REPORT FROM MANAGEMENT CONSOLIDATED BALANCE SHEET CONSOLIDATED STATEMENTS OF CONSOLIDATED STATEMENT AS AT SEPTEMEBR 30, 2010 November 2, 2010 INCOME AND RETAINED EARNINGS OF CASH FLOWS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 FOR THE SIX MONTHS ENDED SEPTEMEBR 30, 2010 To our shareholders UNAUDITED UNAUDITED UNAUDITED BAS has posted net earnings of $1.45 Million for the six-month period ending September 30th 2010, whilst our earnings from operations stand 2010 2009 2010 2009 2010 2009 at $1.74 Million. A respectable result given the state of the local $ $ $ $ $ $ economy that speaks to Management’s continued focus on cost CURRENT ASSETS REVENUE OPERATING ACTIVITIES containment and efficiency in these difficult times. Cash and short-term deposits 4,316,882 2,231,233 Sale of goods 1,591,958 1,661,675 Net income for the period 1,454,916 1,977,461 There is nothing new to be said about the local economic environment. It Accounts receivable and prepaid Supply of services 26,257,575 24,411,845 Adjustments to convert to cash is sufficient to say that it still lacks luster and the midterm outlook expenses 12,689,565 11,573,883 basis: remains uncertain. However Management believes that BAS is Inventories 2,360,432 2,692,185 Total revenue 27,849,533 26,073,520 Amortization 616,894 595,225 comprised of a solid foundation of diverse, legacy companies that will Interest expense on debt 18,276 59,163 see it weather the economic climate and always provide good value for 19,366,879 16,497,301 its shareholders. DIRECT COST OF REVENUE Non-controlling interest 145,234 98,859 Cost of goods sold 535,480 640,940 Changes in non-cash working For BAS it has been a six-month period where we have seen our NON-CURRENT ASSETS Direct cost of services revenue 12,119,705 9,413,824 capital: revenue, in contradicting fashion, rise near 6% over last year. This Accounts receivable and Other receivables 4,335,602 2,487,817 revenue increase has been driven solely by our subsidiary CCS Ltd. Total direct cost of revenue 12,655,185 10,054,764 prepaid expenses (2,493,810) (1,436,658) which has aggressively pursued sales on much more competitive Capital assets 6,738,494 7,715,209 Inventories (177,397) (285,693) margins, a necessary strategy in these challenging times. Although this Goodwill 18,153,648 18,153,648 strategy has consequently driven up BAS’s consolidated revenues and Accounts payable and GROSS PROFIT 15,194,348 16,018,756 accrued liabilities (697,922) (1,173,508) direct costs, we have been able to contain our operating expenses over 29,227,744 28,356,674 the prior year as we have strived to do more with less. Deferred revenue 1,240,649 184,020 OPERATING EXPENSES ASB Ltd. has returned a modest profit for the six-month period, a result TOTAL ASSETS 48,594,623 44,853,975 106,840 18,869 that has exceeded management’s initial expectations, given the Wages and benefits 10,101,548 10,644,217 Other direct expenses and absorption of significant restructuring costs, new competition and continuing weak airline volumes. While the bottom line result is not overheads 2,735,514 2,743,483 INVESTING ACTIVITIES exceptional, it is definitely encouraging; as it has underscored that the Amortization 616,894 595,225 organizational enhancements instituted by Management are driving the CURRENT LIABILITIES Investment in capital assets (256,043) (431,145) efficiencies that we were looking for. Accounts payable and accrued Total operating expenses 13,453,956 13,982,925 liabilities 4,698,869 4,742,381 FINANCING ACTIVITIES BAS-Serco, Weir Ltd. and Otis Bermuda Ltd. have had strong mid-year Deferred revenue 3,925,743 2,301,853 results. BAS-Serco has managed to duplicate the same robust INCOME FROM OPERATIONS 1,740,392 2,035,831 Share issuance - 26,425 performance that it had last year with net earnings in line with those of Current portion of long-term debt 477,623 794,338 Loan Proceeds 900,000 - the prior period. The latter two companies have impressively outperformed the previous year’s results having done so with marginally 9,102,235 7,838,572 NON-OPERATING ITEMS Loan repayments (18,276) (441,206) lower revenues. Other income (loss) (121,968) 99,652 Dividends (685,349) (862,583) Interest expense on debt (18,276) (59,163) Dividends paid to IBC Ltd., had an acceptable six-month performance. Although flat NON-CURRENT LIABILITIES non-controlling interests (63,859) (64,834) revenue growth and increased direct cost associated with the cost of Long-term debt 422,377 1,357,190 Non-controlling interest (145,233) (98,859) airfreight has eroded net earnings compared to the prior year, 470,076 385,023 1,454,915 1,977,461 132,516 (1,342,198) Management is in no doubt that IBC is fundamentally a sound company Non-controlling interest NET INCOME FOR THE PERIOD and this ebb in earnings is a reflection of the broader local economy. 892,453 1,742,213 RETAINED EARNINGS CASH & CASH EQUIVALENTS CCS Ltd. has incurred a series of accounting errors, which despite having no cash impact on the company have necessitated adjustments Beginning of the period 20,056,179 16,384,122 Increase during the period (16,687) (1,754,474) that have caused a material reduction in the six-month net earnings of SHAREHOLDERS’ EQUITY Net income for the period 1,454,915 1,977,461 Beginning of the period 4,333,571 3,985,707 the company compared to the prior year. Management has acted Capital stock 5,076,659 5,076,659 Dividends (685,349) (862,583) decisively by making organizational changes and redesigning accounting Share premium 12,697,531 12,697,531 End of the period 4,316,884 2,231,233 processes to prevent the re-occurrence of similar issues. Retained earnings 20,825,745 17,499,000 End of the period 20,825,745 17,499,000 The next half of the year will be equally challenging, if not more so, for the local economy. Management is committed to remaining vigilant and 38,599,935 35,273,190 seeking out greater efficiencies and opportunities to strengthen BAS. TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 48,594,623 44,853,975 Kenneth Joaquin Kenneth Joaquin Group President and Chief Executive Officer The accompanying notes are an integral part of these consolidated financial statements The accompanying notes are an integral part of these consolidated financial statements The accompanying notes are an integral part of these consolidated financial statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DIRECTORS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 CHAIRMAN DEPUTY CHAIRMAN UNAUDITED Michael L. Darling 1,2 E. Eugene Bean 1,2,3 1. Significant Accounting Policies These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in 1,2,3 1,2 Bermuda and Canada and follow the same accounting policies as the March 31, 2010 annual report. Jeffrey G. Conyers Gerald D. E. Simons GROUP OF COMPANIES 1,2,3 3 R. Anthony Jones Alexander W. J. A. Swan 2,3 2 Gail E. M. Pantry N. Reeve Trott 2 2. Per Share Amounts Scott Pearman J. Patricia Lynn 2010 2009 James King Bermuda Aviation Services Limited SECRETARY $ $ E. John Thompson INTERIM REPORT Income per share $0.29 $0.39 for the six months ended 1 Executive Committee SEPTEMBER 30, 2010 Income per share has been calculated on 5,076,659 (2009 – 5,076,659) shares. 2 Audit Committee 3 Compensation Committee 3. Segment Reporting The Company has six reportable segments as shown below. The Company's management has identified the operating segments based on the goods and services they provide. The accounting policies of each of the segments are the same as those described OFFICERS in the March 31, 2010 annual report. All business activities are conducted in Bermuda and all inter-segment transactions are accounted for at arm’s length. Aircraft Services Bermuda Ltd. Kenneth L. Joaquin E. Eugene Bean GROUP VICE PRESIDENT AND EXECUTIVE DEPUTY CHAIRMAN CHIEF EXECUTIVE OFFICER BAS GROUP OF COMPANIES BAS GROUP OF COMPANIES Revenue from external Inter-segment revenue Amortisation of capital Net income from Total assets customers assets Operations 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 Andrew Griffith George Hammond $ $ $ $ $ $ $ $ $ $ VICE PRESIDENT AND MANAGING DIRECTOR CHIEF FINANCIAL OFFICER WEIR ENTERPRISES LIMITED Administrative BAS GROUP OF COMPANIES Services 165,410 157,136 417,400 431,428 67,554 100,124 (1,035,436) (1,103,211) 1,474,175 1,170,505 Aircraft and Rick J. Craft Passenger Handling 3,121,879 3,925,039 - 130,835 154,305 207,264 298,612 2,006,715 2,954,698 Frank Williams VICE PRESIDENT AND VICE PRESIDENT AND CHIEF EXECUTIVE OFFICER Automotive CHIEF EXECUTIVE OFFICER INTERNATIONAL BONDED COURIERS OF Garages 1,591,958 1,661,675 86,118 282,533 19,848 19,393 537,186 490,572 4,809,850 4,805,923 OTIS / BAS-SERCO LIMITED BERMUDA LIMITED Cargo Handling 5,799,455 5,835,023 1,202 7,250 82,103 115,118 413,612 484,974 2,769,213 2,900,062 Facilities Management 5,682,629 5,497,081 - 42,733 29,634 1,168,204 941,255 4,015,292 3,627,142 IT Services 11,488,202 8,997,566 - 276,821 176,651 449,562 923,629 11,053,944 8,771,398 27,849,533 26,073,520 504,720 721,211 616,894 595,225 1,740,392 2,035,831 26,129,189 24,229,728 Reconciliations 2010 2009 2010 2009 $ $ $ $ NET INCOME TOTAL ASSETS Reportable segments 1,740,392 2,035,831 Reportable segments 26,129,189 24,229,728 Other income (121,969) 99,652 Inter-segment balances - (17,218) Interest expense Goodwill 18,153,648 18,153,648 on debt (18,276) (59,163) Non-controlling interest (145,233) (98,859) Other long term receivables 4,311,786 2,487,817 1,454,9151 454 915 1,977,461 48,594,623 44,853,975 .