In 2008/09 KeyTech successfully completed a number of major infrastructure projects and substantially advanced others which strengthen its position as a diversified communications service provider. Investment in infrastructure for the year totaled $46.3M of which $26.4M relates to the Challenger submarine cable system.

In terms of operating conditions for the twelve months it was a tale of two halves. Initially KeyTech’s dual approach of targeting revenue growth in data and tight control of operating costs achieved anticipated net income results. However by the end of the second quarter, September 30, 2008, the changing global economic conditions began to impact revenue opportunities with customers changing their plans in anticipation of continued global recession in 2009.

“Like our customers, we re-evaluated our short-term economic outlook and implemented a number of initiatives, both short and long-term, that we believe will effectively cut costs while improving both product and customer service. We have reduced maintenance rates with a number of suppliers, frozen executive salaries at current pay levels and revamped organizational structures with a reduced total number of staff positions”, said KeyTech CEO Sheila Lines

KeyTech completed the year ending March 31, 2009, with net income of $10.6 million, down from $14.6 million in the prior year.

Total revenues for 2008/09 decreased 2.8%, or $3M, to $105.5 million due to declines in fixed line local voice revenue, consistent with industry trends, and in hardware sales. Partially mitigating the impact of these declines, data revenues increased in the year. In the prior year revenues grew 3% as the growth in data and cellular revenue streams more than offset the diminishing fixed line local voice revenue. “The slower growth of new revenues in 2008/09 is consistent with more challenging current economic conditions.” said KeyTech CEO Sheila Lines.

Total operating expenses for 2008/09 increased 0.7%, or $0.7M, due to a $4.3M increase in maintenance costs driven by increased electricity costs, construction of temporary office space as the internal renovations of 30 Victoria Street continue and increased warranty and materials costs. Partially offsetting these maintenance cost increases were reductions in all other categories of operating expenses year over year. In the current year and prior year KeyTech was fortunate in not suffering significant windstorm or hurricane damage to plant and facilities.

Due to general poor investment conditions in 2008/9 and also the realization of a substantial portion of marketable securities in the summer of 2008 to fund capital projects, investment income combined with realized gains, losses and depreciation on investments decreased from income of $1.1M in the prior year to a loss of $0.4M in the current year. Equity earnings in affiliates increased $0.6M in the current year.

Three major capital projects were completed in the year: the Challenger high speed submarine cable, M3 Wireless WCDMA/3G network, and BTC’s Internet protocol Next Generation Network. In addition, M3 Wireless introduced the much sought after iPhone to Bermuda in April 2009. “Challenger forms a key platform of our long-term strategy of growing data revenues as does the launch of M3 Wireless’ high speed 3G network which interoperates with M3 Wireless’ existing 2G network, providing additional network resiliency”, said KeyTech CEO Sheila Lines.

The transition in the year of BTC’s core network to a Next Generation Network based on Internet protocol is in keeping with global technological changes in the telecommunications industry. BTC is also implementing a new integrated billing and operations support system which combines in one system outside plant and network records, customer service orders and billing.

Logic has continued to grow corporate and residential data revenues. Logic launched the Detechtives in June 2008 and new “Colours of Logic” bandwidth speeds of 3 and 4 megabytes per second in November 2008. The Detechtives, Logic's certified team of computer technicians, offer diagnostics, virus clean-up, installations, Internet set-up, and much more.

The 2009-10 Bermuda Telephone Directory, distributed in June 2009, is packed with valuable community and advertisers’ information. Bermuda Yellow Pages also began in-house production of videos for customers and video tours of Bermuda and Bermuda events which can be viewed on www.bermudayp.com.

In the Cayman Islands, KeyTech’s subsidiary WestTel, determined that while fixed wireless is suitable for residential service delivery, corporate customers prefer provision of data service over wire line. WestTel therefore commenced construction of a fibre network in George Town with service offered to customers on the first section in March 2009.

Cable Co., a newly created KeyTech subsidiary, constructed and operates a submarine high capacity cable system, Challenger. Challenger was completed on budget at $26.4M and ahead of schedule in December 2008. Challenger provides international bandwidth to carriers, enabling them to better serve Bermuda’s business and residential customers.

“We anticipate that the economic environment will continue to be challenging and we have taken steps to prepare to weather a softer revenue environment. Nevertheless we face 2009/10 with the excitement of a service provider who has new products and services to offer based on our recent investments”, said KeyTech CEO Sheila Lines

Total cash dividends paid to common shareholders for the year was $0.60 per common share, the same level as in the prior year. A 1 for 10 share dividend for the holders of the common shares was declared and issued fully paid on July 24, 2008. At the end of the year, net assets per common share were $9.87, compared to $9.96 in the prior year.

The dividend for the common shareholders of KeyTech Limited for the quarter ending June 30, 2009 will be 15 cents per share.

KeyTech’s basic and fully diluted earnings per common share for the year were $0.724 compared to $1.002 in the prior year.

Operating revenues for the year were $105,483,253 as compared to $108,477,914 for the prior year.

Net income attributable to shareholders was $10,551,303. Net income attributable to shareholders for the prior year was $14,595,959.

Total equity earnings in affiliates for the year were $1,135,084 as compared to $487,726 for the prior year.

Investment income and realized losses and gains were a loss of $164,085 for the year and realized depreciation on investments was a loss of $190,376 for the year. Investment income and realized losses and gains for the prior year were an income of $1,101,048.

Non-controlling minority interests for the year were $489,600 of earnings as compared to $63,846 for the prior year.

During the financial year KeyTech invested $46,324,188 in capital assets. During the prior year KeyTech invested $24,849,063 in capital assets.