BAS Announces Annual Results in Chairman's Report

Hamilton, Bermuda: 30 June 2006 - Bermuda Aviation Services (BAS) Limited Announces Annual Results In Chairman's Report:

CHAIRMAN'S REPORT

May 31, 2006

I shall begin my annual letter by thanking all of you, our shareholders, for your support and your confidence in our Company. The result of our recent rights issue has been ample proof of this.  

For the past twelve years we have seen BAS prosper despite the many challenges presented by external forces over which we have little or no control. There have been economic cycles to test us, but we have managed to overcome these too. Now, as a result of strategic planning and diversification, we have emerged with a strong performance and the best results to date. 

o      Revenues reached $35 million, an increase of 63% over 2005.

o      Income from operations for the period was up 42% to $4.2 million.

o      Net earnings were ahead 40%, to $2.8 million. 

o      Retained earnings were up 21% to $13 million.

o      Shareholder equity was ahead 121% to $30 million.

The most important event this year was the rights issue. This was supported by 80% of current shareholders and the balance by those eager to participate in the future. On March 3 we were able to retire 100% of the Company's debt and on March 30 we purchased the bulk of the minority shareholdings. There remains a small holding, 10%, in one of the subsidiaries which we do not wish to acquire as it involves us in an important strategic partnership. There will be some funds remaining and these will be used to make further acquisitions when opportunities present themselves. Meanwhile, the surplus will help generate income. As a result of all these measures we can expect significant earnings growth in the next twelve months.

It can be said that the businesses we are running are not for the faint of heart. They are labour intensive and, as I have said before, they are subject to forces beyond our control. I am both impressed and amazed by the energy and passion shown by our management team. They are a talented group who serve BAS well. They are both positive and optimistic and they lead from the front, while embracing change when this is needed. Having said that, we all know that a chain is only as strong as its weakest link. Our line staff are equally dedicated to a company that they have come to know as both fair and caring. On behalf of the directors I thank all our employees for their superb efforts.

At this time I should mention that the Board has set aside a block of 100,000 unissued shares for purchase by senior management over the next five years.  All future compensation for senior management will be tied to results and will be a mixture of cash and shares at market value. As we all know there is tremendous competition for talent in all areas in the Island today. This will enable them to become shareholders in the company that they have been so involved in building.

We will ensure that we have strong management and a Board that is vigilant and committed to good governance. We are proud of our achievements and we will continue to ensure that your interests are foremost in our minds.

Michael L. Darling

Chairman