Once again, Credit Corporation Finance Limited, the PNG based finance arm of the Group has experienced another excellent result, with a major contributing factor being the business emanating from the ongoing PNGLNG project. Once again, all branches had excellent results in amounts financed as well as the reduction of delinquent accounts.

Credit Corporation Finance Limited recorded an operating profit before tax of K19.61 million for the year ended 31 December 2010, 23.64% higher than last year's overall result of K15.86 million. This is due mainly to new accounting methods and change in estimated general provision for doubtful debts. We are now required to use actuarial method instead of the Rule of 78 method when accounting for finance charges on advances. We also saw low Treasury Bill and Central Bank Bill rates on surplus funds.

The demand for finance, especially in the civil construction and the transport sectors has shown that the financial economic climate has improved considerably and this trend is expected to continue with the gathering momentum of the PNGLNG project. For example, Lae office has been able to capitalise on this by securing a very large client during the year as well as assisting many of our current clients' ventures into this area. Port Moresby has been able to diversify into other areas and has also been able to secure a large new client and this is proving to be another excellent acquisition. Kokopo still has a solid base of loyal and trusted clients, as do all the branches, who continue to support us with sound business.

The Balance Sheet for Credit Corporation Finance Limited continues to be strong with net assets of K76.00 million. The total finance book is just over K194 million and delinquent accounts as at the end of the financial year were only 0.75% against an Australian standard figure of 3.5%, a truly excellent result.

Staffing levels in all branches remain stable and all staff need to be congratulated on another very good result. Without the dedication and loyalty of all management and staff, Credit Corporation Finance Limited would not be the success story it is today.

Once again, Credit Corporation Finance has been a major contributor to the overall profit of the Group in 2010 and this is expected to continue into 2011, despite increased pressure from the banking sector in providing similar products as ours. Our strategy for 2011 is for a small growth factor, continued minimisation of delinquent accounts and further concentration on the PNGLNG project. We will also continue to maintain our excellent relationships with our current clients and introducers.

We are again confident that Credit Corporation Finance Limited will continue to perform well in all areas of lending and will continue to bring in favourable results to the Group in the forthcoming year.

David Weston
General Manager Finance