ASCENDANT GROUP LIMITED Annual General Meeting 18 May 2018 FORWARD - - PowerPoint PPT Presentation

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ASCENDANT GROUP LIMITED Annual General Meeting 18 May 2018 FORWARD - - PowerPoint PPT Presentation

ASCENDANT GROUP LIMITED Annual General Meeting 18 May 2018 FORWARD LOOKING INFORMATION This document contains forward-looking statements that reflect managements current beliefs with respect to Ascendant Group Limiteds (Ascendant)


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SLIDE 1

ASCENDANT GROUP LIMITED

Annual General Meeting 18 May 2018

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SLIDE 2

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.

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SLIDE 3

OUR BUSINESS

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Powering Bermuda for more than 100 years

Electric Vehicles Power Generation Transmission, Distribution and Retail Energy Services

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SLIDE 4

YEAR IN REVIEW

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SLIDE 5

(25%) (5%) 15% 35% 55% 75% 95% 115% 135% 155% Jan 2016 Apr 2016 Jul 2016 Oct 2016 Jan 2017 Apr 2017 Jul 2017 Oct 2017 Jan 2018 Apr 2018 AGL S&P/TSX Capped Utility Index

RENEWED PERFORMANCE

  • New Management Team and strategy in last two years
  • Strong execution is delivering results

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CEO transition Licences granted

2 Year Total Shareholder Return

Replacement generation approved Electricity Act 2016 Electricity regulation transfers to Regulatory Authority Energy Commission directive setting rate methodology Replacement generation proposal submitted IRP submitted New strategy adopted Dividend increased 50%

Source: FactSet, Bloomberg.

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SLIDE 6

16% decrease in customer

  • utage

minutes

(2017 vs. 2016)

43% earnings growth

(2017 vs. 2016)

AG Holdings core earnings up $2.7 Million

(2017 vs. 2016)

North Power Station approved

(March 2018)

45% share price growth

(2017 vs. 2016)

RECENT MAJOR ACCOMPLISHMENTS

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SLIDE 7

ASCENDANT 2017 GROUP RESULTS

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$1.32 Unregulated businesses $0.28 Reduction in corporate expenses $0.20 Other $0.10 $1.90

2016 2017

Core Earnings Per Share

Capital spending Increase in cash Dividend / Share repurchase Debt repayment

2016 FFO 2017 FFO

Cash Flow Per Share

$4.28 $3.14

UP 36% UP 43%

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SLIDE 8

ASCENDANT 2017 SUBSIDIARY RESULTS

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$24.3

Fuel and purchased power Inventory Obsolescence Fuel adjustment revenue Tariff stabilisation fund Other

$23.3

2016 2017

BELCO Core Earnings ($ millions) $0.5

AIRCARE IFM Other

$3.3

2016 2017

AGH Core Earnings ($ millions)

UP $2.8M STABLE

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SLIDE 9

BELCO OPERATIONAL HIGHLIGHTS

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297 250 2016 2017

Customer outages in minutes1

90% 85% 2016 2017

Plant Availability Sales (kWh)

2.66 2.19 3.29

2016 2017 CARILEC benchmark

Injury frequency rate2

1 System average interruption duration index 2 Lost time injury frequency rate

400 450 500 550 600 650 700 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

(in millions)

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SLIDE 10

LOOKING FORWARD

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SLIDE 11

Strategic Priorities

OUR STRATEGY

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Strategic Pillars Engaged passionate people Operational excellence Superior customer experience

  • 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 Reduced Customer Rates Increased Shareholder Value

Outcomes

Execute $250M capital plan Achieve competitive valuation Achieve productive regulatory compact Grow non-regulated business Improve cost and efficiency

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SLIDE 12

ACTION PLAN

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Execute $250M capital plan Achieve competitive valuation Achieve productive regulatory compact

Strategic Priorities

Grow non-regulated business

2018 2019 2020 2021 2022

Improve cost and efficiency

  • Capital plan approved
  • Appropriate tariff

methodology in place

  • Replacement Generation
  • Battery storage
  • Achieve operational

efficiencies to bring rates in line with peers

  • $10 Million EBITDA
  • Revisit dividend policy
  • List on North American

exchange

  • Close export financing
  • Establish investment grade

credit rating

  • Access private placement

markets

  • T&D upgrades
  • Advanced meters
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SLIDE 13

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.

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TD&R IPPs Distributed generation End-user

Vertically integrated utility PPA PPA + net benefit test Feed-in tariffs

Proposed regulatory structure Generation

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SLIDE 14

CAPITAL PLAN

  • Significant investment

profile over next five years

  • Financing plan delivers

more appropriate capital structure

  • Drives cash flow and

earnings growth

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$- $100 $200 $300 $400 $500 $600 2017 2018 2019 2020 2021 2022

$ Millions

Capital Profile

Other fixed assets Grid rate base Generation rate base Debt Rate Base

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SLIDE 15

GENERATION INVESTMENT

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New power station location

North Power Station & Battery Storage

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SLIDE 16

GENERATION INVESTMENT

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Engineering and civil works

Equipment delivery

Construction Commissioning

Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019

  • $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

North Power Station & Battery Storage

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SLIDE 17

GRID INVESTMENT

  • $124 Million over 5 years
  • Transmission and substation upgrades to enable new technologies
  • Advanced metering and related infrastructure

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Belmont to Lighthouse

Prospect to Flatts

Lighthouse to NOB Flatts to Mullet Bay

2018 2019 2020 2021

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SLIDE 18

COST AND EFFICIENCY

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  • Capital Plan investment designed

for more efficient operation

  • Strategic initiative to lower costs
  • ver five years
  • Review procurement and

inventory processes to reduce cost and capital employed

  • Company-wide process redesign

to streamline work

Fuel $55.9 Fuel Tax $29.2 Other $11.4 D&A $25.0 Labour $51.1 Supplies and other O&M $40.1

2017 Operating Costs ($ Millions) Controllable Non- controllable

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SLIDE 19

CAPITAL STRUCTURE

  • Target solid investment grade debt metrics

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0.0 x 0.5 x 1.0 x 1.5 x 2.0 x 2.5 x 3.0 x 3.5 x 4.0 x 4.5 x

Debt to EBITDA

2017 2022e Industry benchmark 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Debt / Equity

2017 2022e Industry benchmark

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SLIDE 20

VISIBILITY TO GROWTH

  • Regulated capital plan plus non-regulated growth deliver
  • utstanding growth

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$0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00

Core EPS

2016 2017 2022e $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00

FFO/sh

2016 2017 2022e

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SLIDE 21

EXPERIENCED TEAM

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Balanced skill-set across diverse range of industries Extensive public company experience Mix of local and global experience

Board of Directors Executive

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

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SLIDE 22

0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x AGL Island utility average (1) US Small Cap average (2) Canadian utility average (3) 0.0x 0.2x 0.4x 0.6x 0.8x 1.0x 1.2x 1.4x 1.6x 1.8x 2.0x AGL Island utility average (1) US Small Cap average (2) Canadian utility average (3)

STRATEGIC PLAN DESIGNED TO UNLOCK SIGNIFICANT VALUE

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TEV / EBITDA (trailing 12 mths)

________________________ Source: FactSet as of April 24, 2018. (1) Includes Caribbean Utilities, Hawaiian Electric (2) Includes Portland General Electric, ALLETE, El Paso Electric, Ottertail Corporation (3) Includes ATCO, Fortis, HydroOne, Algonquin, Emera, AltaGas

Price / Book Value

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SLIDE 23

THE VALUE OF ASCENDANT’S STRATEGY

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Valuation upside

  • Execution of strategy designed to unlock Company’s true

value in 24 to 36 months

Evolving regulatory environment

  • Significant progress toward establishing strong

regulatory compact

Visible growth plan

  • $250 Million Capital Plan will drive significant cash flow

growth over next five years

  • Growth in non-regulated business

Solid track record

  • 134% total shareholder return since 2016
  • 43% core earnings growth since last year

Stable earnings

  • More than 80% of earnings from regulated business
  • Non-regulated business underpinned by long-term

contracts

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SLIDE 24

QUESTIONS?