Portfolio Composition by Asset Class
The Fund’s domestic cash allocation (Domestic Cash Portfolio) comprises bank and finance company at call accounts and term deposits, with a term less than 182 days to maturity at the time of issue. As at 31 December 2017, the Fund has around 9.7% of the portfolio in cash.
The Fund has achieved a significant benefit from holding substantial amounts of offshore cash, and international equity assets against a backdrop of a weakening Kina. Domestically high levels of cash reflected the following: (i) advance planning for cash flow needs for approved investment projects that will come to fruition in the next 12 months. In particular, the Fund has pre-approved property development activities that will move into the construction phase later in 2018. The Fund is also investigating some larger unlisted equity investments, which if they come to fruition will also absorb a component of the cash held, (ii) an inability to obtain adequate foreign exchange from the controlled exchange rate scheme, as adopted by BPNG in order to further diversify the Fund’s investment into international assets.
The Fund’s fixed interest allocation, or fixed interest portfolio, comprises bank term deposits, government securities and corporate loans, with a term equal, or more, than 182 days to maturity, at the time of issue. As at 31 December 2017, the value of Fixed Interest Portfolio was approximately 37.4% of the total investment portfolio. This is an increase over the previous year for reasons noted above.
This asset class is made up mostly of government securities and the Fund continues to monitor the market for opportunities to acquire government bonds at suitable yield levels. The Fund remains a regular participant in auctions of both long and short term government securities, subject to the yield on offer being suitable to the Funds requirements and view of risk.
In addition to government securities, the asset class also includes investments in commercial loans for subsidiary companies construction projects and syndicated infrastructure loans.
As at 31 December 2018, the Fund’s allocation to this asset class was 26.0% of the Fund value, a slight decrease from the prior year due to revaluation losses on a number of the unlisted equities consistent with the challenging domestic market environment.
As at 31 December 2018, domestic listed equity was around 10.1% of the Fund. The decrease in value compared to 2017 was primarily due to significant declines in Credit Corporation Limited (CCP) and CPL Limited (CPL) share values which more than offset increase in the share price of Bank of South Pacific (BSP). NSL was instrumental in the Board spill at CCP during 2018 and a new Board elected into office. Early indications are that CCP is back on the road to recovery under the guidance of the new Board and management. The Fund opted not to participate in a capital raise by CPL in the prior year and continues to monitor its investment in the company. Again, BSP continues to provide strong return to the Fund through good dividend and capital growth reflecting its strong financial performance during the year.
The figure below shows the holdings of the Fund in domestic listed equities.
|Bank South Pacific Ltd||POMSoX||Banking/Finance|
|Credit Corporation Ltd||POMSoX||Finance/Property|
|City Pharmacy Limited||POMSoX||Health/Retail|
As at 31 December 2018, domestic unlisted equity was roughly 15.9% of the Fund.
The Fund reviewed a number of investment proposals during the year. Lead times for unlisted investments tend to be quite long and information intensive and as such many other investment proposals remained work in progress at the end of the year. The Fund continues to work closely with its investees to assist the growth of those businesses through strategies to finance opportunities through activity such as mergers and acquisitions, which in turn will be of benefit to the Fund.
During the year the Fund participated in a capital raise by one of its investee companies, Paradise Company Limited (PCL) to acquire Laga Industries Limited (Laga) from Steamships. Laga is a complementary business to PCL and significant synergistic benefits are expected going forward. The Fund also disposed of its holding in Brian Bell & Company Limited (Brian Bell) during the year.
Domestic Unlisted Equities as at 31 December 2018
|Unquoted Ordinary Shares
|Alotau International Hotel Ltd||Hotel|
|Capital Life Insurance Company Ltd||Insurance|
|Gazelle International Hotel Ltd||Hotel|
|Kumul Hotels Ltd||Hotel|
|Pacific Management Services Ltd||Building Maintenance|
|Paradise Foods Ltd||Food & Snacks/Manufacturing|
|PNG Water Ltd||Utilities|
|Post Courier Ltd||Media|
|SP Brewery Ltd||Manufacturing|
|Toyota Tsusho (PNG) Ltd||Motor Vehicle|
|Westpac Banking Corporation (PNG) Ltd||Banking /Finance|
The domestic properties portfolio is comprised of commercial, residential, industrial properties and unimproved land. As at 31 December 2017, this asset class was approximately 11.6% of the Fund.
The Fund has continued the implementation of the property strategy, which involves the following activities: (i) divesting non-core and underperforming assets while providing adequate maintenance to all properties, and (ii) upgrading existing key assets.
During the year, the construction of the second stage of Nambawan Plaza precinct was approximately 50.0% completed, and is on time and on budget. When complete, the precinct will consist of a word class mixed use office, residential, entertainment and retail complex with green areas for outdoor entertainment and recreation. Leasing of the first building in the complex, what is now known as Deloitte Haus, progressed well during the year. The building was approximately 60% leased at the end of December 2017 and the Fund expects it to be close to fully leased over the first half of 2018. This building is providing excellent levels of income to the Fund.
The Rangeview Heights development, which was approved by the Fund in 2016, has made progress during the year. The mobilisation payment has been undertaken and construction is expected to commence in the latter half of 2018.
The Fund undertook extensive maintenance programs for a number of properties including Revenue Haus Morobe Haus (Vele Rumana) and Aopi Centre during the year.
Specifically, the Fund remains focussed on optimising profitability on core property asset holdings. The ‘divestment’ initiative, which is currently underway, is expected to further stream line, and improve the composition of this asset class. In turn, this will lead to an improved risk-return profile for the Fund, and a diminished exposure to sub-optimal holdings. During the year the Fund completed its divestment of its 50% share in Lawes Road, the Cedar Apartment and Hibiscus Apartment.
Property Portfolio as at 31 December 2017
(S20 L12 Champion Parade)
|Port Moresby||7 Level Commercial Office Complex in the CBD|
(S20 L13 Champion Parade)
|Port Moresby||9 Level Commercial Office Complex in the CBD|
(S405 L15 Waigani Drive)
|Port Moresby||A 6 Level Twin Tower Office Complex on Waigani Drive.|
(S390 L12,13&14 Waigani Drive)
|Port Moresby||6 Level Commercial Office Complex in Waigani|
(S20 L11 Champion Parade)
|Port Moresby||9 Level Commercial Office Complex in the CBD|
(S20 L3,4&5 Champion Parade)
|Port Moresby||4 Level Mixed Office & Retail Space in the CBD|
(S3 L21 Hunter Street)
|Port Moresby||9 level Mixed Use Commercial/ Residential Complex in the CBD|
|Morobe Haus (Vele Rumana)
(S6 L47 4th Street, Top Town)
|Lae||6 Level Commercial Office Complex in the CBD.|
|Nambawan Super Haus (S49 L3,4,5,6 & 7)||Lae||7 level Mixed Use Commercial/Residential Complex in CBD.|
|S15, 16& 17 L64 (Bowmans and Gordons Warehouse)||Port Moresby||Partly, NSL Data Storage & archive facility|
|Voco point S42 L5 &6||Lae||Industrial Wharehouse.|
|Bayside Apartments (Portion 178)||Port Moresby||42 x 2&3 Bedroom Residential Units|
|Lawes Road (S7 L24) (50%)||Port Moresby||20 x 2&3 Bedroom Units|
|Pacific Vista (S42 L14)||Port Moresby||7 x 3 Bedroom Executive Apartments|
|Portion 212 (Portion 212, Boundary Road)||Lae||40x 2&3 bedroom residential units|
|Pinnacle Apartments (Touaguba Apts) (S63 L22 Daugo Drive)||Port Moresby||Residential apartment with 8 levels containing, 11 apartments and a penthouse apartment|
|9 Mile Land (portion 2156,2157 & 2159)||Port Moresby||Vacant undeveloped Agricultural Land|
|Ex-Angco (L1 S6, L2, 3 & 5 S6 and L1 S5||Banz||The properties are located on L1 S5, Banz, L 1 S6, Banz and L 2, 3 & 5 S 6, Banz. Vacant undeveloped land|
|Ex-post PNG (4 mile, Boroko) (S387 L20))||Port Moresby||Vacant undeveloped land|
|Malolo Estate (S22 L 7 & 8)||Port Moresby||Housing Estate|
|Koki land (Portion 176)||Port Moresby||Staff Housing|
|PROPERTIES IN HOLDING COMPANIES|
|Coastwatchers Court Limited||Port Moresby||Holding company that owns 31 constructed apartments on Touaguba Hill. NSL owns 65% of the company.|
|Waigani Asset Limited||Port Moresby||Holding company that owns two multi-level commercial properties, Eda Tano HausLands Department Building and The Treasury buildings. NSL owns 65% of the company.|
|Old Parliament House Limited||Port Moresby||Holding company that owns Nambawan Plaza a multi-level commercial development including Deloitte Haus) and additional structures still under construction and anticipated to be completion in 2018. NSL owns 65% of the company|
|Moki Ltd||Australia||Vacant Land between TISA Haus & Telikom Rumana.|
|Morobe Front Holdings Ltd||Lae||Holding company that owns Lae Waterfront Land as its sole asset.|
|Rangeview Heights Limited||Port Moresby||Rangeview is a joint venture company between Lamana, Nambawan Super Limited (NSL) and National Capital District Commission (NCDC) that proposes to bring to market a mixed use commercial and apartment’s development on 6,009 sqm of vacant land situated between NCDC City Hall and Savannah Heights along Waigani drive.|