Bermuda First Investment Company Limited - Results Announcement (Excerpt)

Hamilton, Bermuda – 19 September, 2013 – Bermuda First Investment Company Limited (the "Company" or "BFIC"; Ticker: BFIC.BH), an investment holding company with a number of significant investments in BSX Bermuda listed companies, is pleased to announce its results for the quarter ended June 30, 2013 and for the financial period ended June 30, 2013.

Highlights:

•       Profit in the quarter of $4.4 million (including an unrealised profit on the Company’s investments of $4.1 million);

•       Revenue in the quarter of $0.6 million;

•       Market value of listed investments as at June 30, 2013 of approximately $36.7 million;

•       Issue of unlisted warrants to shareholders on a one for three basis with an exercise price of $10.00 per share, to provide the Company with funds to be used to make future investments; and

•       Recommended final dividend to shareholders of $0.20 per share.

Commenting on the financial results, J. Michael Collier, Chairman of BFIC said: “We are pleased to see that a number of the Company’s investments, despite the continuing backdrop of a difficult economy in Bermuda, are starting to show improved results. We are conscious that the economy will remain challenging in the short term but believe that our investments are well positioned if the economy does improve. The Board is please to declare a final dividend for the financial period ended June 30, 2013 of $0.20 a share. “

Financial summary

For the quarter ended June 30, 2013, the Company reported revenue of $0.6 million and profit of $4.4 million (including an unrealised gain on its investments of $4.1 million). Total expenses were $0.3 million with $0.2 million relating to accrued interest expense on the Company’s unsecured 2019 loan notes.

For the financial period ended June 30, 2013, the Company reported revenue of $1.9 million and profit of $2.4 million (including an unrealised gain on its investments of $1.4 million).

As at June 30, 2013, the Company’s investments had a total value of $36.7 million. The Company had shareholders funds as at June 30, 2013 of $19.2 million and unsecured long term seven year loan notes that it issued to its founder shareholders in October 2012 of $17.1 million.

Under International Financial Reporting Standards, the Company values its investments based on an average of the bid and offer prices quoted on the BSX.

Final Dividend

The Company’s Board is recommending a final dividend payment of $0.20 a share. The record date for the dividend will be September 30, 2013 and the payment date will be October 25, 2013.

Investments

KeyTech

On 10 July 2013, KeyTech announced that profit for the year ended 31 March 2013 was $8.3 million versus $7.2 million for the prior year. Operating revenues for the year were $73.9 million as compared to $80.6 million for the prior year. Voice and Data Revenues declined a total of $3.3 million over the prior year. Directory revenues were significantly impacted by the weak economy and were down $0.6 million over the prior year. Hardware and Software Revenues declined $1.2 million. This was offset by reductions in cost of goods sold.

Total operating expenses decreased $12.4 million primarily due to reductions in salary expenses and a one-off amortization expense charge in the prior year. Salaries and employee benefit expenses declined $3.7 million. Staff termination costs were $0.6 million, $2.4 million lower than the prior year. Depreciation and amortization expenses decreased $5.4 million.

Total capital asset expenditure in the current year was $21.6 million compared to $11.7 million in the prior year. This included the purchase of TeleCayman as well as infrastructure build out to increase DSL speeds at BTC and the continuation of the fiber build and IPTV rollout in the Cayman Islands.

Share of income of associates for the year were $6.9 million as compared to $3.2 million for the prior year.

We believe that in the current financial year the benefits of the acquisition of Telecayman and the amalgamation of Logic with Northrock, and in particular the savings associated with Capex and other synergy benefits, will begin to flow through to KeyTech’s financial performance. We continue to believe that KeyTech’s businesses are well positioned for any upturn in Bermuda’s economic performance.

As at June 30, 2013, BFIC was interested in approximately 23.4% of KeyTech’s issued share capital which was valued at approximately $21.3 million.

Post the financial year end, on September 16, 2013, BFIC acquired an additional 935,000 shares in KeyTech, and as at the date of this announcement the Company is now interested in approximately 29.9% of KeyTech’s issued share capital.

Ascendant

Ascendant announced its results for the six months ended June 30, 2013 on September 18, 2013. Consolidated net earnings decreased $3 million to $1.8 million. Investment in iFM Limited (60% owned by Ascendant) and Air Care Limited (now 85% owned by Ascendant) generated a $1.6 million increase in earnings compared to 2012, but these were offset by significant declines in propane gas sales ($1.2 million) and increased operating costs.

BELCO’s electricity sales were unchanged at $66.9 million, driven mainly by an increase in tariffs. Commercial sales declined due to the ongoing economic issues in Bermuda which have materially affected both local and international businesses. This is the fourth consecutive year that Bermuda has seen reduced kWh consumption on the island.

Ascendant is looking at alternatives for its partly frozen defined benefit scheme due to a one-off expense in the period of $905k relating to a change in actuarial assumptions.

The key for the company going forward will be to demonstrate a clear strategy supported by all stakeholders which will include a coherent and fair regulatory environment and transparency over how the strategy will be funded. However, there is no doubt that even though the second half of 2013 will be seasonally better than the first half, Ascendant will continue to face challenges due to the economic environment in Bermuda.

The Company is interested in approximately 10% of Ascendant’s issued share capital and as at June 30, 2013 it was valued at approximately $12.1 million.

Argus Group Holdings Limited (“Argus”)

On 24 June 2013, Argus announced its results for the year ended 31 March 2013. They reported earnings of $12.6 million compared to $1.7 million in the prior year. Argus also reinstated the dividend, at 6 cents per share.

Shareholders’ equity was $95.5 million, representing an increase from $83.8 million one year ago. The earnings per share for the year were $0.60 compared to $0.08 last year. As at March 31, 2013, total assets including Segregated Fund Assets stood at $1.9 billion.

Net premiums written decreased by $2.8 million or 2% and net Benefits and claims decreased by 1% as increasing healthcare costs were offset by lower than expected claims experience primarily in the area of overseas healthcare.

Investment income and share of earnings of associates was $16.5 million. The equity portfolio contributed $5.8 million through net unrealized gains and dividend income whilst the bond portfolio contributed $12 million primarily through interest income and net realized gains during the year. Interest on loan decreased in the year as the loan taken out to fund the construction of 14 Wesley Street was fully repaid during the year. All debt has now been eliminated from the group’s balance sheet.

It is pleasing to see the reinstatement of the dividend and the improved operating results. However, it is clear that in certain areas, notably the health care division, Argus’ operating performance is facing macroeconomic headwinds. The company is now in a much stronger financial position with no debt and it appears that all the material impairment of investments has been realized.

The Company is interested in approximately 2.1% of Argus’ issued share capital and as at June 30, 2013 it was valued at approximately $2.1 million.

Other investments

The Company’s other investments include small holdings in The Bank of N.T Butterfield & Son Ltd (“Butterfield”), West Hamilton Holdings Limited, Bermuda Aviation Services Limited and Watlington Waterworks Limited. Post the quarter end the Company sold its holdings in BF&M Limited and Bermuda Press Holdings Limited, realizing a small profit to the Company.

Butterfield has continued to expand its common share buyback programme which is providing support to the share price and is likely to continue to do so in the short to medium term. Its earnings continue to improve and over the last few quarters it has paid a quarterly dividend of $0.01 per share.

The rate of decline in the earnings reported by the Company’s other investments appears to have reduced which indicates that the economy in Bermuda is declining at a slower pace than in previous years. However, until there is an increase on the number of people living in Bermuda it is clear that any growth in the Bermuda economy will be slow and is unlikely to occur in the short term.

Bermuda First Investment Company Limited is a Bermuda exempt investment holding company with significant investments in a number of BSX listed Bermuda companies. Its main investments are in KeyTech Limited and Ascendant Group Limited. The Company’s core strategy is to continue to build strategic investments in local Bermudian companies. BFIC’s shares and loan notes are publicly traded and listed on the Bermuda Stock Exchange www.bsx.com (Tickers: BFIC.BH and BFICN.BH).

Media Contacts:

Alasdair Younie

Director

Bermuda First Investment Company Limited

Tel: 441-299-2897