West Hamilton Holdings Ltd Releases 2011 Annual Report

Hamilton, Bermuda – 11 May, 2012 – West Hamilton Holdings Limited (the “Company”; Ticker: WHHL.BH) today released the Company’s financial results for the year ended 31 December, 2011. In a letter to shareholders Mr. David White, President & Chairman, stated;

Introduction

This was a year of continued pressure on rental rates as a result of increasing vacancies from existing properties and additional space being added to the market. Our focus has been on retention strategies to maintain our current tenants by keeping operating costs down and responding to the needs of our tenants. The Company’s balance sheet was strengthened substantially as a result of the rights issue in July 2011.

Profitability

Notwithstanding a difficult operating environment with high vacancy rates, fierce competition in the market and lower rental rates, the Company earned a net operating income for the year of $633,130 compared with $562,458 in 2010 an increase of $70,672 or 12.56 percent.

Despite the pressure on pricing, rental income for the year totaled $2,120,159 as compared with $2,006,991 in 2010, an increase of approximately 5.6 percent. The average rental rate decreased to approximately $42.00 per square foot compared with a high of $49.00 per square foot in previous years.

This reduction has been offset by increasing demand for parking spaces, which is expected to continue especially in 2013 when the new Waterloo building is occupied.

The financial statements have been prepared in full compliance with International Financial Reporting Standards (IFRS) which was adopted in 2011 and permitted certain items to be brought into the income statement to calculate total comprehensive income.

During the year ended December 31, 2011 the Company reported a gain of $72,823 within other comprehensive income compared with a loss of $377,912 for 2010. The change in comprehensive income is primarily related to the change in certain marketable securities that are held for resale.

As a result of the adoption of IFRS, the total comprehensive income for the year was $705,953 compared to $184,546 in 2010 an increase of $521,407. The change in comprehensive income is not related to our core business and this level of fluctuation will persist in future years based on the change in market prices of the securities held in the Company’s portfolio.

Operating expenses were relatively flat when compared with the previous year and it is expected to be lower in 2012 because of efficiencies that will be realized from operational enhancements.

Interest expense increased by $63,077 compared with the previous year while the borrowing rate remained fixed at 3.0 percent and will remain so until the 3 month Libor goes above 1.5 percent. Interest expense is expected to be reduced sharply in 2012 as the Company’s debt was reduced by $7.0 million in 2011.

Strengthening the Balance Sheet

In July 2012, the Company successfully completed a rights issue by offering one common share for each common share in issue at a price of $6.50 to raise approximately $9.3 million. The rights were offered to members in proportion to their holding of shares on the effective date of the offering.

Current assets, which include cash and other assets that could readily be converted into cash, increased significantly to $10.25 million compared with $2.89 million in 2010. The increase is directly related to proceeds from the rights offering.  There were no new additions to the property except upgrades to operating systems and structural changes to the building.

Total assets increased to $34.36 million compared with $27.24 million at the end of 2010 an increase of $7.12 million with the property measured on a cost basis.

The property was recently appraised by Rego Realtors (Bermuda) Limited and in their opinion the value is between $61.0 million and $64.0 million although in management’s opinion realizable value cannot be reliably estimated at this time.

Since the Company has adopted IFRS, it could choose to record the value of the property at market which would increase the total assets to more than $71.0 million or greater than twice the value reported on the balance sheet. 

Total liabilities decreased from $18.65 million at the end of 2010 to $15.99 million at the end of 2011. The decrease of $2.66 million is attributed mostly to the repayment of a short term loan of $2.0 million.

Shareholder equity increased by $9.79 million. The rights offering contributed $9.08 million, net of underwriting costs. Book value per share at the end of 2011 was $6.36 and $5.94 at the end of 2010. This represents an increase of $0.42 cents per share or 7.07 percent.

As set out above, the Company completed a rights offering in which Bermuda Commercial Bank Limited (“BCB”) was appointed the underwriter and sponsor of the rights offering. The rights offering was made public by an offering document approved by the Company and the Bermuda Stock Exchange. Following the conclusion of the rights offering BCB became the major shareholder in the Company owning approximately 41 percent of the Company’s outstanding shares.

The rights offering raised $9.38 million dollars (gross) and 1,443,910 million new shares were issued of which approximately 28 percent were issued to current shareholders with the remaining shares issued to the underwriter, BCB, pursuant to the terms of the underwriting agreement. The net proceeds after deducting the cost of underwriting amounted to approximately $9.0 million.

These proceeds were used to repay a short term loan of $2.0 million with Butterfield Bank. Subsequent to the end of fiscal 2011 a further amount of $5.0 million was used to repay part of the construction loan of $15.0 million provided by Butterfield Bank in 2009. The remaining $2.0 million will be used during 2012 to fund remediation works identified by Woodbourne Associates to prolong the life of the Belvedere Building and to enhance its attractiveness.

Property Matters

Since the downturn in the commercial real estate market in Bermuda, the Company has focused on strategies to retain our tenants. I am pleased to inform you that the Company has secured tenancy renewals for 2012 with options to renew for 2013 from all major tenants. In addition, the Company has signed leases from three tenants occupying 7,119 square feet, which expire in 2015.

The vacancy rate for the Belvedere building in 2011 was 5.6 percent and approximately 15 percent for the parking facility.

Our success in remaining competitive in a challenging market was realized from our focus on tenant retention by providing quality service on a timely basis.

During the year several modifications and enhancements to building and operating systems were completed based on requests from our major tenants.

During the year the Company entered into a mediation agreement with Butterworth Associates, the architect of record for the construction of Phase I, which was completed in February 2011. An amicable settlement was reached between the parties and the Company retained the copyrights to the design drawings prepared by Butterworth Associates. 

Looking Forward

In the near to middle term, we anticipate that our tenants will continue to operate their businesses from our premises because of competitive rates and quality service.

Our plan to develop the property by constructing four new buildings yielding 133,640 square feet of office space, 33,540 square feet of residential space and underground parking for 181 cars remains our long term objective.

We are currently in discussion with several interested parties including our major shareholder, BCB, to construct the first of the four buildings.

We look forward to 2012 and beyond with great enthusiasm and expectation for continued success in a difficult economic environment which is expected to continue for a few more years.

Other Matters

During the year we were saddened to learn of the death of Mr. B. W. “Jordy” Walker who served admirably as a Director for many years. It should also be noted that our long serving maintenance person Mr. Henry Whitter retired in March 2011.

Finally, we would like to thank our clients, staff and the Directors for their participation, dedication and support during the past year.

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About West Hamilton Holdings Limited: The Company was incorporated in Bermuda in 2007 at which time the directors of the Company approved a reorganization of the West Hamilton Group of Companies. The primary assets of the Company consist of real property at 69 and 71 Pitts Bay Road, Pembroke HM 08. It remains the Company’s intention to develop this site by constructing four new buildings yielding 105,000 square feet of office space, 40,000 square feet of residential space, 8,000 square feet of retail space and underground parking for approximately 181 cars.

Contact:

Harrichand Sukdeo

Chief Financial Officer                       Tel: (441) 295-3985