THE BUSINESS ARM OF THE EASTERN HIGHLANDS PROVINCIAL GOVERNMENT:

HOME PAGE
BUSINESS & INVESTMENTS

NOKONDI INVESTMENTS, AKOGERE ESTATES, & ALS AUTO REPAIRS

       
Restored houses at Nokondi Compound & the Akogere Estate

2.             Action taken on existing problems 

The closure of the Als Auto Repairs business and subsequent termination of all employees became a priority.   This was done to immediately stop the drain of funds from Akogere Estates to Als Auto Repairs.    

To further efforts to streamline and economise the Nokondi group’s operations PNG Gold Finance (PNGGF) has utilised its own facilities in many instances.  This included the use of PNGGF office and vehicles.  This immediately reduced many overhead expenses.   Furthering the drive for greater efficiency and simplicity of operations, unnecessary bank accounts were closed and one new cheque account was opened with ANZ.  This effectively means that only the Akogere Estates Ltd is trading. 

Thereafter priority was given to the restoration of assets associated with the core-business.  This involved evicting non-performing tenants and engaging in a major restoration programme.   

All evictions proved to be quite difficult, and indeed PNGGF staff were in many cases under threat to personal safety due to the tension still evident from the change of Government, at the time.  Nothwithstanding this, all evictions were completed, irrespective of occupants’ position. 

The restoration program for residences took place over 14 months, with building crews working seven day a week to complete.  Despite pressure from creditors to settle outstanding debts from previous managements, PNGGF channeled efforts and income into restoring the ‘income producing properties’.  It should also be noted many white goods and other chattels required replacement, as they were either damaged or stolen. 

The logic behind this direction was that once the source of income for the company was secured (by repairing properties to a high state of repair), income would then continue uninterrupted, and could then be used to settle creditors and other issues.  In hindsight, this approach has proved to be very successful.   

PNG Gold Finance thereafter made special approaches to major creditors.  Offers to settle the Group’s outstanding debts were made at extremely low prices, in return for expedient payment to the creditor.   After months of negotiations PNG Gold Finance was realising major windfall savings for the Nokondi Group – up to 90% in some cases.  Areas where major savings were achieved include the Westpac loan, PNGVF loan and preferential shares and utility bills (refer attached activity report for details).  Once all payments for creditors were negotiated, payment was delivered promptly as agreed.  

The Nokondi Group was not only under siege from creditors, but it was also being bombarded with claims from various individuals for a range of matters.  During the transition to the new Government, many people thought they could make some easy gains.  PNGGF took a hard line approach to these situations.  Despite intense pressure, all claims were refuted without payment with the exception of Paul Minala, whose relatively small claim proved to be genuine. 

At the same time, it became apparent that the sale of two Nokondi compound properties took place under suspicious circumstances.  PNGGF immediately sought legal advice and is currently persuing Samson Jubi, who has withheld the sale proceeds totaling K220,000.00.  No supporting documentation or records are on file.  Despite having one judgement against Mr Jubi, he has failed to pay judgement monies.   Under further instruction from PNGGF a lockout exercise was carried out at Mr Jubi’s Port Moresby residence (refer attached activity report for details on this case and other cases).

3.             Unresolved issues 

An area that still requires further attention is the large outstanding IRC taxation bill of K612,000.00  refer attached schedule of taxes owing for details.  This outstanding situation needs to be considered with respect to the viability of the other companies.  

4.             Objectives 

Overall objectives have been identified for the management of the Akogere Estates Ltd.  These are to:

(i)                   Continue to develop the reputation of Akogere Estates as an outstanding, reputable supplier of quality rental accommodation;
(ii)                 Continue to develop Akogere Estates into a viable, profitable business able to identify, settle and meet its operational obligations; and
(iii)                Reduce exposure to potential claims and spurious litigation, by maintaining the strong recent legal performance of the company in these types of circumstances in the courts system. 

5.             Current status 

The groups’ assets are now in excellent physical condition.  Aspects of this include the:    

      ·       newly renovated and restored rental properties at Akogere, Numuni and Nokondi compounds;
·       newly sealed road at Akogere Estates;
·       the completion of major repairs and restoration within Akogere, Numuni and the Nokondi compounds; and
·       beautifully landscaped gardens in all locations. 

The group’s operational capability has become highly efficient with:

      ·       a well coordinated internal repairs and maintenance division;
·       improved skill level of maintenance personnel;
·       improved performance of security services, now largely outsourced;
·       streamlined administrative and management functions;
·       ‘performance based’, management fees structure for PNGGF – on its track record - represents excellent ‘Value for Money’, with respect to the fees paid  Vs  the results achieved); 
·       reduction in creditor debt; and
·       the completion of financial statements for Akogere Estates Ltd, Als Auto Repairs Ltd, and the Nokondi Investments Ltd from 1998 to 2004 inclusive.  The final phase to be undertaken will be the appointment of auditors and the subsequent auditing of all accounts. 

6.             Future opportunities 

The group, operating under Akogere Estates Ltd, now stands in a strong position to enter into new business dealings.  One such initiative is the acquisition of Bobiufa Estates, owned by Collins & Leahy Ltd.  After discussions with the vendor, PNG Gold Finance has negotiated a purchase price offering a potential K750,000 saving (listed at K1.25 M and negotiated to K0.5 M).  This low purchase price greatly improves the viability of the Bobiufa project. 

PNG Gold Finance will continue to seek ways to further grow the group’s asset and income base in the most cost effective manner possible, and  identify and implement further opportunities for operational efficiencies in existing businesses. 

NORMAN M CARVER
Managing Director
Gold Finance Ltd
Managment Company for the
Nokondi Group of Companies

 ________________________________________________________________________________________________________