Bermuda First Investment Company Limited - Q4 2014 Results

Hamilton, Bermuda – 19 September, 2014 – Bermuda First Investment Company Limited (the "Company" or "BFIC"; Ticker: BFIC.BH), a BSX listed investment holding company which owns a number of significant investments in BSX Bermuda listed companies, announces its results for the year ended June 30, 2014.

Highlights:

•       Profit before unrealized loss on investments for the year ended June 30, 2014 of $1.5 million (2013: $1.0 million);

•       Revenue of $2.7 million (2013: $1.9 million);

•       Market value of investments as at March 31, 2014 of approximately $31.5 million; &

•       Final dividend of $0.20 per share (2013: $0.20 per share).

Commenting on the financial results, J. Michael Collier, Chairman of BFIC said:

“The value of the Company’s assets during the year has been adversely affected by the decrease in share prices of our two major investments, Ascendant and KeyTech. We continue to believe that both companies are significantly undervalued but recognise the difficult macroeconomic environment they currently operate in. We are supportive of the corporate transactions recently completed by KeyTech and we believe they will prove to be transformational.

We are announcing a final dividend of $0.20 per share which is maintained from the prior year. We believe that the next twelve months will continue to be difficult in Bermuda but the opportunities for a company such as KeyTech are significant and we look forward to their growth over the next few years.“

Financial summary

For the quarter ended June 30, 2014, the Company reported revenue of $0.5 million and profit of $0.1 million (before an unrealised loss on its investments of approximately $6.2 million, relating to the movement in the value of the Company’s investments between March 31, 2014 and June 30, 2014). Total expenses were $0.4 million with $0.3 million relating to accrued interest expense on the Company’s unsecured 2019 loan notes. The Company’s diluted loss per share was $3.08.

For the year ended June 30, 2014, the Company reported revenue of $2.7 million (2013: $1.9 million) and profit of $1.5 million (2013: $1.0 million) (prior to an unrealised loss on the Company’s investments of approximately $13.6 million).

As at June 30, 2014, the Company’s investments had a total value of $31.5 million and the Company had net debt of $5.6 million. The Company had shareholders’ funds as at December 31, 2013 of $8.9 million and unsecured long term seven year loan notes that it issued to its founder shareholders in October 2012 of $17.1 million.

Investments

KeyTech Limited (“KeyTech”)

KeyTech recently announced that it had sold 100% of its interest in BTC to Barrie OpCo Limited (“Barrie”), a private equity group, for a total consideration of $30 million, comprising $25 million in cash and $5 million in vendor financing through the issue to Barrie of a 5 year loan note bearing 4% interest. In addition to the sale of BTC, KeyTech announced the acquisition of BOTCAT, that owns 100 per cent. of WestStar TV Ltd. in Cayman and a 40% interest in CableVision Holding Ltd in Bermuda. As a result of this acquisition KeyTech will now have a controlling interest of 68% in Cablevision. The BOTCAT acquisition was financed through a combination of debt and equity. The debt was financed through senior debt of $45.0 million (five year loan from HSBC) and subordinated debt issued to the shareholders of BOTCAT of $23.9 million. In addition KeyTech issued 2,424,242 shares to BOTCAT shareholders which represent 14% of KeyTech’s enlarged share capital.

Whilst recognising the significant risks, both financial through the increase of debt on it balance sheet and operational and management risks associated with a significant acquisition, we support these transactions as they are expected to be transformational for KeyTech.

Ascendant Group Limited (“Ascendant”)

Ascendant are expected to release its results for the six months ended June 30, 2014 shortly. We do not expect the results to be materially different to recent reporting periods. Demand at BELCO is likely to continue to be subdued in light of a mild winter and the continuing slow growth in Bermuda. We anticipate that the company will present an update on the LNG project but progress is likely to be slow give Government support will be required in a number of different ways.

In June, Ascendant announced that it was reducing its annual dividend from $0.85 to $0.30 per share. This was due to a combination of the current financial results and the future CAPEX investment required as part of Bermuda’s energy future. We expect earnings to remain depressed for the foreseeable future. However, given the significant discount to book value Ascendant still remains an interesting investment opportunity.

Argus Group Holdings Limited (“Argus”)

Argus released its results for the year ended March 31, 2014 on July 21, 2014. Argus announced earnings of $13.2 million (2013: $12.8 million) and declared an interim dividend of 7 cents a share.

Shareholders’ equity was $106.9 million (2013: $94.4 million). Argus reported a return on average shareholders’ equity of 13.2% (2013: 14.5%), earnings per share were $0.63 (2013: $0.61) and total assets including segregated fund assets stood at $2.1 billion. Net premiums written increased by $3.0 million or two per cent. from a combination of new business and high client retention levels. Net benefits and claims decreased by seven per cent. and investment income decreased significantly compared to 2013. Argus reported an unrealised loss on its fixed income portfolio of $5.3 million compared to a $2.7 million gain in 2013. Operating expenses decreased by three per cent.

These results were in line with our expectations and continue the theme over the last 24 months of a company repairing its balance sheet and reducing the impact of historical investments. The key moving forward will be how can Argus grow its bottom line particularly as it is primarily exposed to an economy which continues to experience minimal growth.

Other investments

The Company’s other investments include small holdings in BF&M Limited, Bermuda Aviation Services Limited and Watlington Waterworks Limited.

Whilst it was encouraging to see GDP in Bermuda on a nominal basis grow in 2013, there are no signs that the economic recovery will be anything other than slow unless significant decisions are made to encourage business investment in Bermuda and there is a marked increase in resident numbers. The fall in the share prices of our core investments, Ascendant and Keytech, continue to highlight the difficult conditions that they face but we remain of the opinion that with management taking proactive steps, as KeyTech have recently done, that they still represent attractive investments for the long term.

About Bermuda First Investment Company Limited

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 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).

For more information, including the full text of this release, visit www.bfic.bm

Media Contacts:

Alasdair Younie

Director

Bermuda First Investment Company Limited

Tel: 441-299-2897

Email: ay@icm.bm