reviewing financial risk and by standardizing the metric, our clients can view their risk exposure on an equivalent basis.

Use of Information

Policy Regarding the Sharing of Information with New Parties

The financial information being provided by your company is solely intended for the client related to this request. Neither your submission, nor our subsequent rating and reports will be shared with any other entity. Ratings will be disclosed at the Transparency Level set by your company. Should another client contact you with a similar request, we will engage with you directly to seek explicit written guidance on whether your firm permits additional disclosure. You are in complete control of your disclosures.

Privacy & Security

RapidRatings provides a Non-Disclosure Agreement that provides assurance that we will maintain the security of the data that you submit to us for analysis and subsequently, the ratings we produce. We are happy to countersign this Non-Disclosure Agreement if you would like, to demonstrate our dedication and agreement to protect your data.

RapidRatings is ISO 27001:2013 certified and GDPR compliant. All data is transmitted via HTTPS TLS1.2 encryption and is encrypted at rest when stored in US based data centers that are ISO27001:2013 and SOC1 & 2 certified.