Nambawan Super Limited (NSL) expects its key assets to bounce back from the current economic climate heavily impacted by the COVID-19 pandemic.
The Fund witnessed key assets drop in value significantly during 2020, a direct result of the nationwide lockdown imposed to restrict to the widespread transmission of COVID-19.
NSL is optimistic that these assets can bounce back as the economy improves.
On March 31st, Nambawan Super Limited announced a net profit of K89 million from its 2020 financial results, an 82.3 percent decrease from its 2019 result of K504 million.
The result allowed NSL to declare a 1 percent interest to be credited to member accounts, 6 percent less than the 2019 crediting rate.
Nambawan Super said the difficult economic conditions, worsened by the COVID-19 global pandemic, heavily impacted values and returns for many of the funds key investments in the PNG economy.
Key asset value reductions included South Pacific (SP) Brewery by K91 million, Old Parliament House Limited by K83 million, and Westpac (PNG) Limited by K30 million.
Paradise Company Limited and Coastwatcher Court Limited had slight value reductions while the upcoming Rangeview Heights Property value increased.
Focusing on SP Brewery, NSL CEO, Paul Sayer, said the nationwide lockdowns due to COVID-19 had a major impact on the businesses.
“The easiest one to think about there is SP brewery. So when we think about a lockdown what happens? We stop selling alcohol. And that’s a decision the government has to think about and make. But that has ramifications to that business. Now our members they own that business (and) now they’ve suffered through that particular exercise,” said Sayer.
Additionally, the increase in excise on alcohol added further misery to the business.
“What’s also happening in something like SP Brewery is that as the government went through and made decisions about excise, and looked at increasing excise because of what was occurring in 2019, they thought they were going to get more revenue from excise. So they put excise prices up, and what happened in 2020 is that the volumes all dropped. And that all hurt the business.
"They are decisions that the government needs to make and that fine. We need to operate and businesses need to operate in that environment. But as an investor, this is where some of those things where those decisions are made have implications to our investors,” Sayer said.
The NSL CEO believes that once the economy picks up in the long term, members will see proper returns.
“And unfortunately and that's why we are saying if things go back to normal, what would we expect with SP Brewery, is that people are able to go and get a safe amount of alcohol, drink responsibly, but the volumes should lift and that will have a ramification back to the value, and that’s how we will get it to bounce back.
“We think some of these are short term, and as the economy lifts and comes out, then members should see the benefits. So it's very important that we think about how can we assist getting the economy back into shape, and part of it is what’s our response to COVID. There’s a balance between health and the ramifications to businesses.”
NSL Board Chairman, Reg Monagi, concurred saying members will see improvements in the long term.
“That’s why we emphasise that it’s a long term view. If the economy bounces back in the next couple of years, SP brewery will bounce back or most other fast moving consumer goods like Paradise Foods we own. They will bounce back and do even better so, it will impact members' funds and the returns will get better,” said Monagi.