BAS records $4.5 million net loss for the year

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Bermuda Aviation Services (BAS) recorded a $4.5 million net loss for the year due to a $5.7 million goodwill writedown and discontinuation of major operating segments at Aircraft Services Bermuda Ltd.

The loss per share for the year ended March 31, 2012 is $0.93.

BAS recorded $2.7 million in continuing operations earnings for the year and the earnings per share based on continuing operations are $0.52 per share.

The net loss was a consequence two key events that occurred during the year.

The first event was the strategic decision to discontinue major operating segments at Aircraft Services Bermuda Ltd. (ASB). During the year BAS executed a plan to discontinue operations of select segments of ASB. This was facilitated by an asset sale to a third-party. While the net cash implications of the discontinuance were minimal, the accounting implications of the transaction have negatively impacted earnings by $1.5 million.

The second and more material event that occurred during the year arose as a consequence of a writedown of part of the goodwill that was carried on the BAS Consolidated Statement of Financial Position of $18.1 million. After conducting annual goodwill impairment testing, it was concluded that a permanent impairment existed in the value of goodwill carried in relation to the Cargo Handling segment of the business.

Therefore, a goodwill impairment loss in the amount of $5.7 million has been recognised in the current year’s results. This adjustment, while significantly impacting earnings, had no cash impact on the Company.

According to BAS, the company continues to generate excellent cash flows from its operations and consequently remains in a very strong cash position, up over $3 million from the prior year, with a cash balance of $9.4 million at year end. This has allowed BAS to pay a special dividend of $0.02 per share during the year in addition to maintaining a quarterly dividend of $0.05 per share.

“Attaining this degree of liquidity was intentional and strategic as the company is poised to not only withstand the current economic challenges, but more strategically, to have the ability to take advantage of opportunities that will arise from changes in the market segments in which the group operates,” said BAS in a statement.

“At its core and on an operational basis, BAS continues to perform well. With the noted exception of ASB, whose financial performance was impacted due to restructuring costs, all of the other companies in the group contributed positively and as expected to the results for the year ended March 31, 2012.”

While the impairment to goodwill and the recognition of restructuring costs forced BAS into a net loss position, the Board of Directors and Management of BAS said they remain pleased with the ongoing operational profitability of the core group of companies. “Although continued pressure on earnings, driven by a still sluggish economy and increased competition is anticipated, the group consists of a diverse and synergistic portfolio of service companies that will generate reasonable profits and by extension an acceptable return for shareholders. Consequently, the Board and Management are confident that BAS will not only remain relevant in its market spaces, but will also make inroads into other new service market segments,” read a statement.

BAS Chairman, Michael Darling added: “BAS was born out of aviation and has a rich history in Bermuda’s aeronautical past. Today, aviation plays a very small part in the day-to-day operations of the Group. The name belies the modern face of BAS as a well-rounded service company that crosses several industry segments. It is through its diverse but complimentary corporate service base that BAS is able to provide a measure of stability in these uncertain times. ”

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