I am happy to report that the Credit Corporation (PNG) Limited Group continued to grow during 2011 with ongoing improvement in core business cash operating profit.

• Group core business cash operating profit for 2011 was K74.16 million, a pleasing increase on the 2010 result of K68.24 million.
• Group total assets increased from K849.55 million to K890.56 million.
• Shareholders' equity reached K633.86 million,
• A dividend totaling K25.31 million was paid to shareholders during August 2011, this being a significant 16% increase on the 2010 dividend payment of K21.79 million.

All subsidiary companies in the Credit Corporation (PNG) Limited Group continued to trade with strong liquidity and on a well capitalised status.

Financing volumes in Papua New Guinea, Fiji and the Solomon Islands exceeded expectation during 2011; however reduced volumes were booked in Vanuatu. The Vanuatu finance subsidiary has reached a level of growth that appears a sustainable size and appropriate to the Vanuatu economy. Strong volumes of new finance contracts continue to be settled so far during 2012. It is anticipated that 2012 will again produce good results in this sector of Group activity.

The recent upward pressure on both office and residential rental rates in Port Moresby has now flowed through to the prime Port Moresby real estate portfolio. Both Credit House and the 93 executive residential and town house apartment development, Era Dorina Estate, will continue to contribute significantly to the Group profitability result. A further 20 executive apartments are under construction at Era Dorina Estate. On completion these apartments will complete the maximum development of the Era Dorina Estate with a total of 113 executive town houses and apartments.

The significant strategic shareholding in Bank of South Pacific Limited (BSP), whilst producing a good dividend flow, again required a negative adjustment to the 2011 profit and loss account. During 2011 BSP shares traded on the Port Moresby Stock Exchange reduced in value from K7.90 to K7.53. This required a negative adjustment of K15.61 million to the 2011 profit and loss account.

Following this adjustment, a Group after tax profit of K42.10 million was achieved. This is a healthy 43% increase on the 2010 after tax result of K29.50 million.

The Board has now resolved to progressively dispose of a portion of the BSP shareholding and to use the relevant funds to diversify into alternative shareholding opportunities as these may arise in the future. Alternative investments will be carefully analysed, with a prime aim of maintaining ongoing dividend income streams.

During 2011, the On Market Share Buy Back whereby shareholders can dispose of up to 5,000 shares via the share buy back scheme continued. The sum of K2.00 million has been allocated in respect to this scheme. As this sum has not yet been fully expended the Board has resolved to continue the scheme for a further period to 29 November 2012.

A significant upgrade of the Group's internal computer and data system was undertaken during 2011. This has significantly increased the Group's accounting, data and management reporting capacity and will serve the Group well, particularly in the focus area of risk management.

Following the acquisition of the Colonial National Bank interests in Fiji by Bank South Pacific Limited, the parcel of shares held in subsidiary Credit Corporation (Fiji) Limited were purchased by Credit Corporation (PNG) Limited. The Fiji subsidiary is now 100% owned by Credit Corporation (PNG) Limited.

The continued shareholder support together with customer and service provider support is paramount to the success of the Credit Corporation (PNG) Limited Group. The dedication of the executive and support staff is also sincerely appreciated as is the significant contribution by my fellow Board members.

The strong result for 2011 is evidence of this unilateral support that has again produced the favorable growth and profitability recorded in this Annual Report.

Garth McIlwain
Chairman