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.
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| 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.”
