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NZ Guardian Trust reverts to normal-sized dividends after exit payment to Suncorp

Thursday 30th May 2013

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New Zealand Guardian Trust, the trustee company acquired by ASX-listed Trust Co in early 2011, has reverted to a lower dividend based on earnings after making a bigger payment to its former owner as part of the sale agreement.

The company paid a dividend of $3 million in the year ended Feb. 28, its financial statements show. That's down from the $8.49 million paid the previous year to former owner Suncorp Group.

The dividend to Suncorp was part of the sale agreement to Trust Co and was the first dividend for a number of years. The latest dividend to Trust Co "was part of the normal order of business and was based on Guardian Trust's earnings," a company spokesman said.

Sales fell to $35.5 million in the latest year from $37 million, reflecting a decline in trustee and fund management fees. Profit fell to $3.57 million from about $6 million.

Australian insurer Suncorp sold Guardian Trust to Trust Co for $42 million, recording a loss of A$40 million on the sale after it wrote off goodwill. That followed Suncorp's decision to sell fund manager Tyndall Investments to Japan's Nikko Asset Management.

Trust Co itself is now under competing takeover offers. In April it rejected an offer from rival Equity Trustees, instead entering a scheme of arrangement with Perpetual Ltd that would see Perpetual acquire 100 percent of its shares. Trust Co subsequently rejected a sweetened offer from Equity Trustees.

Guardian Trust was forced to freeze $249 million in its mortgage fund in 2008 as liquidity fell away in the wake of the global financial crisis. Later that year the group provided an indemnity to compensate the Guardian CashPlus Mortgage Units Fund for any capital losses incurred on the investment.

As at Feb. 28 this year, the group provided $5.3 million to cover expected losses, up from $5.2 million a year earlier, its accounts show.

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