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Ascendant sees electricity sales dip

Ongoing project: Belco's North Power Station is about halfway to completion, Ascendant says (Photograph by Akil Simmons)

Ascendant Group Ltd’s core earnings dropped 10 per cent to $18.3 million last year as electricity sales slipped.

Net income plunged 73 per cent, to $5.4 million from $20.2 million in 2017, driven by a one-off $12.8 million restructuring charge, related to operational efficiency measures as well as costs for financial and strategic advisers, the company stated.

Core earnings broke down to $1.87 per share compared to $2.06 per share in 2017.

Ascendant said lower sales at its power utility, Belco, and higher expenses at group level drove the fall in earnings. This was offset by a 30 per cent increase in earnings for Ascendant’s non-utility business.

The company spent $10.69 million on buying back 650,745 of its own shares last year at an average price of $16.43.

In its earnings statement, released today, Ascendant said the aggressive repurchasing was made “in light of its strong financial position and the material discount to book value of its share price”.

Book value, the accounting value of the business’s assets minus its liabilities, was $28.57 per share at the end of 2018.

The buybacks benefited earnings per share by about 6.2 per cent, or 12 cents per share, the company added.

Ascendant said that it closed new financial facilities totalling $158 million last year to support its capital plan and improve the company’s capital structure.

The company’s board also announced a quarterly dividend of 11.5 cents per share, unchanged from the previous quarter.

“Our performance in 2018 continued to be very strong from a financial and operational perspective,” Sean Durfy, chief executive officer of Ascendant, said. “We are proud of the company’s efforts to control costs in the face of lower electricity sales in 2018.

“We continued to work constructively with the Regulatory Authority to ensure an appropriate rate compact.”

He added that 2018 had been a year of progress in implementing the company’s capital plan and building a strong foundation for the future, with work at the new North Power Station progressing well.

“We are currently halfway through the construction phase of the 56 megawatt replacement generation which will replace 50 per cent of our older generators,” Mr Durfy said.

“The 10MW battery energy storage system, which will be used for spinning reserve, will be up and running by May 2019. The company also began the $55 million grid modernisation programme in 2018.

“All of these initiatives are in support of a more reliable energy system that will reduce costs for our customers over the long run.”

Ascendant announced in January that its board had begun to evaluate strategic options including a potential sale of the company. There was no detail on any progress made, but the company reiterated its reasons for this approach.

Ascendant stated: “The company understands that its responsibility is to a broad group of stakeholders, including shareholders, customers, employees, and regulators.

“Each of these stakeholders brings to bear on the company a wide range of perspectives and expectations. Furthermore, the industry in which the Company operates is facing unprecedented change, and with change, we must have the ability to explore and leverage new opportunities for the betterment of Bermuda.

“The board remains enthusiastic about the future prospects of Ascendant, to the benefit of all of its stakeholders, and will continue to communicate progress on strategic alternatives for the company as this process continues.”

Dennis Pimentel, president of Belco, said 2018 had been a busy year for regulatory matters.

“Belco submitted an integrated resource plan in February 2018 as well as the final Grid Code in October 2018,” Mr Pimentel said.

“Also in October 2018, the Regulatory Authority released the new Retail Tariff Methodology as well as the Feed In Tariff Methodology General Determination. Having certainty around the regulatory process enables us to continue to provide Bermuda with a reliable, cost-effective electricity supply.”