BSP clarifies results of subsidiary

THE financial results of Fiji-based BSP Convertible Notes Ltd (BCN) for the 2017 is not an indication of the Bank South Pacific Group performance, says Bank South Pacific chief executive Robin Fleming.
He told The National that the bank’s subsidiary was incorporated to give investors an opportunity to buy equity in BSP.
Last week, Fiji Times reported that BCN, which is listed on the South Pacific Stock Exchange, released its audited financial statements for the year ended Dec 31, 2017.
BCN’s net after-tax profit last year stood at F$2.28 million (K3.5 million) when compared with F$2.36 million (K3.63 million) for the same period in 2016.
The profit drop was attributed to the decrease in the support fees received from BSP in Papua New Guinea from F$1.91 million (K2.93 million) in 2016 to F$1.85 million (K2.84 million) in 2017 and the increase in operating expenses from F$33,166 (K51,038) in 2016 to F$58,641 (K90,242) last year.
“BSP Convertible Notes Ltd is a special purpose company incorporated in Fiji and is a wholly-owned subsidiary of Bank South Pacific Ltd (BSP),” Fleming said.
“BCN was incorporated in April, 2010, to facilitate the issuance of convertible notes to Fiji investors and give them an option to own an equity interest in the Pacific’s best bank.
“The funds raised from the issue were invested in a loan to BSP’s Fiji branch and the interest received is the source of income for BCN.
“The convertible notes mandatorily converted to Fiji Class Shares after a period of three years on 20 April 2013, and the noteholders became Fiji class shareholders.
“Following the conversion of the notes to Fiji class shares, BCN is required to make dividend payments to Fiji class shareholders.
“The holder of the Fiji class shares receives dividends equivalent to the dividends that will be paid on BSP ordinary shares listed on Port Moresby Stock Exchange, expressed in Fiji dollars.
“Due to the excellent performance of the BSP Group and the ever-increasing dividends, BSP contributes a support fee to allow BCN to meet its dividend commitments to Fiji class shareholders.
“The financial results of BCN are not an indication of the performance of BSP’s branch in Fiji or the BSP Group.”