Chairmans Review

"Despite the general slowdown in the Papua New Guinea economy during 2015, the group financial performance is pleasing with strong profitability and growth in total assets"

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Chairmans Review

PNG’s economy continued to languish during 2016, which impacted our finance and property operations while our investment arm performed strongly. A summary of our performance is as follows:

  • Core business operating profit from finance, property and dividend revenues was
  • K65.94 million, compared to the profit of K75.76 million recorded for 2015.
  • The Group recorded an operating profit after tax of K98.9 million, up 57% on last
  • year.
  • Group total assets reached K1, 249.15 million at year end, an increase from K1,164.88
  • million at the end of 2015.
  • Total shareholders’ equity at year end was K787.29 million, an increase of K43.60
  • million from 2015. This equates to Net Asset Backing per Share of K2.50.
  • Dividend payments for 2015, totalling K44.10 million, were distributed to
  • shareholders during 2016 at the rate of 14 toea per share, increasing the dividend
  • paid for 2014.
  • Interim dividends for 2016 year were paid in November 2016 and January 2017,
  • amounting to K12.60 million at a rate of 3 and 1 toea respectively.

To comply with the International Financial Reporting Standards, the following fair value adjustments have been made to the 2016 consolidated financial statements:

1. Bank of South Pacific Limited (BSP) shareholding

A positive adjustment largely to recognise the increase from K7.50 to K9.00 in the value of BSP shares traded on the Port Moresby Stock Exchange. A sum of K57.40 million has been booked in this regard.

2. Investment Properties

A reduction of K22.05 million has been recognised to account for the fair value adjustment of the various Group investment properties. This recognises reducing rental levels and current and anticipated vacancy levels in the market.

As highlighted in the 2014 and 2015 Annual Reports the challenges continue as the Papua New Guinea economy adjusts to reduced mining activity, low oil prices and low agriculture commodity volumes and prices.
Government revenues are under extreme pressure with widespread delays in payments for various infrastructure and associated contracted services as well as government employees.

The market is pinning its hopes on the anticipated announcement of a new LNG project by the major oil and gas companies Exxon Mobil and Total. It’s expected that once an announcement is made the economy will receive a much-needed stimulus which should benefit the country and the economy.

2017 is expected to be another difficult year in PNG and your Board is addressing methods to assist Credit Corporation to achieve the best possible outcome while being well positioned to maximise opportunities going forward as the economy improves. Our South Pacific operations are performing well which is expected to continue. I would like to acknowledge the contribution of the outgoing Chairman, Garth McIlwain and the outgoing CEO, Robert Allport who have been pivotal in the growth and development of Credit Corporation over many years.

We have a strong and experienced Board of Directors which is taking an increasingly active role in the operations of Credit Corporation along with a new CEO who has extensive international and PNG experience. I’m confident we have the right leadership and direction to ensure Credit Corporation prospers going forward.

Sir Wilson Kamit, CBE