Belco parent reports 3.7%–jump in profits
Ascendant Group’s profit rose 3.7 percent to $11.5 million in 2012 compared to $11.1 million in 2011 as its Bermuda Gas and PureNERGY subsidiaries offset a $1.4 million decrease in Belco’s earnings.
The company said Belco was hit last year by falling electricity sales, fewer customers and more people unable to pay their bills because of the recession.
New investments in iFM Limited and Air Care Limited during 2012 contributed $820,059 to net earnings.
The parent of Belco and Bermuda Gas said operating revenue and other income totalled $263.3 million compared to $246.1 million in 2011.
Expenses including energy supply and delivery were $250.7 million compared to $234.7 million. And operating income was $12.6 million compared to $11.5 million.
Walter M Higgins, Ascendant president and CEO said, “The primary factor affecting our business is the economy.
“As Bermuda’s economy has weakened, we have seen sales decline, including core electricity sales. It’s worth noting that for the first time in its 107-year history, Belco has seen its customer base decrease to 35,770 in 2012 from 35,862 in 2011 due to the departure of non-Bermudians, Bermudians relocating to other countries, and commercial customers closing, reducing activities or moving operations to other jurisdictions.”
Mr Higgins pointed out that the economic downturn has also had a negative impact on revenues from the sale of other goods and services that Ascendant Group’s operating companies provide.
Also, because customers have competing priorities for reduced incomes, the company has seen a growing number unable to pay accounts in full and in a timely manner, resulting in Ascendant Group incurring additional costs for increased bad debt provisions.
Belco’s net income fell $1.4 million to $13.2 million for the year, as compared to 2011 net income results of $14.6 million, which follows a decline of approximately $1.5 million from 2010 results of approximately $16 million. Sales of electricity net of fuel adjustment for 2012 totalled $145.4 million, a decrease of $5.4 million versus $150.8 million in 2011.
Bermuda Gas’ net earnings increased $444,356 to $1.4 million in 2012 from $969,104 in 2011 due to an improvement in margins, a reduction in operating costs and an increase in other income.
Mr Higgins said, “We are taking positive steps to diversify Ascendant Group and to manage costs. For example, in 2012 we acquired a majority interest in Air Care, which provides Ascendant Group with an opportunity to enter new markets both locally and overseas and complements the services provided by our other operating companies. Ascendant Group uses a combination of earnings from across the group of companies, as well as investor funds and debt, to expand its service and product offerings beyond traditional electricity production and delivery.
“Diversification will allow us to combine energy services with infrastructure solutions that will improve energy efficiency and lower overall prices. Ascendant Group believes firmly that any new initiatives in the energy industry in Bermuda must bring prices down. This is a strategic imperative for the Ascendant Group working with engineers, planners and customers through all of its subsidiaries to increase efficiency, reduce costs, and find alternatives to traditional electricity production.”
Mr Higgins continued: “We are confident in the underlying strength of the company and committed to delivering value to shareholders, while continuing to participate in the community as a service provider, employer, taxpayer, donor and purchaser of local goods and services.”
AG Holdings recorded net earnings for 2012 of $427,676, representing an improvement of $1.4 million versus a net loss of $925,102 in 2011. While PureNERGY posted a loss of $385,399 in 2012, this represents an improvement of $1.0 million when compared to the loss of $1.4 million sustained in 2011.
iFM’s contribution to Ascendant Group’s net earnings was approximately $103,000. In 2012, the company acquired a majority investment in Air Care, which has earned $717,063 for the seven-month period ended 31 December 2012, of which $451,779 is attributable to Ascendant shareholders after deducting minority interests.