KeyTech Advises BSX of Preliminary Announcement of KeyTech Results For The Financial Year Ended 31st March 2006

Hamilton , Bermuda: June 29, 2006 - As a preliminary announcement of results for the full financial year to 31^St March, KeyTech Limited reports consolidated net income of $11,677,203.

Following a year of intense competition, the KeyTech Group of Companies is pleased to announce that it has delivered a Net Income of $11.7M for the fiscal year ending March 31st, 2006, an increase of 16% over the prior year's return. Basic and Fully diluted Earnings per Share were $0.97 up 13.5 cents or 16% over the prior year.

Total operating revenues were $98.9 M, up $1.6M from $97.3M in the prior year with growth in wireless, consulting and directory revenues exceeding the decreased revenue from residential Internet services due to price reductions. [1]  Total expenses decreased to $86.2M down $4M from $90.2M in the prior year, primarily due to a decrease of $3.4M in amortization expenses. Prior year amortization included a $1.8M adjustment to reflect M3 Wireless's transition from a TDMA to GSM cellular technology.  Included in general and administration expenses for the current year is a $1.3M adjustment made to reflect the cumulative impact of the irregularities discovered in October 2005 within the Banking and Cashiering sections of the BTC Finance Department. The Company has zero tolerance for fraud and appropriate action has been taken to address this matter.

Losses in Affiliates were up by $0.3M to $1.65M as a result of timing delays in building out signal coverage for WestTel in Cayman and in expansion of infrastructure for QuoVadis. Losses from discontinued operations in the current year of $1.6M arise due to the discontinuance of operations by Bahamas Data & Media Limited. These losses are offset, however, through additional income of $1.7M realized in April 2005 from the sale of KeyTech's interest in PacketExchange (Ireland) Limited.

Income from continuing operations for the current year was $13.3M. Excluding the one time gain made on the sale of the investment in PacketExchange and the adjustment made to reflect the cumulative impact of the banking and cashiering irregularities, income from continuing operations for the current year was $12.9M.

"In an ever changing industry, our challenge has been to continue to position our companies to maintain and grow market share. The diversification within the Group has supported our efforts in this regard but it has also been equally important to develop flexibility and agility in responding to change," said Mrs. Sheila Manderson, CEO KeyTech Limited, "We have focused on product development and explored opportunities to grow and provide state of the art products and services to our clients."

Total cash dividends paid to common shareholders for the year was $0.60 per common share, the same level as in the prior year.  At the end of the year net assets per common share were $11.32, increased from $10.95 in the prior year.

During the financial year KeyTech invested $16.7 million in capital assets, to maintain existing plant and improve its networks, and also support provision of new services.  KeyTech continues to recognize the value in continuing to invest in Bermuda's telecommunications infrastructure where an adequate return for its shareholders will likely be achieved.  During the prior year KeyTech invested $16.2 million in capital assets. 

The dividend for the common shareholders of KeyTech Limited for the quarter ending 30th June 2006 will be 15 cents per share.  It will be payable to the common shareholders of record on 6th July 2006 and the payment date will be 17th July 2006.  The Directors of KeyTech have also declared a 1 for 10 share dividend for the holders of the common shares, to be issued fully paid by way of capitalization of reserves otherwise available for distribution (retained earnings).  The record and payment date of the 1 for 10 share dividend for the common shares is 24th July 2006.

The KeyTech Annual General Meeting will be held at 4pm on Friday, 21July 2006.  The record date for Members entitled to receive notice of and to vote at this Annual General Meeting will be Tuesday, 4 July 2006.

Operating revenues for the year were $98,899,022 as compared to $97,292,392 for prior year. 

Total equity loss in affiliates for the year was $1,651,636 as compared to $1,335,602 for the prior year. 

Investment income for the year was $629,355.  Investment income for the prior year was $489,699.

Other income for the year was $1,677,275 and includes the gain realized in April 2005 from the sale of KeyTech's interest in Packet Exchange (Ireland) Limited. 

Net income before discontinued operations was $13,309,165.  Net income before discontinued items for the prior year was $11,237,431.

Losses attributable to discontinued operations were $1,631,962 for the year and $1,184,154 for the prior year.

Net income after discontinued operations for the year was $11,677,203 as compared to $10,053,277 for the prior year.

KeyTech's basic and fully diluted earnings per common share for the year were $0.970 after discontinued operations.  KeyTech's basic and fully diluted[2] earnings per common share for the prior year after discontinued operations were $0.835. 

KeyTech's basic and fully diluted earnings per common share for the year were $1.106 before discontinued operations.  KeyTech's basic and fully diluted earnings per common share for the prior year before discontinued operations were $0.933.

Total cash dividend payments for the year and prior year were $0.60 per common share.

    _______________