Ascendant Group Limited (“Ascendant” or the “Company”) (BSX: AGL.BH), a publicly traded provider of energy and energy-related services, today announced results for the first six months of 2019.
- Capital Plan progress continues with engines delivered for the North Power Station and ongoing upgrades to transmission and distribution infrastructure.
- Core earnings decreased $1.4 million resulting from lower electricity sales offset by continued growth in non-utility businesses and cost savings.
- Continued cost reductions through operational efficiencies and implementation of an early retirement programme.
- Announced sale of the Company to Algonquin Power & Utilities Corp. pending shareholder and regulatory approvals.
Executing Ascendant’s Strategic Plan
Ascendant CEO, Sean Durfy said: “The Company has identified a prospective buyer, Algonquin Power & Utilities Corp. (“Algonquin”) that has a long track record of renewable energy generation in the North American market and has the capital resources, operational knowledge and experience in technological innovation to bring more renewable energy to Bermuda. The Board is in support of Algonquin purchasing the Company and is asking shareholders to approve the sale.”
Bermuda Electric Light Company Limited (“BELCO”) President, Dennis Pimentel said: “BELCO is continuing the construction of the $120 million replacement generation and commissioned the battery storage project at the North Power Station. We also continue to invest in upgrades to the transmission and distribution grid to ensure reliability of the system but also to allow the integration of more renewables as per the release of the much anticipated Integrated Resources Plan (“IRP”) by the Regulatory Authority (“Authority”) on 25 July 2019. The Company supports the IRP and all efforts to improve Bermuda’s environment and reduce greenhouse emissions wherever possible. BELCO is currently in the review process to determine how it can work with the Authority to implement this aspirational plan and ensure a continued supply of safe, reliable and cost-effective power for our customers.”
Mr. Durfy continued: “In addition, the Company’s efforts to reduce costs are bearing fruit. Considering declining sales, these costs savings are critical to keeping rates in check. Our non-regulated businesses continue to perform well and experienced healthy growth of 21% compared to the first six months of 2018.”
Core earnings from operations, before corporate expenses, were $2.7 million or $0.28 per share compared to $4.1 million or $0.41 per share for the first six months of 2018.
The decrease in core earnings from operations was largely the result of lower electricity demand at BELCO, in addition to a small increase in depreciation expense. This was partially offset by 21% growth in Ascendant’s non-utility businesses and $2.2 million lower corporate expenses.
Six month reported earnings were $(1.9) million or $(0.20) per share compared to $3.1 million or $0.32 per share for the same period in 2018. Reported earnings were impacted by the changes to core earnings from operations described above as well as $4.6 million in restructuring charges related to the sale of the Company.
Cash flow and capital spending
Cash flow provided by operations, before changes in non-cash working capital balances, decreased $4.3 million, to $9.8 million for the six month period ended 30 June 2019. The decrease was primarily driven by decreased BELCO revenues and restructuring charges, offset by cost savings at BELCO and Ascendant.
Capital expenditures for the first six months of 2019 were $73.1 million compared to $36.5 million for the same period of 2018, reflecting execution of the Company’s capital plan including BELCO’S replacement generation, battery storage and transmission and distribution modernisation projects.
The Company’s share repurchase programme was suspended on 1 April 2019 as a result of the invitation for proposals for the purchase of the Company. Trading was suspended on 3 June 2019 in anticipation of the announcement that the Company had signed an agreement for the sale of the Company, pending shareholder and regulatory approvals, and resumed on 4 June 2019. Since that time, shares have traded as high as $34.95 per share, with a closing price of $24.01 per share on 30 June 2019.
The Company’s Board of Directors has declared a quarterly dividend of 11.25 cents per common share. Year-to-date, the Company has declared dividends totaling 22.50 cents per common share. 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 (“2018 MD&A”) in Ascendant’s 2018 Annual Report for further discussion of these items.
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 2018 MD&A, which can be found on Ascendant’s website at www.ascendant.bm.
The quarterly Consolidated Financial Statements and Management’s Discussion and Analysis are available on Ascendant’s website at www.ascendant.bm.