Kina Securities Ltd Annual Report 2016

← All annual reports

FY2016 Annual Report · Kina Securities Ltd

Loading PDF…

we grow
together

annual report 2016

For personal use only

Statutory profit of

PGK41.0 million

for the year to December, compared
with PGK5 million in the prior year

Final dividend of

PGK0.10 toea

(AUD$0.0395 cents) per share,

full year dividend

PGK0.20 toea

(AUD$0.0804 cents) per share

Net interest margin
remains strong at

8.3%

Loan impairment
expense of

PGK2.8
million
equal to 0.5% of
gross loans and
advances.

For personal use onlyLoan growth of

62% from December 2015,

taking total lending to

PGK605 million

Strong

prudential
position and
conservative
capital adequacy

Capital adequacy
ratio of

30%

compared with
minimum
requirement
of 12%

Contents

Performance highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PNG Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Chairman’s letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Managing Director’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Wealth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Kina’s strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Investing in our people . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Board of directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Executive management team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Corporate Governance Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Directors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Remuneration report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Directors’ declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Independent auditor’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Income statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Statements of Changes in Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . 57

Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Notes to the financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

Corporate directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

For personal use onlyPerformance highlights

Banking
New mobile products,
improved systems and online services .
Kina customers can
access all ATMs in PNG, and a vast
network of EFTPOS terminals .

Major client win
Kina wins Nasfund client, adding
PGK4 billion FUA and
growing Kina’s client base
to 700,000 clients .

Continued growth
of the low-cost deposit base .

TitleTitleFor personal use onlyKina Deposits
(PGK Mln)

959

686

252 225

2013 2014 2015 2016

Deposits
up 40% to PGK959
million, due to
new products
and enhanced
customer service.

Kina Lending Book
(PGK Mln)

605

374

196 202

2013 2014 2015 2016

Lending
up 62% to PGK605
million, driven by
customer service,
strong management
and new product
offerings.

6.2

5.9

5.3 5.4

FUM
(PGK Bln)

4.6 4.8

4.1

Funds Under
Management
(FUM)
increased 14%
to PGK6.2 billion.

Dec 13 Jun 14 Dec14 Jun 15 Dec15 Jun 16 Dec16

FUA
(PGK Bln)

3.74 3.82

5.61

4.85

4.41

Funds Under
Administration
(FUA)
increased by 16%
to PGK5.6 billion.

2012 2013 2014 2015 2016

Kina Annual Report 2016 | Corporate Governance Statement 3

For personal use onlyThere are also positives for the economy on the horizon,
including the potential government approval of the Frieda
River and Wafi-Golpu Project in 2017. The Total-led Papua
LNG Project, which is PNG’s second LNG project, may also
gain approval in 2018.

There are also a number of new power projects slated for
commencement including Exxon-Mobil 50MW plant, along
with Daewoo and Oil Search also planning plants in Lae.

On the agriculture front, PNG’s 2016 coffee crop was the
strongest since 2011. The coffee industry earns about
PGK700 million (US$220 million) annually in foreign
exchange and currently supports more than two million
farmers, who are predominantly rural-based.

There has been strong growth
in PNG’s banking and financial
services industry, driven by
a growing small-to-medium
enterprises (SMEs) sector and
a burgeoning middle class.

PNG Overview

Our operating environment
Kina operates within the PNG economy
which is showing signs of recovery from
a challenging period due to falling global
commodity prices.

The PNG economy is forecast to grow by 2.8% in 2017,
recovering from 2.0% growth in 2016.

This means the PNG economy is into its fifteenth year of
positive economic growth.

Increased economic activity is expected to be fuelled in the
short term by government spending related to the National
Elections to be held mid-year, as well as construction
activity associated with the 2018 Asian-Pacific Economic
Corporation APEC conference.

Kina operates in the banking and financial services industry
in PNG, which plays a key role in underpinning the country’s
economic growth.

There has been strong growth in PNG’s banking and
financial services industry, driven by a growing small-to-
medium enterprises (SMEs) sector and a burgeoning
middle class. This growth is expected to continue as
financial services customers become more sophisticated in
their financial needs.

Foreign currency access has been a key challenge for PNG
businesses in recent years. The government is seeking to
resolve this situation and there are signs of improvement.

According to the PNG Government’s 2016 PNG Mid-year
Economic and Fiscal Outlook, foreign exchange is
becoming more available because of the re-opening of the
Ok Tedi mine and the drawdown of the Credit Suisse first
tranche of a US$200 million syndicated loan facility in early
August 2016.

Kina Annual Report 2016 | PNG Overview

TitleTitleFor personal use onlyKina operates in the banking
and financial services industry
in PNG, which plays a key role
in underpinning the country’s
economic growth.

Kina Annual Report 2016 | Corporate Governance Statement 5

For personal use onlyChairman’s Letter

Dear Shareholder,
We are strongly dedicated to
our vision for prosperous customers
and communities, underpinned
by progressive accessible
financial services .

To achieve our vision we understand we must put our
customer at the centre of all that we do and continue to
deliver them simpler and more convenient banking services
and products.

With this focus it has been another significant year for Kina
as we maintained the momentum of our acquisition of the
Maybank business and our successful stock exchange
listing in 2015.

Despite a challenging economic environment, full year net
profit was PGK41.0 million, up from PGK4.9 million for the
prior corresponding period.

The Board declared a final dividend of PGK10.0 toea per
share, taking the full year dividend to PGK20.0 toea per
share, compared with PGK9.9 toea per share paid for the
full year to December 2015. This converts to a final dividend
of AUD$0.0395 per share, taking the full year dividend to
AUD$0.0804, compared with AUD$0.0340 per share paid
for the full year to December 2015.

Kina’s total operating income of PGK117 million was up 68%
on the previous corresponding period, with net interest
income rising 52% (PGK65 million) and non-interest income
(PGK52 million) almost doubling.

A pleasing feature of the result was the decreased loan
impairment expense to PGK2.8 million, from PGK3.0 million
in the prior year. Impairment expenses as a proportion of
Gross Loans and Advances (GLA) remained low at just
0.5%, which is the best level recorded since listing in 2015.
Gross non-performing loans were PGK2.0 million, equal to
0.3% of GLA.

Kina’s foreign exchange income also grew strongly to
PGK20.6 million, up from PGK6.9 million. This growth was
achieved despite the withdrawal of the Company’s former
correspondent banking partner for USD in the last quarter
of 2016. Kina has identified a new potential partner for USD
transactions and expects to have a solution in place by the
second quarter of the calendar year.

An important achievement was the successful tender for
the Funds Administration business of PNG’s largest
superannuation fund, Nasfund. This will lift Kina’s funds
under administration by another PGK4 billion this year and
will also provide us with access to a large and affluent
customer base in the future.

Following the close of the financial year, Kina also
celebrated an important milestone on the stock exchange,
joining the list of companies on the S&P/ASX All Ordinaries
Index – Australia’s premier market indicator.

Kina Annual Report 2016 | Chairman’s Letter

TitleTitleFor personal use onlyI am proud to be part of a business that plays such
an important role in assisting our personal and business
customers to meet their financial needs, while supporting
economic growth and job creation in PNG.

Helping customers improve their circumstances

Board renewal

As Kina’s Chairman, I have continued to reinforce the
importance of embracing a customer-focused culture
across the business. This approach has enabled us to
deliver for our customers, our people and our shareholders
and it will continue to be the cornerstone of our success in
the future.

Kina’s purpose is help our customers improve their
circumstances through our business activities. I am proud
to be part of a business that plays such an important role in
assisting our personal and business customers to meet
their financial needs, while supporting economic growth
and job creation in PNG.

Outlook

The PNG economy is forecast to grow by 2.8% in 2017,
after it saw a lower 2.0% growth in 2016 affected by falling
commodity prices. The increased economic activity is
expected to be supported by government spending
related to the National Elections to be held mid-year, as
well as construction activity associated with the 2018
Asian-Pacific Economic Corporation (APEC) conference.

Against this backdrop, Kina is continuing to find ways to
engage more meaningfully with its target markets. We are
constantly introducing new, innovative products and
services, strengthening our technology platforms, and
improving our distribution networks to broaden and
deepen our customer reach.

These various business initiatives will help to ensure Kina
maintains its strong growth trajectory.

There were a number of changes to the Board during 2016
as we maintained our program of renewal, ensuring we
have the skills and expertise to provide the highest
possible standards of governance. I sincerely thank the
three directors — Don Manoa, Peter Ng and Hilary Wong -
who retired at the Annual General Meeting in May.
They made an immense contribution to the Company in
its formative years, and their advice and counsel was greatly
appreciated. I also welcome to the Board Isikeli Taureka
and Karen Smith-Pomeroy, who joined us later in the year
and bring important technical knowledge and
management experience.

I would also like to thank the staff at all levels of the
Company for their hard work and dedication. They are
what makes the Company successful.

And finally I thank all our shareholders for their ongoing
support in 2017.

Yours faithfully

Sir Rabbie Namaliu, GL CSM KCMG
Chairman

Kina Annual Report 2016 | Chairman’s Letter 7

For personal use onlyManaging Director’s Report

Dear Shareholder,
It was another milestone year for Kina
Securities . We maintained our momentum
following our acquisition of Maybank
PNG, and we are building a stronger and
more efficient business while delivering
on our purpose of helping our customers
improve their circumstances .

During 2016, we maintained our focus on putting
customers at the centre of everything we do, living our
values and driving a positive culture. Despite the
challenging environment, our strong performance during
the year was driven by improved customer service,
leveraging the Kina brand, investing in people and
strengthening management.

In Personal Banking, the EsiLoan consumer lending
product showed strong growth during the year. EsiLoan
was relaunched at the beginning of the year with increased
marketing and promotional activities and enhanced
access to the product. Kina also worked with a number
of corporate customers to increase penetration of the
EsiLoan product.

We know customers want simpler and more convenient
products and services and our focus on introducing new
products and expanded services enabled the Group to
increase customer acquisition.

Technology has played a critical role in fuelling growth
through the creation of new products and increasing the
availability of our product and services.

Our lending book has grown by 62%, to PGK605 million at
the end of 2016. The rapid growth was predominantly
achieved in the business lending segment, with term loans
increasing from PGK197 million to PGK416 million over the
period. Kina continues to compete on service rather than
price, however there are signs of some easing in lending
rates due to competitor activities.

Customer service was enhanced during the year with the
implementation of banking interconnect infrastructure,
and agreements were reached with other PNG banks to
enable Kina customers to access cash through any
Automatic Teller Machine (ATM) in the country. New
agreements also have been reached with other banks to
enable Kina debit card customers to access their EFTPOS
networks of more than 12,000 terminals.

Kina has also commenced enhancements to its banking
systems and technology during the year to assist business
growth. These include upgrading and modernising the
Core Banking systems, which has enabled the addition of
new products, an expansion of online services, and new
synergies between the Banking and Wealth Management
business. This project is expected to continue in 2017.

The upgrade of our branch network continued during the
year, with a major refurbishment of the new concept branch
located at Vision City Shopping Centre currently under way.

Kina Annual Report 2016 | Managing Director’s Report

Section headingFor personal use onlyIt is scheduled to be completed in May 2017 and offers a
full range of services to customers.

At 2016 year end, deposits totalled PGK958 million, which
was an increase of 40% compared with the previous year.
This growth was achieved mainly through the introduction
of new term deposit products.

During the year, Kina grew the number of term deposits
accounts by 46%, while savings account numbers increased
by 35% and cheque account numbers were up by 11%.

In addition, competitive rates were set on traditional
products in response to market movements in rates, and a
number of high-value corporate customers were acquired
as a result of these marketing initiatives.

The Wealth Management business also achieved some
exciting advancements during the year.

Wealth Management income totalled PGK18.5 million.
This included income of PGK8.5 million from Funds
Administration, PGK8.7 million from Funds Management,
and PGK1.3 million from share trading and other
operations.

Funds under Management increased 14% over the year to
PGK6.2 billion, due to growth in member contributions, as
well as positive investment returns.

Funds under Administration increased by 16% to
PGK5.6 billion, and member numbers increased by 5.4%
to 170,000 during the year.

Efficiency was improved by streamlining of administration
work practices and increasing use of the technology
platform supporting our funds administration business.

A highlight of the Wealth business was winning a
competitive tender for the Funds Administration business
of PNG’s largest superannuation fund, Nasfund. This will lift
Kina’s funds under administration by another PGK4 billion
this year, taking it to almost PGK10 billion. Importantly, it
will also provide us with access to a large and affluent
customer base in the future. Kina is now able to leverage
relationships with all three major PNG superannuation
funds (Nasfund, Nambawan Super and Comrade Trustees
Services). This provides exciting opportunities to offer
targeted banking and wealth management products
to a customer base in excess of 700,000 superannuation
fund members.

Importantly, we have been able to achieve these
results without sacrificing our credit standards or margins.
The loan impairment expense decreased to PGK2.8 million,
from PGK3 million in the prior year, and there was only a
minor contraction in net interest margins, which remained
at a very healthy 8.3%.

However, the year was not without challenges, and foreign
exchange operations were affected by the withdrawal of
the Company’s former correspondent banking partner for
US dollar transactions.

Kina has identified a new potential partner for USD
transactions and is currently working through the process
to implement a solution in the near term. However, it is
expected foreign exchange earnings will be affected to a
similar extent to that experienced in the second half 2016.

Our people

Our people play a critical role in building customer trust.
Our values of integrity, trust, fairness, putting customers
first, and the opportunity to make a difference are central
to how we support and lead our people. Kina has
maintained a strong focus on building the capabilities
of our people and the leadership skills of our managers.
This focus has been further enhanced by key additions to
our executive leadership team during the year, including
Chetan Chopra as Chief Financial Officer, Danny Robinson
as Executive General Manager Banking, and Deepak Gupta
as the Executive General Manager Wealth.

Outlook

In the current economic environment, Kina will adopt a
disciplined approach to operational performance as we
continue to focus on maintaining a strong balance sheet,
solid asset quality and capital position.

The Company has set a number of key operational
priorities for 2017. These include:

• Leveraging its relationship with key Funds to facilitate

cross-selling opportunities across its fund
administration clients

• Delivering the Nasfund transition to Kina fund

administration services

• Completing the bank’s technology transformation.
This includes expanding Kina’s suite of personal and
business banking products and services

• Providing increased convenience for our customers

• Finalising and expanding correspondent banking.

In conclusion, I thank all our staff for their hard work and
diligence over the past 12 months. The Directors also have
made a major contribution to the success of the past year
through their valuable experience and wise counsel.

Finally, to shareholders, I thank you for your ongoing
support and look forward to delivering another strong year
in 2017.

Syd Yates, OBE
Chief Executive Officer

Kina Annual Report 2016 | Managing Director’s Report 9

For personal use onlyBanking

Kina operates the fourth-largest bank in PNG
with more than 14,000 clients and seven
branches covering the major industrial and
growth centres in PNG.

The majority of customers with outstanding loans are
private companies, active in the property, wholesale,
retail, transport, forestry and storage sectors. As at
31 December 2016, the total loan book value was
PGK605 million.

Kina’s head office and branch is located in the central
business district of Port Moresby, PNG. It has additional
bank branches in Waigani (one located in the central
business district and another in the Vision City retail centre),
Lae, Kokopo, and a sales office in Mount Hagen.

A new branch is scheduled to be launched at Vision City
Mega Mall in Port Moresby in May 2017.

The Kina Bank network has been tailored to the specific
requirements of the PNG retail and business banking
markets and includes cash-free branches, full service
branches, automatic teller machines and an online
banking platform.

Kina offers a wide variety of lending products to a broad
cross-section of the personal, business and corporate
markets within PNG.

The loans and advances are provided on a secured or
unsecured basis, in the form of term loans and overdrafts
related to commercial and retail business lending, and
property lending.

A key unsecured lending product is Kina’s EsiLoan that
provides short-term loans accessible via card, which can
be used in either ATMs or EFTPOS facilities.

Kina also offers festival loans to eligible employees as
part of its employee benefits scheme.

Kina is primarily funded by depositors and retained
earnings. The Company offers a number of deposit
products to customers including traditional cash
accounts, cheque accounts and other term deposits.

Kina offers a broad range of financial products and
services in addition to deposits and traditional lending.

These products and services include foreign exchange
transactions, insurance premium funding, novated leases,
vehicle financing, operating leases and general insurance
on an agency basis.

Kina offers a wide variety of
lending products to a broad
cross-section of the personal,
business and corporate
markets within PNG.

Kina Annual Report 2016 | Banking

For personal use onlyThe Kina Bank network
includes cash-free branches,
full service branches,
automatic teller machines
and an online banking
platform.

Kina Annual Report 2016 | Corporate Governance Statement 11

For personal use onlyWealth

Kina operates the largest Wealth
Management business in PNG.

Services include:

•

funds management and advisory

funds administration

• custodian and trustee services

• financial planning

• stockbroking and corporate advisory.

Kina’s funds management business manages investment
funds for several major superannuation funds, landowner
groups, corporate, and private investment clients. It manages
funds (FUM) of PGK 6.2 billion as at 31 December 2016.

The funds management division is a licensed Investment
Manager under the PNG SGP Act. The division has an
in-depth understanding of the investment climate in
PNG and the Asia-Pacific region.

This division provides investment management
services across all major asset classes, both in PNG
and internationally, to a diverse set of institutional clients,
including portfolio management and financial advisory,
primarily catered to institutional clients such as investment
funds, corporations and financial institutions.

It manages assets including cash investments,
fixed income investments (government and corporate
debt), listed equities, private equities and property
investment (real estate and property trusts). In addition
to its investment management services, Kina also
provides strategic advisory services, risk management,
debt and equity investments, public offerings
and private placements.

Nambawan Super generates the largest portion of
Kina investment management fees, and is a substantial
shareholder in the company.

Kina acts as a fund administrator for a number of
superannuation funds and private investment clients.

In FY2016, Funds Under Administration (FUA) grew
by 16% to PGK5.6 billion and has 169,000 customers.
The addition of Nasfund as a new client in 2017 will
add PGK4 billion FUA and grow Kina’s client base to
700,000 members.

Kina also provides custodian and trustee services, and
is responsible for safeguarding the financial assets of
individuals and organisations. It is licensed by the PNG
Securities Commission under the PNG Securities Act to
accept appointment or act as a trustee of unit trusts and
in respect of other debt securities. It holds investments
in trust on a nominee basis.

Kina is also the custodian of various investments such
as equities, bonds and commodities. It also arranges
settlements of investments and reports related to
withholding tax implications.

Kina Wealth Management also provides clients
with information on money management, investments,
retirement planning, insurance, estate planning
and philanthropy, in addition to a full-service
stockbroking offering.

Kina Annual Report 2016 | Wealth

For personal use onlyKina also provides custodian
and trustee services, and is
responsible for safeguarding
the financial assets of
individuals and organisations.

Kina Annual Report 2016 | Corporate Governance Statement 13

For personal use onlyKina’s strategy

Kina’s business is about relationships
and people. Our motto is “Together
it’s possible.”

To achieve our vision of prosperous customers and
communities, underpinned by progressive, accessible
financial services, we must put our stakeholders at the
centre of everything we do.

We understand our success will be built on continuously
improving our customers’ experience. We want our
customers to be our advocates.

Innovation and technology play a key role in building
customer trust and delivering an outstanding experience
when they interact with our business.

We want to enable customers to connect with Kina
‘anytime, anywhere, anyhow’ and to make it easy
to do business with us. As a Company we are also
focused on finding innovative solutions to match our
customers’ aspirations.

This year, Kina significantly improved its banking systems
and technology, enabling us to upgrade mobile and online
services to our customers.

A key milestone in 2016 has been our capacity to provide
Kina customers with access to all ATMs in PNG, and a
significant network of EFTPOS terminals.

Kina understands that it is our people who are responsible
for delivering our strategy and providing a great
experience for our customers.

That is why we are focused on identifying and developing
great people and leaders within our business. We are also
focused on providing training for our people so they can
support and contribute to a high-performance culture.

We also understand that we must continually challenge
what we do and how we do it so we can continuously
improve the products and services we provide
our customers.

To achieve our vision of
prosperous customers and
communities, underpinned by
progressive, accessible financial
services, we must put our
stakeholders at the centre
of everything we do.

Kina Annual Report 2016 | Kina’s strategy

For personal use onlyWe understand we must continually challenge what we do and
how we do it so we can continuously improve the products and
services we provide our customers.

We will deliver shareholder value and
proactively move to lift market share by:

Innovation and
Technology

Leveraging
Relationships

Putting the customer
at the centre of
everything we do

Expert,
Committed Staff

Operational
Excellence

Corporate Social
Responsibility

Kina Annual Report 2016 | Kina’s strategy 15

For personal use onlyInvesting in our people

We are proud of our people and are
committed to investing in them and
their futures .

By providing diverse training opportunities, Kina
supports employees to further their knowledge, skills
and qualifications, as well as increase their contribution
to our business, our customers and the community.

During 2016, training opportunities and achievements
included:

• 199 training days at the Institute of Business and

Banking Management (IBBM), covering topics such as
sales fundamentals, MS Excel, supervisory skills, risk
assessment and management, and ‘train the trainer’

• an employee from Personal Banking completing Kina’s
Leadership Development Program, graduating with a
Diploma in Leadership and Management

• 34 employees from Kina Investment Superannuation

Services (KISS) undertaking a Diploma in
Superannuation with the Association of Superannuation
Funds of Australia

• one senior female executive completing a Governance,

Strategy and Risk for Directors workshop with the
Australian Institute of Company Directors (AICD).

The AICD workshop was initiated by Business Coalition for
Women (BCFW), an organisation dedicated to being an
innovative, relevant and inclusive driver of business growth
through positive change for women in Papua New Guinea.
Kina is one of the inaugural members of this group.

Diversity

Kina recognises the importance of workplace diversity. We
value the unique qualities, attributes, skills and experiences
of all our people, and are committed to actively promoting
a positive work environment based on respect.

In recent years, improving gender balance within our
business, particularly within leadership positions, has
been a significant focus. This year, we appointed Karen
Smith-Pomeroy as the first female member of our Board
of Directors, and increased the number of female team
leaders within our business by 10. Our objective wherever
possible is to ‘promote from within’, establishing career
pathways for our emerging female leaders.

At Kina, we also believe in promoting and providing
leadership opportunities for our people. Our business
is proudly Papua New Guinean, and contributing to and
supporting the success of our local workforce is important
to us. As a result, in 2016, we proudly promoted 20 male
and six female Papua New Guinean employees to
leadership roles in different parts of the business.

At Kina, we also believe in
promoting and providing
leadership opportunities
for our people.

Equal opportunity and encouraging all staff to embrace
an inclusive workplace are also being actively promoted.
Our gender-smart policies provide maternity leave and
paternity leave for new parents. Within the first six months
of a child’s life, mothers are also allowed to take an extra
hour of paid leave per day to feed the new baby, in line
with local legislation.

Kina will continue to champion awareness and
understanding of workplace diversity principles,
and implement policies protecting employees
against discrimination and harassment.

Kina Annual Report 2016 | Investing in our people

For personal use only1.

1. Bernadette Tanou
Current position: Branch Manager, Operation – Lae Branch
Joined Kina: 2011
Province: Manus
Recent training: Leadership course, Kina, Credit and
leadership training
What do you like about working for Kina? Kina is a diverse
company . There are a lot of opportunities for individuals with
drive and motivation to grow in their careers .

2. Jamin Kuson
Current position: Systems Specialist – IT
Joined Kina: 2010
Province: Manus and Central
Recent training: Core Banking System training, Infopro, Malaysia
What do you like about working for Kina? We have a
management team that understands how we work . I also have
the opportunity to grow as a person, while leading and
mentoring others in my team .

3. Hahui Fairi
Current position: Branch Manager Operations – Waigani
Joined Kina: 1994
Province: Gulf
Recent training:

• Accounting, office administration, and lending and

securities courses, Institute of Banking and Business
Management (IBBM), Papua New Guinea

• Trade finance course
• KYC, AML, compliance, and corporate image and

branding training

• Credit training, Omega Performance, Malaysia

What do you like about working for Kina? Working at Kina is
very family-orientated, especially in the branch . I like that
management come down to the staff level . It makes interaction
a lot easier and shows the company cares about staff wellbeing .

4. Peterson Buna Kipla
Current position: Senior Relationship Manger
Joined Kina: 2016
Province: Western Highlands
Recent training: Trade Finance Program, Asian Development
Bank, Fiji

“With the knowledge I obtained in this course, I can better
assist my customers with their trade needs .”
What do you like about working for Kina? Kina is a local,
home-grown bank that’s contributing to the development of
our country .

5. Sharon Punau
Current position: Manager Business Development
Joined Kina: 2009
Province: Manus
Recent training:

• Diploma in Superannuation, Association of Superannuation

Funds of Australia (ASFA)

• ASFA annual superannuation conference, Association of

Superannuation Funds of Australia

What do you like about working for Kina? Kina has given me
the opportunity to be trained and upskilled, and to give back to
the company by mentoring and training others .

6. Solomon Kabaru
Current position: Senior Software Developer
Joined Kina: 2013
Province: East Sepik Province
Recent training: Core database training, Infopro
What do you like about working for Kina? My team, because
they are innovative, spontaneous and bright .

Kina Annual Report 2016 | Investing in our people 17

For personal use onlyCorporate Social Responsibility

In future, Kina aims to support 20 charities each year, and
achieve a donations target of K100,000 in 2017, K110,000 in
2018 and K120,000 in 2019. This goal is in addition to our
Volunteer Day Program, which encourages employees to
get involved in our corporate social responsibility activities.
In 2017, our aim is for at least 50% of staff to participate,
with the target increasing by 10% each year, to 60% in
2018 and 70% in 2019.

From top to bottom: PinkTober; Port Moresby General
Hospital Corporate Blood Drive. At right: AFL PNG.

At Kina, we are keenly aware of our social
responsibility to support the growth and
prosperity of Papua New Guinea . In line with
our vision, which is to see local customers
and communities prosper, we contribute to –
and directly participate in – a range of
great causes and events each year .

Key corporate social responsibility (CSR) activities in
2016 included:

• PinkTober – Kina sponsored a series of PinkTober

morning and afternoon teas as part of women’s cancer
awareness month, with staff raising K3,500 for research
and support services. We matched this figure as part of
our Kina-for-Kina program, donating a total of K7,000 to
the Papua New Guinea Cancer Foundation (PNGCF).
This was in addition to K10,000 in sponsorship.

• Port Moresby General Hospital Corporate Blood
Drive – In October, 56 Kina employees participated
in our annual blood donation drive at Port Moresby
General Hospital. Their donations will save lives, and
we could not be more proud of our team members’
contributions – a genuine personal commitment to
community involvement.

• PwC Corporate Challenge – Kina sponsored 10 teams
of employees to participate in the 2016 PwC Corporate
Challenge, contributing K10,000 to several charities,
including the Heart Institute, Child Fund Inc., WeCare
Inc., Port Moresby General Hospital, and Ginigoada
Foundation Inc. Not only did our people contribute
funds to and raise awareness for these charities, they
did so in style, being recognised as the ‘most creative’
by event organisers.

• Kina employees also supported White Ribbon Day,
raising awareness of domestic violence, and World
AIDS Day to raise awareness and reduce the stigma
associated with the disease.

Kina Annual Report 2016 | Corporate Social Responsibility

For personal use onlyKina Annual Report 2016 | Corporate Governance Statement 19
Kina Annual Report 2016 | Corporate Governance Statement 19

For personal use onlyBoard of Directors

Sir Rabbie Namaliu
GCL, KCMG, CSM
Non-Executive Chairman

Sir Rabbie Namaliu is a distinguished statesman with more
than nine years of board experience in the financial services
and mining and petroleum industries in PNG. Sir Rabbie has
been the Chairman of Kina since 2009.

Sir Rabbie is former Prime Minister of PNG and former
Speaker of the PNG National Parliament. Furthermore, Sir
Rabbie has ministerial experience in Foreign Affairs & Trade,
Treasury, Primary Industry, Petroleum and Energy and other
areas of government responsibility. Before entering politics,
he was Chairman and Secretary of the PNG Public Services
Commission, Provincial Commissioner of East New Britain
and Principal Private Secretary to the Chief Minister of PNG,
Sir Michael Somare before Independence. In 1973 he was
Senior Tutor and Lecturer in History at the University of Papua
New Guinea.

Sir Rabbie is Chairman of Kramer Ausenco Ltd (appointed
2010), Kina Asset Management Ltd (appointed 2008), Kina
Investment & Superannuation Services Ltd (appointed 2012).
In addition, Sir Rabbie holds directorships at Era Resources
formerly Marengo Mining Limited (appointed 2008),
Bougainville Copper Limited (appointed 2011). InterOil
Corporation (appointed 2012 and retired on the 22nd
February 2017), South Pacific Post Ltd (appointed 2013).

In 2011, Sir Rabbie was appointed the Chairman of the 2012
PNG Games Host Organising Committee by the East New
Britain Provincial Government to plan and coordinate
preparations for the 2012 PNG Games held in Kokopo, PNG.

Sir Rabbie is a member for the PNG Institute of Directors.

Sir Rabbie also holds the following charity and
honorary positions:

•

Chancellor and Chairman of Council, PNG University of
National Researches and Environment (2007-2011);

Chairman, RH Foundation

Chairman, ENB Sports Development Authority

Patron, YWAM Medical Ships

Director, YWAM Medical Ships (PNG) Ltd

Patron, Badili Club Inc.

Patron, Jesus Halfway House

Patron, PNG Softball Federation

Sir Rabbie holds a Bachelor of Arts (BA) degree from the
University of PNG and a Master of Arts (MA) degree and an
Honorary Doctor of Laws (Hon. LLD) from the University of
Victoria, British Columbia, Canada.

Syd Yates, OBE
Chief Executive Officer
Managing Director

Mr Syd Yates joined Kina in 1997 and has extensive
experience in the banking, finance and investment industries,
with a career spanning more than 30 years. He is currently
serving as the CEO of Kina Group.

Within Kina Group, Syd is also a director of Kina Ventures
(appointed 2012).

Syd is also currently serving as a director of KAML (appointed
2007), Port Moresby Stock Exchange Ltd POMSoX (appointed
1998) and the Commonwealth Games Association of PNG
and is the Chairman for the Fundraising Committee of the
PNG Olympic Committee.

Syd is a fellow of the Australian Institute of Company
Directors, the Australian Institute of Management and the
Financial Services Institute of Australasia. Syd is also a
member of the PNG Institute of Directors.

Kina Annual Report 2016 | Board of Directors

For personal use onlyWayne Golding, OBE
Non-Executive Director

Jim Yap
Non-Executive Director

Mr Jim Yap has been a Director of Kina since 2012. Jim has
significant experience in the banking industry in Australia,
PNG and Taiwan.

Jim also currently serves as a director of Niule No.1 Ltd
(appointed 2009) and Raintree Development Ltd
(appointed 2012).

Jim’s previous experience includes senior management roles
at ANZ Banking Group (PNG) Ltd, including roles as head
of commercial banking and head of regional sales and
origination. In addition, Jim has held a number of other roles
within ANZ spanning over 37 years in retail banking, import
and export, credit, corporate and institutional banking.

Jim holds a Bachelor of Science degree and Graduate
Diploma in Education from Monash University, Melbourne,
Australia, a Graduate Diploma in Management from the Royal
Melbourne Institute of Technology, Melbourne, Australia, and
is a member of the PNG Institute of Directors.

Mr Wayne Golding has over 25 years of board experience
and has an extensive range of experience and skills in PNG’s
trade, investment and finance industries. Wayne is a former
chairman of Kina.

Wayne is currently a Director of Kina (appointed 1996). Wayne
is also currently serving as a director of Matching Investments
Limited (appointed 1995), New Town Trading Ltd (appointed
1999), Ratung Ltd (appointed 1999), Tanubada Dairy Products
Ltd (appointed 1988), 2G Developments Ltd (appointed 2012),
and 2G Housing Ltd (appointed 2013).

Wayne is a former director of International Air Radio Limited,
a subsidiary of British Airways (from 1992 to 1996), and was a
member of the negotiating team acting for PNG regarding
PNG’s entry into a trade and investment agreement with the
European Union.

Wayne was also a member of the committee that formed the
APEC Business Advisory Council and has held various co-chair
positions in their committees, including as co-chair of the
Economic and Finance Committee.

Wayne is also the founding chairman of the Manufacturers’
Council of PNG, a representative of the PNG/Queensland
Business Council Group and advisor to the PNG National
Fisheries Authority.

Wayne is a member of the PNG Institute of Directors
and holds accounting and commerce qualifications from
University of Technology, Sydney, Australia (formerly Sydney
Technical College).

Kina Annual Report 2016 | Board of Directors 21

For personal use onlyBoard of Directors

David Foster
Non-Executive Director

Isikeli Taureka
Non-Executive Director

Mr David Foster is an experienced non-executive director
with a diverse portfolio of directorships and advisory roles.
David has 25 years of experience in financial services. David
was appointed a Director of Kina in 2015.

David is currently an independent non-executive director
for a variety of ASX listed companies across a range of
industries. David is Chair of Motorcycles Holdings Ltd, and
a Non-Executive Director of G8 Education Ltd, Genworth
Mortgage Insurance Australia Ltd, Thorn Group Ltd and the
commercial arm of Local Government Association of QLD.

David’s prior experience includes a number of senior
executive roles within Suncorp Group Limited, most recently
as CEO of Suncorp Bank, where David led it through a highly
volatile period during the global financial crisis. This included
the turnaround of its retail, small and medium enterprise and
agricultural businesses and managing down $18 billion in
problem and non-core assets to maximise shareholder capital
outcomes. David was also the Group Executive, Strategy
during the acquisition of Promina Limited one of Australia’s
largest financial services transactions.

Prior to Suncorp, David had over 14 years at Westpac
Banking Corporation in a number of senior roles in Sydney
and Queensland.

David has an MBA, a Bachelor of Applied Science and
is a Senior Fellow with Financial Services Institute of
Australasia and a Graduate of the Australian Institute
of Company Directors.

Mr Isikeli Taureka was appointed as a Director of Kina in
18 May 2016. He is an Executive Director at InterOil
Corporation and was previously InterOil’s Executive
Vice President, Papua New Guinea, accountable for the
company’s daily operations across the country.

Isikeli previously held a number of roles with Chevron
Corporation including Head of Chevron Corporation’s
Geothermal and Power Operations; President of
ChevronTexaco China Energy Company with responsibility
for Chevron’s oil and gas upstream activities in China;
Managing Director of Chevron Asia South Business Unit
responsible for exploration and production in Thailand,
Bangladesh, Cambodia, Myanmar and Vietnam and;

General Manager and Country Manager for Chevron
New Guinea Limited with responsibility for oil operations
in Papua New Guinea and Western Australia.

Before joining Chevron, Isikeli managed the PNG-owned Post
and Telecommunication Corporation, worked at the Bank of
South Pacific Limited in a senior management capacity and
was Deputy Managing Director at Resources Investment
Finance Limited.

He holds a Bachelor of Economics degree from the University
of Papua New Guinea and is a Graduate Member of the
Australian Institute of Company Directors.

Kina Annual Report 2016 | Board of Directors

For personal use onlyKaren Smith-Pomeroy
Non-Executive Director

Ms Karen Smith-Pomeroy was appointed as a Director on
12 September 2016. She is an experienced non-executive
director, with involvement across a number of industry
sectors. Karen has over 30 years of experience in the financial
services sector, with senior roles in Queensland and South
Australia, including a period of 5 years as Chief Risk Officer
for Suncorp Bank.

Karen has specific expertise in risk and governance,
deep expertise in credit risk and specialist knowledge
of a number of industry sectors, including energy, property
and agribusiness.

Karen is currently a non-executive director of Queensland
Treasury Corporation, Stanwell Corporation Limited,
InFocus Wealth Management group and National Affordable
Housing Consortium Limited. She is also a member of the
Qld Advisory board for Australian Super, Australia’s largest
industry super fund.

Karen holds accounting qualifications and is a Fellow of
the Institute of Public Accountants, Fellow of the Financial
Services Institute of Australasia, a Member of Association
of Superannuation Funds of Australia, a Certificate member
of Governance Institute of Australia and a Graduate of
the Australian Institute of Company Directors.

Peter Ng Choong Joo
Non-Executive Director

Don Manoa
Non-Executive Director

Hilary Wong
Non-Executive Director

Kina Annual Report 2016 | Board of Directors 23

For personal use onlyExecutive management team

Syd Yates, OBE
Chief Executive Officer
Managing Director

Deepak Gupta
Executive General Manager –
Kina Wealth

Mr Deepak Gupta has had a long and successful career in
financial services spanning 32 years, having held a variety of
senior executive roles in leading financial services institutions
including Westpac, AMP and domestic New Zealand
institutions.

These roles have involved all facets of institutional
funds management, private equity investment, funds
administration, financial planning, and corporate trusteeship.
In addition Deepak has strong governance experience having
acted as a Non-Executive Director on the boards of NZX and
ASX listed companies, and private businesses in a variety of
industries. He has also been active with industry bodies and
has represented New Zealand on international analyst bodies.

Deepak brings substantial experience and a track record of
success and innovation across a number of areas in financial
services. These include successful development of New
Zealand’s first institutional private equity fund for retail
investors, and leading the commercial development and
success of New Zealand’s largest registry business for its
workplace based retirement savings scheme.

Within Kina Group, Syd is also a director of Kina Ventures
(appointed 2012).

Chetan Chopra
Chief Financial Officer

Mr Chetan Chopra has been appointed as Chief Financial
Officer, reporting directly to the CEO. Chetan is a widely
experienced finance executive and joins Kina after spending
the past two years as CFO of PNG’s largest superannuation
fund, Nambawan Super Limited.

An accountant by profession, Chetan previously worked for
many years as a PNG partner for KPMG and as CFO for Dunn
and Bradstreet South Asia. He also has held a number of
senior leadership roles in both private companies and public
sector organisations, including the Australian Taxation Office.

Kina Annual Report 2016 | Executive management team

For personal use onlyDanny Robinson
Executive General Manager –
Kina Bank

Michael Van Dorssen
Chief Risk Officer

Danny Robinson is Executive General Manager of Banking,
responsible for the implementation of the Group’s ambitious
growth and profit targets as we establish ourselves as a new
force in PNG retail and business banking sectors following
the Maybank acquisition.

Danny has had a long and successful career in financial
services, having held a variety of senior executive roles at
Suncorp Metway, commencing in 1997. These roles included
General Manager of Commercial Banking, Executive General
Manager of Specialist Sales and Service and Head of Business
Customers. Most recently, he worked in an executive capacity
within Suncorp’s risk management section. He brings a wealth
of experience and a successful track record of establishing
Suncorp’s distribution networks in new markets and achieving
outstanding growth targets while delivering enviable
customer service standards.

Danny holds a Post Graduate Diploma in Banking
Management from the Macquarie Graduate School of
Management, Australia, is a Graduate of the Australian
Institute of Company Directors and a Fellow of FINSIA.

Mr Michael Van Dorssen joined Kina in 2009 and is currently
the Chief Risk Officer for the group. As part of the good
governance of Kina and consistent with financial industry
best practice, Kina has established the risk division to assist
the group in its risk management and controls. Michael has
extensive experience in the banking industry in both Australia
and PNG, with a career spanning more than 30 years.

Prior to joining Kina, Michael worked for Suncorp Limited
as the District Manager for the bank’s agribusiness division
(from 2004 to 2008) and Westpac Bank PNG Limited
(from 1999 to 2002).

Tony De La Fosse
Executive General Manager –
Shared Services

Tony is responsible for a range of corporate functions
including Human Resources, Administration, Information
Technology, Real Estate, Legal and Procurement & Sourcing.

Tony graduated from the Royal Military College Duntroon in
1982. He holds an Arts Degree from the University of New
South Wales together with a Graduate Diploma in Human
Resources and an MBA.

He is also a graduate of the Australian Institute of
Company Directors.

He has extensive senior level experience in Corporate
Services having served throughout various Australian
Public Service departments such as the High Court of
Australia, Migration Review Tribunal, Ausaid, and the
Australian Pesticides and Veterinary Medicines Authority
where he held the position of Chief Operating Officer.
Prior to joining Kina, Tony held the role of Security Manager
at the Australian High Commission in PNG.

Kina Annual Report 2016 | Executive management team 25

For personal use onlyCorporate Governance Statement

Introduction
The Board is responsible for the overall corporate
governance of Kina Securities Limited and its related
entities, including adopting appropriate policies and
procedures designed to ensure that Kina is properly
managed to protect and enhance Shareholder interests.

The Board monitors the operational and financial position
and performance of Kina and oversees its business
strategy, including approving the Company’s strategic
goals and considering and approving business plans,
policy and budget.

The Board has created a framework for managing Kina,
including adopting internal controls, risk management
processes and governance policies and practices.
The Board monitors adherence to this framework which,
in turn, ensures operations comply with all relevant laws,
regulations and standards. The majority of the documents
which make up the Kina Governance Framework have
been reviewed throughout the year to ensure they remain
relevant to current operations and continue to comply with
those requirements or guidelines set down by the Bank of
Papua New Guinea (BPNG), the Australian Securities
Exchange (ASX), the Port Moresby Stock Exchange
(POMSoX), the PNG Companies Act and the Australian
Corporations Act 2011 (Cth).

This Statement outlines Corporate Governance framework
and practices adopted by the Board of Kina and in place for
the financial year ended 31 December 2016, by reference to
the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (3rd Edition)
(Recommendations). The Statement was approved by the
Board on 22 February 2017.

The Board considers and applies the Recommendations
taking into account the circumstances of Kina. Where Kina’s
practices depart from a Recommendation, this Statement
identifies the area of divergence and reasons for it, or any
alternative practices adopted by Kina.

Governance framework
The Board has established a number of corporate
governance documents consistent with the
Recommendations, which in addition to Kina’s Constitution,
form the basis of Kina’s corporate governance framework
– these documents are referenced in this Statement where
relevant, and are as follows:

1. Kina Securities Ltd Constitution (2015)

2. Board Charter (approved December 2016);

3. Audit and Risk Committee Charter

(approved December 2016);

4. Remuneration and Nominations Committee Charter

(approved December 2016);

5. Securities Trading Policy (approved June 2016);

6. Shareholder Communications Policy (approved

October 2016);

7. Continuous Disclosure Policy (approved October 2016);

8. Diversity Policy (approved October 2015);

9. Directors Code of Conduct (approved July 2015);

10. Code of Corporate Conduct (approved July 2015); and

11. Conflict of Interest Policy (approved July 2015).

Copies of the corporate governance documents are
available on Kina’s website (www.kina.com.pg) at:

http://investors.kina.com.pg/investors/?page=corporate-
governance.

Board of Directors

The Role of the Board

The Board is committed to maximising performance,
generating shareholder value and financial returns, and
sustaining the growth and success of Kina. In conducting
Kina’s business in accordance with these objectives, the
Board seeks to ensure that Kina is properly managed to
protect and enhance shareholder interests, and that Kina,
its directors, officers and personnel operate in an
appropriate environment of corporate governance.

Kina Annual Report 2016 | Corporate Governance Statement

For personal use onlyStrategy

Governance

Management

Operations

Industry
specific

• Strategic Planning
• Market

understanding
and insights

• Global orientation

• Board and
Governance

• Government Policy

and Relations
• Regulatory and

Compliance

• Listed Co . experience

• Talent management
• HR management
• Public affairs and
Communication

• Stakeholder
engagement

• Senior management

experience

• Operational
management

• Risk management
• IT
• Company culture

• Tax/Accounting
• Banking
• Capital management

and debt funding
• Financial Services

The Board has adopted a board charter (Board Charter).
The Board Charter sets out, amongst other things, the:

•

roles and responsibilities of the Board, including those
matters specifically reserved to the Board;

role and responsibility of the CEO, which is primarily
the day to day management of Kina;

• procedure for management of potential and actual

conflicts of interest; and

• guidance on board performance evaluation, ethical

standards and taking independent professional advice.

Director Appointment

As is required by the Bank of Papua New Guinea’s
Prudential Standards (BPNG Prudential Standards) Kina
undertakes a ‘Fit and Proper’ testing for candidates for
‘Responsible Person’ positions, which includes Board
Directors and Executive Management. This testing, which,
in accordance with the Standard, is carried out on
an annual basis includes thorough background checks.
When Directors are proposed for election, or re-election at
general meetings the notice of meeting provides material
and relevant information to enable shareholders to make an
informed decision as to whether or not to elect or re-elect
the candidate.

Kina has entered into a written agreement with each
director and senior management team member that sets
out, amongst other items, the terms of their appointment
and their roles and responsibilities.

Board Composition

The Board seeks to ensure that it has the appropriate mix
of skills, knowledge and experience to guide Kina and
assist management to achieve the strategic objectives set
by the Board. To assist in identifying areas of focus and
maintaining an appropriate mix of skills and experience,
the Board uses a self-assessment questionnaire, the results
of which feed into a skills matrix. The matrix, a high level
version of which is depicted above, sets out the skills,
experience and expertise represented on the Board and
assists the Remuneration and Nomination Committee in
identifying actual or potential gaps. The Board reviews
the matrix in light of Company strategy and uses it as
one aspect of the criteria applying to its renewal plan
and Board appointments.

Kina’s Board of Directors has been structured to ensure
it has a high level of public market and PNG experience,
coupled with financial and corporate governance
capabilities. The Board has assessed that this is appropriate
for the current stage of development and size of the
business and the current Board members have the
appropriate skills, knowledge and experience required
to effectively oversee Kina’s business.

Kina Annual Report 2016 | Corporate Governance Statement 27

For personal use onlyCorporate Governance Statement

Independence

Director induction and education

The Board considers an independent director to be a
non-executive director who is not a member of Kina’s
management and who is free of any business or other
relationship that could materially interfere with, or
reasonably be perceived to materially interfere with, the
independent exercise of their judgement. The Board
reviews the independence of each Director in light of
interests disclosed to the Board regularly (and at least
annually) and having regard to the relationships listed in
Box 2.3 of the Recommendations.

The Board does not consider Syd Yates to be independent
as he is the CEO of Kina. At the Annual General Meeting
in April 2016, three Directors resigned, being Peter Ng,
Don Manoa and Hilary Wong; and Isikeli Taureka was
elected. In October 2016, Karen Smith-Pomeroy was
appointed to the Board.

Having regard to the Recommendations, Peter Ng and
Jim Yap are not considered independent due to their
association with a substantial shareholder of Kina; and
Wayne Golding, Don Manoa and Hilary Wong are not
considered independent due to the length of time over
which they have held directorships within the Group.

The Board considers that each of the directors brings
objective and independent judgement to Board
deliberations and makes a valuable contribution to
Kina through the skills they bring to the Board and
their understanding of Kina’s business.

Following Ms Smith-Pomeroy’s appointment, the Board
now has a majority of independent directors.

Kina delivers an induction program to assist and introduce
all new directors to the business. As part of the induction,
new directors are given a detailed overview on Kina’s
operations, copies of governance and internal policies and
procedures and instruction on the roles and responsibilities
of the Board, its committees and management. After their
initial induction, directors are expected to keep themselves
updated on changes and trends within the business, in
the financial sector, market environment and any changes
and trends in the economic, political, social, global,
environmental and legal climate generally.

As required by the BPNG, all directors should devote a
minimum of 20 hours per year to their ongoing professional
development. Directors are encouraged to attend
recognised courses, seminars and conferences and internal
education sessions are scheduled at Board meetings
throughout the year.

Performance Evaluation

In accordance with the BPNG Prudential Standards, and as
set out in the Board Charter, the performance of the Board,
its members and its committees is assessed each year.
The Board has undertaken a performance evaluation and
skills analysis during the year. The findings are used to
further refine the succession and renewal plan which is
focussed on the next two to five years. The plan manages
the retirement and re-election of directors giving
consideration to the length of time served on the Board
and ensuring appropriate levels of Company experience
and corporate knowledge are maintained as well as
ensuring new appointments are made with a view to the
Company’s strategy over the medium to long term.

The Board will continue to review individual, Committee
and whole of Board performance and ensure that Board
composition and the skills and experience of the Directors
is appropriate.

Directors’ details

Name

Sir Rabbie Namaliu

Syd Yates, OBE

Wayne Golding, OBE

Jim Yap

David Foster

Isikeli Taureka

Karen Smith-Pomeroy

Peter Ng Choong Joo

Don Manoa

Hilary Wong, OBE

Appointment
date

Current length
of service

Non-executive?

Independent?

2009

1997

1996

2012

2015

2016

2012 – 2016

2003 – 2016

2001 - 2016

7 years

19 years

4 years

8 months

10 months

5 months

4 years

12 years

15 years

Yes

N/A

Yes

Kina Annual Report 2016 | Corporate Governance Statement

For personal use onlyPerformance evaluations, overseen by the chairman, in the
case of the CEO, and the Remuneration and Nomination
Committee in the case of senior management are carried
out on an annual basis and were completed in the year
under review.

Chairman

In accordance with the Board Charter, the chairman of
the Board is an independent director, Sir Rabbie Namaliu.
The roles and responsibilities of the chairman are contained
within the Board Charter.

Company Secretary

Mr Kong Wong was company secretary from 22 June 2015
until 21 June 2016. Kong has more than 15 years’
experience in banking and finance, investment
management, audit and financial control. Kong has a
Bachelor of Economics, majoring in Accounting from
La Trobe University and is a member of Certified Practising
Accountants Australia and PNG.

Mr Chetan Chopra was appointed company secretary and
CFO on 21 June 2016. Chetan holds a Bachelor of Science
from Mumbai University and an MBA from Melbourne
Business School, University of Melbourne. Chetan is a
member of Certified Practising Accountants Australia,
PNG and a practicing member of the Institute of Chartered
Accountants of India.

The Company secretary is accountable directly to the
board, through the Chairman, on all matters to do with
the proper functioning of the Board.

Board Committees

The Board has the power to establish and delegate
powers to committees that are formed to facilitate
effective decision making. The Board, however, accepts
full accountability for matters delegated by it to those
committees. The Board has established an Audit and
Risk Committee and a Remuneration and Nominations
Committee. Each Committee has a separate charter which
sets out, in detail, the guidance on the membership and
powers of the Committee, and its roles and responsibilities.
The charters are reviewed at least annually.

The Board has also established a Disclosure Committee
which meets on ad hoc basis to consider any issues which
may require disclosure to the market. During the year the
Committee met once, to discuss the documentation to be
released following 2015 financial year end. The Disclosure
Committee consists of Sir Rabbie Namaliu, Syd Yates and
David Foster and, as agreed by the Board, any other
Director whose skills and experience may be required at
that time.

Other committees may be established by the Board as
and when required. Membership of Board committees
will be based on the needs of Kina, relevant legislative
and other requirements and the skills and experience of
individual directors.

For the majority of 2016, the Remuneration and Nomination
Committee comprised two independent directors (David
Foster and Sir Rabbie Namaliu, the Chairman) and two
directors that are not independent (Wayne Golding and
Jim Yap). In October 2016, Isikeli Taureka was appointed to
the Committee and on 7 December 2016 the Board noted
Sir Rabbie’s resignation from the position of Chair of the
Committee and appointed Isikeli to that position.

The Remuneration and Nomination committee did not
contain a majority of independent directors for the majority
of the year, as recommended by Recommendation 2.1. The
Board addressed this by appointing Isikeli in October 2016.

The Audit and Risk Committee comprised Don Manoa
(until his resignation in May), Wayne Golding, Jim Yap
and independent director, David Foster as the Chairman
of the Committee. In October 2016, independent director,
Karen Smith-Pomeroy was appointed to the Committee.
As such, the Audit and Risk Committee did not contain a
majority of independent directors as recommended by
Recommendation 4.1. The Board has assessed that this is
appropriate for the current stage of development and size
of the business and the current Committee members have
the appropriate skills, knowledge and experience required
to perform their duties as a Committee.

Kina Annual Report 2016 | Corporate Governance Statement 29

For personal use onlyCorporate Governance Statement

Remuneration and Nomination Committee

Audit and Risk Committee

Roles &
Responsibilities

•

recommend and review remuneration
policy across group

•

review and consider composition of Board

• make recommendations to Board in regard
to succession planning for CEO and direct
reports and appointments of directors

• administering aspects of Fit and
Proper requirements of BPNG
Prudential Standards

•

review structure and level of director fees

review remuneration framework (incl STIs,
LTIs and non-cash elements) of CEO, senior
management and Responsible Persons

review terms and conditions of
employment agreements

review terms of superannuation and
pension scheme arrangements

• assist in annual performance review of CEO

• oversee annual performance review of

senior management

•

review effectiveness of Diversity Policy and
its objectives and strategies

•

reviewing effectiveness of reporting
of financial information, audit systems
and controls

reviewing and recommending to the Board
half-year and annual financial statements
and reports

• audit planning

•

reviewing the provision of non-audit
services by the external auditor

reviewing internal and external audit
reports and where weaknesses in controls
or procedures have been identified and
monitoring remedial action taken by
management to ascertain whether it has
been adequate and appropriate

• establishing and maintaining a risk

management framework and through this,
working with the Group Chief Risk Officer
and management to identify, manage and
monitor potential and actual issues,
concerns and risks

• monitoring the risk profile of Kina against

the agreed risk appetite and risk
management framework

• annual review of the effectiveness of the

risk management framework in supporting
business performance/ strategy

Membership
throughout the year

David Foster

Wayne Golding

Jim Yap
Isikeli Taureka1 (Current Chair)
Sir Rabbie Namaliu (Chair until 7/12/16)

Wayne Golding
Don Manoa2
Jim Yap
Karen Smith-Pomeroy3
David Foster (Chair)

1 Appointed to Remuneration and Nomination Committee 19 October. Appointed Chair 7 December.
2 Resigned from the Board 18 May 2016. Should this be retired from the board
3 Appointed to Audit and Risk Committee 18 October 2016.

Kina Annual Report 2016 | Corporate Governance Statement

For personal use onlyMembership of the Committees during the reporting period, the number of Committee meetings and the attendance at
those meetings are set out below:

Director

Board meetings

Audit and Risk
Committee

Remuneration and
Nomination

Disclosure Committee

Sir Rabbie Namaliu

Sydney Yates

David Foster

Wayne Golding

Donald Manoa

Peter Ng

Hilary Wong

Jim Yap

Isikeli Taureka

Karen Smith-
Pomeroy

A – Meetings held that Director was eligible to attend

12 September 2016 – K. Smith-Pomeroy appointed

B – Meetings attended

18 April 2016 – I. Taureka was appointed

18 May 2016 – D. Manoa, P. Ng and H. Wong resigned

18 October 2016 – I. Taureka appointed to Remuneration and
Nomination Committee. K. Smith-Pomeroy appointed to Audit
and Risk Committee

Remuneration

Diversity

Kina is committed to fair and responsible remuneration
throughout the Group. Senior Management are
remunerated in a way that aims to attract and retain an
appropriate level of talent and reflects their performance
in relation to the delivery of corporate strategy and
operational performance. Remuneration for non-executive
directors is set using advice from independent consultants
and takes into account the level of fees paid to non-
executive directors of similar corporations and the
responsibilities and work requirements of the non-
executive directors.

The Remuneration Report and further details about
the remuneration policy of Kina are set out in the
Directors’ Report.

The Diversity Policy emphasises Kina’s commitment
to the maintenance and promotion of workplace diversity
and inclusiveness. Kina recognises the importance of
embracing workplace diversity, specifically in valuing
the unique qualities, attributes, skills and experiences
all employees bring to our workplaces.

The Company’s vision for diversity incorporates a number
of different factors, including but not limited to gender,
ethnicity and cultural background, disability, age and
educational experience. The Diversity Policy provides a
framework to help Kina achieve its diversity goals, while
creating a commitment to a diverse work environment
where staff are treated fairly and with respect, and have
equal access to workplace opportunities.

Acting ethically and responsibly

The Board is committed to ensuring that Kina maintains
the highest standards of integrity, honesty and fairness in
its dealings with all stakeholders, and that Kina complies
with all legal and other obligations.

Kina has adopted a Code of Corporate Conduct that
applies to all employees of Kina and its subsidiaries
(including subcontractors and consultants) and a separate
Code of Conduct for Directors (Codes of Conduct).
The Codes of Conduct set out certain minimum standards
of conduct that Kina expects of its employees and directors
including integrity, diligence, impartiality, equality and
fairness. The Codes of Conduct set out how employees
and directors are to conduct themselves in order to meet
these minimum standards.

Kina is committed to actively promoting a positive
work environment based on respect and will continue
to implement initiatives to promote diversity. For example,
Kina strongly supports the development of females in
senior positions. This was demonstrated through Kina
sending a senior female Executive to attend a Governance,
Strategy & Risk for Directors workshop that was run by the
Australian Institute of Company Directors in late June in
2016. This workshop was initiated by the Business Coalition
for Women (BCFW), whose goals are dedicated to being
the innovative, relevant and inclusive driver of business
growth through positive change for women in Papua New
Guinea. Kina is one of the inaugural members of this group
and now has a senior female Executive as part of the Board.

Kina Annual Report 2016 | Corporate Governance Statement 31

For personal use onlyCorporate Governance Statement

Kina’s measurable objectives are:

Objective

2016 Achievement

Maintain or improve Kina’s level of female participation
across all levels of business, with particular focus at the
leadership levels.

Overall the level of female participation across all levels of
the business reduced slightly. Numbers of females in team
leader position increased and a female Director was added
to the Board.
Six female staff were promoted throughout the year into
Leadership roles and provided additional training through
the Leadership Programme.

Maintain or improve level of participation at leadership level
for PNG citizens.

Identified potential leaders were provided with additional
training through the Leadership Programme.

Demonstrate improvement in creating an inclusive workplace
environment.

KSL has continued to support gender smart policies, as
outlined above.

The numbers and percentage of females within Kina’s workforce, including the Board and senior management team is set
out below:

Board

Senior Management

Team Leader

Other employees

2016

2015

100

16%

11%

49%

76%

129

14%

52%

59%

Kina also believes in promoting and providing
opportunities for Leadership locally. As a result, Kina
promoted 20 male employees and 6 female employees in
2016 into Leadership roles in different parts of the business.

Kina is a strong advocate for gender smart policies in the
workplace and provides both maternity and paternity leave
for its workers. Also, within the first 6 months’ of a child’s
life, new parents are provided with paid leave to enable
time out of the workplace to feed new babies. The Group
will continue to promote awareness and understanding
of workplace diversity principles and develop policies to
assist employees to balance work, family and cultural
responsibilities whilst at the same time removing barriers
to employment.

The Remuneration and Nominations Committee reviews
and oversees the implementation of the Diversity
Policy. The Committee has determined that the
existing measurable objectives remain current and
appropriate for 2017.

Written declarations

When the Board considers the statutory half-year and
annual financial statements, the Board obtains a declaration
equivalent to section 295A of the Corporations Act, from
the CEO and CFO in regard to the integrity of the financial
statements and assurance as to the effective operation
of the risk management and internal compliance and
control systems.

External Auditor

Kina’s external auditor is PricewaterhouseCoopers (PwC).
The Audit and Risk Committee is responsible for
recommending the appointment or removal of the auditor
as well as annually reviewing their effectiveness,
performance and independence.

The external auditor is required to attend the Company’s
annual general meeting and is available to address
questions relevant to the conduct of the audit and the
preparation and content of the auditor’s report.

Kina Annual Report 2016 | Corporate Governance Statement

For personal use onlyTimely and balanced disclosure

Kina is committed to observing its disclosure obligations
under the ASX Listing Rules, the Australian Corporations
Act, the POMSoX Listing Rules and the PNG Securities Act.
The Board has adopted a continuous disclosure policy
(Continuous Disclosure Policy) and a shareholder
communication policy (Shareholder Communications
Policy) that implement Kina’s commitment to providing
timely, complete and accurate disclosure of information.

The Continuous Disclosure Policy sets out the roles and
responsibilities of officers and employees in complying with
Kina’s continuous disclosure obligations and nominates
those individuals who are responsible for determining
whether or not information is required to be disclosed.

Shareholder Communications

The Shareholder Communications Policy promotes
effective communication with shareholders and seeks
to ensure that shareholders have equal and timely access
to material information concerning Kina. The Policy sets
out the investor relations program, a key tenet of which
is to encourage effective shareholder participation.
Shareholders are encouraged to attend general meetings
and shareholder information sessions and to submit written
questions prior to those meetings.

Kina’s website contains information regarding the
Company, the Board and management team, corporate
governance, media coverage, ASX announcements,
investor presentations and reports.

Kina’s investor relations program includes a number of
scheduled and ad hoc interactions with institutional
investors, private investors, sell-side and buy-side analysts
and the financial media. At a minimum, so as to ensure
that shareholders and other stakeholders have a full
understanding of Kina’s performance and strategies, Kina
will convene analyst briefings twice a year on Kina’s financial
performance and objectives.

In accordance with the Shareholder Communications
Policy, shareholders are encouraged to attend general
meetings, or, if they are unable to attend, vote by proxy
or other means included in the notice of general meeting.
Shareholders may receive and send information
electronically to and from both Kina and Kina’s share
registry. Other methods of communication are also
available to shareholders and other stakeholders, including
telephone, mail and facsimile. Kina may consider the
use of other reliable technologies as they become
widely available.

Risk Management and internal controls

Throughout the year, in accordance with its Charter,
the Audit and Risk Committee reviewed Kina’s risk
management framework. Kina has continued to invest
significant time and effort in the design of a comprehensive
risk management framework and supporting software
that extends to each area of the business. The risk division
drives and influences the development of a strong and
robust risk culture across the Group that is constantly
being reinforced at all levels. Under supervision of the
Board, management is responsible for the design,
identification, assessment and management of risk
frameworks and related policies, and for adherence to
these. A dedicated compliance department is in place
to ensure that Kina personnel are aware of the Group’s
prudential and legislative obligations and that these are
maintained at all times. Operational risk within the Group
is monitored and an Occupational Health and Safety
regime has been expanded to maintain the safety of
Kina’s employees and customers. A three lines of defence
model has been implemented across the organisation.
The Group’s risk management activities comply with all
relevant regulation including that of the Bank of Papua New
Guinea (Prudential Standards), relevant legislation and the
Investment Promotion Authority (IPA).

Kina has also employed skilled credit managers who have
an understanding of the Papua New Guinean economic
environment to ensure that the growing loan portfolio is
maintained within an acceptable level of risk and within
Kina’s agreed risk appetite.

Kina Annual Report 2016 | Corporate Governance Statement 33

For personal use onlyCorporate Governance Statement

Kina’s risk management framework and internal control
functions incorporate a fully resourced internal audit
function which reports directly to the Audit and Risk
Committee. At present the internal audit function has been
co-sourced with external providers for planning and review
purposes, which is acceptable under the BPNG Prudential
Standards, but not a position Kina will continue in the long
term. The internal audit function provides independent and
objective assurance to the Board, via the Audit and Risk
Committee. The internal annual audit plan is formulated
using a risk based approach. Progress against the plan is
reported to the Committee on a quarterly basis.

All lending proposal are considered based on credit policy
and within the risk appetite of the group. Debt servicing
assessment criteria is maintained to ensure Kina
understands its level of credit risk whilst managing its
impairment exposure.

Kina does not have any material exposure to economic,
environmental and social sustainability risks.

Dealings in Company securities

The Board has adopted a Securities Trading Policy that
applies to the Kina’s equity-based remuneration scheme
and explains the conduct that is prohibited under the PNG
Securities Act and the Corporations Act.

The Securities Trading Policy:

• provides for certain Trading Windows when ‘Relevant
Persons’ may trade provided the appropriate process
has been adhered to;

• prohibits any Relevant Person from entering into a
hedge transaction involving unvested equity held
pursuant to an employee, executive or director
equity plan operated by Kina;

• sets out the prohibitions against insider trading and
prescribes certain requirements for dealing in Kina
securities; and

• prohibits Relevant Persons from trading in Kina

securities while in possession of material non-public
information, which is information a reasonable person
would expect to have a material effect on the price or
value of Kina securities.

Kina Annual Report 2016 | Corporate Governance Statement

For personal use onlyDirectors’ report

The Directors of Kina Securities Limited and its Subsidiaries
submit herewith the annual financial report of the Company
and its Subsidiaries for the year ended 31 December 2016.

An explanation of the operational performance and
highlights of the year is included at the front section of
this annual report.

Principal activities
The principal continuing activities of the Company and its
Subsidiaries during the year were the provision of share
brokerage, fund administration, investment management
services, asset financing, and provision of personal and
commercial loans, money market operations and corporate
advice. The Group acquired Maybank PNG Limited in 2015
whose principal activities were banking and related services.

The Directors consider there are no unusual or other
matters that warrant their comments and the Group’s
financial position and results from operations are properly
reflected in these financial statements.

Operating results
The Group’s operations for the year are reviewed in the
front section of the Annual Report.

The net profit attributable to equity holders for the year
for the Group was K41.0million compared with K4.96 million
in 2015.

The profit includes the following items:

• Net interest income of K65.1 million, compared with
K42.9 million in the prior year to December 2015.

• Net fee and commission income of K28.8 million,
compared with K17.4 million in the prior year.

• Operating income before impairment losses and other

operating income of K117.0 million, up from K69.7 million
in the prior year.

•

Impairment losses on loans and advances to K2.8
million, compared with K3.0 million in the prior year.

• Other operating expenses of K55.6 million, compared
with K54.8 million in the prior period, which included
one-off expenses associated with the acquisition of
Maybank PNG and the listing of the company on the
Australian Securities Exchange (ASX) and Port Moresby
Stock Exchange (POMSoX).

Review of operations
Kina Securities completed an initial public offering and
was listed on the ASX and POMSoX in July 2015, and it
completed the acquisition of the Maybank PNG business
in September, 2015.

The statutory result for the year ended 31 December 2016,
was a profit of K41.0 million and K4.9million for the
12 months to 31 December 2015, which included 12 months
contribution from the continuing Kina operations and
three months contribution from the Maybank operations.
The statutory profit in 2015 was after costs of approximately
K12.0 million associated with the Maybank acquisition as
well as the listing of Kina Securities.

As at 31 December 2016, Kina, which has been regarded as
PNG’s fourth largest bank, had lending assets of K605million
and deposits of more than K950 million.

After balance sheet date events
Subsequent to balance date, the directors declared a
dividend of 3.95 cents per share total of (K16.8m). There are
no other events after the balance sheet date that require
adjustment to or disclosure in the financial statements.

Future developments
The Kina Board and management have developed a 5 year
strategic plan that is customer centric further building on
the principles of “Together it’s possible”. The Banking
business will further grow the business banking segment as
well as increase customer interaction in personal banking.
In 2017 the bank will offer a larger product offering to
include home loans, asset financing and modern banking
channels. Kina fully subscribes to the expansion of the
financial inclusion targets of the Bank of Papua New Guinea.
This will be supported by an aggressive investment in
system upgrades and new technologies and enhancements
to be available anytime, anywhere. The Board has allocated
capital to these initiatives. The Wealth management
business will grow on the gains from the new
superannuation administration contract. The new
arrangements allow the company to interact with a
significant segment of the employment sector and further
develops it wealth advisory services. It also allows the
Banking business further leverage. Kina is also developing
new wealth management products for individuals to
improve the savings and banking environment in PNG.

Dividends
The Company paid dividend of 4.09 cents (9.78 toea) per
share (K12.7m) in October 2016 in relation to the 2015 profit.
Subsequently, the directors also declared dividend of
3.95 cents (10.0 toea) per share (K16.8m) in relation to profit
for the half year ended 30 June 2016.

Solicitors
Allens at Level 6, Mogoru Moto Building, Champion Parade,
Port Moresby, Papua New Guinea.

Auditors
PricewaterhouseCoopers PNG at PwC Haus, Level 6,
Harbour City, Konedobu, Port Moresby, Papua New Guinea

Donations
During the year the Group made donations totalling
K9,197 (2015:K1,000)

Auditor’s fees
During the year fees paid to the auditor for professional
services are shown in note 11 to the accounts. The external
auditor PricewaterhouseCoopers is also engaged in
providing other services to the Group as required and as
permitted by Prudential Standards. The provision of other
services included taxation and general training.

Kina Annual Report 2016 | Director’s report

For personal use onlyIntroduction & Overview to Shareholders

1
The remuneration report is focused on
providing information that the Board
considers important for shareholders to
understand the remuneration framework
of Kina designed to deliver good
operating results.

During the year Kina reviewed its incentive plans to ensure
they were aligned with market best practice and that they
continued to attract, motivate and retain high calibre
management and employees.

Kina Securities Limited
Remuneration report

Contents
1

Introduction & Overview to Shareholders . . . . . . . . 36

2 Kina’s KMP (Key Management Personnel) . . . . . . . . 37

2 .1 Remuneration and Nomination Committee . . . 37

3 Executive remuneration . . . . . . . . . . . . . . . . . . . . . . . 37

3 .1 Remuneration policy and

governance framework . . . . . . . . . . . . . . . . . . . . 37

3 .2 Fixed Remuneration (FR) . . . . . . . . . . . . . . . . . . . 38

3 .3 Short-term incentive plan (STI) . . . . . . . . . . . . . . 38
(a) Structure of STI . . . . . . . . . . . . . . . . . . . . . . . . . . .38

(b) FY16 STI outcomes . . . . . . . . . . . . . . . . . . . . . . .39

3 .4 Long term incentive plan . . . . . . . . . . . . . . . . . . . 41
(a) Structure of LTI . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

(b) FY16 LTI outcomes . . . . . . . . . . . . . . . . . . . . . . .42

3 .5 Retention Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

3 .6 Remuneration components . . . . . . . . . . . . . . . . . 44
(a) FY16 remuneration . . . . . . . . . . . . . . . . . . . . . . . .44

3 .7 Performance based and non-performance

based components . . . . . . . . . . . . . . . . . . . . . . . . 45
3 .8 Performance Rights holdings . . . . . . . . . . . . . . . . .45
(a) KMP Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . .45

(b) CEO employment agreement . . . . . . . . . . . . . .45

4 Non-executive director arrangements . . . . . . . . . . . 46

4 .1 Remuneration policy . . . . . . . . . . . . . . . . . . . . . . 46

4 .2 Remuneration components . . . . . . . . . . . . . . . . . 47
(a) Fee pool. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

(b) Committee fees . . . . . . . . . . . . . . . . . . . . . . . . . . 47

4 .3 Variable Remuneration . . . . . . . . . . . . . . . . . . . . . 47
(a) Special remuneration . . . . . . . . . . . . . . . . . . . . . 47

(b) Reimbursement for out of pocket expenses . 47

(d) Participation in incentive schemes . . . . . . . . . .47

5 Related party transactions . . . . . . . . . . . . . . . . . . . . . 47

6 Directors’ interests in shares . . . . . . . . . . . . . . . . . . . 47

7 Auditor’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

36 Kina Annual Report 2016 | Remuneration report

For personal use only

2 Kina’s KMP (Key Management Personnel)
Kina’s KMP comprise the Directors, CEO and the direct
reports to the CEO and called the Senior Executive Team
of Kina. The Senior Executive Team refers to the CEO and
those direct reports with authority and responsibility for
planning, directing and controlling the activities of Kina
Group, directly or indirectly. The KMP disclosed in this
Remuneration Report are:

Name

Position held during the financial
year ended 31 December 2016

Non-Executive Directors
(section 4 of this Remuneration Report)

Sir Rabbie Namaliu

Non-Executive Chairman

2.1 Remuneration and Nomination Committee

The Remuneration and Nomination Committee assists the
Board in the performance of its statutory and regulatory
duties by:

•

formulating advice to the Board on the remuneration of
the Chief Executive Officer, senior management team
and employees holding Responsible Person positions;

• providing an objective, non-executive review of the
effectiveness of Kina’s remuneration setting policies
and practices;

•

recommending to the Board for approval by
shareholders the amount and structure of directors’
fees;

David Foster

Wayne Golding

Jim Yap

Isikeli Taureka

Non-Executive Director

• administering aspects of the “Fit and Proper”

Non-Executive Director

•

Non-Executive Director

requirements of BPNG Prudential Standard BPS310; and

identifying the mix of skills and individuals required to
allow the Board to contribute to the successful oversight
and stewardship of the Company.

Karen Smith-Pomeroy

Non-Executive Director

Hilary Wong¹

Don Manoa2

Non-Executive Director

Peter Ng Choong Joo3

Non-Executive Director

Executive Directors and
Senior Executive Team (direct reports)

Syd Yates

Chetan Chopra4

Danny Robinson5

MD and CEO

Chief Financial Officer
and Company Secretary

Executive General Manager
of Banking

•

Deepak Gupta6

Executive General Manager Wealth

Michael Van Dorssen

Tony de la Fosse7

Kong Wong8

Victor Shubin9

Chief Risk Officer

Executive General Manager
Shared Services

Chief Financial Controller

General Manager – KFM

Note: The following executive are senior officers but not included
under the definition of KMP – Adam Fenech, Aaron Bird, Saima Kalis

1. Resigned as Director 18 May 2016
2. Resigned as Director 18 May 2016
3. Resigned as Director 18 May 2016
4. Chetan Chopra commenced as CFO on 1 June 2016
5. Danny Robinson commenced as EGM on 3 February 2016
6. Deepak Gupta commenced employment 10 July 2016
7. Tony de la Fosse commenced employment 1 December 2016
8. Kong Wong ceased employment in 30 June 2016
9. Victor Shubin ceased employment 23 September 2016

Refer to Kina’s Corporate Governance Statement
(available on Kina’s website under the Corporate
Governance Link and pages 26–34 of this Annual Report
for more information regarding the Remuneration and
Nomination Committee.

The Remuneration and Nomination Committee regularly
reviews the following to align remuneration, performance
and strategy:

• Kina’s remuneration policy;

the structure and quantum of the remuneration of the
CEO, members of the senior management team, staff
holding Responsible Person positions and selected risk
and compliance staff; and

•

the structure and level of non-executive directors’
board fees and committee fees,

Executive remuneration

3.1 Remuneration policy and governance framework

The Remuneration and Nomination Committee reviews
and determines our remuneration policy and structure
annually to ensure it remains aligned to business needs,
and meets our remuneration principles. From time to time,
the committee also engages external remuneration
consultants to assist with this review. In particular, the Board
aims to ensure that remuneration practices are:

• Competitive and reasonable, enabling the company to

attract and retain key talent;

• Aligned to the company’s strategic and business
objectives and the creation of shareholder value;

• Transparent; and

• Acceptable to shareholders.

Kina Annual Report 2016 | Remuneration report

For personal use onlyKina Securities Limited
Remuneration report

KMP are prohibited from entering into any hedging arrangements that limit the economic risk of holding Kina
securities under Kina equity plans. This helps align executives’ and shareholders’ interests.

The Board has determined that to align the interests of Kina’s Senior Executive Team and the goals of Kina and to
assist in the attraction, motivation and retention of management and employees of Kina, the remuneration packages
of the CEO and the other Senior Executives of Kina should comprise the following components:

Fixed remuneration

STI Plan

LTI Plan

Retention Plan

Total fixed remuneration comprises base salary, other
non-cash benefits and includes superannuation.

The STI plan provides participants with an opportunity to earn an incentive calculated as a
percentage of their salary each year, conditional upon achievement of individual KPIs which
may consist of financial and, if applicable non-financial performance measures. The incentive
earned will be paid:
– 65% in cash
– 35% in an offer of performance rights.
The cash portion of the incentive will be paid in the next pay cycle following confirmation of the
performance outcomes being achieved. The Performance Rights portion will be issued in one
tranche and will vest subject to the participant remaining employed by Kina or a member of the
Kina group at vesting date.

A long term incentive plan that provides an opportunity for employees to receive an equity
interest in Kina through the granting of LTI Performance Rights
Under the LTI Plan, LTI Participants may be offered LTI Performance Rights that are subject to
vesting conditions set by the Board.

A one-off equity based performance rights plan to assist in the retention and reward of key eligible
employees. Under the retention plan for FY15, only Syd Yates was granted Performance Rights.
These Performance Rights were subject to a service condition whereby 50% of the Performance
Rights vest on the first anniversary of the grant date and the remaining 50% to vest on the second
anniversary of the grant date.
The Kina Board has discretion as to whether the Retention Plan will continue and apply to other KMP.

3.2 Fixed Remuneration (FR)

Executives may receive their fixed remuneration as cash, or cash with non-monetary benefits such as insurance, allowances
and tax advisory services. FR is reviewed annually, or on promotion. It is benchmarked against market data for comparable
roles in companies in a similar industry and with similar market capitalisation. The committee aims to position executives at
or near the median, with flexibility to take into account capability, experience, and value to the organisation and
performance of the individual.

3.3 Short-term incentive plan (STI)

(a) Structure of STI

Features

Eligibility

STI components

Description

The CEO and Senior Executive Team are eligible to participate in the STI Plan (STI Participants).

Cash bonus: 65% of the STI Participant’s award under the STI Plan.
STI Performance Rights: 35% of the STI Participant’s award under the STI Plan.

38 Kina Annual Report 2016 | Remuneration report

For personal use onlyFeatures

Description

Performance measures

Calculation of STI
Performance Rights

Treatment of
dividends calculation

Vesting of STI
Performance Rights

Forfeiture of STI
Performance Rights

Payments and grants

Target STI and
maximum STI that
can be awarded

Individual KPIs specific to each Participant are agreed during the performance appraisal process
each year. These KPIs consist of both financial and non-financial performance measures and
include:
• Achievement of agreed Corporate NPAT
• Achieving agreed Cost to Income ratio
• Growth of FUM
• Compliance with Risk and quality framework with no exceptions
No STI is payable unless a minimum Group NPAT is achieved.
The Board allocates an annual pool to the STI each year. There are levels of targeted performance
for allocation of the pool for 2016 :
• Minimum (85% of budget)
• Threshold (85% - 100% budget): 50%
90%
• Target (Budget 100%)
100%
• Stretch (100+ to 110%+)
• Stretch (120%+)
up to 200%
The pool is then allocated in accordance with the maximum and target STI for each KMP
(which is detailed later) as a percentage of Gross pay.

The number of STI Performance Rights granted is determined by dividing the award value by the
10 day volume weighted average price per share prior to 31 December 2016.

Dividends, or the value of any dividends, are not received on unvested share rights. Notional
dividend equivalents accrue during the deferral period and are delivered through an adjustment
to the number of vested share rights at the end of the deferral period. This is calculated by taking
the value of dividends distributed during the deferral period and dividing by a 10-day VWAP as at
the vesting date, in whole share rights.

STI Performance Rights are restricted from exercise until the second anniversary after the grant
date and will vest on the second anniversary.
The 2016 STI PRs deferred in the financial accounts in Share based Premium Reserve for 2016
represents 50% of the STI PRs granted in 2016.

STI Performance Rights are subject to Kina’s clawback policy. Under the clawback policy,
unvested STI Performance Rights may be forfeited if the Board determines that adverse events or
outcomes arise that should impact on the grant of STI Performance Rights to a STI Participant.

Payments under the STI Plan are made in March of each year after the release of full year financial
results to ASX and POMSoX.

CEO

CFO

Target

Maximum

50% of base salary

75% of base salary

40% of base salary

50% of base salary

Other Senior Executives

30% of base salary

45% of base salary

(b) FY16 STI outcomes
The outcomes of the STI payments to Executives for the years FY16 and FY15 are provided in the table below. This shows
the annual base salary and total STI opportunity on an annual basis. For KMP (direct reports to the CEO) joining during the
year, the incentive earned is calculated and awarded based on date of joining.

Kina Annual Report 2016 | Remuneration report

For personal use only

Kina Securities Limited
Remuneration report

STI Payments

Participant

Syd Yates

Michael Van Dorrsen

Deepak Gupta

Chetan Chopra

Danny Robinson

Other senior executives

TOTAL

Annual base
salary (AUD)

Total STI
opportunity on
an annual basis

400,000

306,700

305,000

320,000

1,369,421

1,068,361

3,006,121

1,775,061

200,000

92,010

91,500

122,000

96,000

401,976

320,509

1,003,486

612,519

Year

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

Total
incentive
earned

80,000

270,000

27,603

96,611

18,300

42,700

48,000

138,363

202,548

354,966

569,159

Cash bonus

Performance
rights (35%)
(dollar value)*

52,000

175,500

17,942

62,797

11,895

27,755

31,200

89,936

131,658

230,728

369,955

28,000

94,500

9,661

33,814

6,405

14,945

16,800

48,427

70,893

124,238

199,207

The outcomes of the STI payments to Executives for the FY15 year are provided in the table below:

Participant

Syd Yates

Adam Fenech

Kong Wong

Aaron Bird

Victor Shubin

Michael Van Dorssen

Saima Kalis

Veronica Weiang

TOTAL

Annual base
salary (AUD)

$400,000

$243,000

$270,000

$172,500

$195,000

$306,700

$91,522

$96,339

Target STI
opportunity
(50% for
CEO/30%
for Execs)

Total incentive
earned

Cash bonus
(65%)

Performance
rights (35%)
(dollar value)*

$200,000

$270,000

$175,500

$72,900

$81,000

$51,750

$58,500

$92,010

$27,457

$28,902

$49,208

$60,750

$53,044

$29,250

$96,611

$10,296

$31,985

$39,488

$34,479

$19,013

$62,797

$6,693

$94,500

$17,223

$21,263

$18,565

$10,238

$33,814

$3,604

$569,159

$369,955

$199,207

* Please note, the number of Performance Rights to be issued under the STI plan is yet to be confirmed. At this stage, only the dollar

value is known.

40 Kina Annual Report 2016 | Remuneration report

For personal use only

3.4 Long term incentive plan

Executives participate, at the Board’s discretion in the LTI plan comprising annual grants of Performance Rights.
Further details are shown in the table below:

(a) Structure of LTI

Features

Eligibility

Description

Participants must be a permanent full-time or part-time employee or Executive Director of Kina or any
of its subsidiaries (LTI Participants).

LTI components

The LTI Plan will be delivered as Performance Rights with each right conferring on its owner the right
to be issued or transferred one (1) fully paid ordinary share in the Company.

Performance measures

In respect of the FY16 grant, the Performance Rights will only vest subject to Board assessed
satisfaction of the following conditions:
• Meeting the required TSR performance level based on peer group – 50% weighting
Over a three year period

Peer group relative TSR performance

Vesting outcome

Below 50th percentile of peer group

Nil

At 50th percentile

50% vesting

Between 50th – 75% percentile

Pro rata between 50% to 100%

20% and above

100% vesting

• Meeting EPS target level based on Peer group – 50% weighting

Compound Annual Growth rate over a three year period

EPS performance

< 5% compound annual growth

>5% and < 10%

10%

Vesting Outcome

Nil

50% vesting

Pro rata between 50% - 100%

100% vesting

The Board works with an independent advisor to identify comparator group companies and the
advisor calculates the vesting schedule.
The measurement period for 2016 LTIs will be from 1 April 2017 to 31 March 2020. The vesting will
be effectively on 1 April 2020.

Calculation of LTI
Performance Rights

Grants are approved annually. The number of LTI Performance Rights for each year will be determined
by dividing the LTI Awards by the 10 day volume weighted average price per share prior to
31 December in the year of vesting.

Vesting and exercise of
LTI Performance Rights

While the grants are approved annually, they will vest no earlier than the third anniversary of the
commencement of the performance period and subject to satisfaction of the vesting conditions
and performance measures.
The performance periods for the outstanding awards are as follows:

Period

Date Granted

FY ended 31 December 2015 1 April 2016

FY ended 31 December 2016 1 April 2017

Performance
period / measures

Vesting date
(subject to
performance testing)

Achieving profit of K 5.7 m
IPO Listing

1 April 2019

EPS assessment compound
till FY 2019 – 50%

1 April 2020

Relative TSR assessment
compounded to
FY 2019 – 50%

Kina Annual Report 2016 | Remuneration report

For personal use only

Kina Securities Limited
Remuneration report

Features

Description

Forfeiture of LTI
Performance Rights

Lapse of LTI
Performance Rights

Unvested LTI Performance Rights may be forfeited:
•

if the Board determines that any vesting condition applicable to the LTI Performance Right
has not been satisfied in accordance with its terms or is not capable of being satisfied;
in certain circumstances if the LTI Participant’s employment is terminated; or
in other circumstances specified in the LTI Plan (for example, if the Board determines that the LTI
Participant has committed an act of fraud or gross misconduct in relation to the affairs of Kina).

•
•

Unless otherwise specified in the vesting conditions or otherwise determined by the Board, a LTI
Performance Right lapses on the earliest of:
•

if the Board determines that any vesting condition applicable to the LTI Performance Right
has not been satisfied in accordance with its terms or is not capable of being satisfied;
the expiry of the exercise period (if any);
in circumstances of cessation of employment;
in other circumstances specified in the LTI Plan (for example, if the Board determines that the LTI
Participant has committed an act of fraud or gross misconduct in relation to the affairs of Kina); or
if the participant purports to deal in the LTI Performance Right in breach of any disposal or hedging
restrictions in respect of the Performance Right.

•
•
•

•

Target LTI and maximum
LTI that can be awarded

CEO

CFO

Other Senior Executives

Target

Maximum

50%

40%

30%

50%

40%

30%

(b) FY16 LTI outcomes
Details of Kina’s performance against the LTI performance measures are summarised as follows:

LTI Results

Participant

Syd Yates

Michael Van Dorrsen

Deepak Gupta

Chetan Chopra

Danny Robinson

Other senior executives

TOTAL

Year

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

Value of Performance
Rights granted

200,000

92,010

91,500

122,000

96,000

288,861

291607

890,371

583,617

Financial measures

As per LTI performance
measures

Achieved

As per LTI performance
measures

Achieved

As per LTI performance
measures

Employed with Kina
or Kina Group member
on 3rd anniversary
of Grant Date

Not yet achieved

42 Kina Annual Report 2016 | Remuneration report

For personal use only

3.5 Retention Plan

Features

Eligibility

Retention Plan

Vesting conditions

Calculation of
Performance Rights

Forfeiture of
Retention Plan
Performance Rights

Lapse of
Retention Plan
Performance Rights

Description

The Board to determine the Participants eligible for participation in the Retention Plan.

The Retention Plan is a once off award of Performance Rights to assist in the retention and
reward of key eligible participants.

In respect of the FY15 Retention Plan grant, the Performance Rights for the CEO are subject
to a service condition as follows:
• 50% of the Performance Rights granted to vest on the first anniversary of grant date; and
• 50% of the Performance Rights granted to vest on the second anniversary of grant date.

The Board determined that under the Retention Grant, Syd Yates received a once off grant of $200,000
worth of Performance Rights, which will result in 200,000 Performance Rights being granted.

Unvested Retention Plan Performance Rights may be forfeited:
•

If the Board determines that any vesting condition applicable to the Retention Plan Performance
Right has not been satisfied in accordance with its terms or is not capable of being satisfied;
In certain circumstances if the Retention Plan Participant’s employment is terminated; or
In other circumstances specified in the Retention Plan (for example, if the Board determines
that the Retention Plan Participant has committed an act of fraud or gross misconduct in relation
to the affairs of Kina).

•
•

Unless otherwise specified in the vesting conditions or otherwise determined by the Board, a
Retention Plan Performance Right lapses on the earliest of:
•

If the Board determines that any vesting condition applicable to the Retention Plan Performance
Right has not been satisfied in accordance with its terms or is not capable of being satisfied;
The expiry of the exercise period (if any);
In circumstances of cessation of employment;
In other circumstances specified in the Retention Plan (for example, if the Board determines
that the Retention Plan Participant has committed an act of fraud or gross misconduct in relation
to the affairs of Kina); or
If the participant purports to deal in the Retention Plan Performance Right in breach of any
disposal or hedging restrictions in respect of the Performance Rights.

•
•
•

•

Timing of grants

It is intended that there will be no future grants under the Retention Plan as it was a once off grant.

Kina Annual Report 2016 | Remuneration report

For personal use only

Kina Securities Limited
Remuneration report

3.6 Remuneration components

(a) FY16 remuneration
The components of the Senior Executive Team’s remuneration are set out in the below table (in AUD).

Remuneration components

Short term
employee benefits

Long term employee benefits

Cash salary/
fees/short-term
compensated
absences

Short -term
cash profit
sharing and
other bonus

Non-
monetary
benefits

Super
benefits

Other
post-
employment
benefits

Equity
settled:
options and
rights

Total

400,000

52,000

231,297

228,000

911,297

400,000

175,500

225,434

233,808

494,500

1,529,242

306,700

17,942

154,734

36,664

101,671

617,711

306,700

305,000

62,797

233,105

54,396

11,895

175,278

305,000

27,755

185,331

25,620

320,000

31,200

165,224

1,369,421

89,936

866,209

972,022

131,658

646,813

3,006,121

230,728

1,778,073

62,284

125,823

97,905

782,821

590,078

136,945

680,651

112,800

629,224

337,288

2,662,854

362,500

2,112,993

1,014,609

6,091,815

1,678,722

369,955

1,105,352

54,396

233,808

982,823

4,425,056

Syd Yates

Michael Van
Dorssen

Deepak Gupta

Chetan Chopra

Danny Robinson

Other senior
executives

TOTAL

Year

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

Non-monetary benefits include provision of accommodation and vehicles for official and personal use.
These are taxable perquisites.

44 Kina Annual Report 2016 | Remuneration report

For personal use only

3.7 Performance based and non-performance based components

All elements of the remuneration of The Senior Executive Team that are performance based.

3.8 Performance Rights holdings

The table below sets out the current holdings of Performance Rights by the Senior Executive Team:

Performance Rights holdings

Syd Yates

Michael Van Dorrsen

Deepak Gupta

Chetan Chopra

Danny Robinson

Other senior executives

Total

Employment agreements

Year

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

Performance
Rights held at
start of the year

Performance
Rights issued
during the year

Forfeited Rights
forfeited/lapsed
during the year

Performance Rights
held at year end

506,061

129,961

371,172

1,007,194

228,000

506,061

101,671

129,961

97,905

136,945

112,800

337,288

371,172

1,014,609

1,007,194

-113,091

734,061

506,061

231,632

129,961

97,905

136,945

112,800

595,369

371,172

1,908,712

1,007,194

(a) KMP Contracts
All Senior Executive Team Employment contracts are over a period of 3 years with a notice period of 3 months.

(b) CEO employment agreement
Kina may terminate Syd Yates’ employment without notice or payment in lieu of notice in circumstances where Syd Yates:

•

is bankrupt or has made any arrangement or composition with his creditors or taken advantage of any legislation for
relief of an insolvent debtor; or

is convicted of any criminal offence, other than an offence which in the reasonable opinion of the Board does not
affect his position as CEO of Kina.

On termination of Syd Yates’ employment agreement, Syd will be subject to a restraint of trade period of 12 months.
The enforceability of the restraint clause is subject to all usual legal requirements.

Kina Annual Report 2016 | Remuneration report

For personal use only

Kina Securities Limited
Remuneration report

Remuneration of employees
During the year, the number of employees or former employees (not being directors of the Company), receiving
remuneration in excess of PGK100,000 per annum from the Group stated in bands of PGK10,000 were as follows:

2016

2015

1,520,000 - 1,530,000

1,510,000 - 1,520,000

1,200,000 - 1,300,000

1,100,000 - 1,200,000

1,000,000 - 1,110,000

950,000 - 960,000

860,000 - 870,000

850,000 - 860,000

830,000 - 840,000

820,000 - 830,000

750,000 - 760,000

630,000 - 640,000

620,000 - 630,000

570,000 - 580,000

560,000 - 570,000

500,000 - 510,000

450,000 - 460,000

350,000 - 360,000

340,000 - 350,000

310,000 - 320,000

280,000 - 290,000

240,000 - 250,000

210,000 - 220,000

190,000 - 200,000

180,000 - 190,000

160,000 - 170,000

150,000 - 160,000

140,000 - 150,000

130,000 - 140,000

120,000 - 130,000

110,000 - 120,000

100,000 - 110,000

4 Non-executive director arrangements

4.1 Remuneration policy

Non-executive directors receive a board fee and fees for chairing or participating on board committees, see table below.
They do not receive performance-based pay or retirement allowances. The fees are inclusive of superannuation.

Fees are reviewed annually by the Board, taking into account comparable roles and market data provided by the Board’s
independent remuneration advisor. The current base fees were reviewed in 2015 and 2016 and no increases were applied.

46 Kina Annual Report 2016 | Remuneration report

For personal use only
4.2 Remuneration components

Kina’s Board and Committee fee structure during the financial year ending 31 December 2016 was:

Board fees

Board

Committee fees

Audit and Risk Committee

Chairman

Non-executive
Director/committee member

$135,000 (plus any
superannuation entitlements)

$75,000 (plus any superannuation entitlements)

Fees between $5,000 and $15,000 per annum
will be paid to Directors who participate
in any Committee]

Remuneration and
Nomination Committee

Fees between $5,000 and $15,000 per annum
will be paid to Directors who participate
in any Committee]

Disclosure Committee

No additional fees are paid

(a) Fee pool
Under the Constitution, the Board decides the total amount paid to each Non-Executive Director as remuneration for their
services as a Director of the Company. However, the total amount of fees (including statutory superannuation entitlements,
if any) paid to the Directors for their services (excluding, for these purposes, the remuneration of any Executive Director)
must not exceed in aggregate in any financial year the amount fixed by the Company in general meeting. For the financial
year ending 31 December 2016, this has been fixed at $1.28 million per annum. Any increase in the total amount payable
by the Company to the Non-Executive Directors as remuneration for services must be approved by the Company in
general meeting.

The aggregate sum includes any special and additional remuneration for special exertions and additional services
performed by a Director as determined appropriate by the Board.

(b) Committee fees
The committee chairman fees are not duplicated for those Directors who are appointed to chair meetings of more than
one committee or the Board.

4.3 Variable Remuneration

Special remuneration

(a)
Directors may be paid such special or additional remuneration as the Board determines for performing extra services or
making any special exertions for the benefit of Kina which, in the Board’s opinion, are outside of the scope of ordinary
duties of a Director.

(b) Reimbursement for out of pocket expenses
Directors may be reimbursed for travel and other expenses incurred in attending and returning from any Board, Board
committee or general meeting of Kina, or otherwise in connection with the business or affairs of Kina Group.

(c) Retirement benefits
There are no retirement benefit schemes for Directors, other than statutory superannuation contributions.

(d) Participation in incentive schemes
The Non-Executive Directors are not entitled to participate in any Kina Group employee incentive scheme.

Related party transactions

5
Please refer to Note 30 to the financial statements, for further comments on Related party transactions.

6 Directors’ interests in shares
Directors are not required under the Constitution to hold any shares in the Company.

As at the date of this Remuneration Report, the Directors have the following interests in the shares in Kina (either directly
or through beneficial interests or entities associated with the Director).

Kina Annual Report 2016 | Remuneration report

For personal use only
Kina Securities Limited
Remuneration report

Director

Sir Rabbie Namaliu

Syd Yates

David Foster

Wayne Golding

Jim Yap

Isikeli Taureka

Karen Smith-Pomeroy

Hilary Wong15

Don Manoa16

Peter Ng Choong Joo17

Number of Shares

Shareholding as at the date of
this remuneration report (%)

100,00010

5,180,29711

40,00012

5,116,70613

126,56914

Nil

20,000

Nil

0.06

3.16

0.02

3.12

0.08

0.01%

10.

11.

12.

13.

14.
15.
16.
17.

50,000 Shares held directly and 50,000 Shares held by Tobit Investments Ltd – Sir Rabbie is a Shareholder and Chairman of
Tobit Investments Ltd.
164,200 shares are held directly by Sydney Yates while 4,406,097 shares are held by Columbus Investments Ltd where Syd Yates is a
sole shareholder. 500,000 Shares are held by Kina Asset Management No. 1 Ltd (Columbus Inv. Ltd holds approx. 7% of ISC in KAML
of which KAM No.1 Ltd is a wholly-owned subsidiary and Syd Yates is executive director of KAML).
Prior to Listing, Syd Yates entered into a voluntary escrow in respect of 4,406,097 Shares (Escrowed Shares). Under the terms of the
voluntary escrow arrangement, Syd Yates is restricted from dealing in the Escrowed Shares until a date which is two Business Days
after the date on which Kina’s half-year financial results for the period ending 30 June 2016 are released to ASX and POMSoX by Kina.
Shares held by Foster Coastal Investments pty Ltd as trustee for Foster Coastal Superannuation Fund. Mr Foster is Director
of Foster Coastal Investments Pty Ltd and a beneficiary of Foster Coastal Superannuation Fund).
4,846,706 are held directly by Wayne Golding. 270,000 held by Matching Investment Company, of which Mr Golding owns 50%. Prior
to listing, he entered into a voluntary escrow in respect of 4,846,706 Shares (Escrowed Shares). Under the terms of the voluntary escrow
arrangement, Wayne Golding is restricted from dealing in the Escrowed Shares until a date which is two Business Days after the date
on which Kina’s half-year financial results for the period ending 30 June 2016 are released to ASX and POMSoX by Kina.
Subsequent to the year-end, Jim Yap disposed 33,431 ordinary shares.
Resigned as Director 18 May 2016.
Resigned as Director 18 May 2016.
Resigned as Director 18 May 2016.

7 Auditor’s report
Kina is not required to have this report audited. This report is prepared as a voluntary disclosure.
The expected level of disclosure has been provided through this report.

48 Kina Annual Report 2016 | Remuneration report

For personal use only
Directors’ declaration

The directors declare that:
•

in the directors’ opinion, there are reasonable
grounds to believe that the Group will be able to pay
its debts as and when they become due and payable

•

in the directors’ opinion, the attached consolidated
financial statements and notes thereto are in
accordance with the Companies Act 1997, including
compliance with International Financial Reporting
Standards (IFRS) and giving a true and fair view of the
financial position and performance of the Group.

Signed in accordance with a resolution of the directors.

On behalf of the Directors

Sir Rabbie Namaliu, GL CSM KCMG
Chairman
31 March 2017

Syd Yates, OBE
Director
31 March 2017

Kina Annual Report 2016 | Director’s declaration

For personal use onlyIndependent auditor’s report

Independent auditor’s report
To the shareholders of Kina Securities Limited

Report on the audit of the financial statements of the Company and the
Group

Our opinion
We have audited the financial statements of Kina Securities Limited (the Company), which comprise the statements of
financial position as at 31 December 2016, and the income statements, statements of changes in shareholders’ equity
and statements of cash flows for the year then ended, and the notes to the financial statements that include a summary
of significant accounting policies and other explanatory information for both the Company and the Group. The Group
comprises the Company and the entities it controlled at 31 December 2016 or from time to time during the financial
year.

In our opinion the accompanying financial statements:



comply with International Financial Reporting Standards and other generally accepted accounting practice in
Papua New Guinea; and

give a true and fair view of the financial position of the Company and the Group as at
31 December 2016, and their financial performance and cash flows for the year then ended.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section
of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We are independent of the Company and Group in accordance with the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements.

Our firm carries out services for the Group in the areas of tax advice and other assurance services. These services have
not impaired our independence as auditor of the Company and the Group.

Our audit approach
An audit is designed to provide reasonable assurance about whether the financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the
financial statements.

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the management structure of the Company and the Group, their
accounting processes and controls and the industries in which they operate.

PricewaterhouseCoopers
PwC Haus, Level 6, Harbour City, Konedobu. PO Box 484, PORT MORESBY, PAPUA NEW GUINEA
T: (675) 321 1500 / (675) 305 3100, F: (675) 321 1428, www.pwc.com.pg

50 Kina Annual Report 2016 | Independent auditors report

For personal use only

Kina Annual Report 2016 | Independent auditors report

Materiality Audit scope Key audit matters  For the purpose of our audit of the Group we used overall Group materiality of K2.9 million which represents approximately 5% of the Group’s profit before taxes.  We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial statements as a whole.  We chose the Group’s profit before taxes as, in our view, it is the metric against which the performance of the Group is most commonly measured and is a generally accepted benchmark.  We selected 5% based on our professional judgement noting that it is also within the range of commonly acceptable related thresholds.  We (PwC Papua New Guinea) conducted audit work over all the subsidiaries which comprise the Group consolidation  All subsidiaries of the Group are incorporated and operating in Papua New Guinea and audited by PwC Papua New Guinea  Our audit focused on where the directors made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events  Amongst other relevant topics, we communicated the following key audit matters to the Board Audit Committee:  Loan loss provisioning  Goodwill impairment assessment  Information Technology General Controls  These matters are further described in the Key audit matters section of our report. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements for the current period. The key audit matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be key matters to be communicated in our report. Further, commentary on the outcomes of the particular audit procedures is made in that context. For personal use onlyIndependent auditor’s report

Key audit matter
Loan loss provisioning amounting to K11.9
million - Refer note 18

How our audit addressed the key matter
The procedures we performed to support our audit
conclusions, included:

Our audit focused on this area as loans and advances
are significant to the financial statements. In addition,
the prevailing economic environment in Papua New
Guinea, the subjectivity and management judgements
involved in determining whether loans within the
portfolio are impaired and the amount of impairment
loss that should be recognised in the current period
made it important to focus on this area.

In making an assessment of loans that are impaired
and determining the impairment provision required,
the Group takes a portfolio approach. The application
of the Group’s policy is inherently judgmental.

All loans are collectively assessed on a portfolio basis in
addition to the individual considerations. For this
assessment, impairment models are used which take
into account the type of loan, history of repayment
including arrears and consideration of securities.

Goodwill impairment assessment – Refer note
32

The Group carries K92.7m of goodwill and the Group is
required to annually test the goodwill for impairment.
The Group’s assessment process has some complexity
and involves judgement and is based on a number of
assumptions, including future profitability, future cash
flow, and growth relating to the cash generating unit to
which the goodwill has been allocated. These
considerations are affected by the expected future
market or economic conditions in Papua New Guinea
and the discount rate applied.

The process is subjective and the balance is significant.
As such our audit has focused on this area.

 Assessing the design and testing the operating

effectiveness of the controls over loan origination,
approval and processing of transactions during the
year and performing a combination of
confirmation and loan files review procedures in
relation to the outstanding loan balances on which
the loan loss provision is determined.

 Examining the provisioning methodology for
consistency with the previous years and
compliance with the accounting standards,
evaluating the provisioning rates applied in the
model, testing the accuracy of data and re-
performance of model calculations.



Performing a comparison of the provision balances
determined based on the Group’s methodology
against the minimum provision required for
regulatory reporting purposes.

Performing procedures to check the disclosures
relating to the loan loss provision in accordance
with the applicable accounting standards.

The procedures we performed to support our audit
conclusions included:

 Assessing the Group’s assumptions used in the
goodwill impairment model including future
profitability, cash flows and growth by
understanding the basis and reasonability of those
assumptions and comparing to market information
where applicable.



Performing an analysis of the sensitivity of the
outcome of the impairment model for those
assumptions that have the most significant effect
on the determination of the recoverable amount of
goodwill and the related cash generating unit and
performing procedures in relation to the adequacy
of the Group’s disclosures about such assumptions.

 Comparing the discount rate used in the

impairment model with our expectations.



Performing procedures to re-perform model
calculations.

Together with our valuation specialist reviewing
the methodology adopted in the impairment
model.

52 Kina Annual Report 2016 | Independent auditors report

For personal use only

Kina Annual Report 2016 | Independent auditors report

Key audit matter How our audit addressed the key matter Information Technology General Controls We focused on this area because the Group’s banking operations are heavily dependent on IT systems for the processing of significant volumes of transactions and automated calculations for financial accounting and reporting purposes. These systems are also critical to capturing various data that are used to produce reports which management use to make decisions, monitor and control the business and for financial reporting purposes. This information is also used in our audit. The Group uses three different IT systems, including a main general ledger and two subsidiary systems that are critical and relevant to its financial reporting. The configurations including the interfaces between these systems require frequent monitoring and reconciliation to ensure the consistency of the information. Our audit approach relies on reports that are generated from these critical IT systems. Accordingly, the operating effectiveness of automated controls and IT dependent manual controls are important to enable us to place reliance on these controls. Our audit focused on access rights, because they aim to ensure that changes to applications are authorised and made appropriately. We also assess internal controls to ensure that staff have appropriate access to IT systems and the monitoring of that access. In addition, key controls in mitigating the potential for fraud and error as a result of a change to an application or underlying data are considered critical. The procedures we performed to support our audit conclusions, included:  Assessing and testing the design and operating effectiveness of the controls over the integrity of the IT systems that are relevant to financial reporting and upon which we relied for the purpose of our audit.  Examining the framework of governance over the Group’s IT organisation, the controls over program changes and development, access to programs and data and IT operations, including compensating controls where required. We also carried out procedures over certain aspects of security of the Group’s IT systems including access management and segregation of duties.  Performing external access security (penetration) testing to test the vulnerabilities in relation to the external facing interfaces of the applicable systems such as internet banking and SWIFT.  Performing testing of the reconciliations of the balances between the different IT systems. Information other than the financial statements and auditor’s report The directors are responsible for the annual report which includes other information. Our opinion on the financial statements does not cover the other information included in the annual report and we do not, and will not, express any form of assurance conclusion on the other information. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard, except that not all other information was available to us at the date of our signing. Responsibilities of the directors for the financial statements The directors are responsible, on behalf of the Company for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and other generally accepted accounting practice in Papua New Guinea and the Companies Act 1997 and for such internal control as the directors determine is necessary to enable the preparation of financial statements are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or any of its subsidiaries, or to cease operations, or have no realistic alternative but to do so. For personal use onlyIndependent auditor’s report

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the
ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:



Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.

 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates

and related disclosures made by the directors.

 Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.

 Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.

 Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial statements of
the Group. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the financial statements for the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulations preclude public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.

54 Kina Annual Report 2016 | Independent auditors report

For personal use only

Kina Annual Report 2016 | Independent auditors report

Report on other legal and regulatory requirements The Companies Act 1997 requires that in carrying out our audit we consider and report on the following matters. We confirm in relation to our audit of the financial statements for the year ended 31 December 2016:  We have obtained all the information and explanations that we have required;  In our opinion, proper accounting records have been kept by the Company as far as appears from an examination of those records. Who we report to This report is made solely to the Company’s shareholders, as a body, in accordance with the Companies Act 1997. Our audit work has been undertaken so that we might state to the Company’s shareholders those matters which we are required to state to them in an auditor’s report and for no other purpose. We do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our audit work, for this report or for the opinions we have formed. PricewaterhouseCoopers GE Burns Partner Registered under the Accountants Act 1996 Port Moresby 31 March 2017 For personal use onlyIncome statements

For the year ended 31 December 2016

Interest income

Interest expense

Net interest income/(expense)

Fee and commission income

Fee and commission expense

Net fee and commission income

Profit on sale of shares in subsidiary

Foreign exchange income

Dividend income

Net gain /(losses) from financial assets
through profit and loss

Other operating income

Operating income before impairment
losses and other operating expenses

Impairment losses

Other operating expenses

Profit before tax

Income tax expense

Notes

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

77,267,740

52,298,062

88,336

345,056

(12,139,971)

(9,438,194)

(2,269,965)

(1,539,122)

65,127,769

42,859,868

(2,181,629)

(1,194,066)

28,833,020

17,552,531

3,271,874

2,125,927

(68,645)

(105,559)

(59,288)

(105,559)

28,764,375

17,446,972

3,212,586

2,020,368

–

20,578,719

6,903,329

111,225

586,996

188,928

(499,355)

–

16,691

(2,823)

125,500,000

–

7,474

703

1,805,305

2,766,471

24,551,773

17,068,405

116,974,389

69,666,213

25,596,598

143,402,884

(2,787,028)

(2,961,985)

(245,818)

(7,513,700)

(55,616,930)

(54,820,195)

(20,711,349)

(20,865,815)

58,570,431

11,884,033

4,639,431

115,023,369

(17,594,616)

(6,928,302)

(1,386,236)

(291,434)

Net profit for the year attributable to the
equity holders of the Company

40,975,815

4,955,731

3,253,195

114,731,935

Other comprehensive income

–

Total comprehensive income for the year
attributable to the equity holders of the Company

40,975,815

4,955,731

3,253,195

114,731,935

Earnings per share – basic & diluted (toea)

28 b

2016

25 .00

2015

4.14

The notes on pages 60 to 97 are an integral part of these consolidated financial statements.

56 Kina Annual Report 2016 | Income statements

For personal use onlyStatements of Changes in Shareholders’ Equity
For the year ended 31 December 2016

CONSOLIDATED

ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE GROUP
Share
based
payment
Reserve
K

Retained
Earnings
K

Capital
Reserve
K

Share
Capital
K

Total
K

Balance as at 31 December 2014

2,000,000

49,050

Profit for the year

Contribution by and distribution to owners

Other comprehensive income

–

Additional shares issued through IPO offer –
net of transaction costs

139,797,464

–

Employee share scheme

460,379

97,203,205

99,252,255

4,955,731

–

139,797,464

460,379

Balance as at 31 December 2015

141,797,464

49,050

460,379

102,158,936

244,465,829

Profit for the year

Contribution by and distribution to owners

Other comprehensive income

Employee share scheme

Dividend paid

–

208,000

–

895,154

40,975,815

–

1,103,154

–

(28,674,961)

Balance as at 31 December 2016

142,005,464

49,050

1,355,533

114,459,790

257,869,837

PARENT

ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE PARENT
Share
based
payment
Reserve
K

Retained
Earnings
K

Capital
Reserve
K

Share
Capital
K

Total

Balance as at 31 December 2014

2,000,000

49,050

Profit for the year

Contribution by and distribution to owners

Other comprehensive income

–

Additional shares issued through IPO offer,
net of transaction costs

139,797,464

Employee share scheme

Dividend paid

–

460,379

17,294,466

19,343,516

114,731,935

–

139,797,464

460,379

–

Balance as at 31 December 2015

141,797,464

49,050

460,379

132,026,401

274,333,294

Profit for the year

Contribution by and distribution to owners

Other comprehensive income

Employee share scheme

Dividend paid

–

208,000

–

895,154

3,253,195

–

1,103,154

(28,674,961)

Balance as at 31 December 2016

142,005,464

49,050

1,355,533

106,604,635

250,014,682

Note: Subsequent to the financial reporting date, the directors declared a dividend of 3.95 cents / 10 toea per share total of (K16.8m).

The notes on pages 60 to 97 are an integral part of these consolidated financial statements.

Kina Annual Report 2016 | Statements of Changes in Shareholders’ Equity

For personal use onlyStatements of Financial Position
As at 31 December 2016

Assets

Cash and due from banks

Central bank bills

Regulatory deposits

Financial assets at fair value through profit or loss

Loans and advances to customers

Investments in government inscribed stocks

Due from subsidiaries

Current income tax assets

Deferred tax assets

Investments in subsidiaries

Property, plant and equipment

Goodwill

Intangible assets

Other assets

Liabilities

Due to other banks

Due to customers

Current income tax liabilities

Deferred income tax liabilities

Due to subsidiaries

Employee provisions

Other liabilities

CONSOLIDATED

PARENT

Notes

2016
K

2015
Restated*
K

2016
K

2015
K

148,019,915

131,251,147

15,540,654

35,002,107

208,095,202

228,014,121

96,013,000

45,490,500

–

4,641,657

4,054,661

142,474

145,297

605,112,099

374,059,089

64,328,380

64,134,508

–

351,122,552

352,791,615

2,452,386

6,290,872

–

827,673

5,501,433

–

24,019,327

20,895,228

92,785,855

5,958,869

6,864,249

8,029,866

12,301,552

–

248,331

4,737,129

–

444,778

1,109,021

–

500,008

5,561,169

–

532,729

3,441,344

1,265,747,428

986,180,016

373,344,939

397,974,269

142,943

1,729,388

958,608,911

685,529,464

1,457,086

2,394,933

310,165

94,644

–

168,784

228,718

560,306

85,138

–

118,436,969

112,541,378

3,276,594

5,408,405

1,544,848

44,081,892

46,557,353

2,950,938

2,200,496

8,253,657

1,007,877,591

741,714,187

123,330,257

123,640,975

Net assets

257,869,837

244,465,829

250,014,682

274,333,294

Shareholders’ equity

Issued and fully paid ordinary shares

28 a

142,005,464

141,797,464

142,005,464

141,797,464

Capital reserve

Share-based payment reserve

Retained earnings

49,050

28 c

1,355,533

49,050

460,379

49,050

1,355,533

49,050

460,379

114,459,790

102,158,936

106,604,635

132,026,401

Total equity

257,869,837

244,465,829

250,014,682

274,333,294

*see notes 23 and 32 for details regarding the restatement of other assets and goodwill as a result of the finalisation of acquisition accounting.
This restatement had no impact on the financial position as at 1 January 2015.

The notes on pages 60 to 97 are an integral part of these consolidated financial statements.

These financial statements have been approved for issue by the Board of Directors and signed on its behalf by:
31 March 2017.

Sir Rabbie Namaliu
Director

Mr. Syd Yates
Director

58 Kina Annual Report 2016 | Statements of Financial Position

For personal use only

Statements of Cash Flows
For the year ended 31 December 2016

Cash flows from operating activities

Interest received

Interest paid

Foreign exchange gain

Dividend received

Fee and commission income received

Fee and commission expense paid

Net trading and other operating
income received

Recoveries on loans previously written-off

Support fees charged from subsidiaries

Notes

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

77,316,578

50,662,367

96,988

342,321

(8,864,429)

(11,039,651)

(2,269,965)

(1,539,122)

21,071,837

111,225

9,614,748

188,928

351,632

16,691

25,570,006

21,210,500

3,271,874

(68,645)

(105,559)

(59,288)

2,017,307

5,979,556

6,428,898

1,036,318

2,240,076

899,912

7,474

2,149,605

(105,559)

4,059,417

–

18,656,812

12,088,132

Cash payments to employees and suppliers

(56,792,712)

(53,786,773)

(36,388,369)

(18,574,809)

(20,727,532)

(8,603,253)

(1,634,179)

(547,437)

40,669,953

16,360,939

(11,528,906)

(1,220,066)

- (increase)/decrease in loans and advances

(229,593,540)

(34,561,480)

16,778

(50,522,500)

(1,030,700)

–

Income tax paid

Cash flows from operating profits before
changes in operating assets and liabilities

Changes in operating assets and liabilities:

- increase/in regulatory deposits

to customers

- net decrease/(increase) in other assets

- net decrease in due to customers

- decrease due to other banks

- net increase in other liabilities

Net cash inflow/(outflow) generated
from/(used in) operating activities

Cash flows from investing activities

1,215,717

3,847,495

2,763,686

275,796,095

(67,714,017)

(1,586,445)

(3,364,112)

(519,208)

6,821,491

18,568,195

29c

32,615,168

(76,795,480)

9,819,753

12,022,773

Purchase of property, equipment and software

(6,774,867)

(5,159,704)

(693,845)

(1,007,291)

Proceeds from sale of property and equipment

92,600

49,001

87,600

Receipt of funds from related parties

Loan to subsidiary

Net cash acquired in business combination,
net of consideration paid

–

82,666,404

Net movement in investment securities

29b

(54,274,862)

38,637,689

Acquisition of shares

Proceeds from the sale of redemption securities

Net cash inflow/(outflow) generated
from/(used in) investing activities

Cash flows from financing activities

Proceeds from the issuance of share capital,
net of transaction costs

Dividend payment

Net cash inflow/(outflow) generated
from/(used) in financing activities

–

(114,201)

263,112

(60,957,129)

116,342,301

(606,245)

(119,167,479)

28a

–

139,797,464

–

139,797,464

(28,674,961)

–

(28,674,961)

–

(28,674,961)

139,797,464

(28,674,961)

139,797,464

Net increase/(decrease) in cash and cash equivalents

(57,016,922)

179,344,285

(19,461,453)

32,652,758

Effect of exchange rate movements on
cash and cash equivalents

Cash and cash equivalents at
beginning of year

(214,310)

(1,860,529)

235,251,147

57,767,391

35,002,107

2,349,349

Cash and cash equivalents at end of year

29a

178,019,915

235,251,147

15,540,654

35,002,107

The notes on pages 60 to 97 are an integral part of these consolidated financial statements.

Kina Annual Report 2016 | Statements of Cash Flows

–

27,427

–

6,698,400

6,517,012

49,000

95,527,161

(213,666,768)

–

(106,731)

37,150

–

For personal use only1 . Summary of significant accounting policies
The company and its subsidiaries are incorporated in
Papua New Guinea. The groups business activities include
provision of personal and commercial loans, money
market operations, provision of share brokerage, fund
administration, investment management services, asset
financing, and corporate advice.

Standards, amendments, and interpretations issued
but not effective for the year 31 December 2016 or
adopted early

In addition, there are new standards, amendments and
interpretations issued but not effective for the financial
year ended 31 December 2016. The group has not early
adopted these standards.

This note provides a list of the significant accounting
policies adopted in the preparation of these consolidated
financial statements. These policies have been consistently
applied to all the years presented, unless otherwise stated.
The financial statements are for the Group consisting of
Kina Securities Limited and its subsidiaries.

a) Basis of preparation

(i) Compliance with IFRS
The consolidated financial statements of the Group have
been prepared in accordance with International Financial
Reporting Standards (IFRS) and the requirements of the
Papua New Guinea Companies Act 1997.

The consolidated financial statements as at and for the year
ended 31 December 2016 were authorized for issue by the
Board of Directors on 31 March 2017.

(ii) Historical cost convention
The consolidated financial statements have been prepared
on a historical cost basis, except for the revaluation of
certain financial instruments. Cost is based on the fair
values of the consideration given in exchange for assets.

Accounting policies are selected and applied in a manner
which ensures that the resulting financial information
satisfies the concepts of relevance and reliability, thereby
ensuring that the substance of the underlying transactions
or other events is reported.

The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are
significant to the consolidated financial statements are
disclosed in Note 2.

(iii) New and amended standards

Standards, amendment and interpretations effective
in the year ended 31 December 2016

A number of new and amended standards, and
interpretations became mandatory for the first time for
the financial year beginning 1 January 2016. These
standards generally did not have any significant impact
on the financial statements of the group for the year ended
31 December 2016. Amendments to IAS 1 ‘Presentation of
Financial Statements’ form a part of the IASB’s Disclosure
Initiative and clarify guidance in IAS 1 on a number of
issues including materiality. Accordingly, disclosures
specified in IFRS are included in financial statements
if they are considered material to the entity.

IFRS 9: “Financial Instruments”(effective 1 January 2018)
is expected to impact the financial statements of the group
when adopted. IFRS 9 deals with the classification and
measurement of financial assets and liabilities, hedge
accounting and recognition of impairment losses.
The financial assets and liabilities of the Group are
expected to be impacted by the classification and
measurement and impairment requirements of this
standard. The new standard simplifies the model for
classifying and recognising financial instruments. IFRS 9’s
new impairment model is a move away from IAS 39’s
incurred credit loss approach to an expected credit loss
model. Earlier recognition of impairment losses is likely to
result and for entities with significant lending activities, an
overhaul of related systems and processes will be needed.
IFRS 9 is expected to have significant impact on the
Group’s current impairment practice and some impact on
their classification and measurement.

The group is in the process of performing detailed analysis
of the impact of this standard on the financial statements
and preparing for its implementation.

IFRS 15 ‘Revenue from contracts with customers’
(effective 1 January 2018) is a converged standard from
the IASB and FASB on revenue recognition and replaces
IAS 11 and IAS 18. The new standard is based on the
principle that revenue is recognised when control of a
good or service transfers to a customer – so the notion of
control replaces the existing notion of risks and rewards.
The entity will have to adopt a new 5-step process for the
recognition of revenue:
•
•
identify the separate performance obligations
• determine the transaction price of the contract
• allocate the transaction price to each of the separate

identify contracts with customers

performance obligations, and

•

recognise the revenue as each performance
obligation is satisfied.

The group is expected to be impacted by this standard
and is currently in the process of assessing the impact of
this standard on its financial statements.

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only1 .

Summary of significant accounting
policies (continued)

a) Basis of preparation (continued)

(iii) New and amended standards (continued)
IFRS 16, ‘Leases’ (effective 1 January 2019) replaces the
guidance in IAS 17 and will have a significant impact on
accounting by lessees. The previous distinction under
IAS 17 between finance leases and operating leases for
lessees has been removed. IFRS 16 now requires a lessee
to recognise a lease liability representing future lease
payments and a ‘right-of-use asset’ for virtually all lease
contracts. There is an optional exemption for certain
short-term leases and leases of low-value assets. Under
IFRS 16, a contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
The entity expects that certain leases of property and
equipment that are currently accounted for as operating
leases will, from January 2019, be required to be
recognised as right-of-use assets and depreciated, with a
corresponding lease liability. This will increase reported
debt levels in the statement of financial position and will
increase the reporting charges for depreciation and
interest expense. The details of the impact on the entities
financial statements are currently being assessed by
management.

In addition to there are other standards and amendments
that have been issued and are not expected to have any
impact on the financial statements of the Group.

b) Principles of consolidation

Subsidiaries
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and
has the ability to affect those returns through its power
to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred
to the Group. They are deconsolidated from the date that
control ceases.

The acquisition method of accounting is used to account
for business combinations by the Group (note 32).

Intercompany transactions, balances and unrealized gains
on transactions between Group companies are eliminated.
Unrealized losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred
asset. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with
the policies adopted by the Group.

Segment reporting

Operating segments are presented on a basis that is
consistent with information provided internally to the
Group’s key decision makers. The chief operating
decision-maker, who is responsible for allocating resources
and assessing performance of the operating segments,
has been identified as the Chief Executive Officer.
The Group has three reportable segments, which are
the Company’s two business divisions – Kina Bank and
Kina Wealth Management – and the Corporate segment
(or unallocated costs).

Foreign currency translation

Functional and presentation currency

(i)
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity
operates (the functional currency). The consolidated
financial statements are presented in Kina, which is the
Company’s functional and presentation currency.

(ii) Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign
currencies are recognized in the income statement.

e) Revenue recognition

Interest income

(i)
Interest income for all interest earning financial assets
including those at fair value is recognized in the income
statement using the effective interest rate method.
The effective interest method is a method of calculating
the amortized cost of a financial asset or a financial liability
and of allocating the interest income or interest expense
over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments
or receipts through the expected life of the financial
instrument to the net carrying amount of the financial asset
or financial liability. When calculating the effective interest
rate, cash flows are estimated based upon all contractual
terms of the financial instrument (for example, prepayment
options) but do not consider future credit losses.
The calculation includes all fees and other amounts
paid or received between parties to the contract that are
an integral part of the effective interest rate, transaction
costs and all other premiums or discounts.

Interest relating to impaired loans is recognized using
the loan’s original effective interest rate based on the net
carrying value of the impaired loan after giving effect to
impairment charges. This rate is also used to discount the
future cash flows for the purpose of measuring impairment
charges. For loans that have been impaired this method
results in cash receipts being apportioned between
interest and principal.

Kina Annual Report 2016 | Notes to the financial statements 61

For personal use only1 .

Summary of significant accounting
policies (continued)

e) Revenue recognition (continued)

(ii) Fee and commission income
Fees and commissions are generally recognized on
an accrual basis when the service has been provided.
Commissions and fees arising from negotiating, or
participating in the negotiation of a transaction for a third
party, such as the arrangement of the acquisition of shares
or other securities or the purchase or sale of businesses,
are recognized on completion of the underlying
transaction. Portfolio and other management advisory
and service fees are recognized based on the applicable
service contracts. Asset management fees related to
investment funds are recognized notably over the period
the service is provided.

(iii) Foreign exchange income
Realized gains or losses, and unrealized gains or losses
arising from changes in the fair value of the trading assets
and liabilities are recognized as trading income in the
income statement in the period in which they arise.

(iv) Dividend income
Dividends on quoted shares are recognized on the
ex-dividend date. Dividends on unquoted shares are
recognized when the Company’s right to receive payment
is established.

Expense recognition

Interest expense

(i)
Interest expense, including premiums or discounts and
associated expenses incurred on the issue of financial
liabilities, is recognized in the income statement using the
effective interest method.

(ii)

Impairment on loans and receivables
carried at cost

The charge against profits for bad and doubtful debts
reflects new specific provisions, reversals of specific
provisions no longer required and movements in the
general provision.

(iii) Leasing
Operating lease payments are recognized in the income
statement as an expense on a straight-line basis over the
lease term unless another systematic basis is more
representative of the time pattern of the benefit received.
Incentives received on entering into operating leases are
recorded as liabilities and amortized as a reduction
of rental expense on a straight – line basis over the
lease term.

Income tax

The income tax expense or credit for the period is the tax
payable on the current period’s taxable income based on
the applicable income tax rate adjusted by changes in
deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.

The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of
the reporting period in the country where the Company
and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts
expected to be paid to the tax authority.

Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the consolidated financial statements. However, deferred
tax liabilities are not recognized if they arise from the initial
recognition of goodwill. Deferred income tax is also not
accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business
combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rate (and law) that have
been enacted or substantially enacted by the end of the
reporting period and are expected to apply when the
related deferred income tax asset is realized or the
deferred income tax liability is settled.

The deferred tax liability in relation to investment property
that is measured at fair value is determined assuming the
property will be recovered entirely through sale.

Deferred tax assets are recognized only if it is probable
that future taxable amounts will be available to utilize those
temporary differences and losses.

Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle
on a net basis, or to realize the asset and settle the
liability simultaneously.

Current and deferred tax is recognized in profit or loss,
except to the extent that it relates to items recognized in
other comprehensive income or directly in equity. In this
case, the tax is also recognized in other comprehensive
income or directly in equity, respectively.

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only1 .

Summary of significant accounting
policies (continued)

h) Business combination

The acquisition method of accounting is used to account
for all business combinations, regardless of whether
equity instruments or other assets are acquired.
The consideration transferred for the acquisition
of a subsidiary comprises the
•
•

liabilities incurred to the former owners of the
acquired business

fair values of the assets transferred

• equity interests issued by the Group
•

fair value of any asset or liability resulting from a
contingent consideration arrangement, and

•

fair value of any pre-existing equity interest in
the subsidiary.

Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are,
with limited exceptions, measured initially at their fair
values at the acquisition date. The group recognizes
any non-controlling interest in the acquired entity on an
acquisition-by-acquisition basis either at fair value or at
the non-controlling interest’s proportionate share of the
acquired entity’s net identifiable assets. Acquisition-related
costs are expensed as incurred.

The excess of the following is considered as goodwill
• consideration transferred,
• amount of any non-controlling interest in the

acquired entity, and

• acquisition date fair value of any previous equity

interest in the acquired entity over the fair value of
the net identifiable assets acquired if those amounts
are less than the fair value of the net identifiable
assets of the subsidiary acquired, the difference
is recognized directly in profit or loss as a
bargain purchase.

Where settlement of any part of cash consideration
is deferred, the amounts payable in the future are
discounted to their present value as at the date of
exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent
financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a
financial liability. Amounts classified as a financial liability
are subsequently re-measured to fair value with changes in
fair value recognized in profit or loss.

If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer’s previously
held equity interest in the acquire is re-measured to fair
value at the acquisition date. Any gains or losses arising
from such re-measurement are recognized in profit or loss.

Impairment of assets

Goodwill having an indefinite useful life is not subject to
amortization and is tested annually for impairment or
more frequently if events or changes in circumstances
indicate that they might be impaired. Other assets are
tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognized for the
amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs of disposal and value in
use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of
the cash inflows from other assets or groups of assets
cash-generating units (CGU). Non-financial assets other
than goodwill that suffered impairment are reviewed for
possible reversal of the impairment at the end of each
reporting period.

Cash and cash equivalents

For the purpose of presentation in the statement of
cash flows, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with original maturities
of three months or less from date of acquisition that are
readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value,
and bank overdrafts.

Investments and other financial assets

(i) Classification
The Group classifies its financial assets in the
following categories:
• financial assets at fair value through profit or loss,
•
• held-to-maturity investments, and
• available-for-sale financial assets.

loans and receivables,

The classification depends on the purpose for
which the investments were acquired. Management
determines the classification of its investments at initial
recognition and, in the case of assets classified as held-to-
maturity, re-evaluates this designation at the end of each
reporting period.

Kina Annual Report 2016 | Notes to the financial statements 63

For personal use only1 .

Summary of significant accounting
policies (continued)

Investments and other financial assets (continued)

(ii) Reclassification
The Group may choose to reclassify a non-derivative
trading financial asset out of the held for trading category
if the financial asset is no longer held for the purpose of
selling it in the near term. Financial assets other than loans
and receivables are permitted to be reclassified out of the
held for trading category only in rare circumstances arising
from a single event that is unusual and highly unlikely to
recur in the near term. In addition, the Group may choose
to reclassify financial assets that would meet the definition
of loans and receivables out of the held for trading or
available-for-sale categories if the group has the intention
and ability to hold these financial assets for the foreseeable
future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the
reclassification date. Fair value becomes the new cost or
amortized cost as applicable, and no reversals of fair value
gains or losses recorded before reclassification date are
subsequently made. Effective interest rates for financial
assets reclassified to loans and receivables and held-to-
maturity categories are determined at the reclassification
date. Further increases in estimates of cash flows adjust
effective interest rates prospectively.

(iii) Recognition and derecognition
Regular way purchases and sales of financial assets are
recognized on trade-date, the date on which the Group
commits to purchase or sell the asset. Financial assets are
derecognized when the rights to receive cash flows from
the financial assets have expired or have been transferred
and the Group has transferred substantially all the risks and
rewards of ownership.

When securities classified as available-for-sale are sold, the
accumulated fair value adjustments recognized in other
comprehensive income are reclassified to profit or loss as
gains and losses from investment securities.

(iv) Measurement
At initial recognition, the Group measures a financial asset
at its fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.

Loans and receivables and held-to-maturity investments
are subsequently carried at amortized cost using the
effective interest method.

Available-for-sale financial assets and financial assets at fair
value through profit or loss are subsequently carried at fair
value. Gains or losses arising from changes in the fair value
are recognized as follows:
•

for financial assets at fair value through profit or
loss – in profit or loss within other income or
other expenses

•

for available-for-sale financial assets that are
monetary securities denominated in a foreign
currency – translation differences related to
changes in the amortized cost of the security are
recognized in profit or loss and other changes
in the carrying amount are recognized in other
comprehensive income

•

for other monetary and non-monetary securities
classified as available-for-sale – in other
comprehensive income.

Dividends on financial assets at fair value through profit
or loss and available-for-sale equity instruments are
recognized in profit or loss as part of revenue from
continuing operations when the group’s right to receive
payments is established.

Interest income from financial assets at fair value through
profit or loss is included in the net gains/(losses). Interest
on available-for-sale securities, held-to-maturity
investments and loans and receivables calculated using the
effective interest method is recognized in the statement of
profit or loss as part of revenue from continuing operations.
Details on how the fair value of financial instruments is
determined are disclosed in note 36.

Impairment

(v)
The Group assesses at the end of each reporting period
whether there is objective evidence that a financial asset
or group of financial assets is impaired. A financial asset
or a group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred
after the initial recognition of the asset (a ‘loss event’) and
that loss event (or events) has an impact on the estimated
future cash flows of the financial asset or group of financial
assets that can be reliably estimated. In the case of equity
investments classified as available-for-sale, a significant or
prolonged decline in the fair value of the security below its
cost is considered an indicator that the assets are impaired.

Assets carried at amortized cost

For loans and receivables, the amount of the loss is
measured as the difference between the asset’s carrying
amount and the present value of estimated future cash
flows (excluding future credit losses that have not been
incurred) discounted at the financial asset’s original
effective interest rate. The carrying amount of the asset is
reduced and the amount of the loss is recognized in profit
or loss.

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use onlyThe units or groups of units are identified at the lowest
level at which goodwill is monitored for internal
management purposes, being the operating segments.

(ii) Customer deposits relationship
A customer deposit relationship asset was recognized with
the acquisition of Maybank (PNG) Limited in 2015 (note 32),
representing the value, or avoided cost, of having a deposit
base from consumer and business transaction accounts,
savings accounts, term deposits and other money market
accounts that provide a cheaper source of funding than
alternative sources of funding. Customer deposit
relationship is amortized using the straight-line method
over a period of five years and is stated at cost less
accumulated amortization and impairment. Customer
deposit relationship is also assessed for any indication of
impairment at each reporting date and whenever there is
an indicator that these maybe impaired.

(iii) Software
Costs associated with maintaining computer software
programs are recognized as an expense as incurred. Costs
that are directly associated with identifiable and unique
software products controlled by the Group that will
probably generate economic benefits exceeding costs
beyond one year are recognized as intangible assets.
Direct costs include staff costs of the software
development team and an appropriate portion of relevant
overheads. Expenditure which enhances or extends the
performance of computer software programs beyond
their original specifications is recognized as a capital
improvement and added to the original cost of the
software. Computer software development costs
recognized as assets are amortized using the straight-line
method over their useful lives, not exceeding a period of
five years.

Provisions

Provisions are recognized when the Group has a present
legal or constructive obligation as a result of past events, it
is probable that outflow of resources embodying economic
benefits will be required to settle the obligation, and a
reliable estimate of the amount of the obligations can
be made.

1 .

(v)

Summary of significant accounting
policies (continued)

Investments and other financial assets (continued)

Impairment (continued)

If a loan or held-to-maturity investment has a variable
interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate
determined under the contract. As a practical expedient,
the Group may measure impairment on the basis of an
instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment
loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognized
(such as an improvement in the debtor’s credit rating), the
reversal of the previously recognized impairment loss is
recognized in profit or loss. Impairment testing of loans
and advances to customers is described in note 3c.

Property, plant and equipment

Property, plant and equipment is stated at historical cost
less accumulated depreciation. Depreciation is calculated
on the basis of straight line to write-off the cost of such
assets to their residual values over their estimated lives
as follows:

Furniture and fittings

Building improvements

Motor vehicle

Office equipment

11.25% to 15%

10%

30%

15% to 30%

The assets’ residual values and useful lives are reviewed,
and adjusted, if appropriate at each balance date. Gains
and losses on disposal (being the difference between
the carrying value at the time of sale or disposal and the
proceeds received) are taken into account in determining
operating profit for the year. Repairs and maintenance
costs are charged to income statement, when the
expenditure is incurred.

Intangible assets

(i) Goodwill
Goodwill is measured as described in note 1(h). Goodwill
is not amortized but it is tested for impairment annually
or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost
less accumulated impairment losses. Gains and losses on
the disposal of an entity include the carrying amount of
goodwill relating to the entity sold. Goodwill is allocated
to cash-generating units for the purpose of impairment
testing. The allocation is made to those cash-generating
units or groups of cash-generating units that are expected
to benefit from the business combination in which
the goodwill arose.

Kina Annual Report 2016 | Notes to the financial statements 65

For personal use only1 .

Summary of significant accounting
policies (continued)

o) Employee benefits

Short-term obligations

(i)
Provision is made for benefits accruing to employees in
respect of annual leave and other short term obligations
when it is probable that settlement will be required and
they are capable of being measured reliably.

Provisions made in respect of employee benefits expected
to be settled within twelve months, are measured at their
nominal values using the remuneration rate expected to
apply at the time of settlement. Liabilities recognized in
respect of employee benefits which are not expected to
be settled within twelve months are measured as the
present value of the estimated future cash outflows to be
made by the Group in respect of services provided by
employees up to reporting date.

The contributions in relation to employees of the Group
who contribute to defined contribution pension plans are
charged to the income statement in the year to which
they relate.

Share-based payments

(ii)
Senior executive employees are entitled to participate in a
share ownership scheme. The fair value of share rights
provided to senior executive employees as share-based
payments is recognized as an expense with a corresponding
increase in equity. The fair value is measured at grant date
and is recognized over the period the services are received
being the expected vesting period during which the senior
executive employees would become entitled to exercise
their share rights.

(iii) Cash bonus
The Group recognizes a liability and an expense for
bonuses based on a formula that takes into consideration
the profit attributable to the Company’s shareholders after
certain adjustments. The Group recognizes a provision
where contractually obliged or where there is a past
practice that has created a constructive obligation.

Share capital and other equity accounts

Share capital

(i)
Ordinary shares are classified as equity. Mandatorily
redeemable preference shares are classified as liabilities.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net
of tax, from the proceeds.

(ii) Dividends
Dividends on ordinary shares are recognized in
equity in the period in which they are declared by the
Company’s directors.

(iii) Reserves
Capital reserve comprises accumulated gains on asset
revaluation. Share-based payment reserve comprises the
fair value of performance rights during the vesting period.

(iv) Earnings per share
Basic earnings per share

Basic earnings per share is calculated by dividing the profit
attributable to owners of the company, excluding any costs
of servicing equity other than ordinary shares by the
weighted average number of ordinary shares outstanding
during the financial year (note 28b).

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account the after income tax effect of interest and other
financing costs associated with dilutive potential ordinary
shares, and the weighted average number of additional
ordinary shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.

Fiduciary activities

The Group provides custody, trustee, corporate
administration, investment management and advisory
services to third parties, which involve the Group making
allocation and purchase and sale decisions in relation to a
wide range of financial instruments. Those assets that are
held in a fiduciary capacity are not included in these
consolidated financial statements. Details of such
investments held under trust may be found in note 31.

r) Changes in accounting policies and comparatives

Comparative information has been rearranged to conform
to changes in presentation in the current year wherever
necessary. The comparative information were restated in
relation to the final settlement adjustment to the purchase
price and the goodwill recorded in the 2015 financial
statements. Refer note 32. There were no changes in
the accounting policies in 2016.

2 .

Critical accounting estimates
and judgments

The preparation of financial statements requires the
use of accounting estimates which, by definition, will
seldom equal the actual results. Management also
needs to exercise judgment in applying the Group’s
accounting policies.

This note provides an overview of the areas that
involved a higher degree of judgment or complexity,
and of items which are more likely to be materially
adjusted due to estimates and assumptions turning out
to be wrong. Detailed information about each of these
estimates and judgments is included in the notes to the
financial statements together with information about the
basis of calculation for each affected line item in the
financial statements.

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only2 .

Critical accounting estimates
and judgments (continued)

The areas involving significant estimates or judgments are:
• Recognition of deferred tax asset for carried forward

tax losses – note 13 (a)

• Estimated allowance for loans and advances to

customers – note 18

• Estimated goodwill impairment – note 1(i) and

note 32

• Estimated useful life of intangible asset – note 22
• Estimation of fair values of assets acquired and
liabilities assumed in a business combination –
note 32

3 . Financial risk management
By its nature the Group’s activities are principally related to
the use of financial instruments. The Group accepts
deposits from customers at both fixed and floating rates
and for various periods and seeks to earn above-average
interest margins by investing these funds in high quality
assets. The Group seeks to increase these margins by
consolidating short-term funds and lending for longer
periods at higher rates whilst maintaining sufficient liquidity
to meet all claims that might fall due. The Group raises its
interest margins by obtaining above-average margins, net
of provisions, through lending to commercial and retail
borrowers with a range of credit standing.

Exposure

The Group also enters into transactions denominated in
foreign currencies. This activity generally requires the
Group to take foreign currency positions in order to
exploit short-term movements in foreign currency market.
The Board places trading limits on the level of exposure
that can be taken in relation to both overnight and intra-
day market positions.

Risk in the Group is managed by a system of delegated
limits. These limits set the maximum level of risks that
can be assumed by each operational unit and the Group
as a whole. The limits are delegated from the Board of
Directors to executive management and then to the
respective operational managers.

a) Market risk

Foreign exchange risk

(i)
The Group undertakes transactions denominated in
foreign currencies from time to time and resulting from
these activities, exposures in foreign currencies arise.
Though there are no specific hedging activities to mitigate
any currency risk, this exposure is monitored by
management on an ongoing basis.

The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in PGK, was as follows:

USD

AUD

SGD

GBP

EUR

NZD

HKD

PHP

MYR

31 December 2016

Cash balance

Due from other
banks

31 December 2015

Cash balance

Due from other
banks

–

28,646

12,350

28,649

12,350

1,241

13,787

255

2,470

15,028

2,725

609

616

608

671

There was no material liability denominated in foreign currency.

IN K’000

–

1,233

–

367

–

Kina Annual Report 2016 | Notes to the financial statements 67

For personal use only3 . Financial risk management (continued)

a) Market risk (continued)

(i)

Foreign Exchange Risk (continued)

Sensitivity

As shown in the table above, the Group is primarily exposed to changes in US/PGK exchange rates. The sensitivity of profit
or loss to changes in the exchange rates arises mainly from US dollar denominated financial instruments.

USD/PGK – exchange rate – increase 10% (2015:10%)

USD/PGK – exchange rate – decrease 10% (2015: 10%)

IMPACT ON
INCOME STATEMENT
IN K ‘000

2016

(1,508)

1,508

2015

(1,501)

1,501

Interest rate risk

(ii)
Interest rate risk in the statements of financial position arises from the potential for a change in interest rate to have an
adverse effect on the revenue earnings in the current reporting period and future years. As interest rates and yield curves
change over time the Group may be exposed to a loss in earnings due to the effects of interest rates on the structure of
the statements of financial position. Sensitivity to interest rates arises from mismatches in re-pricing dates, cash flows and
other characteristics of the assets and their corresponding liability funding. These mismatches are actively managed by the
Assets and Liabilities Committee (ALCO), which meets regularly to review the effects of fluctuations in the prevailing levels
of market interest rates of the financial position and cash flows of the Group. The objective of interest rate risk control is to
minimize these fluctuations in value and net interest income over time, providing secure and stable sustainable net interest
earnings in the long term. Interest rate on intercompany transactions was 3.16% and 4.39% for the years ended 31
December 2016 and 2015, respectively.

Sensitivity

Given the profile of assets and liabilities at 31 December 2016 and prevailing interest rates, a 100 basis points increase/
decrease in market rates in relation to lending will result in a K1,065,000 (2015: K2,683,000) increase/decrease in net interest
income at a Group level.

The table below summarizes the consolidated effective annual interest rates for monetary financial instruments:

Assets

Cash and due from banks

Central bank bills

Loans and advances to customers

Investments in government inscribed stocks

Liability

Due to customers

2016
% p.a.

1 .0

2 .80

21 .63

9 .87

3 .16

2015
% p .a .

1.0

2.87

20.71

9.50

4.39

(iii) Price risk
The Group is exposed to equity securities price risk because of investments held and classified as financial assets at
fair value through profit or loss. To manage its price risks arising from financials assets at fair value through profit or loss,
the Group diversifies its portfolio. Diversification of portfolio is done in accordance with the limits set by the Group.
The Group’s financial assets at fair value through profit or loss are publicly traded on the Port Moresby Stock Exchange
(POMSoX) and the Australian Stock Exchange (ASX).

Sensitivity

The sensitivity analysis below has been determined based on the exposure to equity price risks at the end of the reporting
period. If equity prices had been 5% higher/lower, net profit for the year ended 31 December 2016 and net assets as of
balance date would have been affected by K 232,000 (2015: K203,000). The Group’s sensitivity to equity prices has not
changed significantly from the prior year.

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only3 . Financial risk management (continued)

b) Credit risk

Risk management

(i)
The Group takes on exposure to credit risk, which is the risk that a counter party will be unable to pay amounts in full when
due. Impairment provisions are provided for losses that have been incurred at the balance date. Management therefore
carefully manages its exposures to credit risks.

The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to
one borrower, or groups of borrowers. Such risks are monitored on a revolving basis and subject to an annual review or
more frequent review.

Comprehensive credit standards and approval limits have been formulated, approved by the Credit Committee and
implemented. The Credit Committee (which reports to the Board) is responsible for the development and implementation
of credit policy and loan portfolio review methodology.

Exposure to credit risk is managed through daily review of the ability of the borrowers to meet interest and capital
repayment obligations and by changing these lending limits where appropriate. This is the responsibility of the Manager
Credit. Exposure to credit risk is also managed in part by obtaining collateral and corporate and personal guarantees, but
a significant portion is personal lending where no such facilities can be obtained.

The tables below segregate the financial assets of the Group between financial assets that are neither past due nor
impaired, past due but not impaired and impaired. An asset is considered to be past due when any payment under the
contractual terms has been missed. The amount included as past due is the entire contractual balance, rather than the
overdue portion.

CONSOLIDATED

Neither
past
due nor
impaired
Km

Past due
but not
impaired
Km

Impaired
Km

31 December 2016

Cash and due from banks

Central bank bills

Regulatory deposits

Financial assets at fair value
through profit or loss

Loans and advances to customers

Investments in government
inscribed stocks

Total

31 December 2015

Cash and due from banks

Central bank bills

Regulatory deposits

Financial assets at fair value
through profit or loss

Loans and advances to customers

Investments in government
inscribed stocks

Total

148 .0

208 .1

96 .0

64 .3

612 .0

4 .6

1,133 .0

131.2

228.0

45.5

4.0

368.8

64.1

841 .6

–

4 .8

–

4 .8

–

11.2

–

11 .2

Total
Km

148 .0

208 .1

96 .0

64 .3

617 .1

4 .6

Total
carrying
value
Km

148 .0

208 .1

96 .0

64 .3

605 .1

4 .6

–

(12 .0)

–

0 .3

–

0 .3

1,138 .1

(12 .0)

1,126 .1

–

2.7

–

2 .7

131.2

228.0

45.5

4.0

382.7

64.1

855 .5

–

(8.7)

–

(8 .7)

131.2

228.0

45.5

4.0

374.0

64.1

846 .8

Kina Annual Report 2016 | Notes to the financial statements 69

For personal use only
3 . Financial risk management (continued)

b) Credit risk (continued)

(i)

Risk Management (continued)

PARENT

Neither
past
due nor
impaired
Km

Past due
but not
impaired
Km

Impaired
Km

15 .5

0 .1

20 .3

35 .9

35.0

0.1

–

35 .1

–

338 .3

–

360.3

360 .3

–

Total
Km

15 .5

0 .1

358 .6

374 .7

35.0

0.1

360.3

395 .4

Total
carrying
value
Km

15 .5

0 .1

351 .1

366 .7

35.0

0.1

352.8

387 .9

–

(7 .5)

–

(7 .5)

31 December 2016

Cash and due from banks

Financial assets at fair value
through profit or loss

Due from subsidiaries

Total

31 December 2015

Cash and due from banks

Financial assets at fair value
through profit or loss

Due from subsidiaries

Total

Impaired loans

(ii)
Individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly.
The other receivables are assessed collectively to determine whether there is objective evidence that impairment has
been incurred but not yet identified. For these receivables the estimated impairment losses are recognized in a separate
provision for impairment. The Group considers that there is evidence of impairment if any of the following indicators
are present:
• significant financial difficulties of the debtor
• probability that the debtor will enter bankruptcy or financial reorganization, and
• default or delinquency in payments (more than 30 days overdue).

Receivables for which an impairment provision was recognized are written off against the provision when there is no
expectation of recovering additional cash. Subsequent recoveries of amounts previously written off are credited against
impairment loss on loans and advances to customers. See note 1k (v) for information about how impairment losses
are calculated.

Individually assessed impaired loans amounted to K 4.2 million (2015: K5.3million).

(iii) Past due but not impaired
As at 31 December 2016, loans and advances to customers of K4.8 million (2015: K11.2 million) were past due but not
impaired. These relate to a number of independent customers for whom there is no recent history of default.

(iv) Neither past due nor impaired
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical
information about counterparty default rates. These relate to customers for whom payment is made on a timely basis.
Cash and due from banks are maintained at Central Bank of Papua New Guinea and other banks with good
credit standing.

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only
3 . Financial risk management (continued)

b) Credit risk (continued)

(v) Credit risk concentration
A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar
economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes
in economic or other conditions. The risk concentrations within the customer loan portfolio by nature of the customers’
business activities are as follows:

31 December 2016

Real Estate, renting & business services

139 .5

22 .6

CONSOLIDATED

2016

2015

Kmillion

Fisheries

Forestry

Engineering & metal processing

Textile, leather & wood products

Transport, storage & communication

Buyers, processors & exporters

Other manufacturing

Retail trade

Building & construction

Hotels & restaurants activity

Other business

Housing loans

Wholesale

Other personal

Total

Liquidity risk

4 .4

11 .5

0 .4

26 .7

0 .2

14 .5

202 .6

30 .7

4 .3

77 .7

19 .9

48 .3

617 .1

0 .7

1 .9

0 .1

4 .3

0 .0

2 .3

32 .8

5 .0

0 .7

5 .8

12 .6

3 .2

7 .8

91.3

5.0

9.0

0.7

3.0

11.3

4.6

3.0

55.2

26.1

4.6

39.8

81.7

14.9

32.5

23.9

1.3

2.4

0.2

0.8

3.0

1.2

0.8

14.4

6.8

1.2

10.4

21.3

3.9

8.5

100 .0

382 .7

100 .00

Liquidity risk is the risk of being unable to meet financial obligations as they fall due. The Group’s liquidity and funding
risks are governed by a policy framework which is approved by the Board of Directors. Liquidity and funding positions
and associated risks are overseen by the ALCO. The following outlines the Group’s approach to liquidity and funding risk
management focusing on conditions brought on by the current global economic environment:
• ensuring the liquidity management framework is compatible with local regulatory requirements,
• daily liquidity reporting and scenario analysis to quantify the Group’s positions,
•
•
• arranging back up facilities to protect against adverse funding conditions and to support day-to-day operations.

intense monitoring of detail daily reports to alert management and directors of abnormalities, and

targeting commercial and corporate customers’ liability compositions,

The Group is monitoring its liquidity contingency plans, lending requirements and guidelines which include:
•
• early warning signals indicative of an approaching issue and a mechanism to monitor and report these

the monitoring of issue severity/stress levels with high level diligence,

against signals,

• action plans and courses of action to account for early warning signals as noted above,
• management reporting at a higher level,
• maintenance of contractual obligations in regards to deposits, and
• assigned responsibilities for internal and external written communications.

Kina Annual Report 2016 | Notes to the financial statements 71

For personal use only3 . Financial risk management (continued)

Liquidity risk (continued)

Maturities of financial liabilities
The table below analyzes the Group’s financial assets and liabilities into relevant maturity groupings based on their
contractual maturities for all non-derivative financial liabilities. The amounts disclosed in the table are the contractual
undiscounted cash flows.

CONSOLIDATED

Up to 1
month
Km

1 to 3
months
Km

4 to 12
months
Km

1 to 5
years
Km

Over
5 years

Total
contract
value
Km

31 December 2016

Cash and due from banks

148 .5

–

Central bank bills

Regulatory deposits

Loans and advances to customers

Financial assets at fair value
through profit or loss

10 .0

96 .0

59 .1

0 .0

20 .0

186 .0

–

63 .8

–

148 .5

216 .0

96 .0

20 .5

102 .4

359 .3

605 .1

–

4 .6

–

4 .6

Total
value
Km

148 .5

216 .0

96 .0

605 .1

4 .6

Total financial assets

313 .6

83 .8

206 .5

107 .0

359 .3

1,070 .2

Due to other banks

Due to customers

Other liabilities

Total financial liabilities

–

439.9

25.6

465 .5

–

153.2

3.6

156 .8

0.1

360.2

7.3

367 .6

–

5.3

7.6

12 .9

–

0.1

958.6

44.1

0.1

977.3

44.1

1,002 .8

1,021 .5

Up to 1
month

1 to 3
months

4 to 12
months

1 to 5
years

Over
5 years

Total
contract
value

CONSOLIDATED

31 December 2015

Cash and due from banks

Central bank bills

Regulatory deposits

Loans and advances to customers

Financial assets at fair value
through profit or loss

100.4

63.8

45.5

68.3

0.1

–

121.4

–

1.4

–

46.4

–

19.9

4.0

–

42.7

–

241.8

–

100.4

231.6

45.5

374.1

4.1

Total
value

100.4

231.6

45.5

374.1

4.1

Total financial assets

278 .1

122 .8

70 .3

42 .7

241 .8

755 .7

Due to other banks

Due to customers

Other liabilities

Total financial liabilities

–

441.0

37.2

478 .2

–

163.3

8.1

171 .4

1.7

86.8

4.4

92 .9

–

1.9

–

1 .9

–

1.7

693.0

49.7

744 .4

1.7

700.5

49.7

751 .9

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only

3 . Financial risk management (continued)

Liquidity risk (continued)

The Parent’s financial liabilities as at 31 December 2016 and 2015 are all classified from 1 to 12 months; hence, contractual
value is equal to its carrying value.

PARENT

Up to 1
month
Km

1 to 3
months
Km

4 to 12
months
Km

1 to 5
years
Km

Over
5 years

Total
contract
value
Km

Total
carrying
value
Km

15 .5

0 .1

–

15 .6

2.9

–

2 .9

–

351 .1

–

118.4

118 .4

–

15 .5

0 .1

351 .1

366 .7

2.9

118.4

121 .3

15 .5

0 .1

351 .1

366 .7

2.9

118.4

121 .3

PARENT

Up to 1
month
Km

1 to 3
months
Km

4 to 12
months
Km

1 to 5
years
Km

Over
5 years

Total
contract
value
Km

Total
carrying
value
Km

35.0

0.1

35 .1

0.1

–

0 .1

–

352.7

352 .7

5.3

–

5 .3

–

2.8

113.1

115 .9

–

35.0

0.1

352.7

387 .8

8.2

113.1

121 .3

35.0

0.1

352.7

387.8

8.2

112.5

120 .7

31 December 2016

Cash and due from banks

Financial assets at fair value
through profit or loss

Due from subsidiaries

Total financial assets

Other liabilities

Due to subsidiaries

Total financial liabilities

31 December 2015

Cash and due from banks

Financial assets at fair value
through profit or loss

Due from other subsidiaries

Total financial assets

Other liabilities

Due to subsidiaries

Total financial liabilities

Kina Annual Report 2016 | Notes to the financial statements 73

For personal use only

4 . Capital adequacy
Kina Securities Limited (“KSL”) as the parent of Kina Bank Limited (“KBL”) is required to comply with prudential standard
PS1/2003 `Capital Adequacy` issued by the Bank of Papua New Guinea (“BPNG”). BPNG is the Government authority
responsible for the prudential supervision of Banks and financial institution in Papua New Guinea. The prudential guidelines
issued by BPNG follow the prudential guidelines set by the Bank of International Settlements under the terms of the
Basel Accord.

KSL calculates and reports its capital adequacy in respect of the bank (KBL).

Prudential Standard PS1/2003 `Capital Adequacy ‘is intended to ensure KBL maintains a level of capital which:

Is adequate to protect the interest of depositors and creditors,

1)
2) Is commensurate with risk profile and activities of KBL, and
3) Provide public confidence in KBL as a financial institution and the overall banking system

PS1/2003 `Capital Adequacy` prescribes ranges of capital ratios to measure whether KBL is under, adequately, or well
capitalised and also prescribes a leverage ratio. The minimum capital adequacy ratios prescribed under PS1/2003 `Capital
Adequacy` are:

1) Tier 1 risk based ratio of 8%,
2) Total risk-based capital of 12%,and
3) Leverage capital of 6%.

As at 31 December 2016, KBL’s capital ratios was in compliance with the BPNG Minimum capital adequacy requirements as
follows:

Risk weighted assets

Capital : tier 1

Capital : tier 2

Capital : tier 1 and tier 2

Capital adequacy ratios

Tier 1 capital

Total capital ratio

Leverage capital ratio

2016
K

2015
K

678,993,573

506,645,865

166,995,676

170,074,007

39,958,138

19,964,034

206,913,814

190,038,073

24 .45%

30 .34%

8 .50%

35.57%

37.51%

17.78%

The measure of capital used for the purpose of prudential supervision is referred to as base capital. Total base capital varies
from the capital shown on statements of financial position and is made up of tier 1 (core) and tier 2 (supplementary) capital,
after deducting the value of investments in other banks and financial institutions. Tier 1 capital is obtained by deducting
from equity capital and audited retained earnings (or accumulated losses), intangible assets including deferred tax assets.
Tier 2 capital cannot exceed the amount of tier 1 capital, and can include subordinated loan capital, specified assets
revaluation reserves, un-audited profits (or losses) and general loan provisions.

The Leverage Capital is calculated as Tier 1 Capital (less inter-group loans) divided by Total Assets. Risk-weighted assets are
derived from on-statements of financial positions assets. On-statements of financial position assets are weighted for credit
risk by applying weightings (0, 20, 50 and 100 percent) according to risk classification criteria set by the BPNG, for example
cash and money market instruments have a zero risk weighting which means that no capital is required to support the
holding of these assets.

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only5 . Net interest income/(expense)

Interest income

Cash and short-term funds

Investment in government inscribed stocks

Loans and advances to customers

Interest expense

Banks and customers

Due to subsidiaries (note 30)

Net interest income/(expense)

6 . Net fee and commission income

Fee and commission income

Investment and portfolio management

Fund administration

Shares brokerage

Loans fees and bank commissions

Other fees

Fee and commission expense

Net fee and commission income

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

11,103,285

5,951,766

4,864,127

2,323,169

60,212,689

45,110,766

88,336

345,056

–

77,267,740

52,298,062

88,336

345,056

(12,139,971)

(9,438,194)

–

(2,269,965)

(12,139,971)

(9,438,194)

(2,269,965)

–

(1,539,122)

65,127,769

42,859,868

(2,181,629)

(1,194,066)

CONSOLIDATED

PARENT

2016
K

2015
K

8,560,125

8,680,552

471,967

10,311,184

7,781,026

7,412,729

925,927

–

2016
K

–

2015
K

–

471,967

925,927

809,192

1,432,849

2,799,907

1,200,000

28,833,020

17,552,531

3,271,874

(68,645)

(105,559)

(59,288)

2,125,927

(105,559)

28,764,375

17,446,972

3,212,586

2,020,368

7 . Profit on sale of share in subsidiary
On 30 September 2015, the Group, through Kina Ventures Limited (KVL) (a subsidiary) acquired Maybank (PNG) Limited
(subsequently renamed Kina Bank Limited) and Maybank Property (PNG) Limited (subsequently renamed Kina Property
Limited). The Parent sold its investment in Kina Finance Limited (KFL) (a subsidiary) to Kina Bank to facilitate the settlement of
the purchase consideration. Carrying value of this investment at the time of sale was K9.5 million and the sale value of the
shares was K135 million resulting in a profit of K125.5 million in the Parent entity’s financial statements.

8 . Dividend income

Financial assets at fair value through profit or loss

CONSOLIDATED

PARENT

2016
K

111,225

2015
K

188,928

2016
K

16,691

2015
K

7,474

Kina Annual Report 2016 | Notes to the financial statements 75

For personal use only
9 . Other operating income

Profits from disposal of property and equipment

Support fees from subsidiaries (note 30)

Rental from subsidiaries (note 30)

Management fees

Realised gains/losses

Other

CONSOLIDATED

PARENT

2016
K

92,600

–

2015
K

45,482

2016
K

87,600

2015
K

45,482

–

18,397,081

12,088,132

801,974

1,040,677

3,679,692

2,417,626

278,808

850,890

351,632

1,433,897

1,870,099

1,233,794

899,912

576,576

1,805,305

2,766,471

24,551,773

17,068,405

10 . Impairment losses
KSL cover provision on loan impairment expense using either a collective approach or individual approach.

Individually assessed

Individually assessed loans attract 25 to 100 percent provisioning rate per customer loan. Key judgments include the
business prospects for the customer, the realisable value of collateral, the KSL Group’s position relative to other claimants,
the reliability of customer information and the likely cost and duration of recovering the loan. Judgments can change with
time as new information becomes available or as loan recovery strategies evolve, which may result in revisions to the
impairment provision.

Collective assessed

Collectively assessed loans attract 1 to 24.99 percent provisioning rate. Key judgments are based on estimated loss rates
applied on days in arrears. Actual credit losses may differ materially from reported loan impairment provisions due to
uncertainties including interest rates and their effect on consumer spending, unemployment levels, payment behavior and
bankruptcy rates.

The Group assesses impairment as follows:

Individually assessed (note 18, 23 and 30)

(1,011,613)

2,331,368

–

7,513,700

Collective allowance (note 18)

Reversal of prior year provision

3,798,641

630,617

(245,818)

–

2,787,028

2,961,985

(245,818)

7,513,700

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only11 . Other operating expenses

Staff costs

Administrative expenses

Operating lease

Depreciation and amortization

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

28,412,180

23,479,538

11,480,570

8,763,316

10,758,240

6,393,294

4,108,209

2,253,877

3,417,909

3,921,891

416,344

1,286,382

4,556,147

2,480,595

1,605,835

1,901,736

Software maintenance and support charges

2,689,430

1,852,517

Auditor’s remuneration

Initial public offer (IPO) related costs

Impairment losses on other assets

Acquisition costs relating to business combination (note 32)

Other

440,386

–

389,946

4,952,692

415,805

4,122,085

22,679

7,489,850

4,641,941

805,340

194,000

–

163,662

38,978

4,122,085

22,679

112,979

2,101,051

2,200,121

55,616,930

54,820,195

20,711,349

20,865,815

As at 31 December 2016 the Group had 264 (2015: 238) employees and 3 (2015: 2) consultants. The Company had
82 (2015:73) employees and 1 (2015: 2) consultants.

12 . Income taxes
The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in
the financial statements as follows:

Profit before tax

Prima facie tax at 30% (2015: 30%)

Tax effect of

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

58,570,431

11,884,033

4,639,431

115,023,369

17,571,129

3,565,210

1,391,829

34,507,011

- Net gains less losses from financial assets through profit and

244,939

90,291

(4,160)

–

loss

- Non-deductible expenses/non-assessable income

(221,452)

3,272,397

(1,433)

(34,119,765)

Prior year under/(over) provision

Income tax expense

Represented by:

Current tax

Deferred taxes

Income tax expense

–

404

–

17,594,616

6,928,302

1,386,236

18,164,972

6,825,185

1,242,657

(570,356)

103,117

143,579

17,594,616

6,928,302

1,386,236

(95,812)

291,434

437,151

(145,717)

291,434

Kina Annual Report 2016 | Notes to the financial statements 77

For personal use only

13 . Deferred taxes

a) Net deferred tax assets where there is a right to offset:

Allowance for losses

- Loans and advances to customers

- Other assets

Employee provisions

Accrual of employees entitlement

Accruals and others

Tax losses carried forward

Depreciation and amortization

Prepayments and others

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

3,582,653

3,697,262

1,185,237

–

4,003

–

14,365

30,236

–

519,524

2,020,765

463,454

2015
K

21,156

30,236

547,589

–

1,293,516

104,247

102,758

30,336

28,751

11,693

–

6,685,177

5,855,124

536,806

610,674

(305,199)

(89,106)

(394,305)

(183,644)

(170,047)

(353,691)

–

Net deferred tax asset

6,290,872

5,501,433

536,806

610,674

b) Net deferred tax liabilities where there is a right to offset:

Allowance for losses

- Loans and advances to customers

- Other assets

Provision on investments

Prepayments and others

Accrual of employees entitlement

Accruals

Tax losses carried forward

Depreciation and amortization

Net deferred tax liabilities

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

(14,365)

45,268

(89,514)

(30,870)

–

(1,622,521)

–

65,225

(73,190)

65,225

30,575

(463,454)

1,942,142

(28,751)

102,758

–

(396,077)

706,242

310,165

6,351

235,156

(140,512)

94,644

–

65,225

700,299

765,524

–

30,575

665,237

695,812

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use onlyc)

The movement on deferred tax account is as follows:

Balance at beginning of year

Acquisition of subsidiary

Income statement credit/(charge)

Prior year adjustment

Balance at end of year

Represented by:

Deferred tax assets (note 13(a))

Deferred tax liabilities (note 13(b))

14 . Cash and due from banks

Cash on hand

Exchange settlement account (BPNG)

Due from other banks

15 . Central bank bills

Central bank bills

Less than 90 days

Over 90 days

Other eligible bills

Unearned discount

CONSOLIDATED

PARENT

2016
K

5,406,790

–

570,356

3,562

2015
K

2,420,456

3,089,451

2016
K

2015
K

(85,138)

(230,855)

–

(103,117)

(143,579)

145,717

–

5,980,708

5,406,790

(228,718)

(85,138)

6,290,872

5,501,433

(310,165)

(94,644)

5,980,707

5,406,789

536,806

(765,524)

(228,718)

610,674

(695,812)

(85,138)

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2,228,441

1,184,526

319,923

69,851,663

55,655,796

–

2015
K

2,800

–

75,939,811

74,410,825

15,220,731

34,999,307

148,019,915

131,251,147

15,540,654

35,002,107

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

30,000,000

104,000,000

166,000,000

68,665,280

20,000,000

59,000,000

(7,904,798)

(3,651,159)

208,095,202

228,014,121

–

Central bank bills are debt securities issued by the Bank of Papua New Guinea (BPNG). Central bank bills amounting to
K30,000,000 (2015: K104,000,000) with a maturity term of one to three months from the date of purchase are classified as
cash and cash equivalents (note 29). Central bank bills are measured at amortized cost.

16 . Regulatory deposits
Regulatory deposit of the Group as at 31 December 2016 amounted to K96,013,000 (2015: K45,490,500). This represents
mandatory balance required to be maintained in a non-interest bearing account with the Central Bank - Bank of
Papua New Guinea.

Kina Annual Report 2016 | Notes to the financial statements 79

For personal use only
17 . Financial assets through profit or loss

Equity securities

- Listed

- Unlisted

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

4,580,070

3,993,074

142,747

145,297

61,587

–

4,641,657

4,054,661

142,747

145,297

The movement in financial assets at fair value through profit or loss is reconciled as follows:

CONSOLIDATED

PARENT

Balance at beginning of year

2016
K

2015
K

2016
K

4,054,661

4,695,223

145,297

Gains/(losses) from changes in fair value

586,996

(499,355)

114,199

(263,116)

7,710

(2,823)

–

4,641,657

4,054,661

142,474

145,297

2015
K

75,013

703

106,731

(37,150)

–

Additions

Disposals

Gains on disposal

Balance at end of year

The fair value of the listed equities is based on quoted market prices at the end of the reporting period. The quoted
market price used is the current market prices. These financial instruments are categorized as level 1 within the fair value
hierarchy. Unlisted equities are categorized within level 3 of the fair value hierarchy.

18 . Loans and advances to customers

Loans to individuals

Loans to corporate entities

Gross loans and advances to customers

Allowances for losses

Details of gross loans and advances to customers are as follows:

Overdrafts

Property mortgage

Asset financing

Insurance premium funding

Business and other loans

CONSOLIDATED

PARENT

2016
K

2015
K

134,388,116

119,039,921

482,714,042

263,752,890

617,102,158

382,792,811

2016
K

–

47,882

2015
K

–

68,408

(11,990,059)

(8,733,722)

(47,882)

(68,408)

605,112,099

374,059,089

–

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

60,899,437

63,697,588

471,417,274

218,439,947

13,118,532

15,023,932

613,986

244,626

71,052,929

85,386,718

617,102,158

382,792,811

–

47,882

68,408

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only

18 . Loans and advances to customers (continued)
Movements in allowance for losses are as follows:

Collectively assessed

Balance at beginning of year

Impairment losses (reversals) during the year (note 10)

Loans written off, net of other adjustments

Transfers (from/to) collective

Recoveries

Balance at end of year

Individually assessed

Balance at beginning of year

Impairment losses during the year (note 10)

Loans written off

Recoveries

Transfers (from/to) individual

Balance at end of year

Total

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

5,296,477

4,621,381

(1,011,613)

2,308,689

(552,344)

(3,917,722)

3,185,252

1,038,431

154,592

2,129,537

7,956,203

5,296,477

–

3,437,245

2,940,913

3,798,641

(16,778)

–

630,617

(90,232)

110,539

(3,185,252)

(154,592)

4,033,856

11,990,059

3,437,245

8,733,722

68,408

245,818

(16,778)

(249,566)

–

47,882

–

64,660

3,748

––

–

68,408

The collective assessment relates to loans and advances fall in the 0-30 days category. Individual assessment relates to all
loans and advances with arrears over 30 days.

19 .

Investments in government inscribed stocks

Government inscribed stocks principal balance

Unamortized premium

Accrued interest

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

63,000,000

249,355

66,278

1,079,025

1,068,230

64,328,380

64,134,508

–

The movement in investments in government inscribed stocks is as follows:

Balance at beginning of year

Additions

Accrued interest

Amortized premium

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

64,134,508

19,672,699

–

44,085,766

183,166

10,706

512,545

(136,502)

64,328,380

64,134,508

–

Investments in government inscribed stocks are measured at amortized cost.

Kina Annual Report 2016 | Notes to the financial statements 81

For personal use only20 . Investments in subsidiaries

Kina Funds Management Limited (KFM)

Kina Investment and Superannuation Services Limited (KISS)

Kina Ventures Limited (KVL)*

Kina Wealth Management Limited (KWML)

Kina Nominees Limited (KNL)***

2016
%

100

SHAREHOLDINGS**
2016
2015
Amount
%

2015
Amount

100

500,000

*Kina Ventures Limited (KVL) shareholding structure

Kina Bank Limited (KBL) – note 32

Kina Properties Limited (KPL)

100

5,000,000

2,125,000

**All the subsidiaries are incorporated in Papua New Guinea. The results of the operations of above subsidiaries have been considered
in the Group’s financial statements.

During the year, Kina Finance Limited and PNG Home Finance Company Limited were amalgamated into
Kina Bank Limited.

*** Impairment loss on investment in subsidiary amounted to K251,677 for the year ended 31 December 2016.

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only21 . Property, plant and equipment

CONSOLIDATED

Cost

Balance 31 December 2014

Acquisition of subsidiary

Additions

Disposals

Furniture
& Fittings
K

Building
improvements
K

Motor
Vehicles
K

Office
Equipment
K

Land &
Building
K

Work in
Progress
K

Total
K

511,078

520,363

29,870

–

870,120

2,537,224

8,860,262

2,129,010

5,670,485

833,548

2,603,501

9,617,000

909,882

204,518

585,368

–

(438,174)

(2,582)

–

14,907,694

19,244,897

1,729,638

(440,756)

35,441,473

Balance 31 December 2015

1,061,311

7,450,487

3,137,116 12,046,549 11,746,010

Additions

Disposal

14,640

239,415

645,819

858,342

– 4,384,816

6,143,032

–

(605,267)

–

(605,267)

Balance 31 December 2016

1,075,951

7,689,902

3,177,668 12,904,891 11,746,010 4,384,816

40,979,238

Accumulated depreciation

Balance 31 December 2014

Acquisition of subsidiary

Charge during the year

Disposals

(275,730)

(265,628)

(79,165)

–

(447,918)

(1,709,019)

(5,483,166)

(2,286,914)

(643,301)

(1,747,285)

(227,316)

(454,719)

(1,363,322)

–

436,949

289

Balance 31 December 2015

(620,523)

(2,962,148)

(2,370,090)

(8,593,484)

Charge during the year

(126,031)

(682,324)

(645,452)

(1,456,480)

–

–
(108,646)

Disposals

–

605,267

–

Balance 31 December 2016

(746,554)

(3,644,472)

(2,410,275)

(10,049,964)

(108,646)

–

–
–

–

(7,915,833)

(4,943,128)

(2,124,522)

437,238

(14,546,245)

(3,018,933)

605,267

(16,959,911)

Book value 31 December 2016

329,397

4,045,430

767,393

2,854,927 11,637,364 4,384,816

24,019,327

Book value 31 December 2015

440 ,787

4,488,339

767,027

3,453,065

11,746,010

–

20,895,228

Kina Annual Report 2016 | Notes to the financial statements 83

For personal use only21 . Property, plant and equipment (continued)

PARENT

Cost

Furniture
& Fittings
K

Building
improvements
K

Motor
Vehicles
K

Office
Equipment
K

Land &
Building
K

Work in
Progress
K

Total
K

Balance 31 December 2014

Additions

Disposals

511,078

23,982

–

870,120

2,537,224

8,860,262

2,129,010

7,382

204,518

170,981

–

(438,174)

(2,582)

–

Balance 31 December 2015

535,060

877,502

2,303,568

9,028,661

2,129,010

–

14,907,694

406,863

(440,756)

14,873,801

Additions

Disposals

Adjustment

–

(1,391)

–

100,000

130,741

(436,953)

–

427,544

658,285

–

(436,953)

(1,391)

Balance 31 December 2016

533,669

877,502

1,966,615

9,159,402

2,129,010

427,544

15,093,742

Accumulated depreciation

Balance 31 December 2014

Charges during the year

Disposals

(275,730)

(62,760)

–

(447,918)

(1,709,019)

(5,483,166)

(89,443)

(412,512)

(1,269,322)

–

436,949

289

Balance 31 December 2015

(338,490)

(537,361)

(1,684,582)

(6,752,199)

Charges during the year

(59,183)

(85,526)

(391,585)

(944,640)

Disposals

Adjustments

–

436,953

–

Balance 31 December 2016

(397,673)

(622,887)

(1,639,214)

(7,696,839)

–

(7,915,833)

(1,834,037)

437,238

(9,312,632)

(1,480,934)

436,953

–

(10,356,613)

Book value 31 December 2016

135,996

254,615

327,401

1,462,563

2,129,010

427,544

4,737,129

Book value 31 December 2015

196,570

340,141

618,986

2,276,462

2,129,010

–

5,561,169

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only22 . Intangible asset

CONSOLIDATED

Cost
Balance 31 December 2014
Additions
Disposals
Balance 31 December 2015
Additions
Disposals
Balance 31 December 2016

Accumulated depreciation
Balance 31 December 2014
Charges during the year
Disposals
Balance 31 December 2015
Charges during the year
Disposals
Balance 31 December 2016
Book value 31 December 2016
Book value 31 December 2015

PARENT

Cost
Balance 31 December 2014
Additions
Disposals
Balance 31 December 2015
Additions
Disposals
Balance 31 December 2016

Accumulated depreciation
Balance 31 December 2015
Charge during the year
Disposals
Balance 31 December 2015
Charge during the year
Disposals
Balance 31 December 2016
Book value 31 December 2016
Book value 31 December 2015

Customer
deposits
relationship
K

–
3,780,000
–
3,780,000
–
–
3,780,000

Total
K

–
7,212,366
–
7,212,366
631,834
–
7,844,200

–

(189,000)
–
(189,000)
(756,000)
–
(945,000)
2,835,000
3,591,000

(348,117)
–
(348,117)
(1,537,214)
–
(1,885,331)
5,958,869
6,864,249

Software
K

–
3,432,366
–
3,432,366
631,834
–
4,064,200

–

(159,117)
–
(159,117)
(781,214)
–
(940,331)
3,123,869
3,273,249

Customer
deposits
relationship
K

Software
K

–
600,428
–
600,428
36,950
–
637,378

–
(67,699)
–
(67,699)
(124,901)
–

(192,600)
444,778
532,729

–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
–

Total
K

–
600,428
–
600,428
36,950
–
637,378

–
(67,699)
–
(67,699)
(124,901)
–

(192,600)
444,778
532,729

Customer deposits relationship was recognized when Maybank (PNG) Limited was acquired on 30 September 2015.
The value of the customer deposit relationship was derived on the present value of the expected benefit from existing
funds coming from depositors. A pre-tax discount rate of 11.2% was used in the valuation consistent with the impairment
testing performed for goodwill. The intangible assets were estimated to have a useful life of five years based on the license
term of software and expected length of the customer deposit relationship.

Kina Annual Report 2016 | Notes to the financial statements 85

For personal use only23 . Other assets

Prepayments

Security deposits and bonds

Other debtors

CONSOLIDATED

PARENT

2016
K

2015
Restated
K

2,115,410

1,217,648

814,335

566,828

9,151,700

10,633,321

2016
K

700,989

363,428

145,390

2015
K

342,049

287,899

2,914,296

12,081,445

12,417,797

1,209,807

3,544,244

Less: allowance for losses on other assets

(4,051,579)

(116,245)

(100,786)

(102,900)

8,029,866

12,301,552

1,109,021

3,441,344

Other debtors as at 31 December 2015 included certain estimated receivable of K4,121,232 from the seller of Maybank
(PNG) Limited in relation to certain completion adjustments that were being discussed between the buyer and the seller at
the time of finalising the 2015 financial statements an accounted for on a provisional basis. This receivable was restated to
K1,688,782 following finalisation of the settlement in September 2016 (refer note 32 (i))

Movement of allowance for losses on other assets is as follows:

Balances at beginning of year

Impairment losses during the year

Reclassification

Balance at end of year

24 . Due to customers

Corporate customers

Retail customers

CONSOLIDATED

PARENT

2016
K

116,245

–

3,935,334

4,051,579

2015
K

93,566

22,679

–

2016
K

102,900

–

(2,114)

2015
K

80,221

22,679

–

116,245

100,786

102,900

CONSOLIDATED

PARENT

2016
K

2015
K

934,957,697

682,227,143

23,651,214

3,302,321

958,608,911

685,529,464

2016
K

–

2015
K

–

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only

25 . Current income tax (assets) liabilities

Balance at beginning of year

1,567,260

521,298

560,306

670,592

Income tax acquired on subsidiary acquisition

–

2,823,626

–

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

Paid during the year

Current provision

Prior year under provision

Balance at end of year

Current income tax asset

Current income tax liability

26 . Employee provisions

Balance at beginning of year

Charged to profit and loss

Utilized during the year

Balance at end of year

Represented by:

Short term provisions

Long term provisions

27 . Other liabilities

Accruals

Deposits against guarantee

Unclaimed money and stale cheques

Bank cheques

Accounts payable

Unearned commission income

Other liabilities

Balance at end of year

(20,727,532)

(8,603,253)

(1,634,179)

(547,437)

18,164,972

6,825,185

1,242,657

437,151

–

404

–

(995,300)

1,567,260

168,784

560,306

CONSOLIDATED

PARENT

2016
K

2015
K

(2,452,386)

(827,673)

1,457,086

2,394,933

(995,300)

1,567,260

2016
K

–

168,784

2015
K

–

554,363

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

5,408,405

2,172,882

2,200,496

1,084,436

(2,131,811)

3,880,183

(655,648)

1,256,262

–

(699,660)

–

(140,202)

3,276,594

5,408,405

1,544,848

2,200,496

2,459,217

3,300,794

1,230,591

1,407,298

817,377

2,107,611

314,257

793,198

3,276,594

5,408,405

1,544,848

2,200,496

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

13,072,547

14,746,359

2,221,968

3,761,575

10,332,804

7,596,119

3,127,005

9,039,913

5,304,422

12,520,717

–

2,690,590

2,851,620

648,762

1,692,082

1,044,624

3,916,057

–

2,800,000

4,040,786

355,683

80,208

44,081,892

46,557,354

2,950,938

8,253,657

Kina Annual Report 2016 | Notes to the financial statements 87

For personal use only28 . Issued and paid ordinary shares

a) Movement

The Company does not have authorized capital and all ordinary shares have no par value. The table below provides
movement in share capital.

Original shares

Share split

Shares after split and before IPO

Proceeds from IPO at K2.08/share)

Free shares issued to the employees

Total IPO costs

Less: secondary costs (note 11)

Total primary costs

Balance as at 31 December 2015

Share issued during the year – retention incentive

Balance at end of year 2016

Number of
shares

2,000,000

86,121,935

88,121,935

75,580,415

90,902

163,793,252

100,000

163,893,252

2016

21,531,884

(4,122,085)

Share
capital

2,000,000

–

2,000,000

157,207,263

–

(17,409,799)

141,797,464

208,000

142,005,464

In February 2017, the directors declared a dividend of 3.95 cents / 10 toea per share (total of K16.8m). There are no other
events after the financial reporting date that require adjustment to or disclosure in the financial statements.

b) Earnings per share

Basic earnings per ordinary share is calculated by dividing the net profit attributable to shareholders by the weighted
average number of ordinary shares on issue during the year. The group has no significant dilutive potential ordinary shares.
Consequently, basic earnings per ordinary share equals diluted earnings per share.

Net profit attributable to shareholders

Weighted average number of ordinary shares basic earnings

Weighted average number of ordinary shares diluted earnings

Basic and diluted earnings /per share in toea)

Share-based payment reserve

CONSOLIDATED

2016

2015

40,975,815

4,955,731

163,893,253

119,651,650

163,893,253

119,872,986

25 .00

4.14

Kina operates both a Short Term Incentive (STI) and Long Term Incentive (LTI) plan. The purpose of these Plans is to assist
in the reward, retention and motivation of key management personnel and align the interests of management and
shareholders. The plans are commensurate with those adopted by major banks in Australia and the Pacific and is managed
by an independent Plan manager. The operation of both the STI and LTI plans are explained below:

Short term incentive plan (STI Plan)

The STI plan provides participants with an opportunity to earn an incentive calculated as a percentage of their salary each
year, conditional upon them achieving specified performance targets. Under the plan 65% of any award granted is paid as
a cash bonus, with the remaining 35% awarded as a grant of performance rights to shares. The granted performance rights
are restricted from exercise and subject to the Company’s clawback policy and subject to the rules of the Plan. The grants
for 2016 are restricted until the second anniversary after the grant date.

The following STI were approved by the Board.

Cash bonus

Total performance rights entitled

Performance rights recognised in the year

Kina Annual Report 2016 | Notes to the financial statements

65%

35%

2016
K

2015
K

1,179,745

1,298,471

635,247

317,624

699,177

145,662

Notes to the financial statementsFor the year ended 31 December 2016For personal use only28 . Issued and paid ordinary shares (continued)

Share-based payment reserve (continued)

Long term incentive plan (LTI Plan)

The LTI plan provides participants with an opportunity to receive an equity interest in Kina through the granting of
performance rights. LTI plan participants may be offered performance rights that may be subject to vesting conditions as
set out by the Board. The selection of participants is at the discretion of the Board.

A performance right is a contractual right to receive one ordinary share in Kina, subject to performance and vesting
conditions being met. Each vested performance right represents a right to one ordinary share. If the participant leaves Kina
any unvested Performance Rights will be forfeited unless the Board determines otherwise.

Performance rights granted

CEO

Other senior executives

Performance rights recognised in the year

CEO retention incentive

2016
K

457,560

1,333,551

597,037

2015
K

415,200

916,565

184,967

Under the Retention Grant, the CEO received a one off grant amounting to K457,560 (2015: K415,200). 50% of the
performance rights were vested on the first anniversary of the grant date. The 50% of the CEO’s performance rights vested
in August 2016, where the CEO received K208,000 worth of shares (100,000 at K2.08 per share). The remaining 50% of the
Performance Rights will vest on the second anniversary of the grant date subject to him remaining employed by the Kina
Group. Performance rights recognised in 2016 amounted to K57,195 (2015: K129,750).

Share Based Premium Reserve

Under the Plan, share options were granted to the Chief Executive Officer (CEO) and other senior executive employees.
The movement in the Share Based Premium Reserve is as below:

Brought forward from previous year

Adjustment to prior period entitlements

Short-term incentive (STI) plan

Long-term incentive (LTI) plan

One-off payment

Total

CONSOLIDATED

2016

460,379

(76,702)

317,624

597,037

57,195

1,355,533

2015

–

145,662

184,967

129,750

460,379

Kina Annual Report 2016 | Notes to the financial statements 89

For personal use only

29 . Statement of cash flows

For the purposes of the statements of cash flow, cash and cash equivalents comprises the following:

Cash and due from banks (note 14)

Central bank bills (note 15)

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

148,019,915

131,251,147

15,540,654

35,002,007

30,000,000

104,000,000

–

178,019,915

235,251,147

15,540,654

35,002,007

The consolidated financial statements for the year ended 31 December 2016 included central bank bills amounting to
K208,095,202 (2015: K228,014,121) as shown in note 15. As the Group policy is to classify only investments with less than
three maturities as part of the cash and cash equivalent, central bank bills amounting to K30,000,000 (K2015:104,000,000)
have been classified as part of cash and cash equivalents for the purpose of cash flow statements.

b) Movement in investment securities is as follows:

CONSOLIDATED

2016
K

2015
K

Movement
K

Central bank bills (note 15)

208,095,202

228,014,121

(19,918,919)

Central bank bills & other eligible bills (less than 3 months)

(30,000,000)

(104,000,000)

74,000,000

Investments in government inscribed stocks (note 19)

64,328,380

64,134,599

193,781

242,423,582

188,148,720

54,274,862

Reconciliation of net profit after tax for the year to net cash flows from operating activities is presented below.

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

Net profit after tax

40,975,815

4,955,731

3,253,195

114,731,935

Profit from disposal of property and equipment

(92,600)

(45,482)

(87,600)

(45,482)

Profit on sale of shares in subsidiary (note 7)

–

(125,500,000)

Depreciation and amortization (note 21 and 22)

4,556,147

2,472,639

1,605,835

1,901,736

Impairment losses:

Loan and advances to customers (note 18)

(5,861)

2,939,306

(5,861)

–

Intercompany receivable (note 30)

Other assets (note 23)

Premium/discount amortization (note 19)

Share-based amortization

LTI Accrual

Net losses/(gains) from changes in fair values of financial
assets (note 17)

Gain on sale of financial assets (note 17)

Increase/(decrease) in income tax payable

Increase/(decrease) in deferred income tax

Changes in net assets and liabilities:

Decrease/(increase) in assets:

Increase/(decrease) in liabilities:

–

(10,706)

430,375

672,779

(586,996)

–

22,679

136,502

–

499,355

–

(7,710)

(2,562,560)

1,778,069

(573,918)

103,118

–

430,375

672,799

2,823

–

(391,522)

143,579

(264,831,764)

(573,199,454)

4,041,684

254,644,457

483,549,767

154,446

7,487,273

22,679

–

(703)

–

(110,283)

(145,718)

7,164,324

6,517,012

Net cash inflow/outflow) from operating activities

32,615,168

(76,795,480)

9,819,753

12,022,773

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only

30 . Related party transactions
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence
over the other party in making financial or operational decisions. The Group is controlled by Kina Securities Limited (“KSL”)
incorporated in Papua New Guinea, which owns 100% of the ordinary shares of its subsidiaries, unless otherwise stated.

A number of banking transactions are entered into with related parties in the normal course of business. These include
loans, deposits and foreign currency transactions. These transactions were carried out on normal commercial terms and at
normal market rates. The volumes of related party transactions, outstanding balances at 31 December 2016, and related
expenses and income for the year ended are as follows:

a) Directors and management transactions

As at 31 December 2016, Directors and management transactions were as follows:

Niule No 1 Ltd. Trading as Raintree Consultancy provided consultancy services to Kina Securities Limited (KSL) during the
year until May 2016. The fee paid for these services during the year is K100,000 (2015: K345,000). Jim Yap who is the director
of KSL is also a director and shareholder of Niule No 1.

H. Wong (ceased 18 May 2016) maintained interest-bearing deposits at normal market rates of interest with Kina Bank
Limited (“KBL”). The balance due as at 31 December 2016 and related income and expenses for the year ended are as
follows:

Deposit:

Balance at the beginning of year

Received during the year

Balance at end of year

Interest expense on deposit

Average interest rate per annum

2016
K

7,965

271

8,236

–

3 .50%

2015
K

7,626

339

7,965

–

4.00%

W. Golding is a Director and Shareholder of KSL and also a Director and Shareholder of The Manufacturers Council of PNG
(MCP). MCP maintained interest-bearing deposits at normal market rates of interest. The balances due as at 31 December
2016 and related income and expenses for the year ended are as follows:

Deposit:

Balance at beginning of year

Received during the year

Balance at end of year

Interest expense on deposits

Average interest rate per annum

2016
K

59,008

505

59,513

505

1 .25%

2015
K

58,090

918

59,008

918

1.5%

Kina Nominees Limited (“KNL”) acted as a trustee for 2G Development Limited, a company of which W. Golding is a
Director. The 2G Development Limited housing estate clients’ equity funds are held in trust by KNL, processing receipts
and deposits from 2G Development clients and payment made to 2G Development building and civil works contractors.
As at 31 December 2016, KNL have billed and received from 2G Development Limited a total of K34,594 representing
Trustee service fee.

Kina Annual Report 2016 | Notes to the financial statements 91

For personal use only30 . Related party transactions (continued)

a) Directors and management transactions (continued)

S. Yates, Managing Director and Chief Executive Officer of KSL is also a Director of Port Moresby Stock Exchange
POMSoX) and shareholder of Columbus Investment Limited. During the year, POMSoX, Columbus Investment Limited and
S. Yates maintained interest-bearing deposits at normal market rates of interest. The balances due as at 31 December 2016
and related expense for the year are as follows:

Balance at beginning of year

Received during the year

Repaid during the year

Balance at end of year

Average interest rate per annum

Interest expense on deposits

POMSoX
K

Columbus
Investments

S. Yates
K

Total 2016
K

Total 2015
K

–

1,778,261

23,616

(315,587)

1,486,290

1.25%

23,616

69,130

5,164

1,847,391

589,591

28,780

2,000,281

–

(315,587)

(742,481)

74,294

0.35%

164

1,560,584

1,847,391

0 .80%

23,780

0.30%

45,344

From time to time during the year, Directors and Senior Management of the Parent and subsidiaries had deposits in the
Group on normal terms and conditions. Brokerage rates for buying and selling shares for the Senior Management and staff
are discounted.

A listing of the members of the Board of Directors is shown in the Annual Report. In 2016, the total remuneration of the
Directors was K2,336,390 (2015: K2,296,514).

Key management personnel (KMP) during the year were as follows

2016

Syd Yates, Michael Van Dorssen, Chetan Chopra, Danny Robinson, Anthony De La Fosse, Deepak Gutpa,
Saima Kalis, Aaron Bird, Adam Fenech, Victor Shubin*, Kong Wong*

2015

Syd Yates, Michael Van Dorssen, Kong Wong, Adam Fenech, Victor Shubin, Aaron Bird, Saima Kalis

*Key management personnel who resigned during the year

The table below shows the Group specified executive remuneration in aggregate.

No of KMP

Salary

Bonus

Super

Equity
Options

Other
benefits

Total

2016

2015

5,140,965

1,311,768

118,949

895,154

2,651,269

10,118,105

4,392,632

1,298,471

101,303

460,379

1,853,489

8,106,274

Subsidiary transactions and balances

The Company maintains an intercompany account with subsidiary undertakings, which are interest bearing at the rate of
KBL cost of funds plus 12.50 (2015:12.50) basis points, unsecured and with no fixed term of repayment. Details as follows:

TRANSACTIONS

BALANCE OUTSTANDING

INCOME EXPENSES
2016
K

2016
K

INCOME
2015
K

EXPENSES
2015
K

880,245

359,570

2,639,713

1,631,992

–

2,133,976

–

169,301

46,581

–

19,952,197

1,910,395

8,355,120

1,323,240

DUE FROM
2016
K

2015
K

DUE TO

2016
K

2015
K

–

(16,323,596)

(7,981,047)

(7,302,011)

(3,410,540)

(6,151)

(292)

(94,805,211)

(101,149,499)

–

351,106,165*

352,791,165*

16,387

450

–

22,464,434

2,269,965

13,128,809

1,539,122

351,122,552

352,791,615

(118,436,969)

(112,541,378)

KFM

KISS

KWM

KBL

KVL

KNL

* net of allowance for impairment losses of K7,487,273 which is interest free and payable on demand.

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only
31 . Investment under trust
The Group acts as trustee holding or placing of assets on behalf of superannuation funds and individuals. As the
relationship is legally supported, these assets are not assets of the Group and, therefore, are not included in its statements
of financial position. The Group is also engaged in investing client monies. A corresponding liability in respect of these
monies is also excluded from the statements of financial position. Investments under trust at year end are:

Clients funds held for shares trading

32 . Business combination

CONSOLIDATED

PARENT

2016
K

2015
K

2016
K

2015
K

925,265

3,288,828

925,265

3,288,828

A. Acquisition of Maybank (PNG) Limited and Maybank Property (PNG) Limited

Kina Group, through Kina Ventures Limited a (100% owned subsidiary of Kina Securities) acquired all of the shares in
Maybank (PNG) Limited and Maybank Property (PNG) Limited on 30 September 2015.

Purchase consideration

(i)
The purchase consideration was provisionally accounted for the purpose of 2015 financial statements and amounted to
K348,666,768. Certain adjustments to the purchase consideration were being discussed between the buyer and seller at
the time of finalising the 2015 financial statements. These adjustments were finalised in September 2016 in accordance with
the Completion Audit Side Agreement dated 6 June 2016 and the reconciled balances were settled. This resulted in an
increase in the purchase consideration by K2,432,450. This adjustment to the purchase consideration has been
retrospectively accounted in these financial statements and the goodwill has been restated. This restatement had no
impact on the periods before 1 January 2015 or on the profit for the year-ended 31 December 2015 and 31 December 2016.

(ii) Fair value of assets acquired and liabilities assumed

Total assets acquired

Total liabilities assumed

Total net assets acquired

There was no non-controlling interest.

(iii) Goodwill – Restated

Purchase consideration – provisionally accounted in 2015

Adjustment to the purchase consideration finalised in 2016

Final purchase consideration

Fair value of net assets acquired

Goodwill as at 31 December 2016 and 2015

2015
K

951,789,786

(693,476,423)

258,313,363

348,666,768

2,432,450

351,099,218

258,313,363

92,785,855

The goodwill is attributable to Maybank (PNG) Limited’s strong position and synergies expected to arise after the Group’s
acquisition of the new subsidiary. None of the goodwill is expected to be deductible for tax purposes.

Goodwill was tested for impairment as at 31 December 2016 and no impairment has been recognized in the income
statement. The recoverable amount has been determined as the value in use at each reporting date. Value in use refers to
expected future cash flows over the next four years on a discounted cash flow basis.

Kina Annual Report 2016 | Notes to the financial statements 93

For personal use only32 . Business combination (continued)

(iii) Goodwill – Restated (continued)
Key assumptions used in the model are as follows:
• a pre-tax discount rate of approximately 12.6%,
• 2016 actual cash flow projected based on terminal growth rate of 3%
•

historical growth rate in loans and deposits.

Estimates for CGU reflect past experience and are consistent with external sources of information.
Other acquisition related information included in the comparative financial statements are as follows:

(iv) Acquisition related costs
Acquisition-related costs of K7,489,850 were included in the income statement in the reporting period ended
31 December 2015.

(v) Acquired receivables
The fair value of acquired loans and advances to customers is K142,697,234. This included an allowance for impairment
of K3,658,895.

(vi) Revenue and profit contribution
The acquired business contributed revenues for 2015 of K15,105,517 and net profit of K6,745,321 to the Group for the period
from 1 October to 31 December 2015. If the acquisition had occurred on 1 January 2015, consolidated revenue and net
profit of the group for the year ended 31 December 2015 would have been K119,900,998 and K22,676,489, respectively.

33 . Segment reporting
The segment information provided to the Chief Executive Officer for the reportable segments for the year ended
31 December 2016 is as follows:

Interest income

Foreign exchange income

Fee and commission income

Other revenue

Inter-segment revenue

Total revenue

Interest expense

Other operating expenses

Provision for impairment

Depreciation and amortisation

Inter-segment costs

Total expenses

Profit before tax

Income tax expense

Profit after tax

Total assets

Total assets include:

Additions to non-current assets

Total liabilities

Banking
& Finance
K ‘000

Wealth
Management
K ‘000

84,922

20,579

7,511

110

–

540

–

21,322

707

–

113,122

22,569

(18,108)

(45,261)

(2,684)

(2,086)

–

(68,139)

44,983

(13,512)

31,471

1,145,979

5,155

1,003,753

(44)

(9,824)

(109)

–

(9,977)

12,592

(2,594)

9,998

16,162

–

4,097

Corporate
K ‘000

(8,194)

–

25,895

(24,208)

(6,507)

6,012

(21,009)

(1,714)

24,208

7,503

996

(1,488)

(492)

Total
K ‘000

77,268

20,579

28,833

26,712

(24,208)

129,184

(12,140)

(76,094)

(2,787)

(3,800)

24,208

(70,613)

58,571

(17,595)

40,976

103,606

1,265,747

1,619

6,774

1,007,877

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only

33 . Segment reporting (continued)
The segment information provided to the Chief Executive Officer for the reportable segments for the year ended 31
December 2015 is as follows:

Banking
& Finance
K ‘000

Wealth
Management
K ‘000

Corporate
K ‘000

Interest income

Foreign exchange income

Fee and commission income

Other revenue

Inter-segment revenue

Total revenue

Interest expense

Other operating expenses

Provision for impairment

Depreciation and amortisation

Inter-segment costs

Total expenses

Profit before tax

Income tax expense

Profit after tax

Total assets

Total assets include:

Additions to non-current assets

Total liabilities

45,738

7,754

–

53,492

(9,438)

(27,634)

(2,950)

(570)

–

(40,592)

12,900

(5,905)

6,995

817,082

4,152

732,473

734

–

16,238

903

–

17,875

–

5,826

–

1,314

17,978

(17,277)

7,841

–

(15,464)

(26,631)

(12)

–

(15,476)

2,399

(1,024)

1,375

27,303

–

(1,902)

17,277

(11,256)

(3,415)

–

(3,415)

141,795

Total
K ‘000

52,298

7,754

17,552

18,881

(17,277)

79,208

(9,438)

(69,729)

(2,962)

(2,472)

17,277

(67,324)

11,884

(6,929)

4,955

986,180

–

2,776

1,009

9,334

5,161

744,583

There is only one segment for the Parent entity and the information is the same as the primary statements.

Kina Annual Report 2016 | Notes to the financial statements 95

For personal use only

34 . Contingent liabilities

Litigations and claims
Contingent liabilities exist in respect of actual and potential claims and proceedings that have not been determined.
An assessment of the Group’s likely loss has been made on a case by case basis for the purposes of the financial
statements and specific provisions are made where appropriate. As at 31 December 2016, the Group is a party to some
litigation before the courts, however, management does not believe these will result in any material loss to the Group.
There was no litigation matter of a material nature that is not already provided for in the financial statements.

Other liabilities
The Bank guarantees the performance of customers by issuing stand-by letters of credit and guarantees to third parties.
The risk involved is essentially the same as the credit risk involved in extending loan facilities to customers, therefore these
transactions are subject to the same credit origination, portfolio maintenance and collateral requirements applied to
customers applying for loans. As the facilities may expire without being drawn upon, the notional amount does not
necessarily reflect future cash requirements. The credit risk of these facilities may be less than the notional amount but as it
cannot be accurately determined, the credit risk has been taken as the contract notional amount.

Group

Documentary letters of credit

Performance guarantee

Other contingent liabilities

The company had no contingent liabilities.

35 . Commitments
Capital commitments
There was no commitment under contracts for capital expenditure at balance date.

Operating lease commitments
Total of future minimum lease payments under operating lease commitments are as follows:

Within one year

Between one and five years

2016
K

2015
K

1,864,990

146,213

34,937,710

26,011,878

3,075,101

7,907,204

39,877,801

34,065,295

2016
K

2015
K

4,878,929

2,412,838

18,818,786

16,193,520

23,697,715

18,606,358

Kina Annual Report 2016 | Notes to the financial statements

Notes to the financial statementsFor the year ended 31 December 2016For personal use only36 . Fair value estimation
There is no material difference between the fair value and carrying value of the Group and the Company’s financial assets
and liabilities.

The table below analyzes financial instruments carried at fair value, by valuation method. The different levels have been
defined as follows:
• Quoted prices unadjusted in active markets for identical assets or liabilities (Level 1).
•

Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
that is, as prices or indirectly that is, derived from prices (Level 2).

•

Inputs for the asset or liability that are not based on observable market data that is, unobservable inputs (Level 3).

The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2016.

Assets

Financial assets at fair value through profit or loss

Investment in shares – Listed

Investment in shares – Unlisted

Total assets

Level 1
K

Level 2
K

Level 3
K

Total
K

4,580,070

–

4,580,070

–

4,580,070

61,587

4,641,657

The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2015.

Assets

Financial assets at fair value through profit or loss

Investment in shares – Listed

Investment in shares – Unlisted

Total assets

37 . Auditors’ remuneration

Audit

Tax compliance

Other assurance services

Level 1
K

Level 2
K

Level 3
K

Total
K

3,993,074

–

3,993,074

–

3,993,074

61,587

4,054,661

2015
K

553,000

110,323

–

2014
K

509,000

170,132

190,020

In addition, PricewaterhouseCoopers Securities Limited – Australia provided services to the Company in 2015 in relation to
the acquisition of Maybank (PNG) Limited and Mayban Property (PNG) Limited and for the initial public offering. Fees for
these services charged in 2015 were K4,995,723.

38 . Events after the statement of financial reporting date
Subsequent to the financial reporting date, the directors declared a dividend of 3.95 cents / 10 toea per share total of
(K16.8m). There are no other events after the financial reporting date that require adjustment to or disclosure in the
financial statements.

Kina Annual Report 2016 | Notes to the financial statements 97

For personal use onlyShareholder information

Kina Securities Limited

ARBN: 606 168 594

The distribution of ordinary shares ranked according to size as at 10 March 2017 was:

Size of holding

Nbr of holders

Nbr of shares

% of issued capital

1-1,000

1,001-5,000

5,001-10,000

10,001-100,000

100,001-over

232

300

577

25,716

837,937

2,659,232

16,468,046

144,179,655

0.03

0.90

2.86

18.79

77.42

The 20 largest shareholders representing 80.05% of the ordinary shares as at 10 March 2017 were as follows:

Shareholder

FU SHAN INVESTMENT LIMITED

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

UBS NOMINEES PTY LTD

NATIONAL SUPERANNUATION FUND LIMITED

RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD

WAYNE KENNETH GOLDING

COLUMBUS INVESTMENTS LIMITED

COMRADE TRUSTEE SERVICES LIMITED

J P MORGAN NOMINEES AUSTRALIA LIMITED

NATIONAL NOMINEES LIMITED

COMRADE TRUSTEE SERVICES LIMITED

BNP PARIBAS NOMINEES PTY LTD

HITSUMA SDN BHD

PERPETUAL SHIPPING LIMITED

NEW IRELAND DEVELOPMENT CORPORATION LIMITED

RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED

TRUEBELL CAPITAL PTY LTD

DR DAVID JOHN RITCHIE & DR GILLIAN JOAN RITCHIE

CITICORP NOMINEES PTY LIMITED

KINA ASSET MANAGEMENT NO 1 LIMITED

CAPITAL GENERAL INSURANCE LIMITED

Total

Grand total

Nbr of Shares

% of issued capital

57,295,900

26,338,204

8,050,000

8,000,000

6,038,275

4,846,706

4,068,574

3,500,885

2,215,964

1,687,828

1,600,000

1,295,137

1,000,000

800,000

670,710

653,000

600,000

519,800

515,000

500,000

131,195,983

163,893,253

34.96

16.07

4.91

4.88

3.68

2.96

2.48

2.14

1.35

1.03

0.98

0.79

0.61

0.49

0.41

0.40

0.37

0.32

0.31

80.05%

100%

32,758,650 shares held by Fu Shan Investment limited are held in escrow until 27 July 2017

Kina Annual Report 2016 | Shareholder information

For personal use onlyIssued capital as at 10 March 2017 was:

163,893,253 ordinary fully paid shares

32,758,650 shares are held in escrow until 29 July 2017

The following interests were registered on the Company’s register of Substantial Shareholders as at 10 March 2017:

Shareholder

Nbr of Shares

% of Issued Capital

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

FU SHAN INVESTMENT LIMITED

26,338,204

57,295,900

16.07%

34.96%

The Company’s ordinary fully paid shares are listed on the Australian Securities Exchange and the Port Moresby
Stock Exchange.

At 10 March 2017, there were no holders of unmarketable parcels of ordinary shares in the Company

VOTING RIGHTS ATTACHED TO ORDINARY SHARES

Each ordinary shareholder present at a general meeting (whether in person, by proxy or by representative) is entitled
to one vote on a show of hands, or on a poll, for each fully paid ordinary share held.

Kina Annual Report 2016 | Shareholder information 99

For personal use onlyShare registry

PAPUA NEW GUINEA
PNG Registries Limited
Level 2, Aon Haus
PO Box 1265
Port Moresby
Papua New Guinea
Telephone: (675) 321 6377
Facsimile: (675) 321 6379
Email: ssimon@online.net.pg

AUSTRALIA
Link Market Services Ltd
Level 15, 324 Queen Street
Brisbane QLD 4000
Telephone: 1300 554 474
(within Australia)
+61 1300 544 474
(outside Australia)

AUDITOR
PricewaterhouseCoopers PNG
PwC Haus
Level 6, Harbour City
Konedobu
Port Moresby
Papua New Guinea

STOCK EXCHANGE LISTING
ASX Code: KSL
POMSoX Code: KSL

WEBSITE
www.kina.com.pg

Corporate directory

KOKOPO OFFICE
ENB Savings and Loans Society
Building (Suite 3)
P.O Box 1269, Kokopo
East New Britain Province
Papua New Guinea
Telephone: +675 982 5278
Facsimile: +675 982 5416

Branch offices

WAIGANI BRANCH
Cnr. Waigani and Islander Drive
Waigani NCD
Telephone: +675 325 7792
Facsimile: +675 325 6128

LAE BRANCH
Ground Floor
Nambawan Haus
2nd Street
Lae, MP
Telephone: +675 472 7188 /
+675 472 8175
Facsimile: +675 472 8176 /
+675 472 7166

VISION CITY
Ground Floor
Vision City Mega Mall
Waigani Drive
Waigani NCD
Telephone: +675 323 0750
Facsimile: +675 310 0020

KOKOPO BRANCH
Suite 3,
ENB Savings and Loan Society Building
Williams Road
Kokopo, ENBP
Telephone: +675 982 5278
Facsimile: +675 982 5416

MT HAGEN OFFICE
Office 5
Komkui Building
Mt Hagen, WHP
Telephone: +675 542 2306
Facsimile: +675 542 3680

Directors
Sir Rabbie Namaliu (Chairman)
Sydney Yates (CEO)
David Foster
Wayne Golding
Karen Smith-Pomeroy
Isikeli Taureka
Jim Yap
Don Manoa (ceased 18/5/16)
Peter Ng Choong Joo
(ceased 18/5/16)
Hilary Wong (ceased 18/5/16)

Company secretary
Chetan Chopra (appointed 21/6/16)
Kong Wong (ceased 21/6/16)

Registered Office

HEAD OFFICE
9th Level, The Tower
Douglas Street, Port Moresby
National Capital District
Papua New Guinea
Telephone: +675 308 3888
Facsimile: +675 308 3899

VISION CITY OFFICE
Ground Floor
Vision City Building
Sir John Guise Drive P.O Box 1141, Boroko
National Capital District
Papua New Guinea
Telephone: +675 323 0751
or +675 323 0750
Facsimile: +675 310 0020

LAE OFFICE
Ground Floor
Nambawan Super Haus
2nd Street, Top Town
P.O Box 682, Lae
Morobe Province
Papua New Guinea
Telephone: +675 472 7558
or +675 472 7188
Facsimile: +675 472 8176

MT HAGEN OFFICE
Level 1
Komkui Building
Mt Hagen
Papua New Guinea
Telephone: +675 542 2306
Facsimile: +675 542 3680

100

Kina Annual Report 2016 | Corporate directory

For personal use onlyw

www.kina.com.pg

For personal use only