Public Trust announced a NZ$32.1 million loss for the year ended June 30 2008, citing unrealised investment losses of NZ$21.6 million and mortgage provisions of NZ$12.4 million in a difficult investment climate and a deteriorating property market. Public Trust also announced that it had received a NZ$20 million capital injection from the government. (Updated to include content on the capital injection). However the trust did announce a NZ$6.1 million operating surplus for the year, excluding mortgage provisions. This was ahead of target and 17% higher than the previous year. "The predominantly unrealised investment loss of NZ$21.6 million largely came from the re-valuation of interest bearing securities and represents a 3.3% loss on the full investment portfolio of NZ$649.3 million. However, we expect about NZ$20.1 million of these unrealised losses to revert to profit in coming years. This unrealised loss has been incurred on a high quality portfolio predominantly fixed interest investments with a conservative weighted average credit rating of AA-," Chief Executive Grenville Gaskell said. Public Trust has also moved to create an enhanced capital buffer so it can be seen to meet its conservative and prudent mandate. Public Trust Chairman Donal Curtin said that since balance date the shareholder has provided $20 million additional capital as a measure of prudence in the current market environment and to ensure that the utmost confidence in Public Trust is maintained. "The impact of the rapid deterioration in the property market is also of concern. All Public Trust's loans are first mortgages with a deliberately low lending to value ratio averaging 41% across the portfolio. We have seen a significant drop in the value of properties in some sectors. This has resulted in an increase in non-performing and impaired mortgages, and losses and provisions totalling NZ$12.4 million," Gaskell said.Curtin said that: "The year has been very challenging for Public Trust. The business had to weather the global credit crisis and a difficult investment climate. Despite this, Public Trust recorded an improved operating performance with most areas of the business exceeding expectations. The business is well positioned to achieve further growth in core products and services."
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