ASCENDANT GROUP LIMITED Annual General Meeting 18 May 2018
FORWARD LOOKING INFORMATION This document contains forward-looking statements that reflect management’s current beliefs with respect to Ascendant Group Limited’s (“Ascendant”) future growth, results of operations, performance, business prospects and opportunities. All such information and statements are made pursuant to safe harbor provisions contained in applicable securities legislation. Statements that are not historical facts, including statements about management’s beliefs and expectations, are forward- looking statements. The words “anticipates”, “believes”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “projects”, “schedule”, “should”, “budget"," forecast”, “might”, “will”, “would”, “targets” and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. These statements are based on information currently available to Ascendant’s management and should not be read as guarantees of future events, performance or results, and will not necessarily be accurate indications of whether, or the time at which, such events, performance or results will be achieved. The forward-looking information is based on reasonable assumptions and is 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. Factors that could cause results or events to differ from current expectations are discussed in the “Primary Factors Affecting Ascendant’s Business” section of our Management’s Discussion and Analysis as at April 20, 2018 and may also include: capital market and liquidity risk; estimated energy consumption rates; maintenance of adequate insurance coverage; changes in customer energy usage patterns; developments in technology that could reduce demand for electricity; interest rate risk; credit risk; foreign exchange risk; risks associated with pension plan performance and funding requirements; loss of service area; risk of failure of information technology infrastructure and cybersecurity risks; and availability of labour and management resources. Readers are cautioned not to place undue reliance on forward-looking information as actual results could differ materially from the plans, expectations, estimates or intentions and statements expressed in the forward-looking information. All forward-looking information in this document is qualified in its entirety by the above cautionary statements and, except as required by law, Ascendant undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise. Unless otherwise specified, all financial information referenced is in US dollars. Nothing in this document should be construed as an offer or sale of securities of Ascendant or any other person. 2
OUR BUSINESS Powering Bermuda for more than 100 years Transmission, Distribution and Retail Power Energy Generation Services Electric Vehicles 3
YEAR IN REVIEW
RENEWED PERFORMANCE • New Management Team and strategy in last two years • Strong execution is delivering results 2 Year Total Shareholder Return 155% 135% AGL S&P/TSX Capped Utility Index 115% 95% 75% 55% 35% 15% (5%) (25%) Jan 2016 Apr 2016 Jul 2016 Oct 2016 Jan 2017 Apr 2017 Jul 2017 Oct 2017 Jan 2018 Apr 2018 IRP Licences Energy Dividend CEO New strategy submitted granted Commission increased 50% transition adopted directive setting rate Replacement methodology Electricity Act 2016 generation Replacement approved generation Electricity regulation proposal transfers to submitted Regulatory Authority Source: FactSet, Bloomberg. 5
RECENT MAJOR ACCOMPLISHMENTS 43% earnings growth 16% (2017 vs. 2016) North Power decrease in Station customer approved outage minutes (March 2018) 45% (2017 vs. 2016) share price growth (2017 vs. 2016) AG Holdings core earnings up $2.7 Million (2017 vs. 2016) 6
ASCENDANT 2017 GROUP RESULTS Core Earnings Per Share $1.90 Other $1.32 Reduction in $0.10 corporate Unregulated expenses businesses UP $0.20 $0.28 43% 2016 2017 Cash Flow Per Share $4.28 Increase in cash $3.14 Dividend / Share repurchase Debt repayment Capital spending UP 36% 2016 FFO 2017 FFO 7
ASCENDANT 2017 SUBSIDIARY RESULTS AGH Core Earnings ($ millions) $3.3 IFM Other AIRCARE UP $0.5 $2.8M 2016 2017 BELCO Core Earnings ($ millions) $24.3 $23.3 Fuel adjustment Other revenue Tariff Fuel and STABLE stabilisation purchased fund power Inventory Obsolescence 2016 2017 8
BELCO OPERATIONAL HIGHLIGHTS Injury frequency rate 2 Plant Availability 90% 85% 3.29 2.66 2.19 2016 2017 CARILEC 2016 2017 benchmark Customer outages Sales (kWh) in minutes 1 (in millions) 700 297 650 250 600 550 500 450 400 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2016 2017 1 System average interruption duration index 2 Lost time injury frequency rate 9
LOOKING FORWARD
OUR STRATEGY • Vision: By 2021, Ascendant is the most respected, sustainable and progressive energy and services organisation in the Atlantic • Mission: Everyday we provide the people of Bermuda with energy and services to enhance their lives Outcomes Strategic Priorities Achieve productive regulatory compact Reduced Customer Execute $250M capital plan Rates Improve cost and efficiency Increased Shareholder Achieve competitive valuation Value Grow non-regulated business Strategic Pillars Engaged passionate people Operational excellence Superior customer experience 11
ACTION PLAN Strategic Priorities 2018 2019 2020 2021 2022 • Capital plan approved Achieve productive • Appropriate tariff regulatory compact methodology in place • Replacement Generation • Battery storage Execute $250M capital plan • T&D upgrades • Advanced meters • Achieve operational Improve cost efficiencies to bring rates in and efficiency line with peers • Close export financing • Establish investment grade credit rating • Access private placement markets Achieve competitive valuation • Revisit dividend policy • List on North American exchange Grow non-regulated • $10 Million EBITDA business 12
REGULATORY COMPACT Significant progress in establishing regulatory compact • Regulatory Authority issued Licences to BELCO in October 2017 • Tariff and Integrated Resource Plan consultations underway. Anticipate resolution by year-end. Proposed regulatory structure Vertically integrated utility Generation IPPs PPA PPA + net benefit test TD&R Feed-in tariffs Distributed End-user generation 13
CAPITAL PLAN Capital Profile $600 • Significant investment $500 profile over next five years $400 $ Millions • Financing plan delivers $300 more appropriate capital Rate structure Base $200 • Drives cash flow and $100 earnings growth $- 2017 2018 2019 2020 2021 2022 Other fixed assets Grid rate base Generation rate base Debt 14
GENERATION INVESTMENT North Power Station & Battery Storage New power station location 15
GENERATION INVESTMENT North Power Station & Battery Storage • $124 Million capital spend over 18 months – 100% debt financed • 4 x 14 MW dual-fuel capable engines + 10 MW Battery energy storage • Final construction approvals in progress and approved by Regulatory Authority • 86% of project via turnkey contract Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Engineering and Equipment Construction Commissioning civil works delivery 16
GRID INVESTMENT • $124 Million over 5 years • Transmission and substation upgrades to enable new technologies • Advanced metering and related infrastructure 2018 2019 2020 2021 Belmont to Lighthouse to Flatts to Prospect to Lighthouse Flatts NOB Mullet Bay 17
COST AND EFFICIENCY Supplies and other O&M $40.1 • Capital Plan investment designed Controllable for more efficient operation Labour $51.1 • Strategic initiative to lower costs over five years D&A • Review procurement and $25.0 inventory processes to reduce Other $11.4 cost and capital employed Fuel Tax • Company-wide process redesign $29.2 Non- to streamline work controllable Fuel $55.9 2017 Operating Costs ($ Millions) 18
CAPITAL STRUCTURE • Target solid investment grade debt metrics Debt to EBITDA Debt / Equity 4.5 x 60.0% 4.0 x 50.0% 3.5 x 3.0 x 40.0% 2.5 x 30.0% 2.0 x 1.5 x 20.0% 1.0 x 10.0% 0.5 x 0.0 x 0.0% 2017 2017 2022e 2022e Industry benchmark Industry benchmark 19
VISIBILITY TO GROWTH • Regulated capital plan plus non-regulated growth deliver outstanding growth FFO/sh Core EPS $8.00 $4.00 $7.00 $3.50 $6.00 $3.00 $5.00 $2.50 $4.00 $2.00 $3.00 $1.50 $2.00 $1.00 $1.00 $0.50 $0.00 $0.00 2016 2017 2022e 2016 2017 2022e 20
EXPERIENCED TEAM Board of Directors Balanced skill-set across diverse range of industries Extensive public company experience Executive Mix of local and global experience Management Team with combined industry experience of more than 100 years Extensive experience with well- known global public companies Mix of local and global experience 21
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