The parent company of BTC and Logic Communication, KeyTech Ltd., on Friday reported a fall in overall profits of 33 percent or nearly $5 million for the year, after what the chief executive officer described as a "challenging" year.

But the on paper the drop was due to a multi-million dollar boost from pension funds a year earlier, and discounting this figure, profits in the company, which also owns a large stake in CableVision, in fact rose by 38 percent.

"The financial results reflect a solid performance in operations made by our managers and staff. The year has been a challenging one, nevertheless we have accomplished a great deal... to maintain our leadership role in the marketplace," said KeyTech's chief executive officer Sheila Manderson.

The company announced that for the year ended March 31, its net income stood at $10.2 million, compared to a year earlier, when it was $15.1 million.

The 2002 figure included a $7.7 million cash boost from the company's pension plan, which means that excluding this boost, the company's profits increased from $7.4 million to $10.2 million, a rise of 38 percent in real terms.

The company announced that its net income after operating, amortisation and interest expenses increased to $9,284,906 for the year ended March 31, compared to $7,607,979 for the same period a year earlier.

The company said this was achieved in spite of downward pressure on revenues from the traditional business lines primarily due to decreased amortisation and depreciation expenses.

Also, the net income after operating, amortisation and interest of $9,284,906 is before including total equity earnings in affiliates (which includes Bermuda CableVision Limited) of $1,661,757 and the total net consolidated income for the year of $10,162,168 includes all items.

The figures are part of a preliminary announcement and the company said more detailed information can be released when the annual report is presented to the public sometime later this month.

The company also said that after adjusting for the one-for-10 common share dividend on April 30, KeyTech's basic and diluted earnings per common share for the year was $0.996.

Total cash dividends paid to common shareholders for the year was $0.515 per common share. At the end of the year, again after adjusting for the share dividend impact, net assets per common share were $13.78 ($11.45 on a fully diluted basis).

KeyTech said in a release that operating revenues for the period were $87,580,113 compared to $89,529,243 for the same period last year.

And it said the decline can be attributed to lower interconnection settlement rates and domestic wireless revenue as the cellular market has increasingly moved towards customer plans that include periods of free airtime use.

"The company has been successful, however, in offsetting a portion of these declines by diversifying and growing other revenue lines including the consulting services, international long distance and network services of Logic Communications Ltd.," the release added.

An affiliate of KeyTech, Bermuda CableVision has reduced the estimated liability for programming fees and royalties which had been accrued over a period of 15 years giving rise to a one time increase in equity earnings in affiliates in the year of $1,370,670. Total equity earnings in affiliates for the year was $1,661,757.

KeyTech said that during the financial year it invested $25 million in capital assets, to maintain existing plant and also support provision of new services including GSM cellular service and increased coverage of high-speed Internet access to Bermuda residences via Asymmetrical Digital Subscriber Line (ADSL) technology.

KeyTech said it recognised the value in continuing to invest in Bermuda's telecommunications infrastructure where an adequate return for its shareholders will likely be achieved.

"Diversification in related entities, investment in technology and focus on customer service have been the cornerstones of our operations and will continue to be key priorities for our companies going forward," said Ms Manderson.

KeyTech said it also incurred $397,237 in restructuring costs and investment losses for the year were $421,903 and the gain attributable to minority interests for the year was $34,645.