Bermuda Aviation Services Limited Issues Management Report

Hamilton, Bermuda: 30 June 2006 - BAS Report From Management 31 May, 2006:

"BAS had another remarkable year where we achieved all of the goals set in 2005. We retired our debt, grew our revenues and increased our earnings as we continued to actively manage our expenses.

The results for International Bonded Couriers of Bermuda Limited were 5% ahead of forecast. They have been a part of our group for 15 months now and we could not be more pleased with the ongoing performance of the company. Not only has it performed beyond our expectations, but we can proudly say we have an exceptionally proud and productive group of people as part of our family.

BAS-Serco Limited also had an exceptional year with a 7% growth in revenue.  Earnings for 2007 are forecast to be higher. All major contracts for the company are in the process of being renewed.

Weir Enterprises Limited continues to perform to expectations. Revenues in the company grew 10% last year, however net earnings were tempered by higher cost of goods. Earnings growth for Weir, BAS-Serco and IBC will be further assisted by the repurchase of minority shareholdings in those companies.

Earnings in Aircraft Services Bermuda Limited fell 28% as we lost revenue servicing smaller aircraft and faced higher labour cost. Revenue from freight handling and related services were also lower. We do expect some improvement in earnings in 2007 with the anticipated increase in flight activity.

Earnings in Crow Lane Bakery Limited fell 35% as we continued to face higher cost of materials, energy and fuel costs. This year we also felt the effect of competition from some of our major customers. More and more of them are taking the production of baked goods in-house as frozen product becomes more available and of higher quality. To ensure continued profitability, we have taken the decision to close our East Broadway location. The location has not been profitable for some time. The discontinuation of some unprofitable lines and the introduction of some new product are expected to help improve earnings of the company in the next year.

You can tell by the commentary that our success this year did not come easily. The rise in fuel prices has had a direct effect on the importation of our goods, the delivery of the product to our customers, the running cost of our vehicles and the overhead of our facilities. These are the realities of the challenges in our business today. 

What has made BAS successful is its ability to face its challenges. Our model is simple; build a portfolio of companies that is broad-based so that when one area is facing challenges the others will likely be stable or enjoying growth.

Our goals for the next three years are;

o      to increase earnings per share by 30% over the period;

o      to increase the return on investment for our shareholders;

o      to improve return on revenue;

o      to ensure stability for the future; and

o      to generate strong cash flows for future expansion.

We thank you, our shareholders, for your support. We could not have enjoyed such success without you behind us. We would also like to acknowledge the men and women in our company who have supported our vision and helped us achieve our goals.

E. Eugene Bean

Group President