Ascendant Group Ltd’s reported earnings fell 70 per cent in the first six months of the year to $3.2 million.

The decrease from the $10.2 million of net earnings reported in the first half of 2017 was driven by higher depreciation costs, the payment of bonuses linked to a sharp increase in the company’s stock price and advisory fees related to an unsolicited approach from a prospective buyer.

Ascendant, the parent company of power utility Belco, said year-to-date core earnings, before corporate expenses, were $11.1 million, down from $13.6 million for the corresponding period last year.

The Royal Gazette revealed in early May that US company Twenty First Century Utilities had made a $15-per-share offer to buy Ascendant. Since then the company’s shares have rocketed.

During the first half of the year, Ascendant’s share price on the Bermuda Stock Exchange climbed 63 per cent from $9.79 to $16.

Ascendant said it incurred $1 million in advisory fees related to the “unsolicited expression of interest to purchase the company”.

The group also paid out $1.9 million in long-term incentive compensation, driven partly by the spike in the share price.

Depreciation costs associated with Belco engines that are due to be retired in 2020 also climbed by $1.8 million.

Sean Durfy, chief executive officer of Ascendant, said: “Belco and our non-utility businesses performed well in the first half of this year — evidence that our strategic plan is bearing fruit.

“The company’s performance reflects continued, solid growth in our non-utility businesses. While results from Belco reflect seasonally lower revenue and increased depreciation due in part to our aged engines scheduled for shutdown in 2020, we are optimistic that Belco will meet last year’s $23.2 million in net earnings by the end of this year.

“We are extremely pleased that our share price is starting to reflect the significant underlying value of our business.”

Base tariff electricity revenue dipped by $0.8 million from a year earlier.

Ascendant’s non-utility businesses continued to grow, contributing $0.6 million, or 39 per cent, more to core earnings year over year.

Ascendant said it has made progress on its strategic plan during the first half of the year, including getting the go-ahead in March from the Regulatory Authority for a new power station. Since then the company has closed on the contracts for the engineering, procurement and construction, as well as the $107.5 million financing for the project.

Work will start soon and the project is expected to take 18 months.

Mr Durfy said: “Our capital plan will modernise Bermuda’s power system and will bring significant new investment and jobs to Bermuda.

“We’re installing four new 14 megawatt generators to provide a more reliable and fuel-efficient power supply which will comply with the most stringent environmental and noise regulations.

“They will replace nine old engines that will be retired between now and 2020, out of 17 total.

“The new engines will have the capacity to operate on either fuel oil or natural gas, but will continue to use fuel oil until the National Fuel Policy has been implemented for Bermuda.”

Mr Durfy added that Belco was also replacing its underground transmission cabling network to provide more reliable delivery of electricity.

“This will help reduce outages, enable easier maintenance to reduce costs and provide the system improvements necessary to support the addition of renewable energy and the demands of new developments in Bermuda,” he said.

The plan also entails the replacement of all electricity meters with advanced meters, which enable daily monitoring of energy usage and cut the need for manual meter reading.”

Ascendant also spent more than $3 million repurchasing 196,488 of its own shares at an average price of $15.63 during the first half of the year.

In its earnings commentary, the company stated: “Management believes that the execution of the company’s strategic plan will continue to unlock the underlying value of its businesses and therefore share repurchases represent the most efficient way to return capital to shareholders.”

Ascendant increased its share repurchase programme in May, authorising the repurchase of one million shares.

Yesterday, Ascendant’s shares closed at $16.49 on the BSX, giving the company a market capitalisation of $168.3 million.