1st Aug 2005 16:09
Prodesse Investment Limited01 August 2005 1 August 2005 PRODESSE INVESTMENT LIMITED ANNOUNCES EARNINGS FOR THE PERIOD ENDED 30 JUNE 2005 Prodesse Investment Limited (the "Company") today reported net income for theperiod ended 30 June 2005 of US$5.8 million or US$0.21 net income per averageshare. The Company commenced operations on 8 April 2005, thus net income doesnot reflect an entire quarter of operations. As previously announced, dividends declared for the period ended 30 June 2005were US$0.20 per share payable on 4 August 2005 to holders on record on 15 July2005. The annualized dividend yield for the period, based on the 30 June 2005closing price of US$9.63, was 9.02%. The Company was able to provide anannualized return on average equity of 9.67% for the period ended 30 June 2005. "We are pleased to announce the first period results for Prodesse," said MichaelA.J. Farrell, chairman of FIDAC, the Investment Manager of the Company, "We lookforward to continuing to justify investors' confidence in our ability togenerate high current income using high credit quality assets." For the period ended 30 June 2005, the annualized yield on average earningassets was 4.01% and the annualized cost of funds on the average repurchasebalance was 2.67%, which equates to an interest rate spread of 1.34%. Theaverage daily leverage of the Company, as measured by repurchaseagreements-to-equity, was 5.8:1 during the period ended 30 June 2005 and 8.1:1at period's end. Wellington Denahan-Norris, Chief Investment Officer of FIDAC, the InvestmentManager of the Company, commented on the results for the period. "During ourinitial period of operations, our focus was on acquiring assets for theinvestment portfolio. In our strategy, we look to the combination of fixed-rate,adjustable-rate and floating-rate mortgage-backed securities to enable theportfolio to perform through different interest rate environments.Notwithstanding the fact that the current market environment is challenging andthat this has been a startup period, investment conditions for new capital arepromising and we were able to deliver a competitive dividend yield to investorsin Prodesse." Prepayment speeds on mortgage-backed securities, as reflected by the ConstantPrepayment Rate, or CPR, vary according to the type of investment, changes ininterest rates, conditions in the financial markets, competition and otherfactors, none of which can be predicted with any certainty. In general, asprepayment speeds on the Company's mortgage-backed securities portfolioincrease, related purchase premium amortization increases, thereby reducing thenet yield on such assets. The CPR on the Company's mortgage-backed securitiesportfolio averaged 20% for the period ended 30 June 2005. At 30 June 2005, the Company had a net asset value per share of US$9.56. Afterexcluding the effect of current period revenue items (net income for the periodof US$ 5,843,027) the reported net asset value per share is US$ 9.36. Fixed-ratesecurities comprised approximately 33% of the Company's portfolio at 30 June2005. The balance of the portfolio was comprised of 59% adjustable-ratemortgage-backed securities and 8% LIBOR floating-rate collateralized mortgageobligations. As of 30 June 2005, all of the assets in the Company's portfoliowere Fannie Mae and Freddie Mac mortgage-backed securities, which carry animplied "AAA" rating. The Company applied to the Royal Court of Guernsey, immediately after theplacing of the shares, to reduce its share premium account in order to provide adistributable reserve to repurchase its shares if and when it is consideredbeneficial to do so by the Directors. As such the share premium account, afterdeduction of preliminary costs, was reduced by US$220,299,299 and adistributable reserve created for this amount. The Investment Manager will conduct a conference all on Tuesday 2 August 2005 toreview the Company's financial results for the period ended 30 June 2005. Theconference call is scheduled for 3 P.M. London time (10 A.M. EST). Allinterested parties are welcome to participate on the live call. Internationalcallers can access the call by dialing 1-617-614-2713, or 0800-280-02002 for UKcallers or 1-800-659-2037 for US callers and the pass code is 52772825. Pleasedial in 10 minutes prior to the scheduled start of the call and reference"Prodesse Investment Limited Earnings Call". There will be a replay availablefor 48 hours beginning at 12 P.M. EST. The replay number is 1-617-801-6888 forinternational callers and 1-888-286-8010 for US callers and 44-207-365-8427 forUK callers and the pass code is 14462599. This press release includes statements that are, or may be deemed to be,''forward-looking statements''. These forward-looking statements can generallybe identified by the use of forward-looking terminology, including the terms''believes'', ''estimates'', ''anticipates'', ''expects'', ''intends'', ''may'',''will'' or ''should'' or, in each case, their negative or other variations orcomparable terminology. These forward-looking statements include all mattersthat are not historical facts. All forward-looking statements address mattersthat involve risks and uncertainties, are only predictions, and you should notrely unduly on them. Accordingly, there are or will be important factors thatcould cause the Company's actual results to differ materially from thoseindicated in these statements. These factors include but are not limited tothose described in the Company's prospectus under the heading ''SpecialConsiderations and Risk Factors''. Any forward-looking statements in this pressrelease reflect the Company's current views with respect to future events andare subject to these and other risks, uncertainties and assumptions relating tothe Company's operations, results of operations, growth strategy and liquidity.These forward-looking statements speak only as of the date of this pressrelease. Subject to any obligations under the Listing Rules, the Companyundertakes no obligation publicly to update or review any forward-lookingstatement, whether as a result of new information, future developments orotherwise. All subsequent written and oral forward-looking statementsattributable to the Company or FIDAC or individuals acting on behalf of theCompany or FIDAC are expressly qualified in their entirety by this paragraph.Prospective investors should specifically consider the factors identified abovewhich could cause actual results to differ before making any investmentdecision. Prodesse Investment Limited Balance Sheet(unaudited) as at 30 June 2005 2005________________________________________________________________________________ US$ASSETS Current assets Available for sale investments 2,627,255,210 ReceivablesAccrued income receivable 10,559,381Receivable for principal paydowns 8,327,274 18,886,655 ______________ Cash and cash equivalents 5,999 Prepaid expenses 98,256 _______________Total assets 2,646,246,120 _______________ EQUITY AND LIABILITIES Capital and reserves Share capital:28,610,000 @ US$ 0.01 286,100Share premium 50,000,000Distributable reserve 220,299,299Accumulated profits 5,843,027Revaluation reserve (2,843,493) ______________ Total shareholders' equity 273,584,933 ______________ Current liabilitiesSecurities purchased payable 162,120,786Reverse repos 2,206,752,000Accrued interest expense 2,759,461Accrued expenses payable 1,028,940 ______________ Total liabilities 2,372,661,187 _______________ _______________Total equity and liabilities 2,646,246,120 _______________ Net Assets 273,584,933 Net Asset Value per share 9.56Net Asset Value per share excluding currentperiod revenue items 9.36 Prodesse Investment Limited Summary Income Statement(unaudited) from the date of incorporation 22 February 2005 to 30 June 2005* For the period ending 30 June 2005________________________________________________________________________________ US$IncomeInterest income 16,231,405Interest expense (9,330,907) _______________Total income 6,900,498 _______________ ExpensesManagement, Custodian andAdministration fee 937,308Other operating expenses 120,163 _______________Total expenses 1,057,471 _______________ _______________Net income for the period 5,843,027 _______________ Other gains and losses recognised directly in equity:Unrealised loss on revaluation ofavailable for sale investments 2,843,493 _______________ Total recognised income and expense 2,999,534 _______________ Net income for the period per averageshare 0.21 _______________Weighted average number of sharesoutstanding during the period 27,931,786 _______________ * commencement of operations 08 April 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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