News Release: Hamilton, Bermuda (March 2019) – Highlights
  • Continued to grow the non-utility businesses, with 30% year-over-year core earnings growth
  • Cost saving measures at BELCO tempered the impact of lower energy demand sales
  • Focused on operational efficiencies and cost reductions in an effort to lower the price of electricity for our customers
  • Received regulatory clarity in respect of how and when BELCO’s electricity rates will be developed and approved by the Regulatory Authority through the new Retail Tariff Methodology
  • Received an Order from the Regulatory Authority to proceed with the construction of replacement generation and battery energy storage system
Renewable Energy Sources

Ascendant Group Limited (“Ascendant” or the “Company”), a publicly traded provider of energy and energy-related services, released its 2018 annual financial results today, with core earnings of $18.3 million, or $1.87/share, compared to $20.4 million, or $2.06/share, in 2017 and funds from operations (“FFO”) of $46.8 million, or $4.78/share, for 2018 compared to $44.1 million, or $4.45/share, in 2017. Continued growth in Ascendant’s non-utility businesses, slightly lower results from Bermuda Electric Light Company Limited (“BELCO”), higher group expenses, and the positive impact of share repurchases, combined to decrease core earnings per share by 9% year over year. The Company’s Board of Directors (“Board”) also declared a quarterly dividend of 11.25 cents per common share.

“Our performance in 2018 continued to be very strong from a financial and operational perspective,” said Sean Durfy, President and Chief Executive Officer of Ascendant. “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. 2018 was a year of progress in implementing our capital plan and building a strong foundation for the future. We are currently halfway through the construction phase of the 56 megawatt (MW) replacement generation which will replace 50% of our older generators.  The 10 MW 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.”
Dennis Pimentel, President of BELCO said: “2018 was another busy year with respect to regulatory matters. BELCO submitted an integrated resource plan in February 2018 as well as the final Grid Code in October 2018. 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.”
The Company’s core earnings decreased 10% to $18.3 million due to lower sales at BELCO and higher Ascendant Group expenses, offset by continued growth in non-utility earnings at AG Holdings. The Company’s net income declined 73% from $20.2 million to $5.4 million, largely as a result of the non-recurring $12.8 million restructuring charge related to operational efficiency measures as well as costs for financial and strategic advisors.
The Company generated $46.8 million in FFO, which excludes the restructuring charges, and $5.9 million in FCF during the period, compared to $44.1 million and $21.9 million respectively in 2017. FFO has increased due a reduction in cash costs.  The decrease in FCF reflects the larger restructuring charges and higher maintenance capital expense recorded in 2018.
The Company continued with its share repurchase programme in 2018 in light of its strong financial position and the material discount to book value of its share price. Share repurchases during the year totaled 650,745 shares at an average price of $16.43 per share, which compares to the book value of its shares of $28.57 per share at 31 December 2018. These repurchases have increased 2018 core earnings per share and FFO per share, by approximately 6.2%, or $0.12 per share and $0.30 per share, respectively.
The Company’s earnings and cash flow enabled its Board to maintain the annual dividend rate at $0.45 per share, thus continuing the Company’s proud history of paying a regular dividend.
Building a Foundation for the Future: The Company has made important strides in respect of its strategic plan during 2018, including the following key accomplishments:
  • Received approval by the Regulatory Authority in March, 2018 to begin construction of the replacement generation and battery energy storage system;
  • Received regulatory clarity in respect of future rate setting methods and timing through the issuance by the Regulatory Authority of a new Retail Tariff Methodology in October, 2018;
  • Advanced planning for future generation through the submission and public consultation of BELCO’s Integrated Resource Plan;
  • Continued efforts to reduce costs led to a series of measures, including, functional realignment allowing for the more efficient delivery of work; a hiring freeze; and a voluntary early retirement programme designed to increase efficiency and labour costs over time;
  • Began construction of the replacement generation and battery energy storage system, as well as the first phase of the five-year grid modernisation plan;
  • Closed new financial facilities totaling $158 million to support the capital plan and improve the Company’s capital structure;
  • Continued to grow the non-utility businesses, with 30% year-over-year core earnings growth;
With these accomplishments, the Company has laid the groundwork for Bermuda’s energy future. The infrastructure improvements contemplated in the capital plan allows Bermuda to pursue any energy mix it chooses and ensures a cost effective, reliable supply of energy for the foreseeable future.