"The Board of Directors has declared a dividend of 38.5¢ per share for the third quarter of 2002. A cheque is enclosed for shareholders who have requested direct payment. Those who designated a deposit to their savings or current account have been given credit effective today. As of September 23 rd, the market price per share was $30.30.
BELCO
Total kilowatt hour (kwh) sales through August 2002 were up 2.98% over the same period last year. Through 2002 there has been a greater level of activity at several large hotels that were undergoing renovations in the early part of 2001 and this, combined with increased demand for electricity at the ACE building, has contributed to a 5.59% rise in Demand sales. Commercial sales are also 5.07% ahead of the same period in 2001, mainly attributed to the continued development at the South Side property. Residential sales, which got off to a slow start at the beginning of the year due to mild winter temperatures, were strong throughout the summer months. As of August
2002, residential sales were only slightly down from last year, decreasing 0.16%. Total expenses through the end of August 2002 were 1.0% below last year, mainly due to a decrease in fuel costs. Fuel prices averaged $50.21 per barrel through August 2001, compared with $43.55 through August 2002. Operating efficiency was slightly ahead of the same period last year with 678.04 kwh generated per barrel of fuel, versus 675.17 last year. On July 31 st 2002, demand for electricity reached a new record peak of 107,900 kilowatts, which is 1.6% higher than last year.
Restructuring
Change is essential but never easy, and 2002 continues to be a year of change at BELCO. This particularly, as we move forward with plans to restructure the company into core service groups focused on strategic, team-based processes that we need to have in place in order to meet the opportunities and challenges in the future. The traditional organisational chart is being replaced by a flatter organisational structure where processes and outcomes are the centre of attention rather than individual functions and departmental roles. This means that throughout the company, our people are having to change the way they plan and think about their work. Narrowly focused,
traditional departmental employee roles are being replaced by a cross-departmental, team-based approach with greater emphasis on individual and collective responsibility, and accountability for the outcome. As we have shared with you on numerous occasions, our goal is to be the best employer, the best managed company in Bermuda
and the best service provider. Although this position could be considered by some to be overly ambitious, we believe that to strive for anything less would be a violation of our corporate responsibility.
Over the years, we have enjoyed good labour relations at BELCO. This has been by design rather than default, as both the Electricity Supply Trade Union (ESTU) and Management work hard to keep the lines of communication open for the benefit of all employees and the company. You may have heard that earlier this month, following the termination of two BELCO apprentices, a small group of employees demonstrated their displeasure by calling in sick. This was not a union-sanctioned action and discussions regarding the various viewpoints have subsequently taken place. However, as BELCO continues to move through restructuring and re-focusing the organisation on process work, demanding greater responsibility and accountability, there very well could be
disagreements as people migrate from what has been accepted, to what will be expected.
A comprehensive employee opinion survey conducted in 2001 highlighted the need for improved performance measures and better communication of the Company's vision, values, goals and strategies. Between now and next year, BELCO and Bermuda Gas will begin implementing the Performance Management Initiative which will provide a standardised appraisal process for all bargaining unit employees with check points for greater attention to appropriate training and career development opportunities. Traditional job descriptions will be replaced by responsibility profiles, capturing individual responsibilities and corporate behaviours critical to process efficiency. Over the past several months, employees throughout the organisation have been involved in on-site
information, development and communications workshops in preparation for implementation of the Performance Management Initiative.
As an organisation, we have always placed a great deal of attention on the value and potential of our employees. It is within this spirit that we are working with the whole organisation to provide everyone with greater clarity as to expectations and more frequent, productive feedback. We expect that for some this will be uncomfortable. However, as our organisation changes to meet the growing expectations of our customers and community, so must our people.
Bermuda Gas
Bermuda Gas & Utility continues to feel the effects of a weakened hospitality industry and milder winter temperatures, as year-to-date demand for propane gas in both the commercial and residential sectors is down 2.8% from last year. For the eight months to August 2002, commercial sales were down 2.25% and residential sales decreased 5.0%. Indicative of the warmer weather in the first and second quarters of 2002, small cylinder gas sales, mainly used for outdoor cooking, are 5.8% ahead of last year. Throughout the year Bermuda Gas has been introducing a number of new
products which have been well received. Appliance sales through August are 2.7% ahead of last year. As a result of training initiatives early in the year, there has been less chargeable service time, and a decrease of 4.7% in service and parts sales during the first eight months of the year. However, the benefits of training and cost containment initiatives are expected to deliver higher net earnings in 2002 despite the lower level of sales.
BESCO
BELCO Energy Services Company Limited (BESCO) remains on target to meet projected 2002 earnings. BESCO recently completed a new digital surveillance and security/card access system for BELCO. BESCO, offering a diverse package of services, including energy management, uninterruptible power supplies, and engineering project management, is active in a number of projects involving buildings in the City of Hamilton, the Bermuda Land Development Corporation and the Bermuda College.
Electric Vehicle Demonstration Committee
A committee comprised of representatives of BELCO and the Bermuda Government has been working in partnership on an electric vehicle trial programme. Seven electric vehicles, city and golf cars, as well as two scooters have been tested in a variety of applications and a report on their performance, as well as recommendations will be submitted to Government early next month. A public presentation on the performance of these electric vehicles will be held, at a date to be announced.
Community Support
BELCO is pleased to be the lead sponsor in the first Bermuda Culinary Arts Festival November 1-4. Developed to appeal to a niche visitor market, the Festival is targeting participants from the East Coast of the United States, as well as the Atlanta region for a sophisticated three-day culinary experience in Bermuda. The event will feature local talent, as well as ten internationally renowned chefs who will be conducting seminars and dine-out experiences at a variety of local hotels and restaurants. The Culinary Arts Festival has been developed to promote Bermuda tourism and encourage visitors during our slower months. This is a great opportunity to showcase Bermuda, and we encourage everyone to contribute to the success of the Bermuda Culinary Arts Festival by making sure that the participants have a great experience.
Once again, BELCO is supporting the Parents Resource Institute for Drug Education (PRIDE) in their 5 th Red Ribbon Campaign, October 9-18. This year's slogan is "Working Toward a Drug Free Community". Over the course of these ten days, PRIDE will host several events targeted to educate and empower the youth of Bermuda to live drug free. We commend everyone involved in PRIDE on their commitment and support to our community.
Employee News
Please join me in congratulating the employees at BELCO who were selected by their colleagues as Employees of the Quarter for the second quarter 2002: Kandy Caines in
Customer Service, Darren Heyliger in Shared Services and Corrinda Liyanage in Environment.
In closing, please remember that hurricane season runs through the end of November, so stay prepared and periodically check your property for trees that may have over-grown and be affecting power lines, as well as checking for loose items that could become a hazard during a storm. As we all know, often preparation is the best prevention."
Yours Sincerely,
Garry A. Madeiros
President & Chief Executive Officer