2013 Annual Report


Executive Chairman - John Sanday

Once again I make this Statement to you, the Unit-holders, on the progress of your Fund for 2013.

As you all know we have together been working extremely hard to bring the Fund to its strengthened position these last few years. Fund performance for 2013 has continued its strong gains on the back of good performances by all but one of the investee companies. The Fund suffered a write-down on one of its investments and this pared back the overall gains that could have been achieved. Nevertheless, overall gains were quite satisfactory and pleasing.

Today also, I stand proud to announce that our audits are as at 31st December 2013. There are no more qualifications to the actual accounts except for the Qualification on the reconciliation of the number of verified unit-holders against the register. This is one final matter that we as a Board want to finalise in the next financial year to enable the Fund to be completely and 100% free from all the legacy issues.

Looking forward, we see continued potential for growth for the Fund. Business and investor confidence in the general economy remains high with stable government and GDP growth forecasts of 6% in 2014 and a record 21% GDP growth expected in 2015 will propel business activity further.

We will continue to keep a sharp focus on management of the Fund and using every opportunity to maximise the return we get. On that note, we have seen continued growth in dividend incomes and we expect to continue being proactive with our investee companies to help them be more successful in their businesses in PNG as well as being prudent enough to obtain bigger dividend payouts for the Fund without unnecessarily hampering future business growth plans. We have found this style of investment management as delivering strong growth potential for the Fund and at the same time strengthening the business case for each of our investee companies. We have used our local knowledge wisely to bring better outcomes for the investee companies.

To illustrate this, the Fund has noted a growth of 7% or K493.3m compared to K462.5 million in the same period last year 2012, implying that our underlying equity values continued to increase notwithstanding the write-down in one of the investees. Fund value would have increased significantly more had this write-down not occurred. But we take the view that this write-down was prudent and was for the best interest of the unit-holders. Further, the Fund noted an increase in net cash income by K20.8 million or 293% compared to K7.1 million in the same period last year 2012. This is due to increase in cash dividend income received from our investee companies.

Since MTSL initiated the “Clean up exercise” in 2009 and commencement of the reconstruction of accounts back dated to 2003, the fund and shareholder value has increased significantly. Our challenge now is on exploring new investment opportunities in the energy, mining and agriculture sectors whilst at the same time actively and prudently managing the current investments to increase Unitholders value.

In closing I would like to thank the Board and Management for their support and best efforts to produce another solid year for your Fund. I look forward to this continued support next year and beyond. I also like to thank you Unitholders for your patience and support to bring the Fund this far. Things can only get better from here.

~ John Sanday | Chariman
Melanesian Trustee Services Limited


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