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Ascendant Group Limited announces nine-month results for 2018.
Hamilton, Bermuda: - November 2, 2018– In a filing with the Bermuda Stock Exchange (“BSX”), Ascendant Group Limited (the "Ascendant Group" or “Company”; Ticker: AGL.BH) announces nine-month results for 2018.
For Immediate Release
Contact: Magnus Henagulph
298.6177/325.1220
Hamilton, Bermuda (November 2, 2018)
Ascendant Group Limited Announces Nine Month Results
Ascendant Group Limited (“Ascendant” or the “Company”), a publicly traded provider of energy and energy-related services, today announced results for the first nine months of 2018.
Ascendant President and CEO, Sean Durfy said: “It’s been a challenging first nine months of this year for Bermuda Electric Light Company (BELCO), our regulated business, which has been impacted by rapidly falling demand and pressure from the Government and our customers to lower our rates. Our non-regulated businesses have performed according to forecasts and are showing positive growth that now contributes 25% to the net income of the Ascendant Group.”
There are a number of projects and initiatives related to BELCO’s power generation and transmission and distribution businesses that have been progressing in 2018.
Mr. Durfy said: “We have made significant regulatory progress with the public consultations well advanced on both the Integrated Resource Plan (IRP), that will set the future generation mix for Bermuda, and the tariff methodology, that will set our rates going forward. Our capital plan that includes building the North Power Station (NPS), the Battery Energy Storage System (BESS) and upgrading our transmission and distribution system is progressing well. The NPS will usher in a new era for BELCO with four 14 MW engines that can run on diesel or be converted to run on LNG. These engines will be more efficient and require less maintenance which should help bring our costs down and ultimately reduce electricity bills for our customers.”
Earnings
Core earnings from operations, before corporate expenses, were $11.9 million compared to $12.8 million for the third quarter of 2018 and 2017 respectively. On a year-to-date basis, core earnings from operations were $22.9 million compared to $27.2 million for the same period in 2017.
The decrease in core earnings from operations was largely the result of lower revenues arising from lower electricity demand and higher depreciation period over period at BELCO. Maintenance savings of approximately $1.4 million were offset by a reversal of regulatory fees in the prior year.
Ascendant’s non-utility businesses continued to provide core earnings growth in 2018, growing by $0.6 million or 20% year over year.
Third quarter reported earnings were $10.1 million compared to $12.2 million for the same period in 2017. Year-to-date reported earnings in 2018 were $13.2 million, or $1.34 per share compared to $22.4 million, or $2.26 per share, for the same period in 2017. Reported earnings were impacted by the changes to core earnings from operations described above as well as $1.4 million in advisory fees related to an unsolicited expression of interest to purchase the Company, $2.3 million in long-term incentive compensation costs driven partly by the share price increase this year and $1.0 million in non-core earnings included in 2017 from the equity pick-up of earnings in AIRCARE LTD.’s Cayman Islands affiliates, Otis Air-Conditioning Ltd. and O Property Holdings Ltd.
Cash flow and capital spending
Cash flow from operations (excluding the effect of working capital changes) totaled $30.7 million and $31.1 million for the first nine months of 2018 and 2017 respectively. This decrease in cash flow from operations is largely due to lower revenues arising from lower electricity demand.
Capital expenditures for the first nine months of 2018 were $54.8 million compared to $13.9 million for the same period of 2017, reflecting execution of the Company’s capital plan and, in particular, strong progress on the NPS.
The Company’s share price increased 69% from $9.79 to $16.50 over the nine months ended 30 September, 2018. Management believes that the execution of the Company’s strategic plan will continue to unlock the underlying value of its businesses and therefore share repurchases represent the most efficient way to return capital to shareholders. During the nine month period ended 30 September, 2018, the Company repurchased 388,784 shares at an average cost of $16.02.
The Company’s Board of Directors declared a quarterly dividend of 11.25 cents per common share. Year-to-date, the Company has declared dividends totaling 45 cents per common share.
Executing Ascendant’s Strategic Plan
The Company continues to make significant progress on its strategic plan. The Company recently approved $55 million of its five-year $124 million transmission and distribution capital plan and work has now started on the $120 million replacement generation and battery storage project at the North Power Station. Construction is expected to take 18 months with commissioning and handover by December 2019.
Mr. Durfy said: "Our customers and the Government have said we need to reduce our electricity rates. We are committed to doing all we can to reduce our costs and be a more efficient utility despite the challenging business environment which includes falling demand and increasing costs of generating and
distributing electricity. At the same time, we are having to invest in upgrading our aged infrastructure at the generating plant and in our transmission and distribution system with a combined cost of approximately $250 million.
Growth in our unregulated businesses is progressing well and we will be looking to grow these businesses to contribute more to our bottom line going forward.”
Interim Reporting Change
The format of the third quarter Consolidated Financial Statements and Management’s Discussion and Analysis is consistent with financial reports provided for the 2018 second quarter reflecting the Company’s transition from semi-annual interim financial reporting to quarterly interim financial reporting.
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Non-IFRS Measures Ascendant uses financial measures that are not defined under IFRS and may not be comparable to similar measures presented by other issuers. Ascendant calculated the non-IFRS measures by adjusting for specific items that management believes are not reflective of the normal, ongoing operations of the business. Refer to the Non-IFRS Financial Measures section of the Company’s year-end Management’s Discussion and Analysis (“2017 MD&A”) in Ascendant’s 2017 Annual Report for further discussion of these items.
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Forward Looking Information This news release contains forward-looking statements that reflect management’s current beliefs with respect to the Company’s future growth, results of operations, performance, business prospects and opportunities. These statements are based on reasonable assumptions and information currently available to Ascendant’s management and are subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. Additional information about these assumptions, risks and uncertainties is included in the “Primary Factors Affecting Ascendant’s Business” section in the 2017 MD&A, which can be found on Ascendant’s website at www.ascendant.bm. |
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The quarterly Consolidated Financial Statements and Management’s Discussion and Analysis are available on Ascendant’s website at www.ascendant.bm.
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About Ascendant Group Limited
Ascendant Group Limited is a Bermuda-based, publicly traded holding company that through its subsidiaries provides energy and energy-related services. Ascendant Group Limited (AGL.BH) is listed on the Bermuda Stock Exchange (BSX) and is the parent company of Bermuda Electric Light Company Limited (BELCO), and AG Holdings Limited, which includes AIRCARE LTD., IFM Limited, iEPC Limited and Ascendant Properties Limited. For further information about Ascendant Group Limited, visit www.ascendant.bm.
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