Robert Allport
Chief Executive Officer

The Company has enjoyed another extremely successful year achieving excellent results in core underlying profit and shareholder growth. We have witnessed substantial improvement in the Papua New Guinea economy, driven largely as a result of the ongoing US$15 billion Exxon Mobil led PNGLNG project. This project has resulted in increased demand for both our core businesses of finance and property and whilst this demand is expected to level out during 2012 the Company is well positioned with a growing business and a very strong balance sheet.

Credit Corporation (PNG) Limited and its subsidiaries recorded a net profit after tax of K42.105 million for the year ended 31 December 2011, 48% above the 2010 result. The Group recorded a core operating profit of K74.16 million for the year ended 31 December 2011, 9% above the 2010 result.

Included in the 2011 result, the sum of K15.61 million was booked against the profit and loss account due to the ongoing decrease in the value of our BSP shares on the Port Moresby Stock Exchange. The value of our BSP shareholding has now been reduced for the third year in a row. It is hoped that the Bank's long running "Transformation and Modernisation" exercise will soon be at an end and shareholders will at last see some value from their BSP shareholding.

Shareholders' equity has continued the growth of the last few years, and has now reached K633.86 million while total assets have grown to K890.56 million. Earnings per share has grown to 13 toea and our Expense to Income Ratio has dropped to a record low of 31.6.%. 2011 has been a very good year for the Company, with all sectors of the Group performing well. The Company is well placed to improve on the 2011 results in 2012, although with the PNG National Elections to be held during 2012 and the start of the run down on the procurement stage of the PNGLNG project the year will present its challenges.

During 2011, the Board initiated a comprehensive 5 year Strategic Plan with the assistance of accounting firm KPMG. This Plan covers all areas of the Group and, along with the Risk Management Review by accounting firm PWC that took place in 2010, will be one of the drivers of the Company's growth in the years to come.

During 2011, the Company's On Market Share Buy Back that was introduced during 2010 was extended to the end of 2012. The Buy Back has proven to be popular with shareholders and besides stabilising the fluctuation in the Company's share price on the Port Moresby Stock Exchange has enabled shareholders to sell their shareholding at a fair and reasonable price. Over 50% of our shareholders hold under 5,000 shares and the Buy Back has enabled them to sell their shares into the scheme with no brokerage or other fees.

As the Chairman noted in his review a significant upgrade of the Group's internal computer and data system was undertaken during 2011 and is continuing into 2012. The Group now has a modern, world class accounting, data and management reporting software system that will place the Company in a good position going into the future.

Credit House limited

Credit House Limited produced a solid performance in 2011, recording a net profit after tax of K4.12 million.

The major building upgrade which commenced in 2008 was completed in 2011, with the new façade and main entrance, as well as the new air conditioning and lift services, giving the building a new modern look and an extended operational life.

Despite some more tenant movement during the year the building remains fully occupied.

Era Dorina Limited

The prevailing market conditions have seen Era Dorina Limited post another record net profit after tax of K12.22 million in 2011, a 56% increase over 2010.

Design and procurement issues have delayed the commencement of the twenty unit Stage 5 development, as well as the other projects programmed for 2011 and these will now commence in 2012.

Although we anticipate the market will soften from 2012 with the completion of a number of significant residential developments in the city, we believe the high standard and quality of service provided at Era Dorina will ensure high occupancy levels are maintained. Credit House, Port Moresby

Credit Corporation Finance Limited

Credit Corporation Finance Limited has had an excellent year and has made a substantial contribution to the profit of the Group. Net operating profit before tax for the period was K18.68 million. The PNGLNG project has had a large influence on the PNG economy, with the project on schedule and production due to start in 2014. This is expected to have a continuing positive influence on Credit Corporation Finance Limited. .

Credit Corporation (Fiji) Limited

The Fiji operation had another excellent year earning a record profit before tax of F$7.27 million (K8.08 million) which was 7% up on the 2010 figure of F$6.77 million (K7.52 million). This is considered a very good result given the sluggish economic conditions that prevailed during the year.

With the Fiji economy forecast to remain depressed we expect difficult operating conditions to remain during 2012.

During 2011 Ross McDonald, our Country Head, announced he would be retiring after 11 years service to the Company. Ross has done a sterling job in a difficult business environment and I would like to thank him for his valuable contribution to the Company and wish him well in his well deserved retirement.

Ross has been replaced by Peter Dixon, the Group's Business Development Manager, who has over 28 years experience in banking and finance in Papua New Guinea and Fiji.

Credit Corporation (SI) Limited

Credit Corporation (SI) Limited recorded an operating profit of SBD6.60 million (K1.85 million), 130.32% above the 2010 result.

This is an outstanding result which clearly reflects Credit Corporation's position as the No.1 market leader in the finance industry in the Solomon Islands.

The balance sheet remains active with significant growth evident on both sides.

The injection of additional capital of SBD10 million (K2.9 million) by the parent company in December is a vote of confidence in the progress of Credit Corporation (SI) Limited and this reaffirms its commitment to continue to deliver attractive and competitive financial services to individuals and businesses in the Solomon Islands in the future.

Credit Corporation (Vanuatu) Limited

Credit Corporation Vanuatu recorded a profit of Vatu 37.50 million (K0.99 million), a lower result over the 2010 profit of Vatu 68.24 million (K1.51 million). The balance sheet remains strong with an increase in shareholders' funds to Vatu 428.19 million (K9.76 million).

The decrease in profits reflects a slowing in the economy with reduced activity in the major tourism and land development sectors having a negative impact. Commodity exports have also seen decline over 2010.

Outlook

Credit Corporation (PNG) Limited is committed to long term sustainable growth and the pursuit of strategic opportunities to augment our core business of finance and property. To this end, the Company is well placed with terrific employees, an excellent portfolio of assets and a very strong and growing balance sheet. With our performance-focused culture and hunger for growth, the Company is well placed to continue the growth it has enjoyed over the past 33 years.

As I stated in my 2010 report to shareholders, one thing that will never change at Credit Corporation (PNG) Limited is our commitment to our shareholders with our prime focus of delivering value. 2011 has been a very good year for the Company and with the help of all at Credit Corporation during 2012 I am confident we will achieve our budgets and continue to create shareholder wealth in the years to come.

Robert Allport
Chief Executive Officer