Bermuda Aviation Services Income: $1.27M

December 24, 2013

In a filing to the Bermuda Stock Exchange, Bermuda Aviation Services Limited released interim financial results for the six months ending 30 September, 2013.

In a letter to shareholders CEO Ian Cook said they posted an income of just over $1.27 million, an over 60% improvement from the prior year.

“At this stage, no one will require reminding of the state of the local economy. It is more inhospitable than it was one year ago,” said Mr Cook.

Mr Cook’s full letter is below:

To our Shareholders:

For the six-month period ending September 30th 2013, Bermuda Aviation Services Limited (BAS) has posted a credible comprehensive income of just over $1.27 million, an over 60% improvement from the prior year.

At this stage, no one will require reminding of the state of the local economy. It is more inhospitable than it was one year ago. In an adverse economic climate, our response has been to increase sales.

Revenues have improved by $8 million over the prior year, bolstered by the addition of our newer subsidiaries, Eff-Tech and BESCO. However, the most notable revenue increase was made by CCS.

CCS continues to raise the bar in one of the most challenging environments. Consequently, Gross Profit increased by nearly $2 Million and Income from Continuing Operations improved by 62%.

Operating Expenses have increased from the prior year and due to the additions of Eff-Tech and BESCO into the BAS Group. However, Management recognizes the need to keep a tight rein on Operating Expenses.

Management constantly reviews and rationalizes the operations of the various subsidiaries with a view to generating economies of scale and cost curtailments.

There has been a moderate growth in Total Assets – nearly $4 Million. While the cash position has decreased from last year, the Receivables have grown by over $7 Million. We are encouraged by the growth in Receivables as our customers continue to utilize our services.

However, we are mindful that they must be monitored to reduce any potential exposure. We have managed to keep our liabilities in check. The only notable liability increase relates to Deferred Revenue. This is indicative of the increased pipeline of work that we have managed to generate over the prior period.

The strength of BAS rests in its diverse, but synergistic, group of companies. This diversity has served to offset the exposures that some of our subsidiaries face. For example, the cargo handling segments of our operation have been challenged due to the decline in retail activities.

However, many of our service segments in IT, Automotive, and Facilities Maintenance have either performed to or outperformed Management’s expectations. Other segments of our operations are still contributing positively to the Group. This diversity has allowed the Group to mitigate some of the market risk associated with the struggling local economy.

Eff-Tech and BESCO, our newest additions, have fit into the Group well. Eff-Tech has made positive inroads in Bermuda’s heating ventilation and air-conditioning (HVAC) market and is now the only provider of Mitsubishi equipment in Bermuda. BESCO has, with its established market niche, complimented the service provided by our other subsidiaries CCS, ITS, BAS-Serco and Eff-Tech and, in doing so, has more than justified its acquisition.

Management anticipates that the remainder of the fiscal year will continue to be affected by a sluggish economy. We continue to be guardedly optimistic that some exciting opportunities will be generated for BAS by utilizing the synergistic services base and skillsets offered by the BAS Group of Companies.

The Board and I would like to take this opportunity to thank Ken Joaquin for his outstanding contributions that he has made to the Group of Companies over the years. With his leadership we have extended our range of services and continued to be leaders in our chosen markets. We wish him all the best and every success for the future.

Sincerely,

Ian Cook
Group President and Chief Executive Officer

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