BELCO Holdings Reports Record Earnings for 1997

Hamilton, BERMUDA (March 2, 1998) -- We are proud to report that in 1997, our strategy to improve the results of our individual business units through increasing operational efficiencies and to expand our growth through diversification, delivered consolidated net earnings of $16.3 million, representing 9.2% growth over 1996. All of our business units performed well. In December, we increased our annual dividend rate 8.33% from $1.20 per share to $1.30. Our shares also performed well, closing the year at $24.50 per share, up from $19.50 the previous year.

Earnings per share continue to rise reflecting the improved results the group has been able to achieve. They are up 8.7% to $3.60 per share from $3.31. Return on equity also continues to increase rising to 10.2% from the 10.0% achieved in 1996 and the 9.7% achieved in 1995.

BELCO

Gross Electricity sales revenues increased 3.7% or $4,072,247 to $112,333,945 from $108,293,821 in 1996. There was no revenue gain due to higher prices, as the Company did not increase rates in 1997 and does not intend to do so in 1998.

Growth of sales in the residential sector slowed considerably when compared to previous years. This was due in large part to the very unseasonable weather patterns that were evident in early 1997. By year end residential sales had increased 1.3% over 1996.

Sales in the Commercial sector were better than 1996. New facilities such as the expansion to American International, CedarBridge Academy and the Bermuda Underwater Exploration Institute began to draw load late in the summer which contributed to the increased annual sales by a very encouraging 1.9%.

Bermuda Gas & Utility Company Limited

Training, operational changes, standardization and greater marketing emphasis, contributed to significantly improve appliance and service sales results. The Company's sales net of cost of goods sold increased by 6.8% or $309,677 versus 1996. Although total sales revenues increased by 7.5%, the total volume of propane gas delivered increased by only 1.9% while appliance sales were 15.6% higher than in 1996 and service and parts revenues increased by 11.7%.

BESCO (BELCO Energy Services Company Limited)

BELCO Energy Services Company (BESCO), in its second full year of operation, also improved its performance. Expected losses experienced in the first year were substantially reduced and the last three months resulted in profits, as the company expanded its view to include a wider range of engineering services. The addition of a new General Manager has also reduced the expense of overseas consultants. We are optimistic that BESCO's role will continue to grow.

While the results from BESCO are still not positive in terms of earnings produced by this operation, the losses decreased from $716,000 to $269,000.