KeyTech's profits fell by more than two thirds during the last year due to a significant decline in Bermuda Telephone Company (BTC)'s fixed line voice business and a $2.1 million depreciation in the value of its stake in Butterfield Bank.

The company's results for the year ended March 31, 2010 reported a net income of $6.3 million, down $4.2 million over the prior year.

Despite a challenging economic climate in 2009, the utility provider's revenue was up 1.5 percent year-over-year as a result of a focus on sales across the group and growth in its data and wireless services.

Investments over the previous year in the Challenger high capacity submarine cable system and wireless networks drove revenue growth.

Meanwhile, as of 31 March 2010, the Butterfield Bank holding is the company's only material marketable security.

KeyTech's wireless and data businesses improved net income compared to the prior year. In Cayman losses were reduced by $1.1 million and net income from the directory business remained consistent year-over-year. "While we remained focused on our vital long-term strategies of growth in data and wireless revenues during the current economic downturn, the local economy has seen a reduction in employment which has a direct impact on demand for many of our services and corporate demand is lower than in prior years," said KeyTech CEO Sheila Lines.

"We prepared for the continued downturn by negotiating reduced maintenance rates with a number of suppliers, froze executive salaries, and took the difficult decision to reduce the total number of staff positions. Nevertheless BTC, our Bermuda fixed line business, experienced a severe decline in net income."

Revenues for 2009/10 increased $1.5 million to $107 million mainly down to growth in data and cellular revenues exceeding declines in fixed line revenue.

Total expenses over the same period increased $4.7 million versus the previous year. Salary costs rose $2.7 million due to union wage rate increases of 3.25 percent, higher health care costs and increased overtime costs related to the implementation of a new billing and operating system in BTC.

KeyTech incurred $800,000 in staff separation costs in the current year and a further $1.1 million subsequent to the year end as KeyTech continues to restructure the businesses in light of declines in fixed line voice revenues.

"As we re-evaluated strategy, we took the decision to focus on recurring network revenues - our core business," said Ms Lines. "The provision of telephone systems at business customer premises is serviced by a number of established non-carrier competitors and BTC no longer needs to provide the service itself to enable customers to access our carrier voice and data services.

"We intend to transition out of this product line and will continue to support existing customers through this change."

As a result of an impairment on marketable securities of $2.1 million, realised loss on investments increased $2.2 million compared to the prior year. Equity earnings in affiliates increased $700,000 in the current year due to improved results from both Bermuda CableVision Ltd. and QuoVadis Holdings Ltd.

After completing a number of large capital projects in the prior year at a total cost of $46.3 million, including the Challenger cable system, total capital asset expenditure in the current year was $11.3 million.

The KeyTech board has revised the cash dividend rate to 48 cents per share for the next fiscal year or 12 cents per share per quarter.

The dividend for the common shareholders of KeyTech for the quarter ending June 30, 2010 will be 12 cents per share.

KeyTech's basic and fully diluted earnings per share for the year were 43.4 cents compared to 72.4 cents in the prior year.

Investment income was $110,451 and realised loss on investments was $2.3 million for the year. Investment loss for the prior year was $164,085 and realised loss on investments was $190,376 for the prior year.