"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"
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:
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