Bermuda Aviation Services: $1.45m Earnings
Bermuda Aviation Services has reported net earnings of $1.45 million between April and September, a “respectable result” given continuing economic uncertainty.
In a letter to BAS shareholders issued today [Nov 9], Group President and Chief Executive Officer Kenneth Joaquin praised management for keeping down costs and improving efficiency in these difficult economic times.
Mr. Joaquin said BAS and its subsidiary firms have contained operating expenses over the prior year as “we have strived to do more with less” and the strategy has resulted in a more streamlined and profitable operation.
His full letter follows below:
To our shareholders:
“BAS has posted net earnings of $1.45 Million for the six-month period ending
September 30th 2010, whilst our earnings from operations stand at $1.74 Million. A
respectable result given the state of the local economy that speaks to Management’s
continued focus on cost containment and efficiency in these difficult times.
There is nothing new to be said about the local economic environment. It is sufficient to
say that it still lacks luster and the midterm outlook remains uncertain. However
Management believes that BAS is comprised of a solid foundation of diverse, legacy
companies that will see it weather the economic climate and always provide good value
for its shareholders.
For BAS it has been a six-month period where we have seen our revenue, in
contradicting fashion, rise near 6 percent over last year. This revenue increase has been
driven solely by our subsidiary CCS Ltd. which has aggressively pursued sales on much
more competitive margins, a necessary strategy in these challenging times. Although
this strategy has consequently driven up BAS’s consolidated revenues and direct costs,
we have been able to contain our operating expenses over the prior year as we have
strived to do more with less.
ASB Ltd. has returned a modest profit for the six-month period, a result that has
exceeded management’s initial expectations, given the absorption of significant
restructuring costs, new competition and continuing weak airline volumes. While the
bottom line result is not exceptional, it is definitely encouraging; as it has underscored
that the organizational enhancements instituted by Management are driving the
efficiencies that we were looking for.
BAS-Serco, Weir Ltd. and Otis Bermuda Ltd. have had strong mid-year results. BASSerco
has managed to duplicate the same robust performance that it had last year with
net earnings in line with those of the prior period. The latter two companies have
impressively outperformed the previous year’s results having done so with marginally
lower revenues.
IBC Ltd., had an acceptable six-month performance. Although flat revenue growth and
increased direct cost associated with the cost of airfreight has eroded net earnings
compared to the prior year, Management is in no doubt that IBC is fundamentally a
sound company and this ebb in earnings is a reflection of the broader local economy.
CCS Ltd. has incurred a series of accounting errors, which despite having no cash
impact on the company have necessitated adjustments that have caused a material
reduction in the six-month net earnings of the company compared to the prior year.
Management has acted decisively by making organizational changes and redesigning
accounting processes to prevent the re-occurrence of similar issues.
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.
