"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"
Despite the general slowdown in the Papua New Guinea economy during 2015, the group financial performance as detailed in the following pages is pleasing with strong profitability and growth in total assets;
Fair Value Adjustments
To comply with the international accounting standards the following fair value adjustments have been made to the 2015 consolidated financial statements:
Bank of South Pacific Limited (BSP) Shareholding
A positive adjustment largely to recognise the increase from K7.14 to K7.50 in the value of BSP shares traded on the Port Moresby Stock Exchange. A sum of K14.10 million has been booked in this regard.
The sum of K18.56 million has been recognised in order to bring to account the fair value of the various group investment properties. This recognises reducing rental levels and current and anticipated vacancy levels in the present market. After these adjustments a group after tax profit result of K63.14 million is recorded for 2015. As highlighted in the 2013 and 2014 Annual Reports the challenges continue as the Papua New Guinea economy adjusts to reduced LNG, mining activity, low oil prices and low agriculture commodity volumes and prices. The past year has experienced additional challenges with the temporary closure of the Ok Tedi Mine and reduced coffee production due to serious drought conditions in the Highland Provinces. Foreign exchange earnings have therefore been severely reduced due to the reduction in gold, copper and coffee exports. Government revenues are therefore under downward pressure with consequence delays in payments for various infrastructure and associated contracted services. However, the established Papua New Guinea private and corporate sectors are quite resilient. Ongoing communication and cooperation by these sectors will ensure ongoing business activity. The recent re-opening of the Ok Tedi Mine and the anticipation of foreign exchange inflows from LNG exports will assist in returning the domestic economy to a more favourable status. The 2015 results with a core business operating profit result of K75.76 million whilst being a slight reduction from the 2014 result of K82.50 million - demonstrates the focus by the Board and Management to adapt to the fiscal and economic challenges that confront the Papua New Guinea economy from time to time. Whilst trading prospects for 2016 continue to be challenging the Board is confident that measures are in place that will ensure the best outcome for profitability. Strong liquidity and generous capital remain a feature relative to all group subsidiary companies. This will ensure that the Credit Corporation (PNG) Limited Group retains its respected status amongst the locally owned corporations in the South Pacific. The strong performance during 2015 confirms the ongoing support by our loyal customer base. This is sincerely appreciated as is the dedication of the executive management and staff. The ongoing support from fellow Board members is also acknowledged.
Sir Wilson Kamit, CBE