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KeyTech Issues Preliminary Announcement Of Six Month Interim Results
Hamilton, Bermuda, December 12, 2005 - KeyTech consolidated net income for the six month period ended 30th September 2005 increased $1,071,053 to $6,305,116 compared to net income for the same period last year of $5,234,063.
Operating revenues for the period were $51,297,839 as compared to $50,453,867 for the same period last year, an increase of $843,972. This increase can be attributed to increased revenues from M3 Wireless cellular services, Logic professional consulting services and to increased directory revenue from the Bermuda Yellow Pages.
Operating expenses for the period were $34,934,283 as compared to $34,577,183 for the same period last year, an increase of $357,100. In early October 2005 a "Lapping" scheme, unlawfully implemented and operated by several long-term employees over a period of years was revealed within BTC's Banking Administrative and Cashiering function ("Lapping" in this instance, involved concealing cash shortages by delaying bank deposits until the amount could be made up from subsequent cash receipts). Management has taken appropriate action to deal with the individuals involved and with the assistance of a forensic auditor, a plan to minimize the risk of fraudulent activities in the future has been implemented. As a result of the investigation BTC has reduced its reported cash balances by $1,314,497 being the cumulative impact of the irregularities over a period of years. The adjustment is included in operating expenses for the current six month period. Excluding this adjustment to cash balances operating expenses were $957,397 lower than the prior six month period primarily due to the lower salary costs resulting from the restructuring accomplished during the prior year.
Earnings per share for the six month period ended 30th September 2005 were $0.52 compared to $0.43 for the same period last year.
BTC has continued to solidify its role as the center for connectivity in the island's telecommunications infrastructure and over the last six months has increased its number of DSL (Digital Subscriber Lines) and achieved operational efficiencies achieved through restructuring completed in early part of 2005.
M3 Wireless has responded to customer feedback by completing significant upgrades to its infrastructure - improved signal coverage, expanded roaming to more than 140 countries and the launch of the Blackberry product.
Logic continued to lead the marketplace with the September launch of its unlimited US/UK/Canada calling plan for a flat rate of $45 per month and has also generated significant revenue growth in professional consulting services.
Bermuda Yellow Pages had another successful directory campaign and page views on BERMUDAYP.COM have increased significantly. In August 2005 Bermuda yellow Pages launched JUSTYELLCLASSIFIEDS.COM, a free social networking site geared to attract and drive relevant traffic to the BERMUDAYP.COM site and in doing so, provide greater value to advertisers.
During the six month period, KeyTech invested $6.7 million in capital assets. The amount invested in capital assets in the prior period was $7.3M.
Equity losses in Affiliates for the six month period increased to $881,914 as compared to $340,572 the prior period due to significant capital investment expenditures by QuoVadis to upgrade and expand their Disaster Recovery and Certificate Authority Services, and additional funding required by WestTel to accelerate the rollout of residential coverage in the Cayman Islands.
Investment income from marketable securities for the period was $299,590 compared to $354,124 for the same period last year.
Other income of $1,735,275 in the current six month period represents a gain from the sale of Packet Exchange shares in April, 2005. There was no other income in the prior six month period.
Consolidated net income before discontinued operations for the current six month period is $7,884,902 as compared to $5,920,160 for the prior six month period.
KeyTech had invested in The Bahamas Data & Media Limited ("BD&M"), a competitive hard copy and on-line directory business in the Bahamas. While of superior quality sales targets for the directory were not achieved and the Company decided to discontinue funding BD&M. Losses from discontinued operations of $1,579,786 in the current six month comprise results for BD&M for the current six month period and the provision in full against the loan to BD&M included in the 31st March 2005 audited financial statements. In the prior period the loss from discontinued operations of BD&M was $686,097.
The Company declared a common share dividend of $0.15 per share for the quarters ended 30th June 2005 and 30th September 2005.
The Company has also declared a common share dividend of $0.15 per share payable on 14th January to shareholders of record on 30th December 2005.