due to a loss of sales, but the company's president said steps are now in place to reverse this trend.

Net income for $341,497 or $1.20 per share was recorded in financials released to the Bermuda Stock Exchange.

James Pearman, president of the bakery said: "The closure of the retail ButterCrust operation on Pitts Bay Road, severe competition in an otherwise poor consumer retail market, the introduction of a completely new sales /accounting system and the introduction of a new senior management team resulted in a period of tremendous change and accommodation.'' He added: "Net income for the year was severely affected by a loss of sales in the bakery operation compared to 1999. The resultant year end net income of $341,497 or $1.20 per share is half that of the year prior.

"While these results are unsatisfactory by comparison, the compounding impact of the changes noted earlier was not unexpected and strategic steps are now in place to reverse this position.'' Mr. Pearman said the financial statement represents the first consolidated report including the new wholly owned subsidiary Bermuda Bakery Operations Ltd.

He said the separation of the bakery operation allowed for a clearer understanding of the complete costs of the manufacturing business separate from the property division.

Mr. Pearman said: "This has provided the ability to start to put in place new strategies for each and planning for sustained development and growth of our assets.'' He said in his report that 2000 was significant on many other fronts apart from the separation of the two business units.

At year-end 2000, the company's total assets had grown modestly over the previous year reflecting a slight improvement in the cash position, capital investment in the bakery operation and growth in the investment portfolio, Mr.

Pearman said.

Retained earnings increased by two percent from $4.34 million to $4.43 million while total shareholder equity increased by 1.6 percent to $5.85 million.

The rental division also recorded a decrease in net income as a result of a two-fold increase in the maintenance costs associated with the continuing upgrade of the Belvedere Building.

Mr. Pearman added: "Most significant was the work undertaken during the complete renovation and remodelling of two complete floors by our major tenants.'' Trading in Bermuda Bakery shares was modest and in the range of $19 to $22 during 2000.

Mr. Pearman added in his letter that it was with the deepest regrets that he advised of the death during the year of the company's financial controller, Peter Grayston.

He said: "Peter served the Board and the Bakery with dedication and focus for the past six years through a difficult period of financial uncertainty and management change. We mourn his passing and extend our deepest sympathy to his family, friends and associates.''