Public Trust Reports $32.1 Million Loss

News Release 12 November 2008

Public Trust Reports $32.1 Million Loss For Year
- Operating Surplus Of $6.1 Million Exceeded Previous Year

Public Trust today announced a $32.1 million loss for the year ended 30 June 2008, despite achieving a core operating surplus (excluding mortgage provisions) of $6.1 million (17% above previous year). Factors contributing to the loss were the budgeted change costs of $4.6 million, combined with unrealised investment losses of $21.6 million and mortgage provisions of $12.4 million.

Chairman Donal Curtin said, “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.”

Chief Executive Grenville Gaskell said “The predominantly unrealised investment loss of $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 $649.3 million. However, we expect about $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-.

“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 $12.4 million.

“On a more encouraging note, the core operating performance was ahead of target at $6.1 million, and 17% higher than the previous year. Public Trust is experiencing strong business growth as the changes we began implementing last year start to have a positive effect on performance. Family trust revenue is up 12%, personal trust revenue has increased 11% and increased volumes of our appointment as property manager resulted in a 28% revenue rise.

“Our specialised business has also seen a good result with charitable trust revenue up 12%. More than 360 private training establishments have now signed up to our student Fee Protect service. Fee Protect continues its strong growth with more than 166,000 students and $780 million having been safeguarded since it was launched.
“The year also saw deposits grow to $977.7 million, up 25% on 2006/07 as more New Zealanders than ever entrusted their investments to Public Trust,” Mr Gaskell said.

Public Trust’s Corporate Trustee Services division, which serves the corporate and business market, won significant new business with funds under supervision growing from $14 billion to $18 billion during the period.

“Customer satisfaction, measured by an external research company, continued to rate Public Trust very highly. Customers who had their Will prepared by Public Trust rated the service they received 8.2 on a 10 point scale and we scored 8.3 for our work with beneficiaries of estates,” said Mr Gaskell

“These very credible scores underline the quality of service provided by our staff who have embraced the major change programme we have underway to enhance our customers’ experience.”

Public Trust has also moved to create an enhanced capital buffer so it can be seen to meet its conservative and prudent mandate. Mr 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.

“New Zealanders need a safe and professional trustee organisation to help protect their interests. This is especially the case during a period of considerable change and given the prevailing economic conditions. As New Zealand’s largest and most enduring trustee organisation, Public Trust has a clear strategy and is committed to making the changes necessary to ensure we are able to continue to play that role.” he said.

ENDS

October 2008

PUBLIC TRUST
BACKGROUND INFORMATION

Key facts
. Public Trust was established in 1873 (135 years ago) to provide New Zealanders with independent and reliable trustee services
. Public Trust's Maori name is Te Tari Tiaki Iwi, which translates as ‘the department that takes care of people’
. Public Trust has 500 staff operating from 35 customer centres, throughout New Zealand. There are eight in the South Island and 27 in the North Island, including seven in the greater Auckland region
. Of all the staff working in the trustee industry in New Zealand, approximately half are employed by Public Trust
. Public Trust’s lawyers and advisors help more New Zealanders write their Will each year than anyone else
. Number of Wills held by Public Trust is over 320,000
. Number of Wills prepared each year: between 20,000 – 25,000
. Public Trust looks after more estates than any other organisation – around 5,000 each year
. We manage over 400 charitable trusts with a cumulative total of around $400 million in assets; these charitable trusts generate funding for interests as diverse as science, medicine, disability and agriculture
. Public Trust manages more than 4,000 family trusts
. Thirty-three New Zealand farms are actively managed by Public Trust, including Smedley Station – New Zealand’s largest training farm
. Total mortgage lending to Public Trust customers equals around $325 million. Public Trust additionally administers portfolios of more than $200 million for other clients

. Public Trust manages the property matters for more than 700 New Zealanders who are unable to manage their own affairs.

. Public Trust manages the financial affairs of more than 14,000 clients.

. Public Trust administers approximately $3.6 billion in assets, including around $1.4 billion in investment funds managed by Public Trust.

. Corporate Trustee Services is a division of Public Trust serving the corporate and business market. It has approximately NZ$18 billion under supervision.

. Over 360 private training establishments have signed to Public Trust’s Fee Protect service. Since its launch, Fee Protect has safeguarded the fees of more than 166,000 students, totalling over $780 million.

How can Public Trust help?
Whatever stage of life, Public Trust can help New Zealanders get their affairs in order. It helps people:

- Make a Will and an Enduring Power of Attorney  Plan for a comfortable retirement
- Buy their own home
- Manage their affairs if they can’t manage alone
- Get their finances and taxes sorted
- Plan ahead for their funeral and final costs
- Grow their wealth and protect it for the future
- Carry out their last wishes
- Provide for their family and their education
- Look after their estate and beneficiaries

Who owns Public Trust?

As a Crown Owned Entity, Public Trust is owned by New Zealanders. Its independence is guaranteed under the Public Trust Act 2001 which expressly requires it to act independently from direction by the Government in managing estates and trusts. Customer privacy and confidentiality is also assured. Public Trust is managed by a chief executive responsible to a board.

ENDS

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