Below is the report to shareholders from Chairman Neville Conyers with financial highlights.
The full report and audited statements will be presented to the shareholders of the company at a meeting to be held on July 23. The company also declared a dividend of 14 cents per share to shareholders of record April 27, 1999.
Revenues were up 11% from $13,090,187 in 1998 to $14,642,155 in 1999.
Expenses rose by 9% from $11,922,187 in 1998 to $12,992,786 in 1999
Operating Income was up 41% from $1,168,000 to $1,649,329 in 1999
Net Income was $1,500,638 in 1999 comapred with
$992,278 in 1998, an increase of 51%
Earnings per share also rose 51% from $0.94 to %1.42
Dividend Paid in 1999 was $0.48 compared to $0.40 in 1998
Chairman's Report:
I am very pleased to report the results of Bermuda Aviation Services Ltd. (BAS), for the fiscal year ending March 31, 1999. The performance of the company for this period has exceeded all expectations and we once again posted record results. I am particularly pleased with the 51% growth in earnings per share, considering the 74% increase achieved in 1998. Also our stock, considered the best performing local stock in 1998, advanced 52% to $7.60. Bottom line growth was just as impressive as net earnings increased 51% to $1,500,638. Operating income improved 41% to $1,649,329, marking our third consecutive year of earnings growth.
Nearly all divisions of the company produced good results during the period, with BAS and its subsidiaries, Aircraft Service Bermuda Ltd. and Crow Lane Bakery Ltd., experiencing a combined 16% increase in revenue. We were particularly pleased to see our Fleet Maintenance Garage show an operating profit for the first time ever. The one disappointment was our bar and restaurant division in which we recently made quite a substantial investment. It experienced a significant operating shortfall that was not anticipated. The poor performance can be attributed directly to the shortfall in passenger traffic. As a result, the short-term outlook for this area is not seen as particularly bright. Steps are however being taken to minimise the losses. All other divisions performed to plan and contributed significantly to this year's success.
I am often queried on the success of the company over the past five years, considering the state of tourism and its direct effect on our core business. Facing significant losses in revenue in 1994, we knew at that time that it was imperative we take a hard look at our company and make some strategic changes. It meant embracing new ideas and different ways of providing services of more importance it meant accepting new disciplines. Since then BAS has transformed itself from an entity whose sole focus was the provision of aviation support service into a diversified local company that has added bakery and food production, retail and outsourcing to its portfolio. Last year only 78% of sales were derived directly from aviation related services. During this period we also reduced management layers. This improved internal communication and dramatically improved our responsiveness to our clients. I am pleased to report that these strategies are paying off, net income has been increased 205% from $491,000 five yeas ago to $1.5 million this year whilst sales for the period are up 13%. By continuing to expand its business and increase the operating efficiency of the company, BAS has been able to sustain income and dividend growth. The current annualised dividend of $0.56 per share paid to shareholders has been increased every year and has risen 133% over the period. The declaration of these increased dividend payments by the Board of Directors expresses the appreciation for your continued support as a shareholder and the confidence it has in the Company's direction.
Are there tough challenges ahead? Without a doubt there are sagging tourism arrivals and declining hotel beds are a real concern as they continue to have a significant effect on sales in every area of our airport operations. In addition to the impact this has on the bars and restaurants as commented on earlier, it also translated into lower cargo volumes, which are evident in the falling income in our cargo terminal operations. And as expected, it has caused the carriers to take a hard look at their Bermuda operations. To adjust to the lesser demand we are seeing yearly schedules being shortened by some and the equipment used downsized by others. All of these factors have an effect on each of our operations, from the field and ramp through to our flight kitchen and garage. However these are just a few of the many hurdles we have had to face but overcome in the last few years. It is the nature of the business and does not in any way alter my positive outlook for the company. These challenges are the very reason why we refocused on how we were going to operate BAS.
At the end of our fiscal year we announced the acquisition of the marketplace bakery operation. This new bakery production facility will provide the much-needed capacity we require if we are to satisfy the present demand for Crow Lane Bakery products and expand its product line. Slated for opening in August of this year is a second retail outlet, which will be located at the Western end of Front Street. We believe that these two initiatives have excellent potential to contribute significantly to our earnings growth over the long term.
In closing I would like to say "think you" to the fine men and women who work in our company. We will always strive to provide a work environment of satisfaction, respect and fairness. For whilst there are many factors to which we may contribute our success, our real strength lies in these man and women and their commitment to providing the best service to our customers. There is no doubt that with their dedication and the teamwork inspired by our management, our success is assured.
W. Neville Conyers
Chairman