Investment Performance – As Good as Gold

“Investment Performance – As Good as Gold”

The West Coast Development Trust (WCDT) has produced its fourth successive year of returns which have outperformed industry benchmarks for its asset allocation. The Development Trust was capitalised with $92 million received from the Crown in 2001 – this was its part of the $120 million adjustment package distributed to the region to compensate for the loss of access to indigenous forestry in the 1990s.

The major contributor to profit was an outstanding $9.8 million received in investment income, with an overall yield of 9.3% on funds managed. The investment income was $3 million (42%) above budgeted levels for the year.

The Trust invests it’s assets based on the following allocation targets:

Statement of Investment Policy and Objectives

TARGET ASSET ALLOCATION LEVELS

Class 2004-05
Australasian Equities 5%
Australasian Listed Property 5%
International Equities 10%
Active Trading Fund 5%
Alternative Investments 5%
NZ Fixed Interest 60%
Cash 10%
Total 100%

The Development Trust has continued to emphasise stability of income, absolute positive returns and the maintenance of liquidity in its capital portfolio, to ensure it has an earning stream and capacity to undertake its private equity and lending portfolios within the West Coast region.

Last year The Development Trust approved West Coast distribution investments of a total of $12.7 million into 18 clients. Since its establishment, The Development Trust has processed over 450 enquiries, and analysed 85 client applications, and has approved over $36 million of investments within the region.
The West Coast Development Trust produced an excellent Group operating profit of $7.2 million for the year to 31/03/05. It allocated $3.8 million of the operating profit into community distributions and projects, the largest of which was a $1.8 million regional literacy project to be carried out over three years.

The bumper profit has been conservatively utilised in the Trust accounts this year by allocating $2 million into provisions against any future potential adverse investment outcomes.

The Group surplus after provisions and community distributions was $3.4 million, which gave a 3.28% growth on the fund, which brings the Group net equity to $110 million at 31 March 2005.

In the last four years The Development Trust has achieved operating profits totalling over $25 million, and from this has allocated over $5 million into community projects and built a $2 million provision, adding over $18 million to it’s opening equity.

It now holds over $110 million in funds.

The West Coast region has had its 21st successive quarter of growth and in recent National Bank Surveys has consistently been one of New Zealand’s fastest growing regions. “This is an outstanding turnaround over past performance and reflects our region’s strong and diverse economy,” says Development Trust chair Frank Dooley.

“However this growth leads to its own set of challenges which are around meeting shortages of skills, labour, housing and in supporting enhancement in infrastructure services such as transport, health and education.”

ENDS

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