Damage from Hurricane Fabian knocked $2.3 million off KeyTech's net income for the year, the communications company revealed yesterday when it announced its annual results.

The company - which owns BTC, Logic Communications and cellular phone provider Mobility - said the sale of the Bank of Bermuda resulted in it turning in a similar result to its 2003 year.

For the year, KeyTech reported net income of $10.43 million compared to $10.16 million for 2003.

The company's net income could have been higher, but KeyTech does not insure its lines for windstorm damage, meaning that it had to shoulder the $2.3 million cost of repairing BTC's network after the September 5 hurricane.

“Nevertheless, as significant as this impact was, on a multi-year basis it is less costly than if KeyTech maintained insurance coverage of outside cabling for wind storm damage,” the company said.

Fabian's costs were offset by the $2.2 million gain the company realised from the sale of the Bank of Bermuda to HSBC Plc.

That drove investment income for the year up to $2.74 million compared to an investment loss in the previous year of $421,903.

“The diversity of our operations and assets within KeyTech has enabled earnings to be sustained in the face of the severe financial impact of hurricane Fabian and the continuing competitive pressures within the telecommunications marketplace,” said CEO Sheila Manderson.

The company said operating revenues for the year were $93 million compared to $87.4 million in 2003.

The company's decision to take back publication of the Bermuda Telephone Directory from Island Press (Holdings) Ltd. also paid off, with $3.5 million of the group's $5.6 million increase in operating revenues coming from “the book”.

“KeyTech has also been successful in growing other revenue lines including domestic wireline, consulting, international long distance and cellular services,” the company said, adding that total equity earnings in affiliates for the year were $165,814.

KeyTech has a 32 percent stake in Bermuda CableVision and some smaller investments in overseas communications businesses.

In 2003, it had total equity earnings from affiliates of $1.7 million, but $1.4 million of that was a one-off gain.

Net income before discontinued operations was $11.23 million compared to $11.27 million in 2003.

Losses attributable to discontinued operations were $803,017 for the year and $1,106,591 for the prior year.

KeyTech said it invested $18.8 million during the year in capital assets, to maintain existing plant and improve its networks, and also support provision of new services and increased coverage of high-speed Internet access to Bermuda residences via Asymmetrical Digital Subscriber Line (ADSL) technology.

“This is an exciting time to be a provider in the telecommunications marketplace.

“It is dynamic and competitive, and the challenges are many,” said Mrs. Manderson.

“I believe that the key to our success this past year, pre- and post-Fabian, was to remain focused on our strategic initiatives for enhancing shareholder value, growing revenues and providing high levels of customer service.”