"The Board of Directors has declared a dividend of 38.5¢ per share for the first quarter of 2001. 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 March 20, the market price per share was $23.00.
BELCO Holdings Limited reports strong growth in 2000
We are pleased to report that our financial performance during 2000 was once again strong, with net earnings up significantly over 1999. This is due to the strong performance of all three main operating subsidiaries, as well as to the fact that there were no further provisions for loss on Quantum Communications. Net income was $20.5 million, up 29.9 percent from $15.8 million in 1999. It should be noted that results for 2000 were increased by more than $900,000 as a result of new accounting requirements for pensions and post-retirement medical benefits, and 1999 results were reduced significantly by a $3.5 million provision for loss on Holdings' investment in Quantum Communications.
Annual dividends paid per share increased to $1.54 from $1.40 during the last quarter of 2000, as a direct result of the excellent results achieved during the year. The share price increased to $23 from $21 at the end of 1999. Earnings per share increased 29.3 percent to $4.46 from $3.45.
The Annual General Meeting of BELCO Holdings Limited will be held on Thursday, April 26 at 2 p.m. at Bermuda Electric Light Company Limited headquarters at 27 Serpentine Road. We encourage you to attend.
BELCO
Bermuda Electric Light Company Limited (BELCO) had record earnings of $19.2 million, up 5.8 percent from the $18.1 million earned in 1999. New Generally Accepted Accounting Principles requirements for pensions and post-retirement medical benefits, effective January 1, 2000, resulted in an increase to earnings of $943,246.
Gross electricity sales revenues were up 10.4 percent to $127.2 million, with fuel adjustment revenues contributing 8.6 percent of that increase. Kilowatt hour sales were up 2.4 percent, driven largely by the growth in residential consumption. Despite milder summer temperatures, sales continued to grow at a rate of 3.7 percent, driven largely by increased use of air-conditioning and heating. Commercial sales also continued to grow, albeit at a lower level. Expenses increased slightly in areas such as fuel and depreciation costs, driven by the growth in sales and the price of fuel, and capital expenditure.
BELCO got off to a strong start in 2001 with kilowatt hour sales up 4.1 percent for the first two months of this year compared to the same period in 2000. This increase was driven largely by growth in the residential sector, where sales were up 8.1 percent as a result of several cold spells during January and February and subsequent increased use of heating. In the commercial sector, sales fell off 2.8 percent.
BELCO recently hosted the Association of Edison Illuminating Companies (AEIC) annual Power Delivery meeting. More than 60 overseas participants, primarily from US electric utility companies, took part in the three-day conference, which was held at Fairmont's Southampton Princess Hotel. A number of BELCO employees attended. Topics covered which were of particular interest to BELCO, were "Achieving Profitability & Operational Safety in a Competitive Marketplace", "Industry Directions and Emerging Strategies for Transmission and Distribution Companies", and "US Electricity Restructuring with Emphasis on the California Experience", as well as round-table discussions on "Value Added Customer Service", "Staff Productivity and Performance Metrics", "Best Practice Metering Installations and Controls", "Live Line Working Practices", "Distribution Year 2010", and "Oil Containment in Substations".
Bermuda Gas
Bermuda Gas & Utility Company Limited had a strong year, although net earnings were down 4.3 percent from the previous year. Gas volume fell off by 2.2 percent following the closure of a number of hospitality industry properties during the year. Appliance sales were up 7.1 percent as a result of a number of new construction and renovation projects in progress, although these were offset by increases in service costs and promotional expenses.
Bermuda Gas recorded positive results for the first two months of 2001, with total sales up 12.4 percent over the same period last year. However, this increase is largely driven by the increase in the price of propane gas. The total volume of propane gas sales was up 7.8 percent. Residential gas deliveries were up 5.7 percent as a direct result of colder weather in January and February. Commercial gas volume was up 8.8 percent, owing to increased use of gas by laundry operations. Appliance sales were down 8.6 percent, while service and parts sales were up 8.7 percent.
BESCO
BELCO Energy Services Company Limited (BESCO) also performed well, but failed to maintain the excellent results achieved during the previous two years. Net earnings dropped off by 30.6 percent as energy service and protection equipment sales declined. Much of 2000 was spent in establishing contacts and building relationships. A number of new contracts were signed late in the year which are expected to positively impact BESCO's results during 2001.
Share Price
In my last Quarterly Report to you, I quoted the share price on December 14, 2000 as $24.95. In fact that was the bid, while the closing price as of December 14 was $22.60. The price of $24.95 was taken from our website, www.belcoholdings.bm, which has a direct link to the Daily Trade Report on the Bermuda Stock Exchange website. The error occured when the closing price was not listed on the BSX site, and our site, while searching for another number, pulled from the last bid. We have since resolved this problem and I apologise for the inaccuracy.
Electric Vehicles
On January 25, BELCO and Government's Ministries of Works & Engineering and Transport together launched a joint electric vehicle initiative. A joint committee, called the Electric Vehicle Demonstration Programme Committee, was formed early in 2000 to lead a feasibility study on the introduction of electric vehicles to Bermuda.
The committee's first shipment of test vehicles - two pick-up trucks and two neighbourhood vehicles - arrived in Bermuda in mid-January. They have been loaned to the committee by Georgia Power. One of the pick up truck is being used by BELCO, while the second is being shared by BELCO and Works & Engineering. One of the neighbourhood vehicles is currently being used by BELCO as a commuter vehicle while the other, which has a flat-bed attached to the rear of the vehicle, is being used by the Corporation of Hamilton. All four vehicles are being tested over a period of six months on their performance and functionality.
The committee is currently working with local dealers who have begun importing electric vehicles on organising a demonstration day for the public to learn more about electric vehicles. We anticipate the demonstration day will take place in the second quarter.
Community Support
BELCO is a proud sponsor of Bermuda's participation in the Smithsonian Folklife Festival in Washington D.C. this summer. The annual Festival is a living cultural exhibition that takes place every summer through the July 4 holiday and attracts more than 1.5 million visitors. Bermuda is one of just three participants, which also include New York City and Masters of the Building Arts. One of the most important aspects of Bermuda's participation is that the research gathered for Bermuda's exhibit will also be used to generate educational materials for Bermuda's classrooms, documentary recordings, television and radio programmes.
Bermuda's exhibit, Bermuda Connections, will feature more than 100 Bermudians celebrating the Island's traditions, customs and history. In preparation for the Festival, the Bermuda Government has chosen 19 Bermudians to research Bermuda traditions in several areas, which include: building arts, maritime arts, culture and tradition of Bermuda business, cedar crafts, Cup Match and kite making, food traditions, music traditions and storytelling.
BELCO is once again the major sponsor of the Annual Agape House Rubber Duck Derby, now in its fifth year. This year's event, which raises funds for Agape House, Bermuda's only hospice for the terminally ill, will be held on Saturday, May 27 at 3 p.m. in St. George's. As Corporate Chairman of the event, I encourage you to support the Rubber Duck derby by purchasing ducks and attending the races.
Employee News
Please join me in congratulating the employees at both BELCO and Bermuda Gas who were selected by their colleagues as Employees of the Quarter for the fourth quarter 2000: at BELCO, Raymond Bascome in Generation, Lillian Dunkley in Customer Service, and Edward Lewis in Transmission & Distribution; and at Bermuda Gas, Vernal Cann in Service & Parts, Denika Gilbert in Sales & Administration, and Ernest Marshall in Gas Operations.
We also congratulate the three BELCO employees who were selected as Employees of the Year 2000: Raymond Bean in Generation, Michael Daniel in Transmission & Distribution, and Lillian Dunkley in Customer Service. We applaud their spirit of excellence.
We are in the process of completing the 2000 Annual Report which will be mailed to you by April 19. We remind you that the Annual General Meeting of BELCO Holdings Limited will be held on Thursday, April 26 at 2 p.m. at Bermuda Electric Light Company Limited headquarters on Serpentine Road. Please mark this date in your diary or on your calendar. We look forward to seeing you at that time."
Garry A. Madeiros
President & Chief Executive Officer