W . P . l - Welcome to The Royal Naval Dockyardthe widening of Pender Road, work beginning on the second phase of the Dockyard Marina, construction of the cruise ship terminal and

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West end develoPment CorPoration

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The West End Development Corporation | Annual Report 2007

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The fiscal year 2006-2007 has been one of much change and progress for the West End Development Corporation (the Corporation) as it continues to make the West End both a world-class port destination and a vibrant, diverse and self-sustained new town for local residents and businesses. Despite some key personnel changes at management level, the Corporation completed critical improvements to the infrastructure, including the installation of a reverse osmosis plant, construction of the excursion dock and began work on the new Marina on the Great Wharf and residential units at Dockyard Terrace. With further improvements due to take place during 2007-2008, I am confident that the Corporation will be well positioned for the scheduled completion of the second cruise ship terminal in 2009. This will bring a dramatic increase in visitors and with it, further exciting business opportunities. The vesting of the former Casemates property this past year is another exciting development opportunity. With each passing year, Dockyard’s value and importance grows as a port, a destination and a community that contributes significantly not only to the economic well-being of the West End but Bermuda as a whole. The Corporation continues to offer many innovative residential, recreational and commercial opportunities that Bermudians and our visitors can look forward to enjoying in the coming years. As the Minister responsible for the West End Development Corporation, I wish to thank the Board, Management and Staff for their continued dedication and commitment to the Corporation and its vision.

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Letter from the minister

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The past year has again been one of steady progress towards the vision we hold of a new West End community, but there is little doubt that WEDCo now faces some of its biggest challenges if this bold vision is to become a reality.

Since Hurricane Fabian in 2003, much of WEDCo’s funds and investments have been expended on repairing and improving the area’s infrastructure. While such projects are necessary and essential foundations for the area’s long-term success and will continue through 2009, the time is now ripe for major developments to move ahead.

We take great pride in the fact that WEDCo has been self-sustaining for almost ten years and we are keen to see this continue. The West End continues to attract increasing numbers of visitors, residents and businesses but it will not fulfill its true economic and social potential unless major investment is forthcoming. We therefore look forward to entertaining RFPs to develop strategic sites such as Casemates, the Victualling Yard, the South Basin and the Parsonage.

As stated in last year’s annual report, WEDCo continues to work on a financial strategy designed to secure the funds necessary to move forward all aspects of the area’s development. We anticipate the year 2007-2008 will be one of great change with further visible signs of improvements to our infrastructure such as the widening of Pender Road, work beginning on the second phase of the Dockyard Marina, construction of the cruise ship terminal and relocation of the cement works in the South Basin. During this period, the Somerset Bus Terminal is expected to relocate to Dockyard, thus further improving public transport links to and from the West End.

The development of the second cruise ship terminal in 2009 will bring an influx of visitors that, in turn, will offer increased business opportunities and services. We are confident that this will be pivotal in truly transforming Dockyard into a viable, vibrant small town that operates seven days a week, year round rather than a seasonal

tourist destination. We expect that in the near future, more residents will turn west out of their driveways rather than turning east to Hamilton.

Less than 30 minutes from Hamilton by ferry but a world apart in terms of lower costs, less stress, and little pollution, the West End remains “the final frontier” for new sustainable development. Rich in history and natural beauty yet abundant with potential, the West End is becoming the place where people increasingly want to spend more time; a place where they can live, work and play.

It remains important that the West End achieves a diverse balance between business, tourism and residential. Tourism remains very seasonal for the area so it is critical that the West End attracts locals to maintain year-round viability. In the years to come, driven by demands from the second cruise ship terminal, WEDCo envisages a larger retail presence, residential areas and offices together with a thriving nightlife.

For this vision of the West End to succeed, WEDCo, Government and the private sector need to work together as a cohesive body. We look forward to working with Minister Lister going forward and to an extended period of stability that will allow us to progress our development plans and realize our vision.

In the meantime we invite residents, businesses and visitors to “Go West” and see for themselves the unparalleled opportunities that no other area of 21st century Bermuda can offer.

This year we were sorry to lose the services of General Manager Lloyd Telford and Edward Williams, our Business Development Manager. Both men have served the Corporation loyally and with distinction for many years and deserve much credit for helping build WEDCo into the organisation it is today and laying the groundwork for its bright future. We thank them sincerely for all their efforts and we wish them every future success.

These are challenging but exciting times for WEDCo and the Management and Board again wish to extend their appreciation to all staff for their hard work, dedication and commitment.

Stanley Lee Andrew DiasChairman General Manager

Letter From the Chairman & GeneraL manaGer

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Ov e rv i e w 2007

The Royal Naval Dockyard will be Bermuda’s destination of choice for capital investment and tourism, whilst at the same time contributing to Bermuda’s community and economic well being.

our mission

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Introduction

During the year 2006-2007, WEDCo continued taking steps towards the next major phase of development in the West End.

Despite personnel changes at management and ministerial level that temporarily affected stability and our ability to deliver some services consistently, WEDCo made significant progress on several fronts.

These included the installation of a reverse osmosis plant, improved waste management systems, construction of the excursion dock and commencement of the first phase of the new Marina on the Great Wharf, while construction began on residential units at Dockyard Terrace.

Together these developments continue to enhance the infrastructure and stability of the West End and reinforce the vision of the area becoming Bermuda’s premier port gateway and a vibrant, viable and self-sufficient community.

Highlights and Accomplishments

Cruise Ship visitsDuring 2006, Dockyard and Bermuda businesses benefited greatly from a much-improved cruise ship schedule. The Norwegian Cruise Line ship Norwegian Crown made 27 visits to Dockyard while sister ships Norwegian Dawn and Norwegian Spirit made a total of 26 one-day visits. Royal Caribbean Cruise Lines’ Grandeur of the Sea and Explorer of the Seas made a total of 27 one-day stops. In addition, Princess Cruises’ Crown Princess made 10 visits together with various other occasional callers. In all, an estimated 190,000 passengers visited the area.

Staff changesThe year saw a number of significant management and staff changes.

On January 1, 2007 Stanley Lee, who had previously served as Interim Chairman, was appointed Chairman of WEDCo, succeeding Major Glenn Brangman who had served since January, 2006.

Lloyd Telford resigned as general manager in November 2006 after six years in the post. Andrew Dias, WEDCo’s Facilities Manager, stepped in as Acting General Manager from November, 2006 to March, 2007, and was officially appointed to the post full-time with effect from April 1, 2007.

In the Facilities Department, Carmen Harvey has taken over Mr. Dias’ former position as Facilities Manager from June 1, 2007 and Ernest Trott has been appointed assistant Facilities Manager with effect from June, 2007.

The Corporation has accepted the resignation of Edward Williams as Business Development Manager with effect from April 30, 2007 after sixteen years in the position and the process of finding a replacement and filling other vacancies in this very critical area is being pursued aggressively.

Meanwhile, a Cabinet reshuffle following the election of Dr. Ewart Brown as Premier in October, 2006 saw the Honourable Dennis Lister MP succeed Colonel David Burch as Minister of Works and Engineering.

WedCo annuaL report 2006 – 2007

The West End Development Corporation Annual Report 2007

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The Year In Review

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The former prison at Casemates was finally vested to WEDCo in 2006. The Corporation has asked Dr Edward Harris, Director of the Bermuda Maritime Museum to assist in the clean up and archiving of the building in preparation for RFP for future development of the site. It is zoned for mixed use and WEDCo anticipates high interest in this prime site, which offers one of the last major development opportunities in the Dockyard.

Two 40-foot reverse osmosis containers were installed in mid-2006, enabling the Dockyard to be self-sufficient in water. In addition, an agreement was signed with the Department of Works & Engineering to supply water via pipeline to the Government and a minimum of 40,000 gallons per day will now be supplied to the rest of The West End from Dockyard.

Work was completed on two new sewage lift stations in the Victualling Yard. These presently pump sewage into the existing sewage treatment plant but were designed to ensure compatibility with the new plant when it comes online in 2009/10. This much-needed upgrade, combined with the larger grease traps installed at three of Dockyard’s restaurants last year, will greatly improve the effluent quality and reduce unpleasant odours in the area.

Construction work began on improvements within the North Basin. A new excursion dock was completed that allows for pick up of cruise passengers for shore excursions and, to facilitate the creation of the new Marina on the Great Wharf side in front of the Clocktower Building, negotiations were initiated for the relocation of Marine and Ports vessels to the North Arm. As part of the Marina, a new mini mart is due to be opened on the site of the former Windjammer boat rental facility by mid-2007.

Agreement was reached with the Bermuda Cement Company (BCC) on a one-year extension of the lease on their present location in the South Basin through December 2007. It is WEDCo’s intent to enter into a 21-year lease with BCC at an alternate site in the South Basin and negotiations are well-advanced. It is anticipated that the new lease will be signed by the end of 2007.

inFrastruCture

The Corporation continued to improve the security of the Dockyard area, which is of critical importance to the future development of the area as a safe and secure place to visit and in which to live and work. Further enhancements were carried out to the CCTV system installed last year and additional traffic controls were installed on roads throughout the Dockyard area to prevent speeding.

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The West End Development Corporation Annual Report 2007The Year In Review

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Dockyard MarinaThe first phase of the new Marina was completed, creating berths for 50 boats. It is expected to complete the second phase in 2008, when a total of 140 berths will be available. The new Technomarine floating docks will offer a safer harbour for boat owners with improved facilities including electrical power, phone lines, water, and cable TV. When complete, the new Marina will have 60 more berths than its predecessor and it is anticipated that it will become a significant source of income for the Corporation.

Bonefish RestaurantIn 2006, the Pirate’s Landing restaurant in Dockyard was sold and the new owners renovated the site, opening a new restaurant, Bonefish Bar & Grill, in early 2007. A new porch and deck were added and further enhancements are planned in preparation for 2008.

ShellAn agreement was reached with the Shell Company of Bermuda to undertake a major upgrade of the Boaz Island gas station. A new 21-year lease was signed in 2006 and work is due to begin on the site in Winter 2007 to avoid

disrupting the summer high season. The new gas station will include an expanded convenience store to meet the increasing demand of visitors and residents.

RetailDuring 2006-07, WEDCo welcomed two new retail businesses to the Clocktower Mall – Pulp & Circumstance and the Bermuda Bookstore – while Davison’s expanded their retail space into an adjacent vacant space. WEDCo continues to receive interest from Hamilton businesses wishing to take advantage of Dockyard’s unique environment and increasing number of cruise ship visitors.

Business deveLopment

Engine Flushing HouseIn January, 2006, following a successful appeal to change the zoning from recreational, work was started on converting the derelict historic former pumping station into a fish processing plant. The building originally provided salt water flushing for all facilities in the Royal Naval Dockyard. When work is completed in mid-2007, WEDCo will not only have successfully restored an historic building but added a productive business to the area.

Snorkel ParkSnorkel Park continues to be a main feature of the Dockyard area that is increasingly popular with local residents and visitors alike. During the year, Hammerheads restaurant was upgraded and some further expansion of the beach area to the east was created to allow more space for corporate functions and other events.

Dockyard Brewing Company LimitedDuring the year, Dockyard Brewing Company Limited, Bermuda’s only on-site micro-brewery, was opened as a joint venture between Frog & Onion Pub and Northrock Brewing and is adjacent to the Frog & Onion Pub in Dockyard. It is anticipated that the brewery will become an attraction in its own right, offering visitors an experience similar to that of the pottery, glassworks and bakery, of watching genuine handmade Bermuda products being produced.

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The West End Development Corporation Annual Report 2007The Year In Review

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Construction began on developing five units at Dockyard Terrace. Work on the units – four 3-bedroom units and one 2-bedroom unit – is now substantially complete. These units have been renovated to the highest standard with great attention being given to preserving and reinstating the buildings to their former glory.

The Corporation’s units at Boaz Island Village were offered for sale in July 2006. Units were offered first to sitting tenants, then to other WEDCo tenants and the remainder will be put on the open market. At the end of the fiscal year 2006-2007, seven of the 52 properties had approved purchasers signed up with another 10 nearing the end of the approval process.

WEDCo continued to work with Government agencies and the Bermuda Housing Corporation on plans to demolish Victoria Row and develop 100 units of affordable housing. Plans to refurbish Albert Row for sale to existing tenants have been put on hold along with planned development of units in NB9, the South Basin and the Victualling Yard.

Destination Dockyard, the regular Tuesday night event sponsored by WEDCo and the Ministry of Tourism featuring local entertainment, food and crafts, enjoyed enormous success in its second full season, proving popular with locals and visitors alike. Entertainers from visiting cruise ships were also featured in this production, adding to the carnival atmosphere.

Dockyard once again played host to the Bermuda Music Festival which saw TV comedian Steve Harvey host a two-day event featuring international artists such as Gladys Knight, IndiaArie, and The Manhattans.

Dockyard also hosted the finish of the 20th Bermuda End-to-End, Bermuda’s largest charity event, but the popular annual criterium event of the CD&P Bermuda Cycling Grand Prix was unfortunately cancelled due to bad weather.

WEDCo partnered with the Bermuda Sloop Foundation to provide a home port for Spirit of Bermuda, the Foundation’s sail training ship which was successfully launched in 2006. The vessel is berthed at Kings Steps and the boat’s full time staff is housed at Dockyard Terrace.

residentiaL deveLopment LookinG ForWardevents ChaLLenGes

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The Year In Review

During 2007-2008, WEDCo anticipates a major change in cruise ship visits to Dockyard with ships visiting 5-6 days a week and staying three nights a week instead of the current one-day visits. This is expected to have a positive economic impact on businesses in the West End. With the projected completion of the second cruise ship terminal in 2009, Dockyard will become a major port of entry for Bermuda and is expected to bring further economic opportunity to the area. The second terminal, a Ministry of Tourism initiative to be constructed by the Ministry of Works & Engineering, is at present being progressed through the approval stages. Over the next two years, WEDCo is committed to improvements to Dockyard’s transportation and support infrastructure to ensure that it is at a level to handle the anticipated increase in numbers of visitors.

During 2007, the derelict homes along Pender Road will be demolished as part of a road-widening scheme that will see two-way traffic return in 2008, replacing the unsatisfactory one-way system that has been in place in the South Basin. This will improve access to and from the Dockyard in anticipation of the increased traffic volume expected to meet the transport needs of greater numbers of cruise ship visitors and area residents.

In 2007, WEDCo will seek planning permission for the new sewage treatment plant to be located at the western end of the Sallyport. It is hoped that construction will start in 2008 and that the plant will be online to meet increased demand from the second cruise ship terminal in 2009.

The buses and ferries are an integral part of our development. As initiatives take place, the public transport system will continually need to be improved. It is critically important that people have easy access to and from Dockyard to make it an attractive place to visit.

We will continue to work with the Department of Transport and provide the infrastructure to ensure that adequate transport is operational in 2008-09 and going forward.

While WEDCo continues to look forward confidently to the year ahead, the long-term future of the Corporation is at something of a crossroads.

As stated in last year’s report, the West End urgently needs a significant injection of investment, most likely from overseas investors, to move forward with the next phase of development. Large-scale developments such as those envisaged for Casemates, the Victualling Yard and the South Basin require major funding; they cannot be done piecemeal.

WEDCo continues to face physical and economic challenges in maintaining the infrastructure needs of the West End, which, by their very nature, offer little or no return on investment. Within the next two years, a much improved infrastructure will be in place but unless WEDCo is able to attract overseas investment in major developments, the long-held vision of the West End as a viable new town will remain just that: an unrealised dream.

We have proposals on the table from interested parties and we have the foundations in place. We remain committed to the future outlined in the 2020 Master Plan but it requires commitment from all stakeholders to ensure its success.


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The Corporation continues to generate modest growth in revenues while keeping expenditures in line where these are within their control. Revenues increased 6.4% over 2006 to $5.90 million while total expenses rose 4.8% to $6.59 million. Retained earnings increased from $19.96 million in 2006 to $20.14 million in 2007.

There were increased costs under Amortization of capital assets, where new developments have been recognised, resulting in an increase from $1.48 million in 2006 to $1.62 million in 2007. Bad debts have also increased significantly, from $34,461 in 2006 to $198,022 in 2007. Collections have been challenged by factors outside the control of the Corporation but steps are being taken to reverse this trend and to ensure a major improvement in this area in the coming year.

In recent years, the Corporation has seen its cash position decrease significantly due to the progression of various projects. However, it is expected that a number of these investments will generate substantial revenues over time to fund other investment opportunities. There are many development opportunities to be pursued and the Corporation is looking to develop a cohesive funding plan tailored to specific projects to enable these to be progressed in the near term in order to ensure viability in the long term.

As the Corporation at present does not receive any funding from Government, it has to be creative in how it finances development projects. While projects that will generate future revenue streams can stand alone, others, such as major infrastructure development that generally do not return any revenue, are more of a challenge. For projects deemed to be in the national interest, funding will likely be sought from Government. However, where circumstances permit, some of these costs may be included in major development projects.

With the proposed sale of the Boaz Island units, the Corporation must invest the proceeds in other developments that will generate additional revenue streams that, in turn, will be channeled into other new developments. While the Corporation continues to sustain itself operationally, its ability to manage this is often challenged by factors outside its control. Going forward, this will require a delicate balance that, in order to be attained, must be backed by a sound strategic plan that has the full support of all stakeholders.

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Financial repOrt 2007

FinanCiaL revieW 2006–2007


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Office of the Auditor General Victoria Hall

11 Victoria Street Hamilton HM 11, Bermuda

Tel: (441) 296-3148 Fax: (441) 295-3849

Email: [email protected] Website: www.oagbermuda.gov.bm

AUDITOR'S REPORT

To the Minister of Finance

I have audited the balance sheet of The West End Development Corporation as at March 31, 2007 and the statements of operations and retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Corporation's management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with auditing standards generally accepted in Bermuda and Canada. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In my opinion, these financial statements present fairly, in all material respects, the financial position of The West End Development Corporation as at March 31, 2007 and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in Bermuda and Canada.

Hamilton, Bermuda Larry T. Dennis, C.A. July 25, 2007 Auditor General


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Financial repOrt 2007 The West End Development Corporation Annual Report 2007

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NOTES TO THE FINANCIAL STATEMENTSMARCH 31, 2007

expressed in Bermuda dollars

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(d) Use of estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues earned and expenses incurred during the year. Actual results could differ from these estimates.

(e) Financial assets and liabilities

The fair values of the Company’s financial instruments include cash and cash equivalents, accounts receivable, mortgages receivable, accounts payable and accrued liabilities and due to the Government of Canada which approximate their carrying values. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

3. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand, cash in banks and three month term deposits. The carrying amount approximates fair value because of the short maturity of the term deposit.

4. ACCOUNTS RECEIVABLE



1. NATURE OF BUSINESS

The West End Development Corporation (“the Corporation”) was established by the West End Development Corporation Act 1982. The general function of the Corporation is to manage and develop all designated land in the western end of the Island with a view to the progressive improvement of the social and economic conditions.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with accounting principles generally accepted in Bermuda and Canada. The significant accounting policies are summarized as follows:

(a) Government of Bermuda grants and contributions Operating grants are recorded as revenues. Contributions for capital projects are deferred and amortized to

income on the same basis as the related capital assets are amortized.

Contributed capital assets are recorded at their fair value at the date of contribution. When fair value cannot be reasonably determined, the capital asset is recorded at nominal value.

(b) Revenue recognition Rental income, received under operating leases, is recognized on an accrual basis. Leased properties are

outlined in note 7 as rental revenue producing assets.

Berthing revenues, received from all vessels arriving in Dockyard, are recognized on an accrual basis.

(c) Capital assets Capital assets are valued at cost. Costs incurred by the Company for improvements to buildings and

infrastructure, purchase of equipment, site preparation and demolition are capitalized.

Amortization is calculated using the straight-line basis over the estimated useful lives at the following rates:

Years

Furniture, equipment and tools 3 - 10 Building improvements and renovations 10 - 25 Mechanical rehabilitation 10 - 25 Landscaping 5 - 40 Buildings 40 Infrastructure rehabilitation 40


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7. CAPITAL ASSETS (continued)

Under the West End Development Corporation Act 1982, approximately 214 acres of land comprising Watford Island, Boaz Island and Ireland Islands North and South, including buildings thereon, were vested in the Corporation by the Government of Bermuda. According to Section 20 of the Act, the Corporation shall not make a sale or other disposition of any vested property or any interest in vested property unless the Senate and the House of Assembly have first approved the sale or disposition by resolution. The Corporation has received approval for residential properties, subject to the approval of the Minister of Works & Engineering and Housing, as disclosed in note 5.

Included in the above capital assets are rental revenue producing assets at a cost of $16,704,036 (2006 - $16,774,883) and related accumulated amortization $6,936,899 (2006 - $6,537,356).

Assets under development represent the cost of direct materials and labour of capital projects not completed at year-end.

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of:



5. MORTGAGES RECEIVABLE

In April 1985, the Corporation received permission to sell, subject to the approval of the Minister of Works & Engineering and Housing, the freehold interest of its residential properties in the West End Development Corporation area under the provisions of Section 20 of the West End Development Corporation Act 1982. The mortgages are for periods varying from 5 to 30 years at an interest rate of 9% per annum.

6. HOUSING UNITS HELD FOR RESALE

In April 2005, the Board approved the sale of the 52 units owned by the Corporation at Boaz Island Village. Management is actively pursuing potential buyers of the individual units. As a result, the units, previously classified as revenue rental producing assets, have been reclassified in the balance sheet as Housing Units Held for Resale at cost as this is lower than the Net Realizable Value.

7. CAPITAL ASSETS

2007 2006 $ $ Accounts payable 1,216,863 575,761Accrued expenses 324,677 1,902,848Rental deposits 118,837 103,262Others 16,187 34,340

1,676,564 2,616,211


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12. RELATED PARTY TRANSACTIONS

The Corporation is related in terms of common control to all Government of Bermuda created departments, boards and quasi-autonomous non-governmental organizations. The Corporation enters into transactions with these entities in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. Related party transactions entered into by the Corporation are as follows:

13. EMPLOYEE BENEFITS

(a) PENSION PLANS

(i) Pension plan for Bermuda Industrial Union employees

Employees of the Corporation who are included in the Bermuda Government collective bargaining agreement with the Bermuda Industrial Union are covered by the Public Service Superannuation Fund (“the Fund”) which is a defined benefit plan administered by the Government of Bermuda. Employee contributions to the Fund are 5% of gross salary and they are matched by the Corporation.

The Corporation is not required under present legislation to make contributions with respect to actuarial deficiencies of the Fund. As a result, the current year contributions to the Fund represent the total liability of the Corporation. The Corporation’s contributions to the Fund during the year are $35,339 (2006 - $29,642).

(ii) Pension plan for administrative employees

Administrative employees of the Corporation are covered under a private defined contribution plan through BF&M Life Insurance Company Ltd. Employee contributions to the Plan are 5% of gross salary and they are matched by the Corporation. These contributions represent the total liability of the Corporation and are recognized in the accounts on a current basis. The Corporation’s contributions to the Plan during the year are $51,555 (2006 - $49,874).



9. INSURANCE CLAIM RECOVERABLE/DEFERRED INSURANCE PROCEEDS

During fiscal 2003/2004, the Corporation sustained damage to its properties as a result of Hurricane Fabian for which the insurance company compensated the Corporation an amount of $1,650,000. As of March 31, 2007, $1,220,946 (2006 - $1,142,693) had been spent on repairs. Work is ongoing and the amount of the claim that has not yet been used has been deferred and separately identified on the balance sheet.

10. DUE TO THE GOVERNMENT OF CANADA

Effective December 31, 1993, the Department of National Defence, Canada withdrew its personnel from Bermuda. A Deed of Surrender was signed on December 6, 1995, whereby the Government of Canada surrendered 54 Boaz Island Village units to the Corporation. The Corporation shall repay the sum of $5,000,000, interest free, within a term of ten years of the date of this deed. Further, a total amount of $353,483 must be paid to the Government of Bermuda out of the $5,000,000 which represents redundancy payments payable on behalf of the Government of Canada.

For any units sold before the end of the ten year term, an amount of $92,593 per unit is payable by the end of the calendar year in which will be paid first to the Government of Bermuda until the redundancy payments are fully settled. Thereafter, the $92,593 per unit sold must be remitted to the Canadian Government.

11. DEFERRED CAPITAL CONTRIBUTIONS

Deferred capital contributions represent the unamortized amount of grants received for the purchase of capital assets. The amortization of deferred capital contributions is recorded as revenue in the statement of operations.


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NOTES TO THE FINANCIAL STATEMENTSMARCH 31, 2007 expressed in Bermuda dollars

(b) OTHER BENEFITS

Other employee benefits include maternity leave, sick leave, and vacation days. All of these plans are unfunded.

Maternity leave does not accumulate or vest and therefore an expense and liability is only recognized when applied for and approved. There were no maternity benefits applied for or approved during the current year and therefore, no liability has been accrued in the accounts.

Sick leave accumulates but does not vest, and like maternity leave, a liability is recorded only when extended leave is applied for and approved. There was no extended sick leave applied for or approved during the current year and therefore, no liability has been accrued in the accounts.

Vacation days accumulate and vest and therefore a liability is accrued each year. An actuarial study has not been performed for the vacation days benefit obligation as there were no factors used in the calculation that are materially different from the figures that would be estimated by an actuary. The accrued vacation liability as of March 31, 2007 is $97,851 (2006 - $114,958) and is included in accounts payable and accrued liabilities.

14. COMMITMENTS

At March 31, 2007, the Corporation had contractual obligations relating to various capital projects of $1,036,645 (2006 - $750,800). Additional approved projects not yet contracted amount to $16,400,000 (2006 - $6,866,686).

15. COMPARATIVES

Certain comparative figures have been reclassified to conform to the current year’s presentation.

Financial repOrt 2007

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BOARD OF DIRECTORS

ChairPerson:mr. stanley lee

dePuty ChairPerson:mr. marC bean

mr. CeCil o. durham, JP mr. marC daniels

ms. sheryl martins

mr. albert ratteray

dr. edWard harris

eX-oFFiCio

dr. derriCk binns

Permanent seCretary - Works & engineering

FINANCE AND AUDIT COMMITTEE

mr. stanley lee – ChairPerson

ms. sandra Ferguson

mr. andreW dias

WEDCO EXECUTIVE

andreW dias, general manager

sandra J. Ferguson, FinanCial Controller

W. edWard Williams, business develoPment manager

BANKERS

bank oF n. t. butterField & son, ltd.CaPital g bank

annual rePort design

the foundation

Writer

Chris Gibbons

PhotograPhy

CraiG FerGuson

ed Williams

Cover Photo: max Kehrli

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W . P . l - Welcome to The Royal Naval Dockyardthe widening of Pender Road, work beginning on the second phase of the Dockyard Marina, construction of the cruise ship terminal and

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