BAS: Revenues Drop $5.5 Million

In a filing with the Bermuda Stock Exchange [BSX], Bermuda Aviation Services Limited [BAS] released its interim unaudited financial results to September 30, 2011.

For the six-month period ending September 30th 2011, BAS  posted net earnings of $830,000, which the Company said was “broadly attributable to Bermuda’s current economic climate.”

The report to shareholders said, “The pressures of the local economy have been and continue to be an unavoidable reality as we have seen revenues contract by over $5.5 million over the prior year.”

BAS Group of Companies consists of: Aircraft Services Bermuda Ltd. (ASB), BAS-Serco Ltd., International Bonded Couriers Ltd. (IBC), Weir Enterprises Ltd., Otis Bermuda Ltd and CCS Group Ltd.

The full statement follows below:

For the six-month period ending September 30th 2011, Bermuda Aviation Services Limited (BAS) has posted net earnings of $830,000. While these results are broadly attributable to Bermuda’s current economic climate, they are singularly reflective of the costs to exit from segments of Aircraft Services Bermuda Limited (ASB) operations. Net Income before Discontinued Operations and Income from Operations were both in excess of $1 million.

The pressures of the local economy have been and continue to be an unavoidable reality as we have seen revenues contract by over $5.5 million over the prior year. The Sale of Goods has been particularly affected by a recessionary market that has seen consumers with much smaller appetites for new or major capital projects.

This was neither surprising nor unanticipated. Appreciating the economic trends, Management has kept its focus on cost control and containment. Consequently, while revenue is down by $5.5 million from last year, Income from Operations of $1.05 million has decreased by $734,000.

Management’s fiscal conservatism has served the Company well and is reflected in the Consolidated Balance Sheet. Having previously stated our intention to bolster the Company’s cash position in the previous fiscal year in order to allow for more flexibility in what we saw to be challenging times ahead, we have eliminated outstanding debt and have improved the cash position by over $2.1 million from the prior year.

The additional liquidity will provide the Company with the ability to execute some key strategic objectives that will better position us for the future.

The notable event in the first half of the year has been the discontinued operations of key segments of ASB through an asset sale to Renaissance Aviation Ltd. While the transaction proved to be cash neutral for ASB in so far as the context of the proceeds of the sale and associated restructuring costs cancelled each other out, the accounting implications of the transaction had a negative impact on the current period’s earnings.

Notwithstanding, Management remains firm in its conviction, that after having considered the commercial aviation industry and the future direction of BAS, this was the correct course of action.

BAS-Serco has had strong mid-year results and has managed to duplicate the same robust performance that it had last year with net earnings in line with those of the prior period. That said, with a depressed economy and an increasingly competitive facilities maintenance market, we have constrained expectations for the second half of the year.

Weir Enterprise Ltd. has continued its good form into the first half of this year. This is a trend that we expect to continue for the remainder of the fiscal year.

Otis Bermuda Ltd., with its strong maintenance portfolio, has met Management’s expectations for the period. With new work in the pipe-line, the Company is expected to continue to perform to plan.

IBC Ltd. had an acceptable six-month performance and remains a solid investment for BAS still providing a good return. However, due to its retail like nature, its performance will always reflect the state of the broader local economy.

CCS Group Ltd., despite a tough market, has performed well and met Management’s expectations. With the recent appointment of a new General Manager and an anticipated revitalized look at its product and service offerings, CCS will look to capitalize on the changing landscape of the information technology industry.

The next half of the year will be equally challenging, if not more so, for the local economy. Management is committed to remaining vigilant and seeking out greater efficiencies and opportunities to strengthen BAS.

Kenneth L Joaquin
Group President and Chief Executive Officer

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