Bermuda First Investment Company Results

December 11, 2014

Bermuda First Investment Company Limited [BFIC], a BSX listed investment holding company which owns a number of significant investments in BSX Bermuda listed companies, announces its results for the three months ended September 30, 2014.


  • Revenue of $0.2 million [2013: $0.8 million];
  • Market value of investments as at September 30, 2014 of approximately $30.5 million.

Commenting on the results, J. Michael Collier, Chairman of BFIC said: “The Company’s major holdings in Ascendant and Keytech have fallen in value during the quarter. This is a continuation of the weak share price performance over the last 12 months and is a reflection of the challenging Bermuda economy.

“However, we were pleased with the corporate transactions announced by KeyTech in September and with Bermuda hosting the America’s Cup in 2017 and other planned infrastructure projects we are optimistic that our investments are well placed to take advantage of any upturn in the Bermuda economy.“

Financial summary

The filing said, “For the quarter ended September 30, 2014, the Company reported revenue of $0.2 million and loss of $0.3 million [before an unrealised loss on its investments of approximately $1.9 million, relating to the movement in the value of the Company’s investments between June 30, 2014 and September 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 $1.10.

“As at September 30, 2014, the Company’s investments had a total value of $30.5 million and the Company had net debt of $6.7 million. The Company had shareholders’ funds as at December 31, 2013 of $6.7 million and unsecured long term seven year loan notes that it issued to its founder shareholders in October 2012 of $17.1 million.


KeyTech Limited

“KeyTech released its results for the year ended 31 March 2014 on 31 October 2014. It reported earnings of $5.7 million compared to $8.3 million in the prior year. Operating revenues were $81.1 million [2013: $74 million]. Data revenues increased by $5.5 million which was primarily driven by Logic’s amalgamation with North Rock.

“Voice revenues declined by $0.3 million and directory revenues by $0.4 million due to the weak Bermuda economy. The share of income of associates was $7.9 million [2013: $6.9 million]. Operating expenses increased by $9.8 million due to the company’s acquisition strategy. One-time redundancy costs were $0.9 million and depreciation expenses increased by $4.1 million.

“We believe the results hide the strategic progress that KeyTech has made over the last 12 months. The transactions completed in September 2014 have positioned the company for growth in the coming years.

“Growth will not be automatic and there are significant risks both financial and operational but as an entity KeyTech is better placed to deal with the rapidly changing technology world. In order to fully benefit from the synergies associated with the acquisition of an additional stake in Cablevision and WestStar in Cayman, KeyTech announced that it had suspended its dividend for the two quarters ending 31 December 2014.

“Whilst disappointing, we are supportive of the decision as we believe in the long run KeyTech will be able to execute its strategic plan more effectively.

Ascendant Group Limited

“Ascendant released its results for the six months ended 30 June 2014 on 19 September 2014. Net earnings decreased by $0.6 million to $1.2 million. Earnings improved at Bermuda Gas and AG Holdings but these were offset by increased expenses at the holding company and decreased operating results at BELCO. Ascendant’s book value was $30.37 as at 30 June 2014 [2013: $30.64].

“BELCO’s sales revenue excluding the cost of fuel, decreased by $1.1 million compared to 2013. A graduated facilities charge aimed at reducing the charge for those who consume less electricity was introduced in June 2014. The overall decline in electricity sales was due directly to decreased residential kWh sales in the order of $1.8 million. This is the fifth consecutive year of reduced consumption.

“Demand customer sales increased by $0.6 million driven principally by new projects such as the hospital coming online. Commercial sales were largely flat compared to 2013.

“Bermuda Gas’ net income increased by 31% in 2014 due to improved service and parts sales. Ascendant operating expenses decreased by $0.6 million due to a decrease in the BELCO DB pension plan expenditure.

“Ascendant’s IRP for Bermuda’s energy infrastructure development continues to progress and we anticipate further information on this plan in 2015. Ascendant’s results are usually second half weighted so we would expect to see a significant improvement in the second half. However, this will be tempered by the continued weak performance of the Bermuda economy and the two significant storms that affected Bermuda in October 2014.

Argus Group Holdings Limited

“Argus announced on 19 November 2014 that it had acquired the client portfolio of Millenium Insurance Agency Ltd in Malta. The acquisition is intended to strengthen Argus’ existing commercial customer base while growing through new and complementary lines of business. There were no financial details published in relation to the transaction.

“We do not see this as a significant change to Argus’ business model but it is clear that with their main market, Bermuda, experiencing ex growth, Argus is seeking to grow its bottom line through its overseas operations. Given the lack of financial details this transaction is likely to be a small bolt on acquisition and not transformative.

“However, we believe that a cautious approach in its non core market is the best course of action and will help Argus understand Malta better and position itself to take advantage of any significant opportunity that may arise.

“We would expect Argus’ financial results for the six months ended 30 September 2014 to reflect the progress made over the last couple of years.

Other investments

“The Company’s other investments include small holdings in BF&M Limited, Bermuda Aviation Services Limited and Watlington Waterworks Limited which are valued at approximately $0.7 million.

“There are green shoots of an economic recovery in Bermuda with more business commencing operations and with the potential of the America’s Cup and other infrastructure projects, this hopefully indicates that Bermuda is open for business and investment. However, significant improvement in the economy is still required before it will have a meaningful impact on the results of the Company’s investments.”

“Additional residents from more international business and infrastructure projects will improve the earnings for BELCO and Keytech’s subsidiaries. In advance of that it is pleasing to see management teams, such as KeyTech’s, taking long term decisions which reduce the risk of their existing operations and position themselves for future growth.

“We continue to believe that our investments are undervalued but recognize that share prices are depressed due to a combination of the illiquidity of the investments’ shares and the Bermuda economic performance.

“Bermuda First Investment Company Limited is a BSX listed 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.”

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