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Igor batters Ascendant profits

Big repair job: A Belco linesman works to restore power at Barnes' corner last September after Hurricane Igor

The Ascendant Group Ltd’s consolidated net earnings dropped almost $3 million during 2010 as subsidiary Belco incurred $1.2 million in lost sales and restoration costs from the damage caused by Hurricane Igor.The energy group’s net earnings for last year were $16.69 million compared to $19.51 million in 2009, while earnings per share fell 14.9 percent to $1.60 from $1.88 the previous year.But Bermuda Gas’ net earnings rose 3.9 percent to $1.32 million in 2010 from $1.27 million the year prior as an additional 9,512 pounds of propane were sold, primarily in the residential market, and appliance sales were up 15.2 percent, offsetting service sales which declined 7.3 percent over the same period.Belco’s earnings decreased approximately $2.95 million to $16.71 million versus $19.66 million in 2009 despite electricity sales, net of adjustment income, increasing $3.29 million to $153.97 million in 2010 from $150.68 the year before.Commercial sales were also down 1.9 percent or 6.2 million kilowatt hours (kWh) compared to a rise of 2.4 percent in 2009 due to the contraction of the economy, while residential kWh sales climbed 1.9 percent last year on a 1.2 percent increase in 2009.The Ascendant Group’s earnings per share decreased 14.9 percent to $1.60 from $1.88 in 2009. The 2010 cash dividend of 85 cents per share was unchanged from the previous year. The 2010 dividend yield, based on the year-end stock price of $14.95, was 5.69 percent compared to 5.64 percent in 2009, based on the 2009 year-end price of $15.05 per share.Belco’s energy supply expenses were also affected by several one-off events. In August 2010, gas turbine engine GT5 experienced internal damage and was removed from service, with the company incurring $750,000 in costs, representing the net deductible for the claim under the existing insurance policy. The claim will be formally made when costs are finalised, based on quoted repair costs net of likely insurance recovery.A total $1.12 million in costs was also incurred for repairs and maintenance on major engine machine parts, and to extend the useful life of existing engines to meet future demand, as Belco continues to seek Government approval to build new plant to replace its ageing plant.Fuel costs were the company’s most significant energy supply expenses, standing at $107.35 million versus $108.84 million in 2009. This decrease was due to a combination of improved efficiency and decreased generation volume related to lower kWh demand more than offsetting increased fuel costs and increased kWh’s purchased from Tynes Bay. Fuel adjustment revenue decreased $770,000 to $75.60 million in 2010, from $76.37 million the year prior, attributed to improved efficiency last year despite a modest one percent increase in average fuel prices.Belco invested $29.52 million in capital projects in 2010, compared to $36.81 million in 2009. Energy supply capital expenditures last year totalled $10.44 million (2009: $15.80 million). Energy delivery capital expenditures in 2010 amounted to $12.08 million, down from $14.25 million in 2009.Meanwhile a total of $4.06 million (2009: $4.16 million) was spent addressing customer-initiated projects requiring new or amended supply services. As part of the redevelopment of the King Edward VII Memorial Hospital, the company spent $2.1 million relocating the hospital substation.PureNERGY posted a net loss of $410,000 for 2010. Despite being an improvement on 2009’s net loss of $1.10 million, this was below expectations and, consequently, management said it has been reviewing its options with respect to the company. PureNERGY continued to feel the impact of the economic downturn, an increase in the number of competitors entering the renewable energy market, as well as an uncertain policy, legislative, regulatory and financing framework for alternative energy products and services.In an effort to set the example and gain hands-on experience, installation has begun at Belco headquarters of a solar water heating and photovoltaic system purchased from affiliate company PureNERGY.Belco Properties’ earnings fell $77,895 to $177,876 versus $255,771 in 2009; due to the loss of one of the company’s tenants during the year. InVenture, which was incorporated last year as a vehicle for new business opportunities, remains in the development stage and posted a net loss of $72,035 for the year. Sigma, the newest member of the Ascendant Group incorporated last year to provide corporate services for Ascendant Group companies, broke even.