K900m returns report not quite accurate

 I WOULD like to convey to the people of PNG that the headline “PNG rakes in K900m” (Post Courier, May 26) is misleading and has definitely been wrongly perceived by many who do not have any financial management background or understanding of the process involved in shareholding, share buying or selling (speculation) and dividend payouts. 

PNG did not rake in any liquid cash or money. 

What exactly happened here is the value of shares in Oil Search went up or appreciated from the price initially paid by the GoPNG due to market forces of demand and supply. 

No shareholder, including GoPNG, received any cash or money. 

It is only a paper reflection of what could be received if GoPNG sells its shares at the increased price now. 

Note that a shareholder can only receive a return on investment when dividend is declared; usually done after the financial year-end and if the company makes net project and the board of directors declare dividend payout. 

Alternatively a shareholder, such as GoPNG, can rake in K900 million if it decides to sell its 10.01% shareholding with Oil Search at the current market price while dividend payouts will be at a price or share, which is presumably lesser. 

The investment has not paid off yet, so it is premature to say that PNG has raked in K900m or return on investment. 

Tok Tru Advocate, Via email