Nambawan Super Ltd has posted a net after tax profit of K24 million compared to K263 million for the corresponding period in 2010.
“It is not the best outcome but still a good outcome,” said Sir Nagora Bogan, chairman of the board of Nambawan Super when announcing the financial results for the fund for the financial year ending December 31, 2011.
|Sir Nagora Bogan|
“This is a good outcome considering the volatility in performance of some of the assets in its investment portfolio which are subjected to global market factors.
“This result enabled the board to decide on an interest crediting rate of 2% for our members compared to 10% in 2010.
“This crediting rate is marginally higher than the interest rate on funds deposited in commercial banks which is about 1%.
“This is also a solid performance considering some funds globally including in Australia have been experiencing negative growth.
“The board has set a reserve level of 1.32%.
“The interest has already been credited to members’ accounts including in the accounts of our growing number of RSA members.”
Reflecting in hindsight, Sir Nagora said it was not realistic to expect a continuous run of double digit interest in a global market place adversely affected by the global financial crisis, the impact of depressed economic conditions of countries in Europe and exchange rate volatility.
In fact, the board of the fund had recognized this fact and had taken the prudential step to have an overarching investment objective in its revised investment strategy which is “to provide an after-tax return of at least +2% above CPI with negative returns in no more than one in five years”.
“The board has also consistently cautioned members, over past seven years, not to expect a continuous run of double digit interest,” Sir Nagora said.
“In 2011, we faced many challenges from investment markets, and we were reminded that prices do not always rise, and how important it is to have a diversified portfolio of investments to mitigate risks.
“Locally, our share market had a generally quiet year, with share prices moderating after several years of strong returns.
“The days of double digit returns are behind us, and in 2011 we were reminded of that.
“Our offshore investments were severely affected by the appreciation of the PNG Kina over 2011, which rose against most currencies by some 23% over the year.
“This immediately resulted in a fall in the value if our overseas investments by this amount.
“Some members will have only experienced the very strong returns of the past few years, and many of you will have experienced the strong returns of the past decade.
“In any case, it is worth considering the return over the past year, in the context of the longer term and implications for their retirement benefits.”
Sir Nagora said: “Nambawan Super Ltd is a proud Papua New Guinea institution.
“Over the past decade, Nambawan Super has invested on your behalf in a diversified portfolio including property, bank deposits and in blue chip PNG companies such as Bank of South Pacific and South Pacific Brewery.
“More than 80% of the fund’s investments continue to be invested locally, benefiting not only members through strong returns but also our country through employment generation, growth in investments, retention of capital and wealth creation.
“We will continue to have a majority of members’ funds invested in PNG assets, as we see a strong long term outlook for PNG and also to minimise exchange rate risks associated with investing offshore.”