CDO Carador Eur

 

TIDMCDO 
 
RNS Number : 1916L 
Carador PLC 
30 April 2010 
 

Carador PLC 
30 April 2009 
 
The following amendments have been made to the 'Annual Financial Report' 
announcement released on 30/04/2010 at 10.46am under RNS No 1244L. 
 
- Earnings per share figure on Company Statement of Comprehensive Income for 
31st December 2009 amended to EUR0.05 from EUR0.12 
- Earnings per share figure on Consolidate Statement of Comprehensive Income for 
31st December 2009 amended to EUR0.04 from EUR0.02 
- Number of ordinary shares for basic and diluted earnings per share under 
Company as at 31st December 2009 on Note 16 of the Notes to the Financial 
Statements amended to 140,021,054 from 57,284,855 
- Number of ordinary shares for basic and diluted earnings per share under 
Consolidated as at 31st December 2009 on Note 16 of the Notes to the Financial 
Statements amended to 140,021,054 from 57,284,855 
- Earnings per share figure under Company as at 31st December 2009 on Note 16 of 
the Notes to the Financial Statements amended to (0.05) from (0.12) 
- Earnings per share figure under Consolidated as at 31st December 2009 on Note 
16 of the Notes to the Financial Statements amended to (0.04) from (0.11) 
 
All other details remain unchanged. 
 
The full amended text is shown below. 
 
 
                               Annual Report for 
                        the Year Ended 31 December 2009 
 
Carador plc ("Carador" or the Company) has today released its Annual Report and 
Consolidated Audited 
Financial Statements for the period from 1 January 2009 to 31 December 2009. 
 
The Annual Report and Consolidated Audited Financial Statements will shortly be 
available from the 
Company's website www.carador.co.uk and for inspection at the UK Listing 
Authority's Document 
Viewing Facility, which is located at: 
 
Financial Services Authority 
25 The North Colonnade 
Canary Wharf 
London E14 5HS 
 
The financial information set out in this announcement is an extract from the 
Annual 
Report and Consolidated Audited Financial Statements of the Company for the 
period from 1 January 2009 to 31 December 2009 and does not constitute the 
Company's statutory accounts. 
 
 
Enquiries: 
Paul Noonan 
Northern Trust Investor Services (Ireland) Limited +353 1 542 2000 
 
 
 
CHAIRMAN'S REPORT 
 
I herewith present the consolidated annual report and financial statements for 
Carador PLC ('Carador' or the 'Company') for the year ended 31 December 2009. 
 
The first half of 2009 saw an improvement in market sentiment despite the 
significant increase in the leveraged loan default rate, highlighting the 
influence of technical factors in the loan market sell off in 2008. The second 
half of the year saw improving fundamentals support the leveraged loan and CLO 
market further. 
 
The Credit Suisse Leveraged Loan Index returned 44.9% in 2009 compared to -28.8% 
in 2008. As a result, leveraged loans have been one of the best performing asset 
classes in 2009 with similar returns to unsecured high yield bonds (54.22%(1)) 
and significantly outperforming equities (S&P500 2009 return 26.46%) and 
investment grade corporate bonds (Credit Suisse Liquid US Corporate Bond Index 
+19.61%). 
 
Offsetting the recovery in trading levels, the long anticipated increase in 
default rates began to materialise. The 12 month lagging default rate by 
principal amount jumped to 10.81% in November from 3.75% at year-end 2008. The 
increase in defaults, as historically has been the norm, resulted in lower 
recovery rates. The average issuer weighted recovery rate for first lien loans 
was 54.0% in 2009 versus an average recovery for the period 1982-2009 of 
65.6%(2) but still significantly higher than the average recovery rate for 
senior unsecured bonds which was 37.7% in 2009. Despite the significant increase 
in defaults, the recovery rate for first lien loans was higher than in 1993 
(53.4%) and in line with 1998 (56.7%). 
 
Another concern for CLOs earlier in the year was the effect of downgrades in 
their overcollateralisation test ("OC Tests") which are normally adjusted to 
reflect not only defaults but also the proportion of CCC rated assets in the 
portfolios. The higher share of CCC loans among rated issuers has been 
compensated by the outperformance of this subset of the market. US leveraged 
loans rated CCC/split CCC/Default generated a 60.9% total return in 2009, 
outperforming the index by 16%. As a result, the CCC haircuts in the OC test 
have, in some cases, fallen. 
 
The stronger than expected economic rebound, the proactive approach taken by 
companies to amend their covenants, the effect of distressed exchanges and 
strong high yield bond issuance have contributed to marked reductions in default 
expectations.  Moody's default rate forecasting model shows a sharp fall in the 
global speculative-grade default rate to 3.3% by December 2010. Moody's points 
out that the forecasted sharp decline is consistent with previous credit 
cycles(3). 
 
Carador's equity portfolio was affected by the number of defaults and CCC 
downgrades, and their effect in the OC Tests of several transactions, which have 
diverted cash flows to repay senior debt in the first half of the year. It has 
benefited from the underlying loan price improvements and selective purchases 
and sales by the Manager taking advantage of the dislocation of the CLO market. 
The performance of the senior notes in the portfolio has been positive but has 
come mainly in the form of principal prepayments, which the Company cannot use 
to fund dividend distributions. 
 
Performance during the twelve months ended 31 December 2009 
 
During the 12 month period ending 31 December 2009 the Company incurred a net 
loss of EUR1,445,179 and losses per share of EUR0.13. The Board declared quarterly 
interim dividends in respect of the year ended 31 December 2009 of EUR5,706,195, 
in aggregate, equivalent to EUR0.0492 per share (US$0.0693 per US$ share). 
 
The Company's net asset value decreased by 11% in the period to EUR58,103,058. 
This was offset by the dividends distributed during the year which equated to 
10.0% of the opening EUR class NAV and 11.1% of the opening US$ class NAV, giving 
a total return for the year in the EUR Class of -0.2% and for the US$ Class of 
+2.4%. As of 31 December 2009, the Company's portfolio had exposure to 30 CLO 
tranches and 29 loan portfolios. 21% of the investment portfolio was invested in 
cash or senior tranches (AAA/AA original rating) of CLOs, 7% in mezzanine 
tranches (A/BBB/BB original rating) and 45% in subordinated tranches. The 
Company held 27% of its assets in cash as at 31 December 2009. The portfolio is 
broadly diversified across 16 managers. 
 
(1)-Credit Suisse High Yield Index 
(2)-Source: Moody's, "Special Comment: Corporate Default and Recovery Rates, 
1920-2009", February 2010 
(3)-Source: Moody's, "Special Comment: Corporate Default and Recovery Rates, 
1920-2009", February 2010 
 
 
 
CHAIRMAN'S REPORT (continued) 
 
Outlook 
 
The decision by Carador's investors to amend the investment guidelines to 
include senior tranches of CLOs has proven to be prudent. The Board believes 
that the realisations completed during 2009 and the cash held by the Company 
means that Carador is well positioned to take advantage of potential 
opportunities presented by the current market. 
 
Material events 
 
On 13 January 2010, the Board declared an interim dividend of EUR0.01 per share 
in respect of the quarterly period ended 31 December 2009. This dividend was 
payable on 29 January 2010 to shareholders on the register as at the close of 
business on 22 January 2010. US$ class shareholders received US$0.0145 per 
share, calculated at the prevailing exchange rate on 13 January 2010 of 
EUR1:US$1.4508. 
 
On 12 February 2010, the Company issued a circular to shareholders in order to 
provide an update on GSO Capital Partners International LLP's implementation of 
the Company's investment strategy and to notify them of the implementation of a 
share repurchase programme by the Company. As at 28 April 2010, no shares had 
been repurchased by the Company. 
 
On 14 April 2010, the Board declared an interim dividend of EUR0.0091 per share 
in respect of the quarterly period ended 31 March 2010. This dividend is payable 
on 23 April 2010 to shareholders on the register as at the close of business on 
21 April 2010. US$ class shareholders received US$0.0124 per share, calculated 
at the prevailing exchange rate on 14 April 2010 of EUR1:US$1.3626. 
 
On 15 April 2010, the Company released its net asset value as at 31 March 2010. 
As at the close of business on 31 March 2010, the unaudited net asset value per 
share was EUR0.4697 for the EURO class shares and US$0.6006 for the US$ class 
shares. Including dividends paid during the period, the total return for the 
EURO class shares and the US$ class shares in the year to date was 10.66% and 
10.12% per share respectively. 
 
In January 2010, the Company disposed of a portion of its holding in Gale Force 
4. This disposal resulted in the reduction of its holding in the 
equity/mezzanine tranche of Gale Force 4 to below 50% and as a result, in the 
future Gale Force 4 will no longer be consolidated. 
 
Werner Schwanberg 
Chairman 
 
28 April 2010 
 
 
 
 
RESPONSIBILITY STATEMENT 
 
Responsibility statement 
 
The Directors are responsible for preparing the consolidated financial 
statements in accordance with applicable Irish law and those International 
Financial Reporting Standards ("IFRS") as adopted by the European Union. 
 
Irish company law requires the Directors to prepare consolidated financial 
statements for each financial period, which give a true and fair view of the 
state of affairs of the Company and the Group and the profit or loss of the 
Company and the Group for that period. In preparing those consolidated financial 
statements, the Directors are required to: 
 
·    select suitable accounting policies and then apply them consistently; 
·    prepare the financial statements on the going concern basis unless it is 

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