Ministry of Works and Engineering
Office of the Minister of Works and Engineering
27th August, 2010
The financial year 2009/10 has been a period of significant change and
accomplishment for the West End Development Corporation [“WEDCo”]. As the
Minister with assigned responsibility for WEDCo, I am extremely pleased to note that the
partnership between Government and WEDCo remains as strong and as healthy as
ever, one that is rapidly transforming the Royal Naval Dockyard into a dynamic
destination and community of which all Bermuda can be proud.
During the past year, I have had the honour of attending three major openings,
each of which underscored the remarkable progress unfolding in Dockyard as we realize
WEDCo’s vision of the west end of the Island as Bermuda’s premier destination for
residents and visitors alike.
In April 2009, I joined our Premier, Dr. the Hon. Ewart F. Brown, JP, MP in
opening the second cruise ship terminal at Heritage Wharf. With two megaships now
able to dock simultaneously, the increased business that additional passengers and
crew bring provides a considerable economic boost for the Dockyard specifically and the
Island generally. In June 2009, WEDCo Chairman, the Hon. Walter M. Lister, JP, MP,
and I officially opened the second traffic lane across Cockburn Bridge and the widened
historic Main Gates – much-needed improvements that will greatly improve efficient
access to and from Dockyard. Then, in January 2010, I was privileged to preside over
the official opening of the West End Waste Water Reclamation Treatment Plant at Sally
Port. This state-of-the-art facility is essential in meeting the increased water demands of
a thriving Dockyard and the west end.
There can be no doubt that careful planning, unwavering commitment and hard
work on the part of WEDCo and Government provided the underpinning for these three
critically important projects. Indeed, the WEDCo team, headed by Chairman Lister and
General Manager, Mr. Andrew Dias, is richly deserving of gratitude and praise for
continuing to work diligently and enthusiastically as it advances the Dockyard dream.
As the Royal Navy Dockyard celebrated its 200th anniversary this year, we were
honoured by a visit from Her Majesty Queen Elizabeth II and His Royal Highness, Prince
Philip, Duke of Edinburgh. The royal presence, perfect weather and perfect organization
led to a day that WEDCo and the people of the west end of the Island will never forget:
an exciting new chapter in Dockyard’s colourful history had well and truly begun.
The Hon. Derrick V. Burgess, JP, MP
Minister of Works and Engineering
General Post Office Building, 56 Church Street, Hamilton HM 12, BERMUDA
PO Box HM 525, Hamilton HM CX, BERMUDA
Phone (441) 297-7815 Fax: (441) 295-0170 Email:[email protected] Website: www.gov.bm
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Letter From
The Chairman
The face of the Dockyard has changed
more in the last year than it has changed
in the previous fifty years.
In April the Premier, Dr. the Hon. Ewart
Brown, JP, MP, accompanied with the
Minister of Works and Engineering, the
Hon. Derrick Burgess, JP, MP, came to
Dockyard to open the newly completed Heritage Wharf.
This event was attended by many representatives from the
Government, the West End community and the shipping
community. This is the only port in Bermuda that can
accommodate the mega cruise ships and the event marked a
wonderful start to the 2009 cruise ship season.
In June the Minister of Works and Engineering returned to
the West End where he and I together opened the new second
lane to Cockburn Cut Bridge and the widening of the historic
Main Gates of the Royal Naval Dockyard. Traffic now flows
easily in and out of Dockyard.
During the summer of 2009 we announced plans for a
proposed marina for the South Basin. This sparked much
interest in the yachting community although this project is in
its early stages and there is much groundwork yet to be done.
As the summer drew to an end we were happy with the
increased number of cruise ship visitors and the tourists that
came to Dockyard. We have truly become the destination on
the Island most visited by tourists.
The highlight of the year was in November with the Royal
Visit of Her Royal Highness Queen Elizabeth II and His Royal
Highness the Duke of Edinburgh. It was a beautiful day; many
seniors from the various senior homes in Somerset were in
attendance along with tourist and residents from all over
the Island. Her Majesty was greeted at our ferry dock by
elementary school students; the Drum Corps of the Sandys
Secondary School serenaded her Majesty as she drove past on
her way to the Clocktower Mall. At the mall she was greeted
by WEDCo’s Chairman, the Hon. Mr. Walter Lister, JP, MP and
Mrs. Brenda Lister, who then introduced her to other members
of the WEDCo Board and local area Members of Parliament.
re-enactment by Sandys Secondary students of the Dockyard
Apprentices journey to the UK in 1950 to complete their
training. The “real” apprentices were then introduced to Her
Majesty. Dr. David Saul had a display of woodcarvings which
the Queen admired as she made her way into the Chartroom
where Sandys Middle School demonstrated an “old fashioned
Bermuda wedding”.
Outside, Her Majesty unveiled a plaque commemorating the
visit before she left to enjoy lunch at the Commissioner’s
House on the grounds of the Bermuda Maritime Museum.
December saw WEDCo start its special Christmas
Shopping campaign. Each Sunday of the month there
was entertainment provided by various artists; free giftwrapping and a special Kiddie Corner with face painting and
a fun castle, where the little ones could be left while their
parents or guardians shopped.
With all the accomplishments of this fiscal year we were not
done yet; in January 2010 Minister the Hon. Derrick Burgess
JP, MP returned to officially open the new Waste Water
Reclamation Treatment Plant, located in Sally Port, Dockyard.
This facility will assist in servicing our water requirements
throughout the year; especially with the mega cruise ships
during the summer months.
The year 2009 marked the 200th anniversary of The Royal
Naval Dockyard. We are proud of our accomplishments and
look forward to continued growth in our fiscal year 2010-2011.
Upstairs in the Clocktower Mall, Mrs. Bentley, who is 100
years-old and a resident of the Packwood Home rendered
“God Save the Queen” on the piano. This was followed by a
The Hon. Mr. Walter Lister, JP, MP
Chairman
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General Manager’s
Report
I am both proud and delighted to report that the West End
Development Corporation has made significant progress
during the financial year 2009-2010.
heritage and ambience of Dockyard that is at the core of its
appeal. Everything we do should enhance, not detract from
those unique qualities.
The completion and opening of the second cruise ship
terminal at Heritage Wharf and the increased volume of
visitors it brings has changed the face of Dockyard and will
positively impact the West End and the rest of Bermuda for
years to come.
We are committed to ensuring that Dockyard is sustainable
and as “green” as possible. Increased public transportation
and pedestrianisation will help reduce pollution levels;
our strategic planning places great value on retaining and
enhancing open space; and we hope to take advantage of
Dockyard’s location to develop alternative sources of energy
such as wind and solar power.
However in addition to presenting obvious short-term
business opportunities, it also presents new challenges. The
new terminal provides an economic springboard but it is
critical that WEDCo and our various stakeholders nurture and
develop this opportunity and not take it for granted. We need
to manage expectations, especially among our retail partners,
that today’s cruise ship passengers are likely to have different
tastes and spending habits to tourists of the past and that
goods and services need to be targeted accordingly.
We need to ensure that Dockyard continues to provide a
pleasant and memorable experience for locals and visitors
alike, by encouraging a diversity of attractions and activities.
One of the most attractive things about the West End for
locals and visitors is that there is something for everyone.
There is nowhere in Bermuda that provides so much that
is so accessible in one place – shopping, restaurants, water
sports, arts and crafts, history and museums, swimming with
dolphins, superb natural beauty and open space, as well as a
growing live entertainment scene at night.
Although we pride ourselves on developing a premier port
and tourist destination, we have seen a significant and
gratifying increase in local trade over the past two years,
especially at weekends, as Bermuda residents discover that
Dockyard is not only a desirable place to visit but one in
which to live and work.
We need to manage our future growth so that while we
upgrade amenities and facilities to those of a world-class
destination and port, we remain respectful of the remarkable
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In closing I wish to thank WEDCo’s dedicated management
and staff for their efforts during the past year as well as the
Ministry of Works and Engineering and the Ministry of Tourism
with whom we continue to enjoy a productive and successful
working partnership.
Andrew Dias
General Manager
THE YEAR IN REVIEW
HIGHLIGHTS &
ACCOMPLISHMENTS
During a year in which the Royal Naval Dockyard proudly
celebrated its 200th anniversary and welcomed Her Majesty
Queen Elizabeth II, it was fitting that the financial year 20092010 saw the West End Development Corporation (WEDCo, or
“the Corporation”) complete a number of key projects and
initiatives that will help secure the economic and viability of
the area well into its third century.
C ruise S hip V isits
The first full season of operation for the second cruise ship
terminal at Heritage Wharf was a great success and will
become the catalyst for Dockyard’s future growth and
development. The completion of the Water Reclamation
Facility represented not only a significant development
in the area’s sustainability but one of the single most
important environmental developments in Bermuda to date.
The widening of Cockburn Cut Bridge and the main gates
to Dockyard and the transfer of the west end bus depot
to Dockyard helped to significantly improve access and
transportation to the area.
The fact that these achievements were accomplished against
the backdrop of a difficult global economic climate was
particularly noteworthy and says much about the
growth of Dockyard as a viable and vital destination
and port. During this past year, perhaps more
than any other, the true economic potential of
Dockyard as the Island’s premier destination
and port and the positive implications for
the Bermuda tourism industry as a whole,
became self-evident.
6
Work on the second cruise ship terminal at Heritage Wharf
was completed by the Department of Tourism in April 2009.
The new terminal enables Bermuda to dock two post-Panamax
mega cruise ships at the same time. The Norwegian Spirit was
the first ship to dock at the new pier on April 29, 2009 and the
facility was officially opened by the Premier Dr. Ewart Brown,
JP, MP on May 6, 2009.
From April to December 2009 King’s Wharf and Heritage
Wharf welcomed a total of approximately 278,385 passengers,
up from 200,991 in 2008. Regular visits by contract ships
Caribbean Princess (Princess Cruises), Explorer of the Seas
and Grandeur of the Seas (Royal Caribbean International)
and Norwegian Dawn and Spirit (Norwegian Cruise Lines)
accounted for 251,446 visitors with a further 26,939 arriving
on singles visits by 10 other ships.
The increase in both the number of visitors and the amount
of time spent in port had a significant and positive impact
on local stores, restaurants and services in Dockyard. The
Department of Tourism has invited RFPs for a duty free
shop at Heritage Wharf and this is expected to be
available for the 2010 cruise ship season.
Improved transportation facilities at the cruise
ship terminal made it easy for visitors to access
buses, ferries or taxis to transport them to
other areas of Bermuda. WEDCo continues
to work closely with the Departments of
Marine and Ports, Transport and Tourism to
ensure that the flow of increased numbers
of visitors in and out of Dockyard is handled
as efficiently as possible. An additional
road train service was added during 2009
offering cruise ship passengers direct return
trips to Horseshoe Bay.
Visit of Her Majesty Queen Elizabeth II
The Royal visit to Dockyard on November 25, 2009, by Her
Royal Highness Queen Elizabeth II and Prince Phillip, the Duke
of Edinburgh was undoubtedly one of the highlights of the
year. The visit, 35 years after Her Majesty officially opened
the Bermuda Maritime Museum at Dockyard, marked both the
200th anniversary of Dockyard and the 400th anniversary of
settlement of Bermuda.
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HIGHLIGHTS &
ACCOMPLISHMENTS
During the hugely popular visit, their Royal Highnesses were
given a tour of the Clocktower Mall by Chairman Walter Lister,
met Naval Dockyard apprentices from 1950 and were treated
to a series of cultural and historical enactments by local
students. Her Majesty also officially opened the 1,000 square
foot mural in the Commissioner’s House by Bermudian artist
Graham Foster depicting Bermuda’s history.
the accomplishments of the former Dockyard apprentices
were marked in a special ceremony during which Governor
Sir Richard Gozney unveiled a plaque commemorating the
Bermudians who served their apprenticeships at Dockyard
and, following the closure of Dockyard in 1950, completed their
education in the UK. Dr. Edward Harris, Executive Director of
the Bermuda Maritime Museum, led a tour highlighting the
significant contributions of the apprentices to Bermuda.
B ermuda Tattoo
Staff changes
For three nights in October 2009, the Keep Yard at the
Dockyard provided a suitably impressive historic setting for
the spectacular Bermuda Tattoo featuring 400 musicians,
dancers and other performers from Bermuda and overseas.
WEDCo’s management team remained stable during the
financial year. A custodian technician and two maintenance
technicians were added to meet increased operational needs.
D estination D ockyard
Local residents flocked to the West End during December
for the popular Christmas in Dockyard events. Every
Sunday during the festive season, shoppers were treated
to entertainment and free gift-wrapping while their children
were looked after at a special “kiddie corner” where
attractions included face-painting and a fun castle.
The weekly Destination Dockyard street festival continued to
be popular with residents and visitors alike. During the 2009
season, 20 weekly events were held every Monday evening
from mid-May to mid-October, featuring late-night shopping,
local crafts, food and live entertainment.
Festival of the S ea
20 0 th A nniversary
A number of events were held during 2009 to commemorate
the 200th anniversary of the establishment of The Royal
Naval Dockyard.
D ockyard A pprentice Appreciation
For more than two centuries, the apprentice system at HM
Dockyard Bermuda produced generations of highly skilled
Bermudian craftsmen, mechanics and tradesmen. While the
system primarily served the Royal Navy’s ships and shore
stations, the skills and talents nurtured at Dockyard benefited
Bermuda immensely. It provided Bermuda’s first truly racially
integrated school and workshop experience while producing
200 master tradesmen and scholars, many of whom went on
to run their own successful businesses. On March 21, 2010,
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On June 7, WEDCo hosted the annual Festival of the Sea,
to celebrate the Tall Ships Atlantic Challenge 2009, and to
commemorate the 200th Anniversary of the Royal Naval
Dockyard. The event attracted a large number of visitors
and was an opportunity to showcase Dockyard’s versatility
and advantages as both a destination and a venue for major
events. Visitors were able to visit the four class A vessels
berthed at Dockyard during the Challenge - Captain Miranda,
Cisne Branco, Kaliakra, and Kruzenshtern – along with Spirit
of Bermuda, which is permanently based in Dockyard. Other
attractions included live music, gombeys, salsa dancing, roving
‘pirates’, a market on the Clocktower lawn, a beer garden in
the Victualling Yard and a free dolphin show at DolphinQuest
in the Maritime Museum.
E ndless S ummer
Hundreds of residents celebrated Dockyard’s 200th
anniversary on August 30 at the Endless Summer event that
featured family attractions, food, live entertainment and a
free movie presentation.
WE DCo Westgate I nmate Programme
C hristmas in Dockyard
B ermuda M usic F estival
October saw the return of the Bermuda Music Festival to
Dockyard. The Keep Yard of the Maritime Museum played
host to the legendary Quincy Jones and Friends, including
Kenny Rogers, Wyclef Jean, Michael McDonald, John Legend
and Patti Austin.
Since 2007, WEDCo has worked with the Department of
Corrections in providing paid work release opportunities
for low-risk Westgate inmates. The programme provides a
positive and valuable step in the rehabilitation of offenders
and on any given week, up to five inmates work under strictly
supervised conditions alongside WEDCo staff performing
landscaping, plumbing, electrical and other general
maintenance duties. WEDCo expects to sign a memorandum
of understanding with the Department of Corrections
extending the programme through 2010-2012.
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INFRASTRUCTURE
W est E nd Water Reclamation Facilit y
Commercial Dock
R everse Osmosis Plants
The completion of the West End Water Reclamation Facility
was a major step forward in upgrading the area’s water and
wastewater treatment infrastructure to address its existing
and future needs. The new facility uses state-of-the-art
technology to produce high-quality reclaimed water suitable
for use as non-potable reuse as toilet flushing water and
landscape irrigation.
Work on the public dock and excursion boat berths was
completed in time for the 2009 season. This will enable
more convenient access to commercial services such as
jet skis and charter boats for cruise ship passengers and
visitors arriving by ferry.
Management of Dockyard’s two reverse osmosis plants was
taken over by Rocon Services Ltd. from the fourth quarter of
2009. In addition to ensuring a consistent supply of treated
water to visiting cruise ships and Works and Engineering,
Rocon is also assisting WEDCo in monitoring both water
supply and water quality testing throughout the West End.
It replaces a 20-year old facility that was in extremely poor
physical condition, produced a poor effluent quality and was
infamous for foul odours in Dockyard. The new facility is
designed to treat an average of 150,000 gallons per day (gpd),
and peak flow of 250,000 gpd. This capacity can be doubled
when needed by adding new membrane equipment within
the existing structure. The compact design has a smaller
footprint than the old wastewater treatment plant but has the
capability to treat more than six times the flow and produce a
far superior effluent quality.
WEDCo continues to work closely with Police and the
Community Action team in monitoring and improving
security in and around Dockyard. The establishment of a
permanent Police sub-station in Building NB15 did not take
place as expected during the 2009-2010 financial year due
to Police budgetary restraints but WEDCo remains hopeful
that it will take place during 2010-2011.
S ecurity
Casemates
Significantly, the project was managed internally by WEDCo,
which decided to act as general contractor after negotiations
with contractors failed to reduce the estimated $20 million
project budget. WEDCo negotiated contracts with various
subcontractors and managed the construction and startup of
the new facility. This initiative meant the cost of the project
was reduced to $15.2 million.
This facility represents a significant step forward for WEDCo
and Bermuda, and will allow future development of the West
End to proceed in the future.
Pender Road
The much-needed widening of Pender Road was completed
in May 2009, allowing for easier traffic access to and from
Dockyard. The improvements included a new bridge which
has been built at Cockburn Cut, the site of Bermuda’s first
concrete bridge in 1892, and widening of the Dockyard
Gates. The completion of the project has eliminated traffic
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bottlenecks at Cut Bridge and the Dockyard Gates and allows
for more efficient transportation of cruise ship passengers in
and out of the Dockyard.
P ender Road Bus D epot
The Department of Public Transportation’s new Bus Depot
was completed in August 2009 on the site of the former
derelict housing on Pender Road. With all West End routes
now terminating to Dockyard instead of Somerset Village,
it has led to a significant improvement in public transport
facilities for local and visitors alike. Together with the Sea
Express ferry service and Dockyard Train, it has helped make
getting around the West End much easier and more efficient.
N orth Basin Marina
Phase Three of the North Basin Marina development continued
with the relocation of Marine & Ports’ vessels to the North
Arm. One remaining dock is due to be completed in mid-2010
enabling the Marina to accommodate 140 berths.
During 2009, WEDCo also announced plans for development
of the South Basin, which will include a marina with a further
100-120 berths. Work is expected to begin on this project
during 2011.
Technical issues prevented the planned installation of
additional closed circuit cameras during 2009 but WEDCo
is confident that these can be resolved for installation
during 2010.
Following the completion of the Water Reclamation Facility,
a new security gate was installed at the Sallyport. The
gate, which is operated by swipe card access, also provides
additional land-side security for Snorkel Park.
In December 2009, Government transferred Casemate
Barracks and its adjacent buildings and fortifications to
Bermuda Maritime Museum, creating the National Museum
of Bermuda. Archaeological and restoration work on the
former Casemates site continued under the leadership of
Dr. Edward Harris, the Museum’s director.
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BUSINESS
DEVELOPMENT
R etail
R ES ID E N TIAL D EVE LO P M E N T
As expected, the increased volume of cruise ship visitors
and crew following the opening of Heritage Wharf created
demand and opportunity for local businesses with Dockyard
stores reporting average increases in retail sales of 4-5%.
As previously announced, WEDCo relinquished its
management of the Boaz Island Condominium Corporation
after divesting most of its assets at the Village but as the
owner of 34 remaining units, the Corporation retains a place
on the Board.
The growing business confidence in Dockyard reflected by
the establishment of major stores Makin’ Waves and Phoenix
Dockyard Pharmacy in 2008, continued in 2009 with the
addition of popular children’s lifestyle boutique Daisy
& Mac in the Clocktower Mall, which took over the space
vacated by the Bermuda Bookstore. The Duchess Boutique
was another new addition, while in March 2010, Eve’s Cycles
opened Dockyard’s second cycle rental facility, in Dockyard
Terrace No. 10. Popular Bermudian artist Carole Holding
expanded her successful Front Street business to include
The Bermuda Shop in the Clocktower Mall and a concession
at Hertiage Wharf.
Snorkel Park was taken over by the new management team of
Belcario Thomas and Tom Steinhoff who set about enhancing
the facility as both a major tourist attraction and the west
end’s premier entertainment venue with a series of wellreceived summer events and parties. Redevelopment work
included a larger patio for dancing or live entertainment,
improved dining facilities and a separate children’s beach.
The former Beethoven’s restaurant in the Clocktower Mall
was successfully renovated and rebranded as Café Amici by
Livio Ferigo, owner of popular Dockyard restaurant Bonefish.
The new Italian-themed restaurant provides visitors and
local diners with more choice and variety in Dockyard for
lunch and dinner.
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WEDCo expects to see work begin in the 2010-11 fiscal year on
the long-awaited redevelopment of Victoria Row Houses. The
final name for the site has not yet been finalized however for
project purposes it has been given a name of Victoria Place.
The site will be rebuilt as a mix of 100 one-, two- and threebedroom rental units. WEDCo is committed to ensuring that
every opportunity is provided to the sitting tenant to avoid
displacing any tenant during the projects development.
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LOOKING FORWARD
The development of the South Basin will be the next major
project undertaken by WEDCo. Work on the project, which will
involve significant land reclamation and a new third break arm,
is expected to start in 2011. When complete this development
will provide a new 100 - 125 berth marina and space for the
relocation of Marine and Ports and West End Yachts and other
light industries presently located behind the Clocktower Mall
as well as other new businesses. This relocation will in turn
open up another excellent development opportunity in the
North Basin.
WEDCo’s efforts in the coming year are driven by the ongoing
need to increase critical mass. Our continued upgrading of
buildings and facilities is geared to attracting both more
permanent residents and a regular flow of local visitors and
tourists to the West End in order to maintain revenue sources
and ensure long-term sustainability.
We remain committed to the vision of developing the West End
and Dockyard as a unique place in which to live, work and play.
No other destination in Bermuda offers the total experience
that Dockyard offers in terms of dining, entertainment,
shopping, activities, culture, and heritage.
WEDCo remains ever mindful that future development, while
essential for the long-term viability of Dockyard, must be
sensitive to the architectural heritage and history that is such
a major component of the area’s appeal. To this end, WEDCo
endeavours to retain the exterior and character of existing
buildings where possible and strives to ensure that new
structures complement the historical environment. To date
this has been achieved successfully throughout Dockyard
with buildings such as the Clocktower Mall, Dockyard Terrace
and Heritage Wharf.
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WEDCo is fortunate in that it owns the buildings in Dockyard
and is in a position to ensure consistent and appropriate
development – something that has arguably been lost in
Hamilton. Pending developments, for example, will further
utilize second floor space in the Clocktower Mall and other
buildings as offices while retaining lower floors for easy visitor
access to retail businesses, restaurants and other services.
Dockyard continues to provide opportunities for growth in
Bermuda, especially in the current economic environment
where Government increasingly seeks private-public
partnerships. The Corporation also continues to attract
serious interest from overseas investors who view Bermuda
as a safe investment and we remain confident that in due
course this will result in substantial developments that will
benefit not only Dockyard but also the whole of Bermuda.
More than 200 years after it was founded as a naval base,
Dockyard is successfully charting a new course that reestablishes its strategic importance to Bermuda. Today,
though, it is cruise ships, not warships that are providing the
catalyst for economic growth and opportunity. The Board
and management of WEDCo remain committed to managing
that growth to ensure that Dockyard becomes a vibrant and
sustainable destination, port and town that will prosper for
another 200 years.
FINANCIAL REVIEW
2009-2010
While fiscal 2009-2010 was a year in which the Corporation
succeeded in furthering many of its initiatives to promote
growth in the West End, these have not yet begun to generate
the revenue streams that are expected over the longer term.
However, the operating costs begin immediately and therefore
have had a significant impact on the income statement.
During fiscal 2009-2010, the Corporation completed the sale
of nine additional units at Boaz Island Village bringing the
total sold at year-end to 18. The cash position at year-end
reflects the proceeds from these sales and these funds are
targeted for investment in projects that will produce greater
revenue streams than those lost through rents.
This resulted in an operating loss for the period, primarily
due to increased operating costs of 16% associated with the
operation of the new West End Water Reclamation Facility.
This was offset somewhat by an increase in revenues of 8.2%
generated by increases in both rental and dock revenues.
The sales of Boaz Island units produced additional revenues,
generating a net growth in Retained Earnings of 10.4% to
$24.4 million.
Looking forward to the future, the Heritage Wharf complex
continues to be a major catalyst in increasing the critical
mass of both tourists and local residents to the area. While
the Government has commenced proceedings to divest the
Corporation of this asset in financial year 2010-2011, the
Corporation will continue to be responsible for the operation
of the facility.
While the Corporation remains in growth mode, this pattern is
likely to continue for the short-term until new developments
begin to generate the expected revenues to offset the
increase in the cost of providing the appropriate services in
the interim.
The development of the new housing at Victoria Place is
moving forward and while this will not, in and of itself, enhance
the Corporation’s revenues, it will provide an opportunity to
redevelop some of the existing properties with the intent of
better utilising the assets and augmenting existing revenue
streams. Other initiatives, which are currently in the early
stages, are expected to stimulate additional critical mass and
will be pursued aggressively during the coming year.
The future remains clearly in focus and the Corporation is
secure in the knowledge that they are continuing on the right
course to achieving its long-term goals and objectives.
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NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 20010
expressed in Bermuda dollars
1.
AUTHORITY
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.
SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with accounting principles generally accepted in Bermuda and Canada applicable to a ‘going
concern’, which assume that the Corporation will continue its operations in the foreseeable future and will be able to realize its assets and discharge its
liabilities in the normal course of operations.
Management regularly reviews and considers the current and forecast activities of the Corporation in order to satisfy itself as to the viability of operations.
These ongoing reviews include current and future business opportunities, customer and supplier exposure and forecast of cash requirements and balances.
Based on these evaluations management considers that the Corporation is able to continue as a going concern.
For financial reporting purposes, the Corporation is classified as a government business-type organization and has adopted accounting policies appropriate
for this classification. The policies considered particularly significant are set out below:
(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.
assets.
Berthing fees, received from all vessels arriving in Dockyard, are recognized on an accrual basis.
(c)
Cash and cash equivalents consist of cash on hand and current account balances with banks.
(d) Capital assets
Leased properties are outlined in note 8 as rental revenue producing
Cash and cash equivalents
Capital assets are recorded at cost. Amortization is calculated on a straight-line basis over the estimated useful lives of the assets as follows:
Years
Furniture, equipment and tools
Building improvements and renovations
Mechanical rehabilitation
Landscaping
Buildings
Infrastructure rehabilitation
20
3 - 10
10 - 25
10 - 25
5 - 40
40
40
Assets under development represent the cost of direct materials and labour of capital projects not completed at year-end.
(e) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial
period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognized in the statement of operations in the period in which they are incurred.
(f)
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.
A half-year’s amortization is charged in the year the asset is brought into use.
Use of estimates
T h e W e s t E n d D e v e l o p m e n t C o r p o r at i o n | A n n u a l R e p o r t 2 0 1 0
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
(g) Adoption of Accounting Standards
5.
Effective April 1, 2009 the Corporation adopted the following new accounting standards issued by the Canadian Institute of Chartered Accountants (which
are promoted by the Institute of Chartered Accountants of Bermuda by signed agreement and therefore generally accepted in Bermuda).
TENANT IMPROVEMENTS RECOVERY
During the year, the Corporation provided funding, in the amount of $471,663, to the Department of Public Transportation to develop a bus depot in Dockyard
to replace the existing one in Somerset. This loan is to be repaid over 5 years at 7%. An amount of $33,327 was repaid during the year. At March 31, 2010
the balance outstanding was $438,336.
Financial Statement Concepts, Section 1000
Financial Statement Concepts, Section 1000, clarifies the criteria for recognition of an asset and the timing of expense recognition. The adoption of this
standard had no material impact on the Corporation’s financial statements.
Credit risk and fair value of financial assets and liabilities, EIC 173
The guidance clarified that an entity’s own credit risk and the credit risk of counterparty should be taken into account in determining the fair value of financial
assets and liabilities including derivative instruments. The Corporation has evaluated the new EIC and determined that the adoption of the new requirement
did not have a material impact on the Corporation’s financial statements.
(h) Financial Instruments, Recognition and Measurement
6.
The Corporation’s financial instruments consist of cash, accounts receivable, mortgages receivable, tenant improvements recoverable, housing units sale
proceeds receivable, accounts payable and accrued liabilities, due to the Government of Canada and long-term debt.
INVESTMENT IN SUBSIDIARY
During the fiscal year ended March 31, 2010, the formation of a limited liability company known as South Basin Development Ltd. (SBD) was finalized. SBD will
have the specific role of developing affordable housing, marina and land reclamation. The subsidiary is 100% WEDCO owned. It is planned that the ownership
of SBD will change to 60% WEDCO and 40% Clark International, LLC in a Public Private Partnership before SBD commences operations.
The following is a summary of the accounting model the Corporation has elected to apply to each of its significant categories of financial instruments
outstanding at March 31, 2010:
As at year end, $13,974 (2009 - $3,075) in legal costs had been incurred on the formation of SBD.
7.
HOUSING UNITS HELD FOR SALE
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 Sale at cost as this is lower than the net realizable value. As at March 31, 2010, two sales had been completed for which the proceeds, totalling
$900,000, had not yet been received.
8.
CAPITAL ASSETS
MARCH 31, 20010
expressed in Bermuda dollars
•
•
•
Cash, accounts receivable, housing units sale proceeds receivable and accounts payable and accrued liabilities are classified as Held for trading
and are measured at fair value and changes in fair value are recognized in the statement of operations.
Mortgages receivable and tenant improvements recoverable are classified as Loans and receivables and are measured at amortized cost using the
effective interest rate method.
Long-term debt and Due to the Government of Canada are classified as other financial liabilities and are measured at amortized cost.
Unless otherwise noted, it is management’s opinion that the Corporation is not exposed to significant interest, currency or credit risk arising from these
financial instruments.
The fair value of the Corporation’s held-for-trading financial assets and financial liabilities approximate their carrying values due to their short-term maturity.
Certain items such as prepaid expenses, capital assets, deferred revenue, deferred insurance proceeds and deferred capital contributions are excluded from
fair value disclosure requirements as they are not financial instruments.
3.
ACCOUNTS RECEIVABLE
4.
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 five to 30 years at an interest rate of 9% per annum.
22
MARCH 31, 20010
expressed in Bermuda dollars
T h e W e s t E n d D e v e l o p m e n t C o r p o r at i o n | A n n u a l R e p o r t 2 0 1 0
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
8.
CAPITAL ASSETS (continued)
Loan interest incurred during the construction of the Waste Water Treatment Facility totalled $243,914 and is included in the cost of the capital assets.
11.
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 4.
On May 7, 2009, the Government conveyed ownership of the new cruise ship pier known as the Heritage Wharf and the associated reclaimed land to
the Corporation with an estimated value of $58 million for a nominal fee of $1. Under the terms of the conveyance agreements, the Government has an
irrevocable right to purchase the transferred assets for the same consideration.
Included in the above capital assets are rental revenue producing assets at a cost of $21,635,589 (2009 - $21,145,047) and related accumulated amortization
of $9,047,586 (2009 - $8,291,203).
9.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
MARCH 31, 20010
expressed in Bermuda dollars
MARCH 31, 20010
expressed in Bermuda dollars
OBLIGATIONS UNDER CAPITAL LEASE (continued)
Future repayments scheduled over the remaining term of the lease are as follows:
12. 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 deed requires the Corporation to
repay the sum of $5,000,000, interest free, within a term of ten years of the date of the deed.
It is Management’s intention that for any units sold, the proceeds will be paid against this debt obligation by the end of the calendar year in which the unit
is sold. This debt obligation will first be paid to the Government of Bermuda up to a total amount of $353,483, to discharge redundancy payments payable
on behalf of the Government of Canada. Thereafter, the proceeds per unit sold will be remitted to the Canadian Government to satisfy the remainder of
the debt obligation.
10. 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, 2010, $1,257,732 (2009 - $1,242,732) had been spent on repairs. Work is ongoing and the unused
portion of the claim has been deferred and separately identified on the balance sheet.
11.
OBLIGATIONS UNDER CAPITAL LEASE
Effective February 1, 2010 the Corporation entered into a capital lease with Air Care to provide upgrades to existing equipment and to replace any and all
equipment as necessary for a period of 10 years at a total lease cost of $175,084. Under the terms of the lease, the Corporation made a 25% down payment
of $43,771. The remaining balance of $131,313 is payable over a period of 10 years at monthly installment amounts of principal and interest of $1,700. The
lease bears interest of approximately 9.5%.
13. LONG-TERM DEBT
In April 2009, the Corporation secured a loan for $10,000,000 through Capital G Bank to fund the completion of the new Waste Water Treatment Facility in
Dockyard. The interest rate on the loan is the bank’s Bermuda dollar base rate plus margin of 0.75%. This loan is for a term of seven years and repayment of
principal and interest has been guaranteed by the Government by way of annual grants to the Corporation. The total amount of drawn down plus capitalized
interest at March 31, 2010 is $8,537,868 of which $243,914 is capitalized interest.
24
T h e W e s t E n d D e v e l o p m e n t C o r p o r at i o n | A n n u a l R e p o r t 2 0 1 0
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
13. LONG-TERM DEBT (continued)
Scheduled principal and interest repayments are as follows:
16. EMPLOYEE BENEFITS
MARCH 31, 20010
expressed in Bermuda dollars
14. DEFERRED CAPITAL CONTRIBUTIONS
Deferred capital contributions represent the unamortized amount of capital assets received and grants received for the purchase of capital assets. The
amortization of deferred capital contributions is recorded as revenue in the statement of operations.
MARCH 31, 20010
expressed in Bermuda dollars
(a) PENSION PLANS
(i)
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 8% of gross salary and they are matched by the Corporation.
The Corporation is not required, under present legislation, to make contributions to the Fund with respect to quantified actuarial deficiencies. 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 totalled
$55,119 (2009 - $51,718).
(ii) Pension plan for administrative employees
Administrative employees of the Corporation are covered under a private defined contribution plan through BF&M Life Insurance Co. 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 amounted to $74,932 (2009 - $54,358).
(b) OTHER BENEFITS
Other employee benefits include maternity leave, sick leave, and vacation days. All of these benefits 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, 2010 is $111,587 (2009 - $103,759) and is included in accounts payable and accrued liabilities.
Pension plan for Bermuda Industrial Union employees
17. COMMITMENTS
At March 31, 2010, the Corporation had contractual obligations relating to various capital projects of $128,100 (2009 - $8,922,608). Additional approved
projects not yet contracted amount to $34,000,000 (2009 - $560,000).
Capital asset received during the year represents the value of the new cruise ship pier, the Heritage Wharf, conveyed to the Corporation by Government at a
nominal fee of $1.
15. 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 which are measured at the exchange amount,
which is established and agreed to by the related parties. Related party transactions entered into by the Corporation are as follows:
26
18. FINANCIAL RISK MANAGEMENT
The Corporation has exposure to counterparty credit risk, liquidity risk and market risk associated with its financial assets and liabilities. The Board of
Directors has overall responsibility for the establishment and oversight of the Corporation’s risk management framework. The Board of Directors has
established the Finance and Audit Committee which is responsible for developing and monitoring the Corporation’s compliance with risk management
policies and procedures. The Finance and Audit Committee regularly reports to the Board of Directors on its activities. The Corporation’s risk management
program seeks to minimize potential adverse effects on the Corporation’s financial performance. The Corporation manages its risks and risk exposures
through a combination of insurance and sound business practices.
Credit Risk
Credit risk arises from cash held with banks and credit exposure to customers, including outstanding accounts receivable. The maximum exposure to credit
risk is equal to the carrying value (net of allowances) of the financial assets. The objective of managing counterparty credit risk is to prevent losses on
financial assets. The Corporation assesses the credit quality of counterparties, taking into account their financial position, past experience and other factors.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and current account balances with banks. Credit risk associated with cash and cash equivalents is
minimized substantially by ensuring that these financial assets are invested with highly rated financial institutions.
Accounts Receivable
Accounts receivable consist primarily of trade accounts receivable from billings of services provided. The Corporation’s credit risk arises from the possibility
that a counterparty which owes the Corporation money is unable or unwilling to meet its obligations in accordance with the terms and conditions in the
contracts with the Corporation, which would result in a financial loss for the Corporation. This risk is mitigated through established credit management
techniques, including monitoring counterparty’s creditworthiness, obtaining references and taking security deposits. In the year ended March 31, 2010, the
maximum credit risk to which the Corporation is exposed represents the fair value of its accounts receivable.
T h e W e s t E n d D e v e l o p m e n t C o r p o r at i o n | A n n u a l R e p o r t 2 0 1 0
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 20010
expressed in Bermuda dollars
18. FINANCIAL RISK MANAGEMENT (continued)
Liquidity Risk
Liquidity risk is the risk the Corporation will not be able to meet its financial obligations as they fall due. The Corporation’s objective in managing liquidity
is to ensure that it will always have sufficient liquidity to meet its commitments when due, without incurring unacceptable losses or risking damage to
the Corporation’s reputation. The Corporation manages exposure to liquidity risk by closely monitoring supplier and other liabilities, focusing on debtor
collection, generating positive cash flows from operations and establishing and maintaining good relationships with various financial institutions.
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the fair value of recognized assets and
liabilities or future cash flows of the Corporation’s results of operations. The Corporation has minimal exposure to market risk.
Foreign Exchange
The Corporation’s business transactions are mainly conducted in Bermuda dollars and, as such, it has minimal exposure to foreign exchange rates risk.
Interest Rate
The Corporation is exposed to changes in interest rates, which may impact interest expense on long-term debt.
19. CAPITAL MANAGEMENT
The Corporation’s objective when managing capital is to hold sufficient equity to enable it to withstand negative unexpected financial events. The Corporation
seeks to achieve this objective through generating an excess of revenues over expenses. The Corporation maintains sufficient liquidity to meeting its shortterm obligations as they come due. The Corporation is not subject to any externally imposed capital requirements.
20. SUBSEQUENT EVENT
On May 7, 2009, the Government conveyed ownership of the new cruise ship berth and the associated reclaimed land to the Corporation, with an estimated
value of $58 million, for a nominal fee of $1. The Corporation has assumed responsibility for the operation and maintenance of the facility with effect from
that date. However, subsequent to March 31, 2010, the Government has expressed the intention to divest the Corporation of this asset and enter into a lease
and repair agreement with the Corporation.
21. RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Developments
In February 2008, the Accounting Standards Board of the Canadian Institute of Chartered Accountants confirmed its strategic plan which will abandon
Canadian generally accepted accounting principles and effect a complete convergence to International Financial Reporting Standards (IFRS). In September
2009, the Public Sector Accounting Board approved an amendment to the scope of public sector accounting standards. The existing category of government
business-type organizations (GBTO) will cease to exist and such organizations like The West End Development Corporation previously falling into that
category must decide if they are a “Government Not-For-Profit Organization (GNFPO)” or an “Other Government Organization (OGO)”. Other Government
Organizations will be permitted to choose to prepare their financial statements in accordance with public sector standards or IFRS. This choice will depend on
an evaluation of which basis will better satisfy the needs of users of their financial statements. These new developments will be effective for the Corporation’s
financial year commencing April 1, 2011.
22. COMPARATIVE FIGURES
Certain comparative figures have been restated and reclassified to conform to the current year’s presentation.
28
BOARD OF DIRECTORS
C hairperson :
T he H on . W alter L ister , JP MP
D eputy C hairperson :
M r . S tanley L ee
D irectors :
D r . E dward H arris MBE, JP, FSA
M r . C ecil O. D urham , JP
M r . M arc D aniels
D r . M elvyn B assett
M r . A lbert R atteray
M r . M ichael W ellman
EX-OFFICIO
P ermanent S ecretary , W orks & E ngineering
D irector of P lanning
F inancial S ecretary
FINANCE AND AUDIT COMMITTEE
M r . S tanley L ee – C hairperson
M s . S andra F erguson
M r . A ndrew D ias
WEDC o EXECUTIVE
G eneral M anager : A ndrew D ias
F inancial C ontroller : S andra J. F erguson
F acilities M anager : C armen H arvey
B usiness D evelopment M anager : R aymond T annock
BANKERS
B ank of N. T. B utterfield & S on , L td .
C apital G B ank
A nnual R eport D esign
the foundation
W riter
C hris G ibbons
P hotography
C raig F erguson
W ork . P lay . L ive .
W est E nd D evelopment C orporation
P.O. Box MA 415
Mangrove Bay, MA BX
B ermuda
[T] 441.234.1709
[F] 441.234. 3411
[E] i nfo @ wedco.bm
www . t h ew est e n d . b m