At the outset, we began the process of evaluating where we are today, where we want to be in the future, and what we need to do to get us to our desired position. One thing has become clear in our examination. Bermuda is changing. More and more, we are faced with complex challenges; we are increasingly impacted by those same forces and factors - competition, legislation and changing technology among them - which are affecting the world around us. In the utility business specifically, we are seeing the effects of deregulation and intense competition in North America and the UK. We are not exempt from competition; we are seeing it today and will continue to face it in one form or another in the future.
In looking at our community, we know that our customers are more demanding and sophisticated and they expect a greater level of service and reliability. Our shareholders and the financial community expect us to continue to grow shareholder value. Our Government has clearly stated that renewable energy should be a factor in Bermuda's future. Our employees expect opportunities for development, for advancement, and to increase their income.
In order to meet the expectations of all our stakeholders and be ready for any challenges that can impact our business, we realise that we too must change. Consequently, change has been a key word in everything we did in 2000. It has been and continues to be vital, therefore, that we look at all our operations and ensure that we are in a position to anticipate, and not just react to, changes in our operating environment.
As part of our evaluation, we have looked at our systems, the technology we use, our people, the responsibilities we have, and the overall structure of the companies in the Holdings group. We examined the benefits of changing the way we operate by moving away from traditional management and operational styles and incorporating more of a cross-functional team-based approach, focusing on processes rather than functions. We have already made significant changes in three of the departments within BELCO: Information Technology, Transmission & Distribution, and Shared Services, which incorporated the Purchasing and Materials Management, Property Maintenance and Security, and Transport departments. These changes have been made to help improve the efficiency of our day-to-day practices.
This is an on-going and evolving process. Changes will continue to be made during 2001 and beyond. We will not always have the answers and we will make mistakes along the way, but we will admit when we have taken the wrong course and do what is necessary to set ourselves in the right direction. It has always been our goal to be the best organisation in Bermuda. We intend to do what it takes to achieve that.
Company Performance
The Board of Directors has declared a dividend of 38.5¢ per share for the fourth quarter of 2000. This represents a 10 percent increase. 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 December 14, 2000, the market price per share was $24.95.
I am pleased with our achievements in 2000. All three operating companies performed well and I expect that overall we will have exceeded our budgeted projections.
On a separate note, I am pleased to announce that our 1999 Annual Report was the first place winner in the local companies division of the 2000 Annual Reports Competition, sponsored by the Institute of Chartered Secretaries and Administrators in Canada (ICSA) Bermuda Branch. This marks the third consecutive year that the BELCO Holdings Limited annual report has taken first place, and the fifth time overall that it has placed first in the six years since the competition was started.
BELCO
BELCO has had a very strong performance this year. Total kilowatt hour sales through November 2000 were up 2.5 percent when compared to the same period in 1999. Kilowatt hour sales (kWh) in the large demand sector increased slightly by 1.3 percent, while residential kWh sales rose 3.9 percent.
Earlier this year, we successfully completed the expansion of our East Power Station and in doing so, increased our generation capacity by 29 megawatts bringing our total capacity to 168 megawatts. In June, Premier the Hon. Jennifer Smith officially opened the new plant.
In October, we began the implementation of a new integrated outage management system. This system will combine all our operating systems into one, giving us the ability to restore power quicker and improve day-to-day reliability by automating the monitoring of daily operations. We are excited about this new system as it will enable BELCO to streamline and automate the process of fielding customer calls, dispatching repair crews and managing crews while they are in the field restoring electrical power. In addition, it will help us to analyse operating data to help predict and correct potential failures in our distribution system before they occur. We expect to have this system operational by mid-year 2001.
Bermuda Gas
Bermuda Gas & Utility Company Limited reported an overall increase in sales of 9 percent through November 2000 when compared to the same period in 1999. Appliance and service and parts sales were strong, and while gas sales were up by 11.6 percent, the total volume of deliveries was down marginally by 1.6 percent.
The closure of two major accounts - Marriott's Castle Harbour Resort and Quality Drycleaners - in late 1999 left Bermuda Gas with a shortfall in commercial gas volume of 79,000 gallons. However, new installations and increased usage by existing customers helped Bermuda Gas recover half that volume during 2000. Residential deliveries increased by 2 percent.
BESCO
Despite increased business in the second half of the year, BESCO fell short of the excellent results achieved in 1999. After a slow start to the year, a number of new energy contract were signed in the latter half of the year, some of which will not be impacting the bottom line until 2001.
Sales of uninterruptible power supply (UPS) and surge suppression products also picked up with the onset of Hurricane Season in June, and total sales through November surpassed those achieved in the same period last year.
Community Support
In November, the Visitor Industry Partnership honoured 17 people working in the hospitality industry at its second annual VIP Excellence Awards Ceremony. As the major sponsor of the event, BELCO congratulates the efforts of the VIP in working to raise awareness and promote excellence in Bermuda's tourism industry.
Tourism in Bermuda remains an important facet of our economic success. Over the past several years, the industry has been faced with many challenges - fewer air arrivals, flight scheduling difficulties, high local prices and the closure of several major hotel properties. BELCO recognises the importance of tourism to the future of Bermuda and Bermudians. We have committed to supporting many initiatives aimed at improving tourism including the Massachusetts-based Monitor Group who was commissioned to evaluate the industry and make recommendations for change, the Bermuda Hotel Association in its awareness and recognition programmes, and now the VIP.
The VIP was formed with the express purpose of promoting tourism and inspiring all Bermudians to be a part of revitalising the industry. They do this through community, education, and recognition programmes. In addition to their annual Excellence Awards, the VIP also have quarterly Sunshine Awards where visitors nominate locals who have helped make their stay in Bermuda more enjoyable.
It is vital that we all support the industry and the efforts of the VIP. We urge the Island's hoteliers to adopt the principles espoused by the VIP and promote service excellence in all areas of their business. And we hope and expect that this year's winners of the Excellence Awards will serve as role models to the industry.
Employee News
BELCO recently honoured 70 long serving employees at a banquet at Sonesta Beach Resort. One employee was recognised for 40 years of service and two celebrated 35 years. This year's anniversary group has collectively contributed 1,180 years to the Company. We applaud them for their consistent support and loyalty.
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 third quarter 2000: at BELCO, Raymond Bean in Generation, and Damon Bean and Michael Daniel in Transmission & Distribution; and at Bermuda Gas, Jonathan Boyles in Gas Operations, Daron Steede in Service & Parts, and Rosalie Thompson in Sales & Administration. We applaud their spirit of excellence.
New Years Resolution
As we close out 2000 and look ahead to 2001, the New Year brings new beginnings and new opportunitites for all of us. Let us embrace change and make the most of the opportunities before us."