Kina Securities : Appendix 4E Preliminary Final Report - 31 December 2021

For personal use only

28 February 2022

ASX/PNGX | Announcement

ASX Markets Announcement Office	PNGX Markets
Exchange Centre	Harbourside West Building
20 Bridge Street	Unit 1B.02, Level 1, Stanley Esplanade
Sydney NSW 2000	Down Town, Port Moresby 121
Australia	Papua New Guinea

BY ELECTRONIC LODGEMENT

Appendix 4E - Preliminary Final Report

Please find attached for release to the market, Kina Securities Limited (ASX:KSL | PNGX:KSL) Appendix 4E - Preliminary Final Report for the year ended 31 December 2021.

ENDS

This Announcement was authorised for release by Kina Securities Limited's Board of Directors.

For further information:

Samantha Miller

Executive General Manager Investor relations, Corporate Affairs and ESG

Email:[e-mail]

Phone: [phone]

For personal use only

Kina Securities Limited 2021 Full Year Results

(ABRN 606 168 594)

Incorporating the requirements of Appendix 4E

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ASX Appendix 4E

For the Full Year ended 31 December 2021

Results for announcement to the market

Comparisons of the current year results to 31 December 2021 (FY2021, reporting period) are with the full year to 31 December 2020 (FY2020, previous corresponding period (PCP)).

										Change Dec21 vs Dec20
		PGK			Dec-21		Dec-20	PGK'000	%
		Revenue from ordinary activities			334,366		314,794	19,572	6%
		Profit from ordinary activities	106,020		109,906	(3,886)	(4%)
		Underlying Net Profit after tax	96,157		75,974	20,183	27%
		Net Profit after tax attributable to equity holders	70,813		75,974	(5,161)	(7%)
		Net Tangible Assets per security (PGK)				1.69		1.69
		Dividends		FY 2021		FY 2020
		Dividends distributions (Final dividend)
		- unfranked (AUD cents per share)	7.0 cents		6.0 cents
		- unfranked (PGK toea per share)	18.5 toea		16.9 toea
		Dividends distributions (Interim dividend)
		- unfranked (AUD cents per share)	3.0 cents		4.0 cents
		- unfranked (PGK toea per share)	8.25 toea		10.0 toea
		Full year dividend
		- unfranked (AUD cents per share)	10.0 cents		10.0 cents
		- unfranked (PGK toea per share)		26.8 toea		26.9 toea

The Directors have declared a final unfranked dividend for the reporting period based on the Net Profit After Tax (NPAT) attributable to equity holders for the full year of PGK 70.8m. This is compared to PGK 76.0m for the PCP.

The final dividend is converted based on an exchange rate: 1 PGK = 0.3781 AUD.

The Record date for determining entitlements to the dividend is 4 March 2022.

The financial information contained in this report for the reporting period is presently being audited. The figures for the prior corresponding period are audited numbers.

This report should be read in conjunction with the unaudited Consolidated Financial Statements for the full year ended 31 December 2021 in Section 2.

This report is provided to the ASX under Listing Rule 4.3A

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Table of contents
1. Results Overview ................................................................................................................	4
1.1	Disclosure and Context.....................................................................................................	9
1.2	Financial results for the full year-ended 31 December 2021 ......................................................	10
1.2.1 Statutory Results.....................................................................................................	10
1.2.2 Dividends..............................................................................................................	11
1.2.3 Lending ................................................................................................................	11
1.2.4 Funding ................................................................................................................	12
1.2.5 Net Interest Margin..................................................................................................	12
1.2.6 Non-Interest Income ................................................................................................	13
1.2.7 Operating Expenses .................................................................................................	14
1.2.8 Separation Cost ......................................................................................................	15
1.2.9 Asset Quality and Loan Impairment...............................................................................	15
1.2.10 Capital Adequacy...................................................................................................	17
2. Consolidated Financial Statements.........................................................................................	18
2.1	Statement of Comprehensive Income - consolidated ...............................................................	18
2.2	Statement of financial position - consolidated.......................................................................	19
2.3	Statement of changes in equity - consolidated ......................................................................	20
2.4	Statement of Cashflow - consolidated.................................................................................	21
2.5	Basis of Preparation ......................................................................................................	22
2.6	Non-Cash Financing and Investing Activities..........................................................................	22
2.7	Reconciliation of Cash and Cash Equivalents .........................................................................	22
2.8	Ratios .......................................................................................................................	22
2.9	Earnings Per Share ........................................................................................................	22
2.10 Details of aggregate share of profits (losses) of associated entity ..............................................	22
2.11 Issued Shares .............................................................................................................	22
2.12 Segment Reporting ......................................................................................................	23
2.13 Comparison of Profits ...................................................................................................	24
2.14 Contingent Liabilities ...................................................................................................	24
3. Compliance Statement .......................................................................................................	25

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1. Results Overview

Kina Securities Limited (KSL, Kina, Kina Group, Bank, the Business or the Company) has reported an unaudited statutory Net Profit After Tax of PGK 70.8m for the full year to 31 December 2021. This is compared to PGK 76.0m for 31 December 2020.

The statutory profit has been calculated in accordance with International Financial Reporting Standards (IFRS).

The Board has declared an unfranked final dividend for 2H21 of AUD 7.00 cents per share / PGK 18.5 toea per share. This compares to AUD 6.0 cents per share / PGK 16.9 toea in the PCP.

Key results

	Full Year Ended
	Dec-21	Dec-20	%
Underlying NPAT from ordinary activities (PGK m)	96.2	76.0	27%
Statutory NPAT from ordinary activities (PGK m)	70.8	76.0	(7%)
Revenue (PGK m)	334.4	314.8	6%
FX Revenue (PGK m)	65.6	55.2	19%
Loan impairment expense (PGK m)	(6.5)	(22.0)	(70%)
Cost to income ratio (%) underlying	58.1	58.1	0%
Cost to income ratio (%) statutory	66.3	58.1	14%
Net interest margin (%)	6.7	7.5	(11%)
Return on Equity (%) - underlying	16.7	16.8	(1%)
Return on Equity (%) - statutory	12.3	16.8	(27%)
Earnings per Share (PGK Toea) underlying	33.5	37.3	(10%)
Earnings per Share (PGK Toea) statutory	24.7	37.3	(34%)
Dividend (PGK Toea per share)	26.8	26.9	(0%)
Dividend (AUD Cents per share)	10.0	10.0	0%
Deposit Growth (PGK m)	3,036.9	2,560.7	19%
Net loans and advances (PGK m)	1,950.5	1,614.7	21%
Capital adequacy (T1+T2) (%)	23.3	25.4	(8%)

Operating performance and earnings

Kina's FY21 underlying results demonstrates the organic growth opportunities within the market and the ability to execute on strategic priorities. The statutory results were impacted by one-offcosts associated with the termination of the Westpac acquisition. This cost was an agreed retention of Deposit fee of AUD 10m being costs incurred by Westpac on the separation process. The key results highlights are:

• Underlying NPAT increased by 27% to PGK 96.2m.
• The Loan book grew by 21% growth.
• Foreign Exchange (FX) revenue grew by 19% supported by inflows from new to business commodity exporters on-boarded during the year.
• Effective management of loan levels well within industry benchmarks.
• Fees and Commissions increased by 17% to PGK 89.3m primarily by continued development and build out of the Kina's channel network. Organic growth and digital expansion resulted in an increment of 65% in digital and channel fees.