18 January 2013

Treasury Releases Its Crown Portfolio Performance Report

The Treasury’s Crown Ownership Monitoring Unit (COMU), today published the third edition of its Annual Portfolio Report.

The report covers the performance of 44 government-owned enterprises that are worth more than $100 billion in total and represent more than 40% of the Crown’s assets. The report splits its analysis into three parts that cover
• entities that invest Crown funds (called Crown financial institutions or CFIs),
• companies that have a commercial priority, and
• multiple-objective entities such as Crown Research Institutes and the Lotteries Commission.

The report notes that the Crown’s portfolio of commercial and financial investments made a modest return in the year to 30 June 2012, in the context of uncertain business environments.

For the Crown financial institutions, strong gains from fixed-interest securities offset poor equity market performance so that overall they made modest returns. However, the funds performed well relative to benchmarks, indicating that active investment strategies have added value.

In the commercial priority group of companies, total shareholder return and dividend yield were both lower than in 2010/11. In addition to the challenging business conditions unfavourable hydrological conditions also adversely affected portfolio performance because the portfolio has a large weighting of energy sector companies.

COMU Deputy Secretary Andrew Turner said: “Given the tight fiscal position that New Zealand faces in the context of ongoing challenges in the economic environment, efficient and effective balance sheet management is critical. The ability of commercially-focused companies and CFIs to create value and then, where appropriate, make that available for government priorities is more important than ever.”

Publishing the report is consistent with COMU’s role in promoting transparency through public disclosure initiatives. The purpose of the Annual Portfolio Report (APR) is to provide further disclosure, in combination with stronger information flows from the enterprises themselves.

The report is on the COMU website: www.comu.govt.nz/publications/annual-portfolio-report/.

ENDS

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