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Ascendant Group LimitedCondensed Consolidated Interim Financial Statements(Unaudited)For the three-month period ended 31 March 2020First Quarter 2020 Report Page 1
Ascendant Group LimitedCondensed Consolidated Interim Statement of Financial Position (Unaudited)(In thousands of Bermuda Dollars)ASSETSCurrent AssetsCash and cash equivalentsInvestmentsAccounts receivableLong-term receivables, current portionInvestment in leasesInventoryPrepaid expenses and other assetsNon-current assetsProperty, plant and equipment (Note 4)Investment propertyIntangible assets and goodwill (Note 5)Long-term receivablesInvestment in leasesRight-of-use assetsInvestment in associatesRegulatory deferral account debit balancesTotal assets and regulatory deferral account debitbalancesAs at31 March2020As at31 December2019 35,2781017,86226641641,7672,76298,361 3,3164493,175407,9295,9535,455 519,905 516,305The accompanying notes are an integral part of these condensed consolidated interim financial statements.First Quarter 2020 Report Page 2
Ascendant Group LimitedCondensed Consolidated Interim Statement of Financial Position (Unaudited)(Continued)(In thousands of Bermuda Dollars)As at31 March2020As at31 December2019 26225,6451,49064,20591,602 4528,014155,910Total liabilities259,624252,028EquityShare capital (Note 9)Share premium (Note 9)Treasury shares (Note 9)Contributed surplusAccumulated OCIRetained earningsTotal 38-1,239 519,905 516,305LIABILITIES AND EQUITYCurrent liabilitiesCustomer depositsTrade and other payablesDeferred revenuesBank borrowing (Note 10,12)Non-current liabilitiesBank borrowing (Note 10,12)Asset retirement obligationEnvironmental clean-up obligationDefined benefit obligation (Note 6)Other post-retirement benefits (Note 6)Lease liabilityDerivative financial instruments (Note 11)Regulatory deferral account credit balancesTotal liabilities, equity, and regulatory deferralaccount credit balancesThe accompanying notes are an integral part of these condensed consolidated interim financial statements.First Quarter 2020 Report Page 3
Ascendant Group LimitedCondensed Consolidated Interim Statement of Earnings (Loss) (Unaudited)(In thousands of Bermuda Dollars except per-share information)Three months ended31 March20202019CONTINUING OPERATIONSRevenuesOperating revenuesOther incomeExpensesOperating, administrative, regulatory, and energy expenses (Note 12)Depreciation, amortisation, accretion and impairmentOPERATING INCOME (LOSS)Net finance expense (Note 11, 12)Share of earnings of equity accounted investeesIncome (loss) before net movement in regulatory accountbalancesNet movement in regulatory account debit balancesNet movement in regulatory account credit balancesNET EARNINGS (LOSS) FOR THE PERIODEARNINGS PER SHAREBasic:Net earnings (loss)Diluted:Net earnings (loss) 47,5071,31648,823 26,07153,363(1,420)210402,3882,021(285)1,736 4,124(1,590)1,057 0.42 (0.06) 0.41 (0.05)1,057 (533)The accompanying notes are an integral part of these condensed consolidated interim financial statements.First Quarter 2020 Report Page 4
Ascendant Group LimitedCondensed Consolidated Interim Statement of Comprehensive Income (Loss) (Unaudited)(In thousands of Bermuda Dollars)Net earnings (loss) for the periodThree months ended31 March20192018 4,124 (533)Other comprehensive income:Items that may be reclassified to profit and loss:Loss on cash flow hedges (Note 11)TOTAL COMPREHENSIVE LOSS FOR THE PERIOD(6,254)(2,081)(6,254)(2,081) (2,130) (2,614)The accompanying notes are an integral part of these condensed consolidated interim financial statements.First Quarter 2020 Report Page 5
Ascendant Group LimitedCondensed Consolidated Interim Statement of Changes in Equity (Unaudited)(In thousands of Bermuda Dollars)Balance at 1 January 2019ShareCapital 10,526SharePremium 34,246Attributed to equity owners of the CI (13,466) 22,550 (27,197)RetainedEarnings 246,451Total Equity 273,110Total comprehensive loss for the periodNet loss for the periodTotal other comprehensive loss for the periodTransactions with shareholdersrecognised directly in equity:DividendsEquity settled transactionsMovement in treasury stockMovement in ordinary sharesBalance at 31 March 2019----(2,081)(533)-(533)(2,081)(34)38 10,530905(689)630 35,092(1,821) (15,287) 22,550 (29,278)(1,056) 244,862(1,056)905(2,544)668 268,469Balance at 1 January 2020 10,512 32,839 (10,247) 22,550 (47,293) 254,677 263,038----(6,254)4,124-4,124(6,254) 10,512477 33,316 (10,247) 22,550 (53,547)(1,104) 257,697(1,104)477 260,281Total comprehensive loss for the periodNet income for the periodTotal other comprehensive loss for the periodTransactions with shareholdersrecognised directly in equity:DividendsEquity settled transactionsBalance at 31 March 2020The accompanying notes are an integral part of these condensed consolidated interim financial statements.First Quarter 2020 Report Page 6
Ascendant Group LimitedCondensed Consolidated Interim Statement of Cash Flows (Unaudited)(In thousands of Bermuda Dollars)Three months ended31 March20202019OPERATING ACTIVITIESNet earnings (loss) for the periodAdjustments to reconcile net earnings to net cash provided byoperating activities:Depreciation, amortisation & impairmentAsset retirement & environmental clean-up obligation accretionRight-of-use asset depreciationShare of earnings of equity accounted investeesChange in fair value of investmentsInventory provision and impairmentDefined benefit obligation & other post-retirement benefitsNon-cash employee benefits expense: share based paymentsChanges in non-cash working capital balances (Note 12)Net cash generated from operating activitiesINVESTING ACTIVITIESAcquisition of property, plant, equipment & intangible assetsNet cash used in investing activitiesFINANCING ACTIVITIESProceeds from issuance of capital stockPurchase of capital stock (treasury)Dividends paidCash proceeds from bank borrowing (Note 12)Repayment of bank borrowing (Note 12)Net cash generated from financing activitiesIncrease (decrease) in cash and cash equivalentsCash and cash equivalents:Beginning of periodCash and cash equivalents:End of period 4,124 ,056)27,101(730)23,692(3,724)32,81319,468 35,278 15,744The accompanying notes are an integral part of these condensed consolidated interim financial statements.First Quarter 2020 Report Page 7
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)For the three months ended 31 March 20201.OPERATIONSAscendant Group Limited is domiciled in Bermuda. The Company’s registered office is at 27 SerpentineRoad, Pembroke, HM07, Bermuda. These condensed consolidated interim financial statements comprisethe Company and its subsidiaries (together referred to as the “Company”). The Company is mainlyinvolved in energy (electric power generation, transmission and distribution) and infrastructure (sale andservice of heating, ventilation and air condition systems, air quality monitoring, building automation andenergy management, commercial plumbing, fire protection, commercial refrigeration, property andfacilities management, engineering consulting service) businesses.Principal Operating SubsidiariesBermuda Electric Light CompanyLimited (“BELCO”)Principal ActivityElectric utility(generation, transmission & distribution)Ascendant Bermuda Insurance Limited (“ABIL”)Captive property insuranceAG Holdings Limited (“AG Holdings”)Parent company of the following non-utility businessoperations: AIRCARE LTD. (“AIRCARE”)Sale and service of heating, ventilation and airconditioning air (“HVAC”) systems, air qualitymonitoring, building automation and energymanagement, commercial plumbing, fire protection andcommercial refrigeration services. IFM Limited (“IFM”)Property and facilities management services. iEPC Limited (“iEPC”)Engineering procurement, contracting and consultingservices. Ascendant Properties Limited (“AscendantProperties”)Property management.The Consolidated Financial Statements of the Company as at 31 December 2019, which were preparedin accordance with International Financial Reporting Standards (“IFRS”), are available upon request fromthe Company’s registered office above or at www.ascendant.bm.2.BASIS OF PREPARATION[a] Statement of complianceThese Condensed Consolidated Interim Financial Statements, as at, and for the three month periodended 31 March 2020, have been prepared in accordance with IAS 34 Interim Financial Reporting and donot include all of the information required for full annual financial statements under IFRS.These condensed consolidated interim financial statements were authorized for issue by the Board ofDirectors on 5 May 2020.[b] Basis of measurementThese Condensed Consolidated Interim Financial Statements have been prepared on the historical costbasis, except for the following items in the Condensed Consolidated Interim Statement of FinancialPosition: Defined benefit obligation (measured at present value of future obligations net of plan assetsmeasured at fair value); Other post-retirement benefits (measured at present value of future benefits); and Derivative financial instruments (measured at fair value).First Quarter 2020 Report Page 8
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)For the three months ended 31 March 2020[c] Functional and presentation currencyThese Condensed Consolidated Interim Financial Statements are presented in Bermuda Dollars, which isthe Company’s functional currency. Bermuda Dollars are on par with the US Dollar.[d] Use of estimates and judgmentsThe preparation of the Condensed Consolidated Interim Financial Statements in conformity with IFRSrequires management to make judgments, estimates and assumptions that affect the application ofaccounting policies and the reported amounts of assets and liabilities, income and expenses. Theestimates and the associated assumptions are based on historical experience and various other factorsthat are believed to be reasonable under the circumstances, the results of which form the basis of makingthe judgments about carrying values of assets and liabilities that are not readily apparent from othersources.Actual results may differ from these estimates. The estimates and underlying assumptions are reviewedon an ongoing basis. Revisions to accounting estimates are recognized prospectively.3.SIGNIFICANT ACCOUNTING POLICIESThe Company, during the current three-month reporting period, has consistently applied the accountingpolicies as outlined in its Consolidated Financial Statements as at 31 December 2019, which areavailable upon request from the Company’s registered office above or at www.ascendant.bm.4.PROPERTY, PLANT AND EQUIPMENT31 March202031 December2019CostAccumulatedDepreciationNet BookValueNet BookValue 5,579 - 5,579 5,579Bulk Generation389,364196,273193,09184,824Transmission Distribution & Retail297,503141,231156,272158,104Capital Work in Progress (“CWIP”)24,323-24,323121,663Other Physical Assets43,51528,85914,65615,765 760,284 366,363 393,921 385,935In 000’sLandAs at 31 March 2020, included in total CWIP, which is not subject to depreciation until brought intoservice, is 18.9 million in relationship to transmission and distribution upgrades, 2.2 million spent oncampus, 0.4 million to acquire vehicles, and 2.8 million in other capital expenditures. As at 31 March2019 CWIP included 58.5 million associated with the North Power Station, replacement generationconsisting of four 14 megawatt (“MW”) diesel engines replacing retiring engines that currently account forapproximately 50% of the Company’s current generation capacity. The North Power Station wascommissioned on 31 March 2019 and is now included in the cost of Bulk Generation assets.First Quarter 2020 Report Page 9
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)For the three months ended 31 March 20205.INTANGIBLE ASSETS AND GOODWILLIn 000’sGoodwillSoftware in ProgressSoftwareCost 6,91075116,181AccumulatedDepreciation 11,63031 March202031 December2019Net BookValue 6,9107514,551Net BookValue 6,9158834,623 23,842 11,630 12,212 12,421No intangible assets other than software were acquired during the three-month period ended 31 March2020.6.EMPLOYEE FUTURE BENEFITSThe Company and its subsidiaries each maintain one or a combination of defined benefit (“DB”) pensionplans and defined contribution (“DC”) pension plans for employees. The Company and certainsubsidiaries also offer other post-retirement benefit (“OPEB”) plans that provide medical benefit and lifeinsurance benefits for qualifying employees.Amounts related to the Company’s DB pension plan obligation and OPEB plan obligations are as follows:In 000’sNet accrued benefitliability:End of periodDB Pension PlanAs atAs at31 March 31 December20202019OPEB PlansAs atAs at31 March31 December20202019 (10,127) (38,259) (10,900) (38,460)The net benefit cost of providing the DB Pension Plan and OPEB Plans for the three month periodended 31 March is as follows:Three months ended 31 MarchDB Pension PlanOPEB PlansIn 000’s2020201920202019Net benefit costs 93 94 343 395For the three months ended 31 March 2020, the Company expensed 0.6 million ( 0.6 million for thesame period in 2019) related to its DC pension plans.The Company commissions the preparation of Actuarial reports to support the accrued liability provisionbalances of its post retirement plans only for reporting periods ended 30 June and 31 December. Theinformation herein was obtained from Actuarial reports supporting the accrued benefit liability balances ofthe Company’s post retirement plans as at 31 December 2019 as updated for net benefit costs incurred inthe period.The 0.7 million decrease in the DB Pension Plan accrued benefit liability position during the three monthperiod ended 31 March 2020 is primarily due to Company contributions to the plan to support retireebenefit payments.First Quarter 2020 Report Page 10
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)For the three months ended 31 March 20207.SEGMENTED INFORMATIONContinuing operationsin 000’sAs at and for the period ended 31 March2020Segment revenuesLess: Revenues from internal customersRevenues from external customersSegment profit (loss)Segment assets and regulatory debitbalancesSegment liabilitiesContinuing operationsin 000’sAs at and for the period ended 31 March2019Segment revenuesLess: Revenues from internal customersRevenues from external customersSegment profit (loss)Segment assetsSegment liabilities and regulatory deferralcredit balancesBELCOAGHoldingsAll other(a)Total 47,1861447,1724,916 8,7995438,256918 ldingsAll other(a)Total 50,5481350,5352,181403,639 8,3483677,9811,01932,232 3,0052,768237(3,733)18,562 ,253(a) All other, representing segments below the quantitative thresholds, are attributable to AscendantGroup Limited, the ultimate parent company, and ABIL, a captive property insurance company.Reconciliation of segment revenues to total Group revenues is noted below:In 000’sRevenues from external customersCost of goods sold and discountsConsolidated revenuesIn 000’sTiming of revenue recognition:At a point in timeOver timeRevenue from external customersThree months ended31 March20202019 55,699 58,753(6,876)(6,810) 48,823 51,943Three months ended31 March20202019 41955,280 55,699 41958,334 58,753First Quarter 2020 Report Page 11
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)For the three months ended 31 March 2020Reconciliation of segment assets to total Group assets is noted below:As at 31 March2020In 000’sAssetsAssets for reportable segmentsInvestment in associatesElimination of intercompany assetsConsolidated assets and regulatory debitbalances2019 534,8853,292(18,272) 454,4332,342(19,591) 519,905 437,184Reconciliation of segment liabilities to total Group liabilities is noted below:As at 31 MarchIn 000’sLiabilitiesLiabilities for reportable segmentsElimination of intercompany liabilitiesConsolidated liabilities and regulatory creditbalances8.20202019 276,895 187,253(17,271)(18,538) 259,624 168,715RELATED PARTIESLong-Term Incentive and Retention ProgramsThe Company’s Long-Term Incentive Programme and Retention Share Programmes are designed toattract, retain and motivate senior management and tie a meaningful portion of compensation to theachievement of strategic objectives and increased shareholder value.Awards are granted periodically and are generally tied to the Company’s share price or the fulfillment ofstrategic and performance objectives. Payment of awards are either in cash or in shares, as specified inthe respective awards when granted. Awards vest over two to three year periods.The Company’s outstanding cash-settled awards at 31 March 2020, accounted for as a liability andincluded in trade and other payables, totaled 0.9 million (at 31 December 2019: 1.8 million). TheCompany’s outstanding equity-settled awards totaled 3.2 million at 31 March 2020 (at 31 December,2019: 2.7 million). These balances have been included in share premium as a component of theCompany’s equity. The associated expense for the three months ending 31 March 2020 totaled 0.7million (three months ending 31 March 2019: 1.4 million).No Company shares were issued during the current period (three months ending 31 March 2019: Nilshares issued).9.SHARE REPURCHASE PROGRAMMEIn May 2018, the Company’s Board of Directors authorised the repurchase of up to 1,000,000 Companyshares through a share repurchase programme, representing approximately 10% of the Company’s listedshares, in order to facilitate and improve shareholder liquidity. The duration of this programme was oneyear commencing 23 May, 2018. As the programme has ended, there were no share repurchases in thethree months ended 31 March, 2020. During the same period in 2019, the Company purchased 139,395First Quarter 2020 Report Page 12
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)For the three months ended 31 March 2020shares at an average cost of 18.25 per share, of which 104,540 shares were added to the treasury stockbalance and the remaining 34,855 shares were cancelled. The balance in treasury stock as of 31 March2020 is 696,024 shares (as of 31 December 2019: 696,024 shares).10. BANK BORROWINGAuthorisedAs at31 March2020DrawdownAs at31 December2019Drawdown 30,000 4,321 -5,000--50,00049,94049,940HSBC – EKF Term Loan Facility91,40083,88476,330HSBC – Commercial Term Loan Facility16,10011,03811,794TOTAL BANK BORROWING 192,500 149,183 138,064LESS: CURRENT PORTION35,00064,20559,739 157,500 84,978 78,325In 000’sThe Bank of NT Butterfield & Son Limited - Overdraft facilitiesBELCOAscendantCIBC First Caribbean International Bank (Cayman) Limited –Revolving Credit FacilityLONG-TERM PORTIONOverdraft facilities:The Company’s subsidiary BELCO has a 30 million overdraft facility with the Bank of N.T. Butterfield &Son Limited bearing interest at 1% per annum above the Bank’s Bermuda Dollar Base Rate onborrowings. As at 31 March 2020 the Company had drawn down 4.3 million on this facility (as at 31December 2019: Nil).Ascendant has a 5 million overdraft facility with the Bank of N.T. Butterfield & Son Limited bearinginterest at 1% per annum above the Bank’s B
Ascendant Bermuda Insurance Limited (“ABIL”) Captive property insurance AG Holdings Limited (“AG Holdings”) Parent company of the following non-utility business . management, commercial plumbing, fire protection and commercial refrigeration services. IFM Lim
