KEY POINTS:
The Public Trust is blaming its first annual loss in five years on the credit crunch.
The Crown owned entity has announced a $32.1 million loss for the year to June 30, compared with a $4.1 million profit the previous year.
The loss is largely due to unrealised
investment losses of $21.6 million, plus mortgage provisions of $12.4 million and budgeted change costs of $4.6 million.
Chief executive Grenville Gaskell said Public Trust's $649 million investment portfolio had been hit by the international credit crisis.
Under new international accounting standards, it was required to revalue its investments based on the current marketplace, and its interest-bearing securities had been impacted by the problems in the credit market.
"The good news is that we expect $20 million of those to come back to profit in future years, because we are holding those interest-bearing securities until maturity," he said.
Public Trust had a conservative investment strategy and its investments had an average credit rating of AA-.
The losses accounted for around 3 per cent of the total investment portfolio "which in the current market is probably a very solid performance," he said.
By comparison the New Zealand Superannuation Fund made a 5 per cent annual loss in its June year, and the average loss for the year among 24 superannuation funds monitored by FundSource was 7.5 per cent.
Gaskell said Public Trust had achieved a core operating surplus of $6.1 million, a 17 per cent increase on last year.
"So it is a story of two halves where our underlying business is improving as a result of the change programme we have under way, but the material impact of the credit crunch ... is affecting all organisations that do have investment portfolios."
The organisation had also incurred losses and made provisions totalling $12.4 million on its mortgage book.
Public Trust's chairman Donal Curtin said the Government had provided the organisation with $20 million in additional capital.
THE FIGURES
Public Trust result for the year to June 30:
* $32.1 million loss.
* $21.6 million in unrealised investment losses and $12.4 in mortgage provisions contributed to the red ink.
* Core operating surplus rose 17 per cent to $6.1 million.