annual report 2005 - nasfundnational superannuation fund annual report for the year ended 31 st...

Contents Page No.

Vision, Values and Mission Statement 2

Board of Directors 3-4

Chairman’s Statement 5

Management Statement 6 - 9

Understanding Fees, Expenses, Crediting Rates, Returns, Expenses and Reserves 10-11

Understanding the Withdrawal Process and Benefits 12-16

Unemployment 12

Housing Advance Scheme 13

Death of a Member 15

Emigration 16

Retirement 16

Understanding Taxation 17

Corporate Governance Statement 18-25

Risk Management Statement 26

NASFUND – Our People 27

NASFUND – Working With Community 28

Outsourced Administration Provider Statement 29

Outsourced Investment Managers Statement 31

Independent Auditors Report 32

Trustees and Management Declaration 33

Operating Statement 34

Statement of Changes to the Members Funds and Reserves 35

Statement of Net Assets 36

Cash Flow Statement 37

Notes to and Forming Part of the Financial Statements 38-48

Directors and Officers Interests 49

Making Contact with NASFUND 50

Making a Complaint 51

Savings Outside of Superannuation 52

Membership Discount Program 53

HIV Awareness 54-56

Business & HIV/AID’s 54

Free HIV/AID’s testing 55

Contact Addresses for Information on HIV and Staff Education 56

National Superannuation Fund Annual Report for the year ended 31 December 2005

VISION STATEMENT

“The first choice provider of superannuation and other services in Papua New Guinea”

VALUE STATEMENT

Customer service is our first priority

We rely on teamwork to achieve our goal

We should treat each other with trust, respect, consideration and courtesy

We will operate with honesty and integrity

We will never turn a blind eye to corruption of any kind

The efficient use of time will be encouraged

Skill level, progress and contribution will be encouraged and rewarded

We will be responsible for our actions

We will provide necessary training and equipment

We will include the necessary people in decision making

We will empower people to make and carry out decisions

There will be opportunities to learn the whole superannuation process

We learn from mistakes so that we can improve NASFUND and grow

We will communicate NASFUND activities and results.

We will do what we can to support community without impacting on members funds

We will always protect the reputation of NASFUND by ethical behaviour

MISSION STATEMENT

“Safeguarding the retirement income of our Members in Papua New Guinea. To this end the Fund

attempts to credit positive returns annually above inflation and at call money market rates. The Fund

regards compliance to its investment guidelines as paramount to achieving this outcome.”

“THE LEADER IN SUPERANNUATION”

2

National Superannuation Fund Annual Report for the year ended 31

st December 2005

BOARD OF DIRECTORS

John G. Jeffery – Employers Federation of

PNG

Appointed in July 1999 to the previous NPF

Board as an employer representative, John was

elected in July 2002 as the inaugural Chairman

of the privatised NASFUND. John was

appointed as Director of Bank of South Pacific

Limited in July 2001 and is Chairman of its

Audit, Risk and Compliance Committee. John

has been on the Executive Committee of the

Employers Federation of PNG since 1993 and is

currently serving his eighth annual term as

President of the Federation. John is the Chairman

of PNG Power, Chairman of the Small Business

Development Corporation and a founding

member of the PNG Institute of Directors.

While retiring as General Manager of Madang

based James Barnes PNG Ltd at end of 2003, a

position he held since March 1986, John

continues to serve as the resident

Director/Company Secretary. He is Managing

Director of Jayliss Ltd, a family owned

investment and consulting company and is a

Member of the second Superannuation Task

Force.

Mike Manning OBE – Rural Industries

Council

The Rural Industries Council appointed Mike

Manning in May 2002 to the NASFUND Board.

Mike is Papua New Guinea’s leading economic

and social commentator and held the position of

Director of The PNG Institute of National Affairs

until his retirement in December 2005. Mike

comes to NASFUND with a wealth of Board and

practical experience and stands at the forefront of

the anti corruption drive as Chairman of

Transparency International (PNG) and founding

member of the Community Coalition Against

Corruption. Mike holds a bachelor of economics

and a master’s degree (preliminary).

Ramon Thurecht OBE – Manufacturers

Council of PNG

Ramon was appointed to the Board in 2003

representing the Manufacturer's Council of

PNG. He was previously on the Board of

PNGBC and Finance Pacific Limited. He has

been Chairman of both the Port Moresby and

The Papua New Guinea Chambers of Commerce

and is current Chairman and CEO of The Papua

New Guinea Printing Group of Companies. He

is a Director of InfraTech Consultants Ltd and

Chairman of the SPAC Flying Trust. Ray is a

Foundation Fellow of The Australian Institute of

Company Directors and is a Member of The

PNG Institute of Company Directors. He is also

currently The Honorary Consul of PNG for The

Independent State of Austria.

William Lamur – PNG Chamber of

Commerce

The PNG Chamber of Commerce appointed

William to the NASFUND Board in May 2002.

William has extensive experience within the

private sector. Formerly with Shell PNG Limited

he spent twenty years both in PNG, Australia and

Solomon Islands, working his way to senior

management. Now as the General Manager of

Origin Energy (PNG) Ltd, William is seen as one

of PNG’s leading private sector business leaders.

Previously Chairman of Post &

Telecommunication, he currently sits as

Chairman of East New Britain Development

Corporation, a Director of Andersons Foodland

and recently appointed Chairman of the Rural

Development Bank. He is a Councillor of the

Institute of National Affairs, PNG Institute of

Public Administration and Vice President of the

Port Moresby Chamber of Commerce. William

holds a Bachelor degree of Business Studies

from the Lae University of Technology.

3

National Superannuation Fund

stAnnual Report for the year ended 31 December 2005

Reg Monagi – Workers Representative holds degrees in law and jurisprudence

(majoring in industrial relations) from the

University of NSW and has been admitted as a

solicitor of the Supreme Court of NSW. He also

holds a graduate certificate in management from

the Monash Mt Eliza Business School in

Melbourne. He is a former Assistant

Commissioner of Taxes in PNG and has been

Managing Partner of PricewaterhouseCoopers

and another major accounting firm in PNG. He

brings 16 years experience in PNG at a senior

level covering both the public and private

sectors.

Reg Monagi was selected as the worker’s

representative on the NASFUND Board in July

2002 from an extensive list of applicants. Reg

has had extensive private sector experience

having previously worked with Shell PNG,

British American Tobacco and Colgate

Palmolive (PNG). He is currently National Sales

Manager with SP Brewery Limited.

Reg holds a Bachelor of Arts Degree, (in

Psychology), from the University of Papua New

Guinea, a Master of Business Administration and

a Diploma of Company Directors Course, both

from the University of Queensland. A graduate

member of the Australian Institute of Company

Directors, Reg is a founding member of the

Papua New Guinea Institute of Directors.

Mr Charles Evi – PNG Banks & Financial

Institutions Workers Union

Appointed to the Board in 2004, Charles

replaced Reuben Elijah who retired. Charles has

worked with the ANZ Bank for 21 years with

experience in various branches, units and

sections within ANZ Bank. He currently holds

the position as Supervisor Centralised Securities

Unit. Charles has been a National Treasurer for

the PNG Volleyball Federation and the ANZ

Bank branch President for which he has held

both positions for three years. Charles has held

positions within the Banking and Financial

Workers Union for three years and is now

National President.

Mr Reg McAlister – Trade Union Congress

Reg is the Trade Union Congress representative

and regards himself as “true trade unionist” after

many years of active involvement in the

movement. Starting his career with the Waterside

Workers and Seaman’s Union, he rose to the

position of General Secretary. He has held

positions as the General Secretary of the National

Airlines Union and currently holds the position

of General Secretary of the PNG Maritime

Workers Industrial Union. Reg is no stranger to

NASFUND having being a Trustee of the former

NPF from 1980 to 1985. He has also served as a

Director on the PNG Harbours Board.

Melchoir (Mel) Togolo CBE - PNG Chamber of

Mines & Petroleum

Dr John Nonggor – Independent Director Mel Togolo is presently the General Manager,

Corporate Affairs, with Placer Dome Niugini

Limited. Other appointments include Director of

Placer Dome Niugini Limited, Placer Dome

Niugini Management Limited, Placer Dome

(PNG) Exploration Limited, Placer Dome (PNG)

Limited and Westpac (PNG) Limited. He is

currently a Councillor of the Institute of National

Affairs, Member of the Finance Board of the

Catholic Bishops’ Conference and Executive

Member of the Papua New Guinea Chapter of

Transparency International. Mr Togolo is also on

the Board of Jesus Centre Halfway House, which

caters for homeless young people. He is the

immediate past president of the Business Council

of Papua New Guinea. He is a graduate of

Dr John Nonggor is your independent

representative on the NASFUND Board. John

was selected from a large number of candidates

on the basis of his strong legal background and

his commitment to good governance through his

role as Director on the Board of Transparency

International. John is a member of the National

Monitory Authority and Chairman, Law & Order

Sector Committee, Consultative Implementation

Monitoring Council (CIMC).

John Leahy– (Non Director – Audit)

John Leahy is a partner in the accounting firm,

PricewaterhouseCoopers in Port Moresby. He

4


st December 2005

UPNG, University of Leeds (UK) and University

of Hawaii (USA)

CHAIRMAN’S STATEMENT

Dear Members,

The year 2005 has gone well beyond expectations with

the Fund capitalising on sound investment strategies

made three years ago. As you are aware NASFUND

was a prime investor in the merger of Bank South

Pacific Limited with PNG Banking Corporation. Soon

after the merger in 2001, the new Board and

management of BSP began a major restructuring

exercise, which saw the Banks performance

dramatically improve with reduction in cost,

improvement in efficiency and strong growth in

revenue. The subsequent listing of BSP on the stock

exchange has seen the first successful completion of a

privatisation exercise in Papua New Guinea. The result

for investors (all Papua New Guinean entities

including NASFUND) has been very rewarding. Our

investment in BSP has gone from an equivalent 65

toea a share in 2002 to K3.20 as at the end of 2005.

The story is even more remarkable in that we have

also received large dividend income from our 10%

holding in Bank South Pacific Limited.

NASFUND’s returns in 2005 are largely a reflection

of the BSP emergence as the dominant financial

institution in the country. And while we can be all

excited by the return to Members in 2005, I feel it

important at this stage that I issue a word of caution, in

that these double-digit returns in the high 20’s do not

go on indefinitely. They tend in fact to be really a once

in a lifetime event. So what I want to impress on you,

the member, is that we must not raise expectations that

similar or even near similar returns can be expected

over 2006.

But let us talk about returns. A summary of the 2005

NASFUND return can be seen in the following

Gross Return 35.96%

Net Return 32.83%

Death Benefit Fund 3.80%

Reserves 0.03%

Net Return After Tax 29.00%

You will note that we have yet again put some of the

income earned in 2005 into reserves. We have done

this because we as a Board remain cautious. Equity

markets by their nature are volatile and prudent

management suggests that a 4% or approximately K30

million buffer should be kept in reserves to protect

members from any

Date 10 February 2006

adverse price movements in the NASFUND equity

portfolio. I do not wish to dwell any further on the

return this year, as this is only one aspect of a Fund.

Members expect and look to more than just returns and

I would suggest they place as much store in service

and in communication.

In the areas of service and communication, I am

pleased to report that we continue to build on previous

success. In regards to member service, I am

continually astounded at how such a small staff that

we have, continue to process so many applications and

deal with such an enormous amount of member

queries. The Board is very conscious of the efforts of

our well-trained staff. How true it is that the most

important asset of NASFUND is our staff and related

to this is also in how we treat our employees.

This year we opened two new branches in Tabubil and

in Goroka. The Board is very conscious that client

service continues to remain a priority and I envisage a

further branch opening in the first half of 2006 to help

in meeting this on going challenge. In regards to

communication, I think we have done remarkably

well. The Marketing team have done an exceptional

job in bringing information to the member’s door. The

2005-year saw over 250 employer visits and shop floor

meetings with thousands of our members. What

pleases me most is not only are we reaching out on

important issues like financial literacy and

superannuation education, but we are also at the

vanguard of dissemination of information on what we

see are the important issues of our time –

empowerment of women and HIV Aids awareness.

The 2006-year is now upon us and we look to another

prosperous year ahead. I thank my fellow Board

members, senior management and of course the staff

with hard work and determination, who continue to

drive NASFUND as the leader in the financial sector

today.

5


st December 2005

Mr. John G. Jeffery

Chairman

6


MANAGEMENT STATEMENT

10 February, 2006

Dear Employer and Member,

When we look at NASFUND today, we know that what has been built is based on stated principles: principles that

we hold dear and often developed through experience. Experience is not something gained over weeks or months.

Experience is often found through the bitter testing of pain, of sacrifice and of sorrow. Principles developed

through experience are the only way to build a strong superannuation environment for Members: -And the result

of that experience is there for all to see.

Looking back over 2005, NASFUND has achieved a number of milestones in what can only be described as an

extraordinary year.

Criteria 31 December, 2005 % Change

Fund Growth K748,424,975 43.3%

Membership 79,233 10.8%

Gross Contribution K128.5 million 55.7%

Net Return 32.8% 228%

Crediting Rate 29.0% 86.0%

Reserves 29.7 million 4.0%

No of Employers 1,123 10.7%

In all criteria, NASFUND moved ahead and at year end we are pleased to announce a 29% earnings rate net of tax

for Members with the maintenance of an approximate 4% reserving buffer equating to K29.7 million in

unallocated income. One highlight over 2005 that we would like to draw you to was the introduction of Kundu

Pei. This service means that you the member cannot only have your withdrawal paid directly into you bank

account, but you can also obtain same day access for withdrawal. Effectively a member can now down load from

the Internet or through their Human Resource department withdrawal application forms, send into our client

service centre by email or post and receive within three working days your withdrawal deposited into your bank

account.- And have effective value from that date without having to wait the normal bank cheque clearance time

of up to a week. This is what we mean when we talk about NASFUND being the leader in superannuation. This is

what we mean by experienced professional management of your retirement monies.

Your Fund has also once again led the charge on superannuation reform with an extensive submission to the re

constituted Superannuation Taskforce led by Lady Mina Siaguru. The agenda of this Taskforce is to continue the

work that was started with the Superannuation 2000 Act and to ensure that the Act operates effectively for you the

member. NASFUND has continually stated that by setting high standards, demanding strong regulation, leading

by example, and the development of a rigorous Association of Superannuation Funds, that we will turn this vital

sector into a showcase for the Pacific: - and we think we are almost there.

Fund Highlights- A summary

Net Profit result: – Audited K160.1 million after tax.

Five year annualised growth rate of 34.6% p.a

Fund assets climb to K748.4 million over the year from K522.4 million

Fund growth 43.2% over 2005

Crediting rate for 2005 – 29.0% net of tax.

Opening of new branch offices in Tabubil and Goroka

Current reserves K29.7 million or 4% of the net assets of the Fund

K 65.9 million in withdrawals to 28,611 Members

Website revised– www.nasfund.com.pg

Direct Crediting of Member Accounts through Kundu Pei

7


Growth In Net Assets

NASFUND Growth in Net Assets

0

100

200

300

400

500

600

700

800

2001 2002 2003 2004 2005

(K M

illions)

Net Asset Value

The net assets of the portfolio have grown from K522.4 million in December 2004 to K748.4 million at year-end.

Fund growth from net contributions and investment income measured 43.26% annualised increase over the period.

Net Profit After Tax

Net profit after allowance for tax stands at K160.14 million.

Profit & Loss- NPF/NASFUND

025

5075

100125

150175

2001 2002 2003 2004 2005

Year

(K M

il)

Profit

Real Returns

The Fund aims to credit a minimum of 2% above the inflation rate every year.

Crediting Rate Compared With Headline Inflation

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2001 2002 2003 2004 2005

Inflation

Interest

Asset Allocation of NASFUND

8

Nasfund Asset Allocation 2005

32%

12%19%

4%

24%

4% 5%Equities

Property

International Equity

International Fixed

Fixed Int

Loans

Cash & Receivables


Meeting Members Needs

NASFUND has paid out to 28,611 members in net benefits for the twelve months to 31 December 2005

Year Ended 31 December, 2005 Amount Paid (Kina) No of Member %

Unemployment - Full withdrawal 34,337,372 11,081 38.7%

Unemployment – Partial 6,764,939 13,944 48.7%

Disabled 871,296 93 0.3%

Emigration 14,497 1 0.0%

Death 2,051,474 304 1.1%

Retirement 1,960,280 293 1.0%

Housing Advance 17,238,333 2883 10.1%

Transfer 641,537 64 0.2%

Total 63,879,732 28,611 100.0%

Controlling Expenses

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Expense

Rati

o

2001 2002 2003 2004 2005

Expense Break Down

Board Fees &

Expenses

Administration

Expenses

Outsourced Back

Office Fees

Investment

Management Fees

Wages & Salaries

Our Partners in Success

“Independent outsourced professional operators are your independent safeguards for management with

integrity”

Summary

Over 2005, NASFUND welcomed a further net 109 employers into the Fund with NASFUND now reaching out

to 1,123 employers comprising 79,233 active members. Eighteen recently joined employers are from former

licenced superannuation funds, Maritime Workers Superannuation Fund and the University of Papua New Guinea

Fund. We welcome them to the NASFUND family.

This year as a small but not insignificant advancement, NASFUND purchased Port Moresby Grammar school.

Our aim over the next five years is to ensure that POM Grammar becomes the leading educational institution in

Papua New Guinea – another showcase of what can be achieved in Papua New Guinea. Values like governance,

mutual respect, empowerment of women, equal opportunity and awareness of HIV will be included in the

educational program. Once again NASFUND has led the way by being the first major private sector company to

9


see education as not only a financial investment for members but also a social investment in Papua New Guinea’s

future.

Superannuation is now becoming the fastest growing industry in Papua New Guinea and will soon overtake the

banking sector in terms of size. What we together achieved with NASFUND has had an enormous ripple effect

throughout the country. Our imprint is here to stay. We did not only lead with superannuation reform but we

pushed corporate governance and client service to new levels. - And in doing so, we laid the path for other

organisations to follow. As a result we now have a stronger financial sector and a stronger Papua New Guinea.

In all, a good year for the membership with high returns, further reform of the industry underway and a

continuance of our social program in bridging the knowledge gap on issues such as HIV and Equal Opportunity.

Together we have walked through yet another door and in doing so hopefully lead to greater opportunities for

others.

The challenge ahead for us now is to capitalise on the hard work of the past few years to build a comprehensive

financial services business. With superannuation for long-term retirement, housing and unemployment relief; with

the NASFUND Savings and Loans vehicle for short term savings like education for children, and with the

introduction of a death benefit scheme in 2006 to ensure your loved ones are protected in the case of untimely

death; NASFUND is fast becoming the one stop shop when you the member need assistance:- And when we

think about it, that is what NASFUND is all about: putting people first!

Rod Mitchell Ian Tarutia MBE

Chief Executive Officer Chief Operating Officer

Artist: Martin Morububuna- Private Collection

10


Understanding Crediting Rates, Returns, Expenses and Fees

NASFUND is a not for profit non-government organisation. All profits generated by the Fund are returned to

Members. The following sets out the crediting rates, returns, expenses, and fees within the organisation.

Board Fees

Allowance Board Member Chairman Period Date of Entitlement

Fee

K3,600 K4,000 Quarterly 01/07, 01/10, 01/01,

01/05

Additional Fees for

Committee Members

K900 K1,000 Quarterly 01/07, 01/10, 01/01,

01/05

Sitting Allowance K400 K400 At each Board Meeting

or Committee Meeting

Airfares & Hire Car

Yes (Economy)

For non POM

residents only

Yes

(Economy)

For non POM

Residents only

For night before

& day of

meeting only

Paid Directly by

NASFUND on invoice

Accommodation For non POM

residents only

For non POM

residents only

For night before

& day of

meeting only

Paid Directly by

NASFUND on invoice: -

Corporate Rates apply

with Crowne Plaza

Entry and Exit Fees

Entry Fees: K10

Exit Fees: K20 for a full withdrawal or K10 per withdrawal under partial withdrawal.

Membership Card: K15

The above fees are the only fees charged.

Management Expense Ratios

The Management Expense Ratio (MER), measures as a percentage, administration expenses against the net asset

value of the Fund. This ratio is often seen as a measure of administration efficiency. The prudential standard

issued by the Central Bank in February, 2004 stipulates that the MER is to be determined going forward by

dividing the expenses of the Fund by the average monthly net asset value of the Fund.

2001 2002 2003 2004 2005

2.08% 2.03% 1.73% 1.91% 1.56%

Crediting Rate

After the end of year audit of the NASFUND Accounts, interest is credited after taking into account the following

The earnings generated by the Fund

Taxation applicable

Expenses incurred and

Reserving policy in light of the full review of the risk management statement

Interest is credited on a time-weighted basis in accordance with international standards. This means that

contributions received by the Fund during the year relating to the crediting will also be subject to interest.

Interest is usually credited in March of every year.

11


Interim Credit Rate

Members who decide to leave before a crediting period (Annual Review) will receive an interim-crediting rate.

The interim credit rate is determined from time to time with reference to the Fund performance.

The interim crediting rate is currently set at 3.5%

Returns to Members

2001 2002 2003 2004 2005

Gross Return to Member 10.55% 16.39% 19.61% 17.40% 35.96%

NET PROFIT AFTER TAX 8.40% 13.68% 16.05% 13.57% 32.83%

Less

Death Benefit Investment Pool* 3.80%

Less

Reserves^ 1.40% 4.93% 3.55% (0.77%) 0.03%

Equal

CREDITING RATE TO MEMBER 7.00% 8.75% 12.50% 14.50% 29.00%

^ Reserves are not expenses and remain part of Members Funds. Reserves are used in conjunction with the Risk

Management Statement to minimise loss within the Fund. – See Understanding Reserves below for more

information

* See note 6 on page 42 for further details

It should be noted that past returns are not an indication of future returns.

Understanding Reserves Policy of Reserves

NASFUND is committed to crediting Member accounts with all the benefits from the investment of Member

funds over time. The Trustees have set a general policy of crediting all income earned from the investment of

funds to the accounts of Members.

NASFUND maintains a Reserve Account to assist in managing investment fluctuations and to help reduce any

uncertainty of returns for Members. Under it’s Governing Rules and under the prudential requirements of the

Superannuation (General Provisions) Act 2000, the Trustees are required to actively manage investment risks on

behalf of Members.

NASFUND maintains this Reserve Account of not more than four per cent of total funds under management as

approved by the Central Bank of PNG under the Superannuation Act. At the end of each financial year, the

Trustees, review the adequacy of returns to Members. The Trustees then determine whether any adjustment is to

be made to the amount of investment returns to be credited to Member accounts for that year by drawing upon, or

adding to, the Reserve Account. In this way, the Reserve Account acts as a buffer to reduce the impact on

Members in the event of a market downturn and so smooth out the returns to Members over time.

NASFUND is committed to the management and investment of the Reserve Account consistent with the stated

investment strategy of the Fund and its obligations to Members under its Rules and the Superannuation Act.

Funds

under management are invested as a whole for the benefit of Members. The Trustees are concerned that the

principles of equity and consistency apply at all times in its application and investment of all funds under

management.

12


Understanding the Withdrawal Process and Benefits

1. How & When Can I Withdraw My NASFUND Savings?

A member, may withdraw their contributions for the following reasons:

Housing

Unemployment

Death

Disability

Emigration

Retirement

2. If I Am Unemployed Why Do I Need To Wait 12 Months To Get My Funds?

The Superannuation Act 2000 has extended the waiting period from six months to 12 months to promote the

concept of long-term savings for retirement. If you secure employment within a year it is expected that you must

resume your contributions and continue the build up of your retirement savings.

But 12 Months Is Too Long. What If I Do Not Find A Job? I Need My Money Now!

True. We recognise that it may not be easy to secure alternate employment and uncontrollable circumstances may

cause individuals to face financial difficulties especially when the flow of income stops or savings are exhausted.

If after three months has lapsed and you are still unemployed you are allowed a partial withdrawal of your funds.

In this instance you must give reason(s) why you want an early release of your funds and provide supporting

documentation.

3. How Much Will Be Paid To Me?

Full Withdrawal - you will be paid 100% of your contributions, 100% of the employer’s contributions plus

accumulated interest less tax and an exit fee of K20.00. This is a change from previous payout calculations where

forfeiture was applied on the employer’s component depending on the years of membership with the fund. Now

You Are Paid Everything.

Partial Withdrawal - if you have a balance less than K1,000.00 we can pay you in full. If it is an amount over

K1,000.00 we will pay you a minimum of K200.00 per month or up to 50% of your last monthly salary per month

(whichever is the greater amount) until you find another job or until the 12 month waiting period expires,

whichever comes first.

4. What Forms Do I Need To Complete In Order To Withdraw My Funds?

Other than death and housing advances, the forms you require are:

1. SF21 - This form is completed by yourself and signed by your last employer. The SF21 has been

reviewed and is much more easy to read and understand.

2. SF6 - This form is completed by your employer and confirms your exit from the company.

3. SF2 - This is a nomination and declaration form and is usually completed at your initial

registration as a member. Apart from using it to identify you it is also used to determine your tax

13


liability because of your dependants. It is handy at point of withdrawal especially when you do not

update

your beneficiaries. As a general rule we ask members to complete the form again especially if you

are a long serving member.

4. SF22 - Your nominated beneficiaries complete this form in the event of your death. A copy of the

original death certificate must accompany this form when it is submitted.

5. How Is My Entitlement Paid To Me?

As a matter of policy NASFUND will never pay you in cash. This is for obvious security reasons. NASFUND

will pay your entitlements by direct deposit and or by crossed cheque into your nominated bank account. In this

regard we encourage all members to open a bank account and to conduct all financial transactions in this manner.

If the cheque amount is below K500.00 we can pay you over the counter once we confirm your identity. Amounts

in excess of K500.00 will be deposited into the member’s bank account.

6. If I Am Eligible To Withdraw My Funds, How Long Do I Have To Wait To Receive My Entitlements?

We have a benchmark turn around time to screen and process clean applications within 3 working days. A clean

application means the forms have been completed correctly, the former employer has paid all due contributions

and importantly that we have no query on your application. If there are queries, you can expect delays.

7. How Is The Cheque Processed?

Once an application is screened and certified for processing, the application is sent down to our Fund

Administrator’s office and they will process your cheque payment. Our Fund Administrator is Aon Consulting

(PNG) Ltd. This process takes about two days.

Please Note: Although We Respect Your Right To Withdraw Your Funds When You Are Entitled To, We Ask That

You Consider The Long Term Implications Of Taking Away Your Future Nest Egg. If You Do Not Need The

Money Now, Do Not Touch Your Retirement Savings. Think Of The Future And Not Just Today!

Relevant Form for Member Seeking Withdrawal Because of Unemployment FORM SF21 & SF6

What is the NASFUND Housing Advance Scheme?

Housing Advance Scheme

The housing advance scheme is a benefit that is offered to members while they still contribute to the Fund.

Members are able to withdraw part of their contributions (maximum of 60%) to assist with the purchase or

building of a principal residence, or as a deposit for a bank advance or to carry out maintenance/improvement to

the house he/she already owns or to buy State land on which to construct a house.

A Member is able to withdraw his/her contributions to construct a house located on his/her own customary land.

14


NNNote: Advances to build or buy a house in a squatter settlement is not allowed. oottee::

Obligation by Member

Must be a Member of an Approved Superannuation Fund for five (5) consecutive years;

Member to repay housing advance by a further 2% of contribution from the employee portion until the

advance is repaid;

Purchase of land or purchase and construction of a dwelling must occur within six (6) months of an

advance;

A declaration of completion must be furnished to NASFUND on finalisation of the purchase or completion

of the construction or addition to a house.

Rules for Accessing Superannuation for Housing Advance

Purchase of principal place of residence for member;

Deposit for a Housing Loan from a recognised banking institution;

Purchase of land for the construction of a dwelling of principal residence;

Purchase of solar panels or generators for the house;

Purchase of building materials to build a house;

Purchase of a stove or refrigerator;

Substantial renovation or improvement of an existing home owned by the member (Over K1,000);

Labour & transportation costs of housing materials up to the value of K600.00 only.

Amount of Advance

Withdrawal of advance is not to exceed 60% of member’s total contributions;

The advance cannot be paid directly to the member;

Further advances are subject to full repayment of the previous advance;

A further advance cannot exceed the initial advance.

Breach of Advance Rules

Any breach of the Superannuation Act or misuse of the housing advance will render the application void

and the Fund will cancel or seek to recover the advance.

What Documents Are Required To Support Your Application?

A copy of stamped Contract for Sale and Memorandum of Transfer;

A copy of letter from your bank or approved financial institution confirming availability of further

funding.

Building a House/Improvement on State Land?

If you are building a house, carrying out improvements or maintenance to your own house you will need

to submit:-

a) A copy of title to the property (proof of ownership);

b) Quotation from the supplier of building materials or the contractor who is going to build the

house or carry out maintenance/improvement(s). This is important as the cheque will be made

payable directly to the supplier of the materials or the contractor and not to the member. nnoott ttoo tthhee mmeemmbbeerr

15


Building a House/Improvement on Customary Land

If you are building a house on your own customary land or already built a house but wish to carry out

maintenance or improvements, you will have to complete a “Clan Land Usage Agreement” form. In the absence of

a proper legal title, this document serves as proof of your ownership of land by customary right.

How Much Can You Get?

The amount you get is a maximum of 60% of your total contributions.

Clan Land Usage Agreement Form

A Clan Land Usage Agreement Form must be fully completed in order to build a house or undertake

improvements to an existing house on customary land.

Relevant NASFUND Form for Member Requesting Housing Advance FORM SF24

Payment on Death of a Member

Upon the death of a member, NASFUND shall pay to the nominated

beneficiaries the deceased members contributions in accordance with

the nomination made by the member.

To avoid disputes between family members of the deceased over paying out the contributions to the rightful

beneficiary you should review your nomination forms regularly. This should include updating the nomination

forms upon marriage or separation or upon birth of a child or death of a nominee. In each of those cases, the

following rules apply.

(a) Where there is a nomination form existing then the contributions must be paid to those nominees in

accordance with the nomination.

(b) Where there is a nomination existing but it relates only to a part of the members contributions (eg. 50%)

then:

The part to which the nomination relates must be paid in accordance with the nomination; and

The part to which the nomination does not apply must be paid in accordance with custom or a

decision of the court. This includes cases where there is no nomination or none of the

Nominees named are alive.

(c) The Contributions will be paid in accordance with custom or a decision of the court under the following

circumstances:

No valid nomination exists; or

No nomination was made; or

None of the nominees named are alive

(d) If with the application of the rules, the dispute cannot be resolved, than the deceased members

contributions will be paid to the Public Curator for distribution in accordance with the provisions of the

Wills Probate and Administration Act Chapter 291.

16


Relevant NASFUND Form for a Family Member of a Deceased Seeking Withdrawal Because of Death of a

Member FORM SF 22

Beneficiaries

Please ensure that every six months when you receive your superannuation balance statement that you look at the

nominated beneficiaries. It is in your interest that you and your partners’ beneficiaries are accurately recorded to

represent your wishes. There have been many heartaches and unfair allocation of beneficiary entitlements due to

careless oversight in this regard. Remember Superannuation is not just about you; it is also an asset that can

protect your family and loved ones in case of your untimely death.

Relevant NASFUND Form for Change or Nomination of Beneficiary FORM SF10

Emigration – Leaving Papua New Guinea

Specific rules govern the payment of contributions to members on emigration. The Act deals with two situations:

(a) Permanent emigration from PNG; and

(b) Non – Citizen permanently leaving PNG.

1. Permanent Emigration from PNG

Where a member permanently emigrates from PNG their contributions will not be paid to them until

after one year has lapsed since departure from PNG

2. Non – Citizen Permanently Leaving PNG

Where a non-citizen member permanently leaves PNG, their contributions will be paid in the following

way:

(a) All contributions made prior to 31 May, 2002 will be paid to the member immediately upon

departure

(b) The balance of the contributions made after 31 May, 2002 will be paid to the member after

one year has lapsed since departure from PNG

Relevant Form for a Member leaving Papua New Guinea Permanently FORM 21 & SF 6

Payment on Retirement

Members may withdraw their contributions upon retirement under the

following circumstances:

(a) On ceasing to be employed after attaining eligibility age; or

(b) On attaining eligibility age having previously retired

from employment.

Eligibility Age (55 Years of Age)

17


The eligibility age is the age at which the member may withdraw their contributions for retirement purposes on

ceasing to be actively employed after obtaining 55 years of age.

Relevant NASFUND Form for a Member Retiring at age 55 FORM SF 21 Understanding Taxation Of Superannuation Benefits

Tax on Investment Earnings at the Fund Level

The tax on investment earnings of an Authorised Superannuation Fund is as follows:

Income generated by the Fund is taxed at 25%

Income from Government Securities with maturity greater than five years are tax free

Dividend income is tax-free.

There is no capital gains tax on investment appreciation.

Tax on the Member

Member or employee contributions are paid from after tax income. The employee contributions have

already been taxed at the employee level and as such there is no taxation on withdrawal.

Employer contributions to the member are paid by the employer before deduction of tax.

Taxable Components:

There are three (3) components that make up your total contributions.

Employee contribution; and

Employer contribution; and

Interest from the above contributions.

The employee contribution of 5.50% and any voluntary contributions above this level is not subject to tax. The

Member will receive the Employee component of contribution in full on withdrawal.

The employer contribution of 7.70% and the interest component are the part of your contributions that will be

taxed. As such these benefits are taxable on withdrawal by the member.

Tax is levied on your superannuation at the time that you withdraw. The tax system is designed to favour long-

term contributors and substantial tax benefits are incurred for those who remain in the system long term. Different

rules therefore apply depending on the years of service for employer and interest components of superannuation.

Years of

Membership

Less than 5

years

Greater than 5 years

and less than 9 years

Greater than 9 years

and less than 15 years

Greater than 15

years

Rate of Tax Marginal Rate

of Tax

The lesser of 15% or

the marginal tax rate

The lesser of 8% or

the marginal tax rate

2% tax on interest

and employer

contribution

A concessional rate of tax of 2% also applies to distributions where the payments relate to benefits accrued before

01 January, 1993.

Taxation on Death & Disability

All death benefits and payments on permanent disability are taxed at the concessional rate of 2% only.

18


Please Note: This is a summarised version of the tax treatment for superannuation. We recommend that you

consult your tax adviser if you require a detailed summary of tax and superannuation.

Corporate Governance Disclosure Statement 31 December 2005

Objective: “The first choice provider of superannuation and other financial services in PNG”

The Board is responsible for the corporate governance of the Fund. The NASFUND Board is committed to the

highest standards of Corporate Governance and disclosure in Papua New Guinea. The Corporate Governance

matrix consists of five distinct governance objectives

Implementing the vision and values of NASFUND

Identification of risk and managing risk within set parameters within the Strategic Plan

Meeting financial targets

Compliance with the Superannuation 2000 Act

Employment and training of world class staff to meet performance goals

NASFUND believes that its continued strength as the leading institution in superannuation lies in its open

platform of member communication and open disclosure of the operations of the business. This statement sets out

the principal corporate governance practices and disclosures that were in operation throughout the twelve months

to 31 December, 2005.

Board- Role of

Under the NASFUND Constitution the management of the group is vested in the Board. The Board is charged

with the following responsibilities

Corporate governance

Selection and supervision of the Chief Executive Officer

Approving and monitoring strategies, policies and plans

Monitoring compliance with relevant legislation and in particular the Superannuation 2000 Act

Review of human resources, information technology and the resources of the business

Board- Remuneration & Attendance

The Board presently comprises nine Directors. Seven Directors are representatives of the shareholders of

NASFUND. The remaining two Directors are independents selected by the Board. All Board meetings in 2005

were conducted in Port Moresby. The names of the members of the Board at the date of this report including the

Audit and Remuneration Committee for the twelve months to 31 December 2005 are as follows.

Name of Director Kina Board

Status

Expiry

Date

Board

Attendance

Audit

Attendance

Mr John Jeffery - Chairman 18,000 Continued 31/05/2006 5

Mr Ramon Thurecht OBE 14,400 Continued 31/05/2006 5

Mr William Lamur 14,400 Continued 31/05/2006 4 2

Mr Mike Manning ^ 14,400 Continued 31/05/2006 4 1

Mr Reg McAlister 14,400 Continued 31/05/2006 4

Mr Mal Togolo 10,800 New 4

Mr Reg Monagi 14,400 Independent 31/05/2006 4 2

Mr John Nonggor ^^ 14,400 Independent 31/05/2006 5

Mr Charles Evi 14,400 Continued 31/05/2006 5

Non Board Member Kina Board Expiry Board Audit

19


Status Date Attendance Attendance

PriceWaterhouseCoopers 5,525 Continued 30/06/2006 n/a 2

^ Mr Mike Manning donates his Audit & Remuneration Committee fees to the INA

^^ Dr John Nonggor donates his Board fees to City Mission

The Board met formally on four occasions this year. It is the Board policy that prior to each meeting, all available

information on matters to be discussed at the meeting is provided to each Director and Senior Officer at least 14

days in advance. Minutes of the meetings can be obtained through the website. www.nasfund.com.pg.

Audit and Remuneration Committee

There is one committee of the Board known as the Audit and Remuneration Committee. The Committee met

formally on three occasions in the twelve months to 31 December 2005. Three Board Members and an

Independent from accounting firm PricewaterhouseCoopers comprise the Committee. Currently there is one

vacancy. The role of the Committee includes the review of the Fund’s financial statements, strategic plan, risk

management statements and internal audit reports, the review of the Company’s accounting policies, policies and

procedures, internal controls, tenders, salary and remuneration including terms of employment of senior

management and related matters. The members of the Committee as at 31 December 2005 are as follows:

Mr William Lamur

Mr Mike Manning

Mr Reg Monagi

Mr John Leahy (Ex officio PricewaterhouseCoopers)

Minutes of the Audit & Remuneration Committee meetings can be obtained through the website.

www.nasfund.com.pg.

Access to Board Minutes

The Board minutes can be accessed via the Internet or can be personally inspected at NASFUND’s office in

Boroko on written request and appointment. www.nasfund.com.pg

Accounts

Company 2004 Annual

Accounts

2004 Tax

Return

Audited Net

Profit After

Tax 2004

Audited Net

After Tax Profit

2005

NASFUND Lodged Lodged K53,457,952 K160,145,395

Auditor Independence

The external Auditor is prohibited from preparing accounting records, or asset and liability valuations of existing

assets. The independent accountant that sits on the Audit and Remuneration Committee is prohibited from being

an employee of the external audit firm.

Board Resolutions.

Board resolutions made through out the history of NASFUND can be accessed via the website

www.nasfund.com.pg

Central Bank Report on NASFUND

As part of the regulatory environment under the Superannuation 2000 Act, the Central Bank from time to time

will conduct independent audits on the Fund outside normal independent accounting audits. An independent

review by the Central Bank was conducted in early 2004. A follow up review by the Central Bank was completed

in mid 2005.

20


Codes of Conduct & Ethical Standards

The Board has adopted several codes relating to the conduct of Directors, Executives and Staff, including

conflicts, of interest and confidentiality agreements. NASFUND recognises the need for Directors and employees

to observe the highest standards of behaviour and business ethics in conducting their business. All Directors and

senior management have signed a code of conduct. Two members of management are now graduates of the

Australian Institute of Company Directors.

Communication to Members

The Board formally communicate twice yearly with Members in two page newspaper spreads on the performance

and activities of the Fund. The twice-annual reports are also produced in poster format and sent to all contributing

employers for employer notice boards. The content of all reports and graphs are produced internally by

NASFUND. The Management communicates via email to all Employers an additional minimum of four news

bulletins throughout the year. Currently an education program is being rolled out to all employers on the benefits

and withdrawal procedures associated with superannuation. We aim to have direct meetings with a minimum of

100 employers annually.

Contingent Liabilities

As at the 31st December 2005, there were no contingent liabilities.

Crediting Rate Policy

The Board resolved to credit 29.0% interest to Members in 2006 for the year ending 2005. The Crediting Rate is

determined on a time-weighted basis on member balances through out the year. This is in accordance with

international standards on return accreditation. The next crediting rate will occur in February 2006 for the 2005

year.

Defaulting Employers

The level of defaulting employers remains low at 26. These figure exclude those employers currently before the

courts for failure to meet their statutory obligations (Currently 6).

Derivative & Futures Exposure

The Fund through its investment guidelines is not allowed to engage in derivative exposure.

Directors Interests

A list of NASFUND Directors personal shareholdings and Board positions can be accessed via the internet and on page 49 of

this report. www.nasfund.com.pg

Directors Liability Insurance

Under the Superannuation Act it is compulsory for Directors to have Director Liability Insurance. The Directors

Liability Insurance is with American Home Assurance Limited. The amount of insurance is capped at K5 million

per Director. Since the inception of NASFUND there has been no claim against this policy nor do Directors

believe there is any event likely to lead to a claim on this policy.

External Board Positions

As at the 31 December 2005, the following external Board positions were held by NASFUND staff

Name Classification Company

Mr Ian Tarutia Management Amalpack Ltd

Mr Ian Tarutia Management Ramu Sugar Ltd

Mr Erastus Kamburi Management Amalpack Ltd

Mr Rod Mitchell Management Highlands Pacific Ltd

Mr Rod Mitchell Management Credit Corporation (PNG) Ltd

All Board fees from external Boards have been paid directly to NASFUND.

21


Fund Entertainment, Donations & Overseas Travel Expenses

Expense Item Expense

Entertainment (Chief Executive Officer) K4,986

Entertainment (Chief Operating Officer) K3,049

Board Meeting Expenses K1,072

Donations K54,108

Overseas Travel -

Independent Professional Advice Artist: Martin Morububuna

With the approval of the Chairman, a Director is entitled to seek independent professional legal and accounting

advice at the Funds expense, concerning any aspect of that Directors’ duties and or aspects of concern about the

Fund’s operation. It is a requirement that any such legal opinion obtained is distributed to fellow Directors.

Directors sought no external legal advice in 2005.

Investment Transactions Undertaken over 2005- Excluding Cash and Treasury Notes

Investments sold or purchased Classification Settlement Date Description Amount (Kina)

Bank South Pacific Limited Equity Sale Various (1,335,618) shares (4,052,139)

Bank South Pacific Limited Equity (Dividend reinvest) June, 05 1,473,180 shares Nil

City Pharmacy Limited Equity Purchase October, 05 3,328,526 shares 6,324,199

Credit Corporation (PNG) Ltd Equity Sale February, 05 (200,000) shares (450,000)

Highlands Pacific Limited Equity Purchase Various 9,523,810 shares 9,962,641

Inter Oil Limited Equity Purchase Various 83,810 shares 750,015

Lihir Gold Limited Equity Purchase December, 05 351,475 shares 1,860,524

Meringo Limited Equity Purchase November, 05 100,000 shares 572,637

New Britain Palm Oil Limited Equity Purchase Various 2,100,000 shares 11,370,000

New Britain Palm Oil Limited Equity Sale February, 05 (200,000) shares (1,060,000)

New Guinea Energy Limited Equity Purchase November, 05 1,250,000 shares 574,185

Oil Search Limited Equity Purchase Various 2,275,160 shares 12,910,167

Oil Search Limited Equity Sale September, 05 (1,000,000) shares (8,375,722)

Inscribed Stock Fixed Interest Purchase February, 05 15 May, 08 maturity 15,000,000

Inscribed Stock Fixed Interest Purchase February, 05 15 Nov 06 maturity 6,000,000

Inscribed Stock Fixed Interest Maturity September, 05 Matured (9,000,000)

Inscribed Stock Fixed Interest Purchase December,05 August 2012 maturity 8,873,000

Inscribed Stock Fixed Interest Purchase December, 05 February 2016 maturity 6,159,000

Kambang Holdings Limited Loan May, 05 April 2006 maturity 6,000,000

Eda Ranu Loan Loan Redemption December, 05 Early redemption (1,000,000)

Babcock & Brown Notes International Fixed Interest

Purchase

December, 15 80,000 Notes 18,850,201

Port Moresby Grammar Property Purchase November, 05 Lot 9, Sec 68, Boroko 9,282,859

Bank South Pacific Limited Subordinated Debt RedemptionJune, 05 Early redemption (10,000,000)

Investments in the Portfolio Over 5% of the Net Asset Value of the Fund Excluding Government Securities and

Treasury Notes

Asset Classification % Net Asset Value

Bank South Pacific Limited Equity 16.6%

22


Bank South Pacific Limited Equity - Death Benefit Fund 2.4%

Deloitte Tower Property 5.9%

Highlands Pacific Limited Equity 8.6%

New Britain Palm Oil Equity 5.1%

Investment Guidelines:

Current Asset Allocation Guidelines Minimum % Maximum % 31-Dec-04 31-Dec-05

Equities 15% 30% 30% 32%

Government Securities & State Grants 20% 30% 27% 24%

IBD & Treasury Notes 10% 30% 12% 5%

International Equities 10% 20% 6% 19%

International Fixed Interest 0% 10% 3% 4%

Loans 0% 10% 7% 4%

Property 10% 20% 15% 12%

Management Expense Ratios

The Management Expense Ratio (MER), measures as a percentage, administration expenses against the net asset

value of the Fund. This ratio is often seen as a measure of administration efficiency. The prudential standard

issued by the Central Bank in February, 2004 stipulates that the MER is to be determined going forward by

dividing the expenses of the Fund by the average monthly net asset value of the Fund.

2001 2002 2003 2004 2005

2.35% 2.23% 2.10% 1.91% 1.56%

Material Contracts

Contracts entered into by NASFUND with outside parties greater than K50, 000 p.a

Contract Service Expiry Date

BSP Capital Investment Management 31 Dec, 2006

Aon Consulting Administration 02 May, 2006

L J Hooker Rental Collection - Tower 31 March, 2006

Ashton Brunswick Management -Tower 30 April, 2006

Delstar Security Services Security 13 February, 2006

Rod Mitchell Employment Contract 30 June, 2008

Member Statements

Member Statements inclusive of interest credited for the 2004 year were distributed in March 2005. Yearly

Member Statements for the twelve months to December 31, 2005 will be distributed to all Members through

contributing employers after crediting of income in February, 2006

Motor Vehicle Policy

NASFUND has a motor vehicle policy that allows for vehicles to be changed after 120,000kms or after five years,

which ever comes last. Luxury four-wheel drives other than twin cab utilities are not allowed to be purchased by

the organisation. There are currently three management vehicles. Management vehicles are accessible by staff

during working hours for work related business. NASFUND currently has seven vehicles.

Reserves

Reserves after creditation of income currently stand at K29.7 million or 4.0% of the net asset value of the Fund.

23


Remuneration of Board and Staff

The Board’s remuneration is in line with the Central Bank guidelines on remuneration. The Executive and Staff

remuneration are determined with reference to the PriceWaterhouse Coopers annual survey of salaries and

conditions and conditions as generally set in the banking and finance industry. Payment of bonuses to

Management and Staff, if any, are determined on recommendation from the Management to the Audit and

Remuneration Committee.

Remuneration Paid to Full Time Staff

Remuneration paid to fulltime staff includes superannuation, medical, and housing allowances where applicable.

Salary Range No: Employees

Between K 5,001 –K 10,000 11

Between K 10,001 –K 15,000 31

Between K 15,001 –K 20,000 1

Between K 20,001 –K 30,000 16

Between K 30,001 –K 40,000 4

Between K 40,001 –K 50,000 3

Between K 50,001 –K 100,000 2

Between K 100,001 –K 200,000 1

Between K 200,001 –K 300,000 1

$Aud 271,594 1

Total Staff# 71

Artist: Martin Morububuna

~ The contract of employment of the Chief Executive Officer is accessible on the NASFUND Website. The terms

and conditions of employment of the Chief Operating Officer and Company Secretary can be sighted at

NASFUND Head Office. All Management Staff have a maximum three-month payment termination provision in

lieu of notice, if the Board instigates termination.

# A bonus program is in place for staff with a maximum payment of six weeks salary.

Risk Management

The Board, through the Strategic Plan, identifies possible risks to the Fund in meeting its core objectives. The

identification of risks flows through to risk minimisation strategies including policies on reserving. The Fund,

through its risk management statement, attempts to reduce volatility in the Fund and improve resilience to external

future events that may impact negatively on Members Funds. The Board monitors the identified risks to

NASFUND and in particular recognises that adherence to the investment guidelines of the Fund is paramount in

controlling the level of risk to Members.

Staff Levels

Staff Dec-01 Dec-02 Dec-03 Dec-04 Dec-05

Full time 48 48 47 57 70

Full time (Expatriate) 1 1 1 1 1

Contract 0 1 2 1 0

Casual 0 0 2 0 0

Total 49 50 52 59 71

24


Staff levels have increased due to the establishment of a further two new branches, compliance function and

marketing department.

Staff Employment Policy

Discrimination: The National Superannuation Fund is an equal opportunity employer and does not discriminate

on the basis of sex, race, colour or sexual orientation. A comprehensive staff employment policies and procedures

manual has been compiled and reviewed by the Audit and Remuneration Committee annually.

Education: Staff will be given every opportunity to access higher learning and educational advancement through

professional training at NASFUND’s expense. It is mandatory that all staff are proficient in Word and Excel

programs.

HIV: The incidence of HIV/AID’s in the community is increasing at an alarming rate. While the Board and

management are unaware of any staff member with HIV, discrimination against any staff member with the disease

will not be tolerated. The company will provide assistance to any staff member who contracts HIV wherever

possible.

Significant Events

The Board and Management are unaware of any significant event in the reporting period or future event that will impact on the accounts in a material manner

STATISTICAL INFORMATION 2001 2002 2003 2004 2005

Assets & Liabilities

Net Asset Value (000) 267,505 326,317 444,460 522,426 748,425

Growth 20% 22% 36% 18% 43%

Profitability

Net Profit After Tax (000) 15,884 33,487 53,022 53,458 160,145

Interest credited to members accounts 7% 8.75% 12.50% 14.50% 29.00%

Reserves % NTA 1.4% 4.7% 7.3% 5.7% 4.0%

Death Benefit Fund (000)* See page 42 for details 18,240

Employers & Active Members

Number of Active Employers 925 945 981 1,014 1,123

New Employers Registered (gross) 47 64 93 79 188

Employers receivership/merged (52) (44) (57) (46) (79)

Level of employer default 37 31 21 16 26

Number of Active Members 58,673 65,199 71,534 71,505 79,233

New members registered (gross) 13,412 15,292 23,187 19,431 25,563

Expenses

Total Expenses (000) (5,763) (6,631) (7,683) (9,146) (9,946)

Management Expense Ratio 2.35% 2.23% 2.10% 1.91% 1.56%

Outsourced Back Office Provision (000) 565.6 1,362.9 1,488.2 1,774.5 2,041.2

Outsourced Investment Management (000) 0 198.3 807.1 1,134.6 634.4

Number of full time staff 49 48 48 59 71

Cashflow

Withdrawals (000) (Gross) 34,357 35,794 37,275 54,899 65,915

No of Members who received Benefit Payment 15,329 14,718 14,906 23,492 28,611

Contributions (000) 60,382 70,993 102,940 82,502 128,506

25


Trust Deed and NASFUND Limited Constitution

The Deed and Constitution of the Fund have not been amended since inception. Both the deed and constitution of

NASFUND can be accessed via the Internet at www.nasfund.com.pg.

Triple Bottom Line Reporting - Working with the Community

More and more, major companies and organisations are looking at triple line reporting in their accounts. The

public wants to know more than just the strict financials – they want to know how a company interacts within the

community. NASFUND has worked with a number of community based organisations as well as self – initiatives

to improve the quality of life within the community. In line with this philosophy, the Board has developed a

donations policy. The following donations were given over the year.

Wakawa Performing Troupe (HIV Awareness) K1,300

Tsunami Disaster K3,000

Susu Mamas K10,000

Sir Buri Kidu Heart Foundation K10,000

Sporting Groups K4,000

Prison women (Sewing Machines) K3,588

Nine Mile Police Station Opening K1,173

India Association K1,000

Open Heart K1,000

Women Doctors Association K1,000

Salvation Army K1,000

Cheshire Homes K2,746

NCDC Anti Tuberculosis K1,000

Transparency International K10,000

NCD Provincial Aids Committee K2,000

UPNG Open day K1,000

Be Aids Free Educational Concert K1,000

Total K54,108 Artist: Martin Morububuna

Donations represent less than 0.03% on gross income. NASFUND as a community gesture worked with the Police

in reopening the Police Station at Nine Mile, Port Moresby

Valuation Methodology

The valuation of assets is as follows.

Listed Equities: - Sell price as quoted on the relevant stock exchange

Unlisted Equities:- Mid range price determined by BSPCapital Stockbrokers

Property:- By registered valuer associated with a real estate company

Government Securities: At purchase price/face value

Exchange Rate: Aud/Kina 0.4420 (mid price)

State Grants: State Grants are valued to market in accordance with IAS 20.

Cash: Cash & treasury notes with a maturity less than 180 days

John Jeffery Mr William Lamur

26


Chairman Audit & Remuneration Committee

RISK MANAGEMENT – A Disciplined, Sound and Practical Approach.

Executive Management

Diversification

Investment Strategy

Strategic Planning Corporate Culture

Delegations

Internal SWOT

External SWOT

Compliance

Reporting

Compliance Officer Audit & Remuneration Committee Outsourced Investment Management Outsourced Administration

NASFUND Board of Directors

Risk Management Framework

Culture: A culture built on excellence determines the level and quality of risk management at NASFUND.

Successful organisations anticipate problems, are pro active, prepared and ensure that a risk management regime

is in place where possible. The NASFUND Board takes ownership of the assessment and management of risk and

we consciously assess risk on a daily basis. Risk management is always a continuous process of reassessment.

Risk Management is documented both in the organisations Policies and Procedures Manual and the annual

strategic planning process cumulating in the rolling five-year plan.

Objectives: The basis of our risk management policy is to manage the future and protect member’s wealth by

Minimising volatility and surprise

Balancing risk with reward and adherence to diversification

Achieving competitive advantage though understanding the operational and investment risks faced by the

Fund

Parameters: NASFUND has developed a risk management strategy that

Identifies the key risks to the organization

Creates policies and procedures to manage risk within the organization

Allocates ownership of risk

Utilises the Audit & Remuneration Committee and ultimately the Board for on going management of risk

Utilises outsourced agencies (Investment Management & Back Office provision) as an aid to risk

management

Seeks, through the legal Counsel compliance of all statutory obligations including adherence to the

Superannuation 2000 Act.

Seeks compliance through designated Officers

Outcome:

27


NASFUND – Our People

The old saying that “people are our most important asset” is a truism of modern business. The NASFUND success

story is all about people. Their individual and collective efforts are the driving force behind meeting our strategic

plans and goals.

E x e c u t i v e S t a f f

S t r a t e g i c P l a n

S t a f f O b j e c t i v e s

S u c c e s s i o n T r a i n i n g

M e a s u r e m e n t

R e w a r d i n g

I N P U T S

O U T P U T S

B i A n n u a l Y e a r l y S e l f -

B o a r d

P l a n n i n g

A g a i n s t O b j e c t i v e s

K P I s

P e r f o r m a n c e

B o n u s S y s t e m

R e v i e w s A p p r a i s a l

Building the corporate road map: The NASFUND strategic plan is done through traditional SWOT analysis.

From the identification of Strengths, Weaknesses, Opportunities and Threats, objectives are created and from

those objectives action plans are made. The Board ratifies the five year plan and in doing so that becomes the

“road map” for management and staff to follow in terms of meeting the objectives of the organisation.

Beating to one drum: From action plans, management works with each staff member in preparing individual staff

objectives and performance criteria to meet the strategic objectives as set by the Board. Thus there is a total flow

through from Board, management to staff in ensuring that all in the organisation are similarly focused. The

Strategic Plan therefore becomes an important governance and benchmarking tool in measuring the progress of

the organisation and building well trained and qualified staff.

The Level Playing Field: Work places tend to classify people into boxes such as white, black, expatriate, Papua

New Guinean, highlander, coastal, male, female, old, young, married or single, which inevitably are used as career

barriers, intentionally or unintentionally within organisations to hinder individual aspirations and career growth.

NASFUND believes in a level playing field at the work place where these arbitrary classifications play no

importance in the career development of our staff. Equal opportunity, mutual respect and diversity are a key to our

success.

Empowerment: NASFUND believes in staff empowerment. Workers who have a sense of ownership over their

particular area of responsibility are generally more motivated and receive the greatest in work satisfaction.

Workers who have no decision making power often become disenfranchised from the organisation and from lack

of empowerment the path of absenteeism, lethargy and sub optimal work becomes a quick reality. Empowerment

of our staff goes part and parcel with our on going success.

Rewarding Performance: NASFUND recognises that people do not work in a vacuum. A bonus structure that

creates an incentive for staff in meeting properly articulated objectives is an important part of staff motivation.

28


NASFUND rewards hard work, it rewards team players, and it rewards the meeting of objectives that drive the

organisation forward.

NASFUND: Working with Community

The NASFUND of today means more than being the best in the field of corporate governance and client service.

For the men and women in the street we have an obligation to reach out with education on issues such as building

a savings culture, HIV awareness, education on building better lives for women in the workforce, equal

opportunity and working against sexual & domestic violence. It would seem more than incongruous to be a

successful organisation in terms of raw numbers and statistics but remain blinded to the important issues that

effect community.

And reflecting on this point, while NASFUND is certainly market driven at heart and motivated by the financial

well being of private sector members, we do however try and conduct ourselves with a very human face and with

an eye to community aspirations. Hopefully in doing so, we give our members greater quality of life and

opportunity, a social safety net and financial independence - and of course in the process, contribute meaningfully

to a better Papua New Guinea

Artist: Martin Morububuna- Private Collection

Tingim Yut Kompetisen is a nationwide competition

initiated in 2005 aimed at finding and funding good ideas

that address the major challenges facing PNG's young

people in their communities. The competition is an

initiative of the World Bank in partnership with Air

Niugini, Airlines PNG, Bank South Pacific, Coral Sea

Hotels, the Department of Community Development,

Divine Word University, NASFUND, Pacific Enterprise

Development Facility, Port Moresby Grammar School,

UNDP and UNICEF.

To win, project ideas must be creative, innovative, cost-

effective, and have direct impact on youth issues. Winning

projects will be funded for a period of 12 months.

See page 25 for the list of donations undertaken by NASFUND during 2005.

29


Aon PO Box 479 Port Moresby NCD

Level 1, Aon Haus

McGregor Street Port Moresby NCD

Telephone 675 320 2547

Facsimile 675 320 2562

17 January, 2006

Chairman and Directors

National Superannuation Fund

PO Box 5791

Boroko

NCD

Dear Chairman and Directors,

The best I can describe 2005 is another year of accomplishments. We have seen through 2005 the integration of

Maritime Workers Superannuation Fund and administratively, the transfer of this fund provided the Aon team

with some challenges to say the least. Aon has also successfully integrated University of PNG into NASFUND. It

is indicative of the confidence the Directors of the former Trustee Companies have in NASFUND and it’s

partners.

In addition to the increase in new membership, the fund experienced another Annual and Mid Year Review

completed ahead of schedule and well ahead of other Authorised Superannuation Funds in PNG.

The number of employers who are using Ebenefits, an Aon internet database that allows employers to access their

employee’s records on their behalf continues to grow rapidly. Not only does the internet provide accurate

information in a timely manner, but it is accessible 24hrs a day, 7 days a week, 52 weeks a year. This form of

member communication is unsurpassed in PNG.

In the 2004 Report Aon highlighted the number of Employers remitting contributions electronically.

August 2001, Nil Contributions received electronically

January, 2004 – 96 employers and 27,498 members

December, 2004 – 154 employers and 48,088 members

And as at December 2005 – 300 employers and 54,550 members.

So what difference does this make to the day-to-day administration of NASFUND?

Members are able to maximise their Housing Advance Balances due to efficient posting of contributions

Member contributions are allocated more efficiently and accurately.

Efficiency and accuracy through the whole administration process.

Aon will continue to improve services to NASFUND and it’s members. A delivery of service that is unmatched by

any other Superannuation Administration Provider in PNG. I am pleased once again to present this Administration

Annual Report being for the year 2005.

30


Year to 31 December, 2005

Amount Paid

(Kina) No of Member

Unemployment - Full withdrawal 34,337,372 11,081

Unemployment - Partial 6,764,939 13,944

Disabled 871,296 93

Emigration 14,497 1

Death 2,051,474 304

Retirement 1,960,280 293

Housing Advance 17,238,333 2883

Transfer 641,537 64

Total 63,879,732 28,611

Membership – Active Inactive Total Membership

As at Jan 05 72,297 186,192 258,489

As at Dec 05 79,233 192,926 272,159

In closing, Aon in 2005 processed a total of 28,611 (23,492 in 2004) withdrawal payments and loaded 25,563

(19,431 in 2004) new member applications.

We at Aon look forward to continuing to work with the Management and the Board of NASFUND.

TOGETHER WE WILL CONTINUE TO MAKE A DIFFERENCE

Chris Hagan

Chief Executive Officer

Aon Consulting (PNG) Limited

31


2005 - Year in Review

17 January, 2006

The Funds under management by NASFUND continued to grow at a healthy rate with contributions income and

other funds joining NASFUND to enjoy the benefits of a larger fund. PNG and Australian Equities continued

reached all time highs over the last 12 months with particularly good performances from the local resource

sectors.

Fixed interest and property yields continue to fall as the surplus cash in the system, which had been invested in

Treasury Bills looks for better returns. Treasury Bills hit all time lows as the Government reigned in inflation and

the Treasurer restructured the maturity and cost of Government debt into longer dated maturities, abolishing short

dated stock under 90 days and increasing the minimum investment to K1 million and above.

NASFUND was able to take advantage of market situation by reducing its cash and shorter dated securities

towards minimum prudential levels and taking advantage of higher yields in property and longer dated fixed

interest and secured loans.

We look forward to the future with markets set to build on last year’s highs, with stable interest rates and PNG’s

economy looking stronger than ever. The interest shown in PNG’s rich resources and agricultural advantages will

continue to attract overseas investment and no doubt will gain momentum as the success stories attract new

investors.

The overall performance of the fund has been very satisfying and the continuing partnership between

NASFUND’s dedicated management and the manager has been rewarding as we move forward together to 2006

and beyond.

32


Paul Maclaren

Managing Director

BSP Capital Limited

33

National Superannuation Fund Audit report for the year ended 31 December 2005

Scope

We have audited the accompanying financial statements of the National Superannuation Fund (“Fund”) for the

year ended 31 December 2005, consisting of the operating statement, statement of net assets, statement of changes

in members funds, cash flow statement and notes as set out on pages 34 to 48, as submitted by the Trustees.

The audit report issued will be solely to members of the National Superannuation Fund. Our audit work will be

undertaken so that we might state to the members those matters that we are required to state to them in an auditor's

report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility

to anyone other than the National Superannuation Fund and its members as a body, for our audit work, for the

audit report, or for the opinion we will form.

Respective responsibilities of the Trustees of the fund and auditors

The Trustees of the fund are responsible for the preparation and presentation of the financial statements and the

information they contain. Our responsibility is to perform an audit of these financial statements in order to

express an opinion on them to the members of the Fund.

Basis of opinion

We conducted our audit in accordance with International Standards on Auditing to provide a reasonable level of

assurance as to whether the financial statements are free of material misstatement. Our procedures included

examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements

and the evaluation of accounting policies and significant accounting estimates.

These procedures have been undertaken to form an opinion whether, in all material respects, the financial

statements have been prepared in accordance with International Financial Reporting Standards and present a view

which is consistent with our understanding of the Fund’s financial position, the results of its operations and its

cash flows.

The audit opinion expressed in this report is formed on the above basis.

Audit opinion

In our opinion, the financial position of the fund as at 31 December 2005, the results of the operations of the fund

and cash flows for the year then ended have been fairly stated and proper accounting records have been kept by

the Fund as far as appears from our examination of those records.

DATED at Port Moresby this 10th day of February 2006

KPMG

Chartered Accountants

David Wardley

Partner

Registered under the Accountants Act 1996

34

National Superannuation Fund Financial Statements for the year ended 31 December 2005

10 February, 2006

DECLARATION BY TRUSTEES

In our opinion the Funds’ accounts set out on pages 34 to 48 are drawn up so as to give a true and fair view of the state

of affairs as at 31 December 2005, and the surplus before distribution for the year ended on that date, of the National

Superannuation Fund so far as they concern members of the National Superannuation Fund. Further all Risk

Management systems are in place and operating effectively.

The financial statements have been drawn up in accordance with the requirements of the Superannuation (General

Provisions) Act 2000 and the requirements of the Trust Deed of the National Superannuation Fund dated 31 May

2002.

DATED at Port Moresby this 10th day of February 2006

For and on behalf of the Board of Directors of the Trustee

________________________ _________________________

Mr John Jeffery William Lamur

Chairman Audit & Remuneration Committee

DECLARATION BY MANAGEMENT

In our opinion the Funds’ accounts set out on pages 34 to 48 are drawn up so as to give a true and fair view of the state

of affairs as at 31 December 2005, and the surplus before distribution for the year ended on that date, of the National

Superannuation Fund so far as they concern members of the National Superannuation Fund. Further all Risk

Management systems are in place and operating effectively.

The financial statements have been drawn up in accordance with the requirements of the Superannuation (General

Provisions) Act 2000 and the requirements of the Trust Deed of the National Superannuation Fund dated 31 May

2002.

DATED at Port Moresby this 10th day of February, 2006

For and on behalf of the NASFUND Management

________________________ _________________________

Mr Rod Mitchell Ian Tarutia MBE

Chief Executive Officer Chief Operating Officer

35


Operating Statement

2005 2004

Note K000 K000

Net investment surplus

Interest Income 20,511 26,094

Dividend Income 12,145 5,202

Net Property Rentals 7,002 1,326

Movement in net market value of investments 2(a) 134,768 31,283

Direct investment expenses

Provision for doubtful debts - (1,000)

Other direct investment costs (79) (137)

Net investment surplus 174,347 62,768

Other income

Sundry Income

810

2,349

Recovery of loans previously written off - 3,417

Movement in net market value of other assets 2(b) (1) 18

809 5,784

Expenditure

Staff related expenses (2,848) (2,305)

Trustees Fees / Board expenses (214) (134)

Other administration expenses (6,884) (6,707)

(9,946) (9,146)

Net operating surplus before income tax 2(c) 165,210 59,406

Income tax expense 4 (5,065) (5,949)

Net operating surplus after income tax 160,145 53,457

The operating statement is to be read in conjunction with the notes to and forming part of the financial

statements set out on pages 38 to 48.

36


Statement of changes in the Members Fund

Allocated

2005

K000

Unallocated

2005

K000

2005

K000

Total

K000

2004

K000

433,066 89,360 - 522,426 444,460

97,360 2,422 - 99,782 83,216

29,393 (669) - 28,724 -

Withdrawals (65,915) - (65,915) (55,162)

Operating Surplus - 160,145 160,145 53,457

Interest allocated to Members Accounts 57,827 (57,827) - -

Interim interest paid on withdrawals 737 (737) - -

Other adjustments - 3,328 3,328 (389)

Transfer to Nasfund Savings and Loans

Society (66) - - (66) (3,156)

Transfer to death benefit fund (Note 6) - 18,240 -

Death Benefit Total

2005

1 January

Contributions received

Transfers from other funds

-

-

-

-

-

(18,240) -

31 December 552,402 177,782

18,240 748,424 522,426

Allocated funds represent NASFUND’s obligation to pay benefits to Members and beneficiaries arising as at 31

December 2005.

Unallocated funds includes:

: contributions of K8,733,708 (2004 K6,311,169) that have not yet been allocated to individual members

accounts;

: the 2005 operating surplus from which will be allocated interest at the 2005 crediting rate;

: Fund’s not yet allocated as approved by the Bank of Papua New Guinea and to be carried forward to

future years.

The statement of changes to the member’s funds is to be read in conjunction with notes to and forming part of the

financial statements set out on pages 38 to 48.

37


Statement of net assets 2005 2004

Note K000 K000

Investments

Government securities and other loans 5 163,106 133,444

Interest bearing deposits & treasury notes 17 38,268 59,615

Equity investments 8 394,738 206,745

Investment properties 9 87,395 73,244

683,507 473,048

Other assets

Cash on hand and at bank 17 2,516 1,453

Interest receivable 1,908 1,558

Interest with holding tax - 3,661

Property, plant and equipment 10 4,855 4,226

Sundry debtors and prepayments 11 1,341 1,549

Death Benefit Fund 6 18,240 -

State Grant 7 41,000 45,000

69,860 57,447

Total assets 753,367 530,495

Current Liabilities

Bank overdraft 17 - 36

Sundry creditors and accruals 12 2,105 3,854

Provisions for employee entitlements 13 266 102

Taxes payable / (Recoverable) 4 (1,471) 132

Total current liabilities 900 4,124

Net deferred tax liabilities 4 4,043 3,945

Total liabilities 4,943 8,069

Net assets 748,424 522,426

Represented by

Members’ accounts 552,402 433,066

Unallocated funds 177,782 89,360

Death Benefit Fund 6 18,240 -

Total Members Funds 748,424 522,426

For and on behalf of the Board of Directors of the Trustee

………………………………………….. …………………………….

Mr John Jeffery Mr William Lamur

Chairman Chairman Audit & Remuneration Committee

Date 10 February, 2006 Date 10 February, 2006

The statement of net assets is to be read in conjunction with the notes to and forming part of the financial


38


Cash flow statement

2005 2004

Note K000 K000

OPERATING ACTIVITIES

Interest received 20,161 24,138

Rent received 7,210 925

Dividends received 12,145 5,204

Other fees received 4,138 544

Payments (11,155) (8,554)

Withholding taxes paid (2,910) -

Cash flows from operating activities 29,589 22,257

INVESTING ACTIVITIES

Purchase of plant and equipment (470) (2,107)

Proceeds from sale of property plant and equipment 1 5

Proceeds from sale of investment property - 69

Investments in equity investments (75,637) (48,315)

Investments in government securities and other loans (29,662) (35,644)

Investments in investment properties (9,901) (20,550)

Cash flows used by investing activities (115,669) (106,542)

FINANCING ACTIVITIES

Receipt of Government grant 4,000 6,448

Special Employer Contributions - 4,394

Transfers from other funds 28,724 -

Transfer to Nasfund Savings and Loans Society (66) (3,156)

Contributions Received 99,782 83,216

Withdrawals paid (66,608) (55,162)

Cash flows from financing activities 65,832 35,739

Net decrease in cash and cash equivalents (20,248) (48,546)

Cash and cash equivalents at beginning of the year 61,032 109,435

Cash and cash equivalents acquired at amalgamation - 143

Cash and cash equivalents at end of the year 17 40,784 61,032

The cash flow statement is to be read in conjunction with the notes to and forming part of the financial


-

39

National Superannuation Fund of PNG Financial Statements for the year ended 31 December 2005 Notes to and forming part of the financial statements

1. SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

The financial statements of National Superannuation Fund (‘the fund’) have been prepared in

accordance with International Financial Reporting Standards.

(b) Basis of preparation

The financial statements have been prepared primarily on the historical cost basis, except for

investments which have been stated at fair value.

No distinction has been made between the non-current and current nature of assets in the Statement of

Net Assets.

The accounting policies have been consistently applied by the Fund and they are consistent with those

of the previous year.

The Fund’s financial statements have been prepared on a going concern basis.

All figures are rounded to the nearest thousand Kina.

(c) Members accounts

Contributions are accounted for, and members’ accounts credited with their contributions and

employers contributions, on a cash basis based on the receipt of reconciled contribution schedules.

Accounting for interest credited to members’ accounts is in accordance with Section 8 of the National

Superannuation Fund trust deed and is as follows;

1. Interest credited to members is on the basis of the period to which the contributions relate;

2. The rate of interest is determined by the Board of Directors of the Trustees every year and is

calculated on the daily balance of the members’ accounts.

(d) Foreign currency

The reporting currency adopted in the preparation of the financial statements is the Papua New

Guinea currency, the Kina. Transactions in foreign currencies are recorded at the exchange rate at the

date of the transaction. Foreign currency monetary assets and liabilities are translated at the relevant

exchange rate at the balance sheet date. Resulting exchange differences are recognised in the

operating statement for the year. Non-monetary assets and liabilities denominated in foreign currency

are recorded at the exchange rate at the date of the transaction.

(e) Investment assets

In accordance with International Financial Reporting Standards investment assets including

investment properties and equity investments are included in the Statement of Net Assets at net market

value as at the balance date and movements in the net market value of investment assets are

recognised in the Operating Statement in the periods in which they occur.

(f) Property, plant and equipment

Items of property, plant and equipment other than investment properties are stated at original cost or at

valuation less accumulated depreciation and impairment losses. Construction cost for self-constructed

assets includes the cost of materials, direct labour and an appropriate proportion of construction

overheads.

40


Depreciation is provided on cost or revalued amount of all fixed assets, including buildings but

excluding investment properties so as to write off the assets progressively over their estimated useful

lives. Fixed assets are first depreciated in the year of acquisition, or, in the case of construction, in the

year of substantial completion of the asset.

The straight line method of depreciation is used and the rates of depreciation are:

Buildings and construction 2 – 3 %

Office equipment 10 %

Furniture & fittings 7.5 %

Motor vehicles 20 %

Computer equipment 25 %

(g) Receivables

Receivables are stated net of provisions.

(h) Interest bearing loans and borrowings

Interest bearing loans are initially recorded at the net proceeds received. Any discount, premium or

other difference between the net proceeds and the redemption value is amortised and included in

finance costs over the term of the loan.

(i) Provisions

Provisions are recognised when the Fund has a legal or constructive obligation as a result of a past

event, and it is probable that an outflow of economic benefits will be required to settle the obligation.

(j) Taxation

Tax on the surplus or deficit for the year comprises current tax and the change in deferred tax.

Current tax comprises tax payable calculated on the basis of the expected taxable income for the year,

using the tax rates enacted by the balance sheet date, and any adjustment of tax payable for previous

years. Deferred tax is provided using the balance sheet liability method on all temporary differences

between the carrying amounts for financial reporting purposes and the amounts used for taxation

purposes

(k) Funding Arrangements.

The employers have contributed to the Fund during the current financial year at a rate of

approximately 7.70% (2004:7% plus 2% Employer levy until July 2004) of the gross salaries of those

employees who were members of the Fund. Employees contributed to the Fund during 2004 mainly at

the rate of 5.50% (2004:5%) of gross salary.

(l) Deferred expenditure

All staff housing subsidies advanced are amortised over a five-year period with 50% amortised in both

years four and five.

(m) Revenue

Interest on investments and rental income are recognised on an accruals basis. Dividends are

accounted for when they become receivable by the Fund.

41


2. MOVEMENT IN NET MARKET VALUES 2005 2004

(a)

Movement in net market value of investments

K000 K000

In respect to those investments held at the end of the year

Shares in listed companies 121,338 21,999

Shares in unlisted companies 2,064 1,137

Units in international trusts 366 3,420

Investment properties 4,250 4,736

127,828 31,292

In respect to those investments realised during the financial year

Shares in listed companies 6,750 (9)

Investment properties/unlisted companies - -

6,750

(9)

Total 134,768 31,283

2(b) Operating Surplus for the year has been arrived at after

charging / (crediting) the following items

Depreciation 376 285

(Profit) / Loss on sale of assets (1) (9)

Fund Administrators Fees 2,041 1,775

Investment Managers Fees 634 1,135

Auditors Remuneration – Audit 122 90

Auditors Remuneration – Taxation 17 -

Auditors Remuneration – Other Services 47 32

Legal Expenses 230 180

3. EMPLOYEES

The number of full time employees at the end of the year was 71 (2004: 59).

42


4. INCOME TAX EXPENSE 2005 2004

K000 K000

Current tax 4,967 2,699

Change in deferred taxes 98 3,945

Tax effect of movement in reserves - (695)

Income Tax Expense 5,065 5,949

The prima facie tax charge on the profit for the year is reconciled

to the tax expense as follows:

Accounting profit before tax 165,210 59,406

Tax on the profit for the year at 25% 41,302 14,852

Taxation effect of permanent differences

- Non deductible items 36 3

- Non taxable items (36,226) (10,346)

Prior year tax losses recouped - (2,505)

Net deferred tax liability recognised - 3,945

Over provision in prior year (47) -

5,065 5,949

Opening Balance of Income Tax payable 132 3,594

Less: Interest Withholding tax (6,570) (7,079)

Current tax payable 4,967 2,699

Additional provision relating to prior years - 918

Balance of Income Tax payable / (refundable) (1,471) 132

Deferred tax assets and deferred tax liabilities at 31 December 2005 are attributable to the items

detailed in the tables below:

2005 2004

Asset Liability Net Asset Liability Net

K K K

Property, Plant and equipment 323 - 323 34

-

34

Investment Property - (4,232) (4,232) - (3,893) (3,893)

Provisions 431 - 431 411 411

Interest Receivable - (453) (453) - (479) (479)

Other items - (112) (112) 5 (23) (18)

Net tax assets / liabilities 754 (4,797) (4,043) 450 (4,395) (3,945)

43


5. GOVERNMENT SECURITIES AND OTHER LOANS 2005 2004

K000 K000

(a) - Government Inscribed Stock 134,840 97,444

(b) - Eda Ranu Loan 5,000 6,000

(c) - Southern Highlands Provincial Government 1,000 1,000

(d) - Airlines of PNG promissory notes 16,900 20,000

(e) - Kambang Holdings 6,000 -

(f) - Other 366 -

(g) - Bank of South Pacific Limited - 10,000

164,106 134,444

Less: Provision for doubtful debts (1,000) (1,000)

163,106 133,444

(a) Average maturity 2.40 years

(b) Maturity 0.83 years

(c) NASFUND has obtained a successful judgement against the

Southern Highlands Provincial Government through the courts. As

the loan is in default, the Board of Trustees have under the draft

prudential standards governing non-performing loans provided

fully for this loan and outstanding interest

(d) Promissory Notes issued by Airlines of PNG – 2% above 180 day

treasury notes - minimum 6%- max 10%

- Average Maturity 2.48 years

(e) - Maturity 90 days

(f) Various Loans – Maturity one month

6.

DEATH BENEFIT FUND

In 2005, the Superannuation Taskforce in its review, considered submissions from sections of the

industry on incorporation of life insurance products within superannuation. NASFUND’s submission

which has been endorsed by the Board is for a self funded death benefit product that gives active

members a K3,000 benefit to families on the event of death. The Superannuation Taskforce has

endorsed the proposal and the Fund is now awaiting approval from the Central Bank before

commencement. Until such time as the Central Bank approves the death benefit, the funding for this

product has been quarantined within the Fund. Total funding for the Death Benefit is K18.24 million

represented by shares in Bank South Pacific Limited at market value. If the Central Bank fails to

endorse the product, the K18.24 million Death benefit Fund will be distributed to Members in 2007

as part of the 2006 creditation.

44


7.

STATE GRANT

In December 2000 the government passed the National Provident Fund (Financial Reconstruction)

Act 2000. Under Section 4 the State shall make payments to the Fund on each of 28 February;

31 May; 31 August; and 30 November.

For the preceding quarter in each year, a payment of K1 million commencing 31 May 2001 and

ending 28 February, 2016 indexed to the CPI. A total of K41 million remains outstanding as at 31

December 2005 (2004: K45 million).

The fair value assessment of the amount outstanding at the balance date approximates the

carrying value of the State Grant. Fair value was determined by discounting the future cash

flows based on a 10 year moving average of inflation rate and discount rates based on interest

rates applicable for deposits greater than 12 months.

8. EQUITY INVESTMENTS 2005 2004

K000 K000

Quoted Shares - Domestic

Bank of South Pacific Limited 123,935 58,627

City Pharmacy Limited 6,652 -

Credit Corporation (PNG) Limited 21,014 9,535

New Britain Palm Oil Limited 37,997 26,550

Ramu Sugar Limited 3,305 2,129

192,903 96,841

Quoted Shares - International

Highlands Pacific Limited 64,307 35,531

Interoil Limited 1,312 932

Lihir Gold Limited 3,460 -

Marengo Mining Limited 688 -

New Guinea Energy Limited 566 -

Oil Search Limited 17,303 2,646

Steamships Trading Company Limited 18,432 12,661

106,068 51,770

Unquoted Shares & Units

Amalgamated Packaging Limited 5,693 4,878

Pacific Balanced Fund 15,069 -

Port Services Limited 288 -

South Pacific Brewery Limited 2,319 1,651

South Pacific Post Limited 16 -

Toyota Tsusho (PNG) Limited 237 226

Westpac Bank PNG Limited 3,770 3,310

27,392 10,065

Quoted Units – International Equity

ING International Equity Trust 35,999 33,553

45


Quoted Units – International Fixed Interest

2005 2004

K 000s K 000s

Vanguard International Fixed Interest Trust 14,276 14,516

Babcock & Brown Limited 18,100 -

32,376 14,516

394,738 206,745

The valuation methodology of the equity portfolio is as follows

(a) Quoted Shares: The closing price on the Australian Stock Exchange and

Port Moresby Stock Exchange as at 31 December 2005. The exchange

rate used for conversion is the mid rate between the quoted Bank buy and

sell rates AUD/Kina 0.4420 (2004 0.4105).

(b) Unquoted Shares: High and low valuations of unlisted equities have been

obtained from BSP Capital as of 31 December 2005. NASFUND has

used the mid prices to value the unquoted equities.

(c) Quoted Units: ING International Equity Trust is quoted by ING Limited

on a weekly basis.

(d) Vanguard International Fixed Interest Trust is quoted by Vanguard on a

weekly basis.

(e) Babcock & Brown units are redeemable convertible notes quoted on the

Australian Stock Exchange with the date of conversion set at

15 November 2010.

9. INVESTMENT PROPERTIES AND PROPERTY

COMPANIES

Land 1,197 1,228

Properties

Deloitte Tower 44,000 42,916

NCDC Haus 9,100 9,100

API Building 4,850 4,726

Basilisk Apartments 5,824 3,623

Chester St Apartments 2,590 2,757

Coral Suites Apartments 3,460 3,233

Kitogara Apartments 5,225 4,219

Mage Mage apartments 1,866 1,442

Port Moresby Grammar School 9,283 -

87,395 73,244

The investment in NCDC Haus represents a 65% interest in an incorporated joint venture known as

City Centre Developments Limited

In October 2005, the Fund engaged L J Hooker, professional valuers, to carry out a valuation of all

NASFUND Properties. The Trustees have considered the valuations in arriving at the carrying values

at 31 December 2005.

46


10. PROPERTY, PLANT AND EQUIPMENT

2005 2004

K000 K000

Land & buildings at cost - 2,102

Land & buildings – at valuation 3,700 1,277

Accumulated depreciation - (95)

3,700 3,284

Plant and equipment at cost 2,886 2,416

Accumulated depreciation (1,731) (1,474)

1,155 942

Total written down value 4,855 4,226

11. SUNDRY DEBTORS AND PREPAYMENTS

Sundry debtors & prepayments 1,150 1,350

Bonds and sundry deposits 33 25

Staff home ownership scheme and staff debtors 158 174

1,341 1,549

12. SUNDRY CREDITORS AND ACCRUALS

Sundry creditors and accruals 1,987 3,743

Bonds and repayable deposits 118 111

2,105 3,854

13. PROVISIONS FOR EMPLOYEE ENTITLEMENTS

Provision for annual leave 74 87

Provision for long service leave 192 15

266 102

14. EMPLOYEE BENEFIT PLANS

Post-employment benefits

The fund contributes to the National Superannuation Fund for its own employees.

The plan for general employees is a defined contribution type, whereby the Fund matches

contributions to the scheme made by employees at a rate of 7.70% of the employee’s base salary.

Employee contributions are based on various percentages of their gross salaries. During 2005 the

47


Fund has expensed K247,013 in contributions payable (2004: K141,229).

15. COMMITMENTS AND CONTINGENCIES

(a) Commitments

Commitments not otherwise provided for in the financial statements are as follows:

2005 2004

K000 K000

Commitments arising from contracts for expenditure in respect of

investment properties and other investments in the normal

course of operations. - -

There are no forward commitments outstanding as of 31 December 2005

(b) Contingent Liabilities

Nil

16. EVENTS AFTER THE BALANCE SHEET DATE

There are no significant events subsequent to the balance sheet date, which require adjustment to or

disclosure in the financial statements.

17. NOTES TO THE STATEMENT OF CASH FLOWS 2005 2004

K000 K000

Reconciliation of cash

For the purpose of the Statement of Cash Flows, cash includes

cash on hand and at bank and short-term deposits, net of bank

overdrafts. Cash as at the end of the financial year as shown in the

Statement of Cash Flows is reconciled to the related items in the

balance sheet as follows:

Cash on hand and at bank 2,516 1,453

Bank overdraft - (36)

Interest bearing deposits, and treasury notes. 38,268 59,615

61,032

RELATED PARTIES

BSP Capital Limited is the Investment Manager contracted to provide investment management and

advice to NASFUND. NASFUND owns 10% of the shares in Bank South Pacific Limited, the parent

company of BSP Capital Limited. The value of that investment as at the end of the financial year was

K142,174,986 representing 19% of the Funds assets. The Chairman of NASFUND is also a director

of Bank South Pacific Ltd

40,784

18.

48


(a)

Investments with Service Providers

The following investments with service providers were in existence as at 31 December 2005.

Term deposits Type Amount Rate

Bank South Pacific Ltd 30 Days K4,737,479 1.25%

(b) Loans from Service Providers

The following loans from the Bank of South Pacific were obtained by Directors and Officers in the

normal course of business.

Trustee/Director Loan <K500,000 Loan >500,000 Date of Loan

Mr Mike Manning Yes - 2005

Mr Reg Monagi Yes - 2000

Management

Mr Ian Tarutia MBE Yes - 2002

(c) Services by BSP Capital Stockbrokers

The following Directors utilised the services of BSP Capital Limited throughout the year

Mr John Jeffery

Mr Ramon Thurecht through SPAC Flying Trust

(d) Value of share and loan investments held by the Fund of contributing employers

K396.6 million or 53% of the portfolio.

19. FINANCIAL INSTRUMENTS

Exposure to credit, interest rate and currency risk arises in the normal course of the fund’s

activities.

The Fund’s foreign currency risk is in respect to various investments denominated

predominantly in Australian dollars.

There is minimal credit risk.

The fund monitors the interest rate on investments on a regular basis.

49


National Superannuation Fund is a trust domiciled in Papua New Guinea

Principal place of business Section 58, allotment 6 &7, Boroko

4 mile, Hubert Murray Highway

Port Moresby

Papua New Guinea

Trustee National Superannuation Fund Limited

Directors of the Trustee Company Mr John Jeffery

Mr Ramon Thurecht OBE

Mr William Lamur

Mr Mike Manning OBE

Mr Mel Togolo CBE

Mr Reg McAlister

Mr Charles Evi

Mr Reginald Monagi

Dr John Nonggor

Auditors KPMG

Chartered Accountants

PO Box 507

Port Moresby

Papua New Guinea

Investment Managers BSP Capital Ltd

Fund Administrators Aon Consulting (PNG) Ltd

Bankers Bank South Pacific Ltd

Branch Offices: Lae

Manager: Geoffery Kinibo

P.O Box – Morobe Province

[email protected]

Ph 472 4633 Fax 472 5971

Mt Hagen

Manager: Johnathon Wane

P.O Box 1539, Mt Hagen

[email protected]

Ph 542 3145 Fax 542 3134

Kokopo

Manager: Tony Deman

P.O Box 2079

Rabaul – ENBP

[email protected]

Ph 982 8730 Fax 542 3134

Madang

Manager: Ms Cunnie Chinou

P.O Box 1166

Madang – Madang Province

[email protected]

Ph 852 1835 Fax 852 1847

50


51

Tabubil

Manager: Anapu Anapu

PO Box 133

Tabubil – WP

[email protected]

Ph 548 8091 Fax 548 8051

Kimbe

Manager: Horris Wartovo

PO Box 935

Kimbe – WNBP

[email protected]

Ph 983 4114 Fax 983 4115

Goroka

Manager: Percy Vagi

PO Box 595

Goroka – EHP

[email protected]

Ph 732 1089 Fax 732 1086

SHAREHOLDER DIRECTORS - INTERESTS REGISTER

John Jeffery:

Director:

Shareholder:

Other:

Employers Federation (PNG)

James Barnes PNG Ltd, Employers Federation (PNG), PNG Manufacturers Council, Bank South Pacific Ltd, Small Business

Development Corporation (Chairman), Jayliss Ltd, National Tripartite Consultative Council, PNG Power Limited.

Highlands Pacific Ltd, Oil Search, Jayliss

PNG Institute of Directors,

Mike Manning

Director:

Shareholder:

Rural Industries Council

INA, IPA, National Roads Authority, Transparency International, Community Coalition Against Corruption, Peace Foundati

Ginigoada Ltd, Mirel Ltd, Mineral Resources Authority, Business Council (PNG)

New Britain Palm Oil, Amadeus Ltd, Life Theraputics Ltd

Ramon Thurecht

Director:

Memberships:

Other:

Manufacturers Council (PNG)

PNG Manufacturers Council, Papua New Guinea Printing Group, HRH Holding Ltd , Olympic Stationary Limited, Lae

printing, PNG Mufflers & Radiators Ltd, Infratech Management Consultants Ltd, SPAC Flying Trust

Australian Institute of Directors’ Institute of Directors (PNG)

Honorary Consul for The Independent State of Austria

William Lamur

Director:

Member:

Employee:

PNG Chamber of Commerce

East New Britain Development Corporation (Chairman), ENB Port Services, Anderson Foodland, Rural Development Bank

(Chairman), Origin Energy (PNG) Ltd , Nasfund Savings & Loans

PNG Chamber of Commerce, Institute of National Affairs,

Origin Energy (PNG) Ltd

Melchoir (Mel) Togolo

Director:

Member:

Employee:

PNG Chamber of Mines & Petroleum

Placer Dome Group of Companies (PNG), Westpac (PNG) Limited

Transparency International (PNG), Finance Board, Catholic Bishop Conference, INA, Jesus Centre Halfway House

Placer Dome Niugini limited

Charles Evi:

Employee:

Related Party:

PNG Banks & Financial Institutions Workers Union

ANZ (PNG) Ltd

NASFUND Contributor

Reg McAlister:

Employee:

Trade Union Congress (PNG)

General Secretary of the PNG Maritime Workers Industrial Union

INDEPENDENT DIRECTORS

Reg Monagi:

Director:

Member:

Employee:

Related Party:

Independent Workers Representative

Nasfund Savings & Loans

Australian Institute of Directors, Institute of Directors (PNG)

SP Brewery Ltd

NASFUND Contributor

Dr John Nonggor:

Director:

Other:

Independent

Transparency International, Nonggor & Associates

National Monitory Authority, Law & Order Sector Committee, Consultative Implementation Monitoring Council, Independe

Public Business Corporation,

Honorary Counsel, British High Commission, Law Society (PNG),

John Leahy:

Employee:

Independent – Audit & Remuneration Committee

PriceWaterhouse Coopers (Partner)

OFFICERS

Rod Mitchell

Director:

Member:

Related Party:

Chief Executive Officer

Highlands Pacific Ltd, Credit Corporation (PNG) Ltd, Atagubu Ltd, City Centre Developments Ltd, Australian Institute of

Directors, Institute of Directors (PNG)

NASFUND Contributor

Ian Tarutia:

Director:

Member:

Related Party:

Chief Operating Officer

Amalpack Limited, Ramu Sugar Limited, NASFUND Savings & Loans, Seychelles Ltd, Transparency Int, PNGID

Australian Institute of Directors, Badili Club, SIA (affiliate)

NASFUND Contributor

Erastus Kamburi

Director:

Member:

Company Secretary & Chief Legal Officer

Amalpack Ltd

Law Society (PNG)

National Superannuation Fund of PNG Annual Report for the year ended 31 December 2005

53

Related Party: NASFUND Contributor

How Can We Help You?

For queries relating to your account, withdrawals, change of details, and housing advance, please contact the

client service hotline

Service Operator Phone Facsimile Email Address

Ms Maureen Abba 324 1859 323 3559 [email protected]

Ms Norah Ponilau 324 1857 323 3559 [email protected]

Ms Geita Ario 325 9522 323 3559 [email protected]

Ms Miriam Nalo 324 1868 323 3559 [email protected]

Switch Board 325 9522 323 3559 [email protected]

For employer related queries please contact the Chief Operating Officer, Ian Tarutia direct on 323 5595 or email

at [email protected]. For questions relating to NASFUND phone the Chief Executive Officer direct on

325 8148 or email at [email protected] For complaint resolution phone Mr Siri Koae direct on 325

6353 or email: [email protected]

Visit our website at NASFUND: www.nasfund.com.pg

Branch Offices Phone Facsimile Email Address

Kimbe 983 4114 983 4115 [email protected]

Kokopo 982 8730 982 8731 [email protected]

Lae 472 4633 472 5971 [email protected]

Madang 852 1835 852 1847 [email protected]

Mt Hagen 542 3145 542 3134 [email protected]

Goroka 732 1089 732 1086 [email protected]

Tabubil 548 8091 548 8051 [email protected]

Making Contact with Board and Management

Please note that relevant information pertaining to the qualifications of Directors and Officers can be

obtained at our website: www.nasfund.com.pg

Trustee/Director Stakeholder Representation Phone No

Mr John Jeffery Employers Federation of PNG 325 9272

Mr Ramon Thurecht Manufacturers Council of PNG 321 7610

Mr Mike Manning Rural Industries Council of PNG 321 1045

Mr William Lamur PNG Chamber of Commerce and Industry 321 4248

Mr Mel Togolo Chamber of Mines & Petroleum 322 4800

Mr Reg McAlister Trade Union Congress 321 5408

Mr Charles Evi PNG Banking Financial Institutions Workers Union 325 9769

Dr John Nonggor Independent Director 325 7933

Mr Reg Monagi Independent Director 302 8247

Management Position

Mr Rod Mitchell Chief Executive Officer 325 8148

Mr Ian Tarutia MBE Chief Operating Officer 323 5595

Mr Erastus Kamburi Legal Counsel and Company Secretary 325 7571

Non Board Member

Mr John Leahy PricewaterhouseCoopers 321 1500


54

Making sure your superannuation works for you!

If You Have a Complaint

Members who have a concern with any aspect of their account or progress concerning their withdrawal are

advised to firstly ring the Client Service Centre – Ph 325 9522. If you are not getting satisfaction from the Client

Service Centre on your claim or other relevant matter, you should then access the NASFUND Complaints Officer

for resolution – Ph 325 6353.

If after 90 days from lodgement of a written complaint to the Fund and you are still not satisfied with the outcome,

you can write to the following address. Please enclose all particulars and supporting documentation of the

complaint matter to the

Chairperson: Complaints Resolution Committee

Association of Superannuation Funds of PNG Inc

P.O Box 1205

Boroko

Papua New Guinea

ASFPNG has a new website : www.asfpng.org.pg – Complaints to the Superannuation Council can be

lodged through the internet on www.asfpng.org.pg

www.asfpng.org.pg www.asfpng.org.pg www.asfpng.org.pg www.asfpng.org.pg www.asfpng.org.pg

Artist: Martin Morububuna- Private Collection, Ela Beach Hotel


55

Savings outside Superannuation

Superannuation is an investment vehicle catering for long-term savings with stringent rules for access. For short-

term savings outside of superannuation, NASFUND developed the NASFUND Contributors Savings & Loan

Society (“NCSL”).

The NASFUND Contributors Savings & Loan Society was established in October 2003 to complement our

superannuation services and offers members a smarter, easier alternative to banks and other deposit taking

institutions. Smarter, because there is more than one-way to save and easier because we provide a friendlier,

personalized and more accessible service for all our customers. Our range of services includes a selection of

savings accounts and personal loans at very low interest rates. They are:

An Education Account that covers school fee / education expenses,

General Savings Account that covers personal loans

Christmas Account that covers spending at Christmas time.

Through NASFUND offices in Lae, Mt Hagen, Goroka, Madang, Kimbe, Kokopo and Tabubil, apart from our

head office in Port Moresby, we are well represented throughout the whole country. This importantly, allows us to

bring services closer to our members.

For further information on how to join the only Savings & Loan Society, please contact the following:

NASFUND CONTRIBUTORS SAVINGS & LOAN SOCIETY

P.O. Box 7732, Boroko

National Capital District

Phone: (675) 325 5696

(675) 325 7166

(675) 323 0773

Fax: (675) 325 6347

Email: [email protected]

Website: www.ncsl.com.pg

Branch Offices:

Lae

Manager: Geoffery Kinibo

P.O Box – Morobe Province

[email protected]

Ph 472 4633 Fax 472 5971

Mt Hagen

Manager: Jonathon Wane

P.O Box 1539, Mt Hagen

[email protected]

Ph 542 3145 Fax 542 3134

Kimbe

Manager: Horris Wartovo

PO Box 935

Kimbe – WNBP

[email protected]

Ph 983 4114 Fax 983 4115

Kokopo

Manager: Tony Deman

P.O Box 2079

Rabaul – ENBP

[email protected]

Ph 982 8730 Fax 542 3134

Madang

Manager: Ms Cunnie Chinou

P.O Box 1166

Madang – Madang Province

[email protected]

Ph 852 1835 Fax 852 1847

Goroka

Manager: Percy Vagi

PO Box 595

Goroka – EHP

[email protected]

Ph 732 1089 Fax 732 1086

Tabubil

Manager: Anapu Anapu

P.O Box 133

Tabubil – WP

[email protected]

Ph 548 8091 Fax 548 8051

Note: NCSL is a separate entity from NASFUND. Saving deposits to NCSL must be paid separately and not included with superannuation

savings


56

MEMBERSHIP DISCOUNT PROGRAM


57

Business And HIV/AIDS

Chambers of Commerce has a responsibility to disseminate to their respective members, best practice on

HIV/AIDS in the workplace. This could be done through a Charter of Principles and best practice, drawing on

South African business experience. But every business, however small, has a responsibility:

(i) To educate its employees about HIV/AIDS;

(ii) To inform employees about HIV/AIDS related Legislation, eg. the 2003 Act making it a manslaughter offence

for an HIV positive person to knowingly infect another;

(iii) To inform/educate employees about the role of violence, especially against women, in the spread of HIV/AIDS

and ensure that female employees are properly informed about their rights under the law;

(iv) To make available condoms to employees;

(v) To inform employees about the role of alcohol/drugs in the spread of HIV/AIDS;

(vi) To ensure equal conditions of service for both male and female employees, and to educate them on the

importance of wider equality between men and women;

(vii) To provide appropriate counselling (either within the business, or for small businesses outside, eg. through

NACS or Stop AIDS) for any employees that suspect they might be HIV positive;

(viii) To ensure appropriate rules and practice of confidentiality;

(ix) To consider (possibly drawing on best practice in the mining sector) how to promote voluntary HIV testing;

(x) To draw up clear rules on (non-discriminatory) treatment of HIV positive employees in the workplace;

(xi) To ensure that company personnel policy has clear guidelines for managing HIV positive employees, especially

whey they develop full-blown AIDS. This will need to cover fundamental points, eg. will the business meet the

cost of ART? If so, will it do so for life? Will the spouse, if infected, also be covered? If the employee dies

from AIDS what settlement will apply to the spouse and children?

(xii) To assess whether company employee insurance needs appropriate revision to take account of the future impact

on the HIV/AIDS crisis;

(xiii) To develop comprehensive long-term personnel guidelines i.e. for ten years hence, when the current epidemic

has become a pandemic. These guidelines will need to deal with a range of issues, eg. time off to help care for

sick relatives, or to attend funerals; company health insurance; recruitment policy etc.

(xiv) To ensure that future employee contracts conform with relevant laws, and incorporate as necessary, clauses

defining health related conditions, including HIV/AIDS.

A successful HIV/AIDS policy and programme requires co-operation, trust and dialogue between employers,

staff and governments.

Source: Presentation to Port Moresby Chamber of Commerce and Industry by HE David Gordon-Macleod, British High

Commissioner


58

FREE HIV - AIDS TESTING AND COUNSELLING

ANGLICARE STOP AIDS PNG

HIV/AIDS is a disease that affects everyone. It affects the individual regardless of where you live, what you do and who you

are. It does not discriminate.

It could be your neighbour, your wantok or you that is carrying the disease. The only way you can tell if someone is HIV

positive is from a blood test.

At Anglicare STOPAIDS PNG we offer free and confidential testing and counselling for HIV, with ongoing counselling

provided where necessary. Anglicare STOPAIDS PNG encourages anyone who believes they are at risk of contracting the

disease either from their own actions or their partner’s to have a test done.

Persons wishing to be tested will find caring, approachable and confidential staff at the Anglicare Centre. Being tested for HIV

is considered a sensible approach to your health care and no stigma is attached to anyone being tested at the centre. No

judgement is made.

LOCATION: Anglicare Centre

Off Koura Way

Waigani Heights

(before Mobile Service Station)

SERVICES PROVIDED

FREE VOLUNTARY TESTING AND COUNSELLING FOR HIV

CARE & COUNSELLING

POSITIVE LIVING

EDUCATION COURSES FOR PEER EDUCATION

HIV/AIDS AWARENESS FOR WORKPLACE, SETTLEMENTS & VILLAGES

FOR MORE INFORMATION & SUPPORT, CONTACT:-

PNG National AIDS Council Ph 323 6161

ANGLICARE STOPAIDS Ph 325 1855

YMCA Ph 325 2181

HOPE WORLDWIDE Ph 323 6901

Or the Provincial AIDS Committee in your province


59

HIV ADDRESSES


60

INSIDE BACK COVER

Source: Alcheringa-gallery.com


61

INSIDE FRONT COVER

Front Cover: “A Servant Of The Servants.” Artist: Martin Morububuna- Private Collection, NASFUND

“The painting depicts the paramount unique lifestyle of the Trobriand society and its people. The paramount chief

gathers all the food from all four corners of the island and distributes back to the people after the feast. The

paramount chief is the head that governs everything for everyone, politically, economically, socially and

culturally. Everyone is happy to contribute and benefit from it.

On the same token, the government should consider adopting some unique system into our judiciary system in

order to sustain stability, prosperity and progress, in political, economical, social and cultural development of

PNG as a whole.” – Martin Morububuna