NWF - NZ Windfarms

[kiora]

Hmmm someone has been nibbling away on the buy side for a while?

[JAYAY]

Hmmm someone has been nibbling away on the buy side for a while?

Yes it's been going on for a while. Someone has been buying up steadily at 5c. Either a gambler or they know something. It would be great to be a fly on the wall at PNCC.

[jonu]

Favourable judgement from Court of Appeal, dismissing PNCC. Just the noise issue now? Nwf appears to want to talk their way through that. Maybe PNCC will rethink sinking further ratepayer money into fighting this?

[BlackPeter]

Favourable judgement from Court of Appeal, dismissing PNCC. Just the noise issue now? Nwf appears to want to talk their way through that. Maybe PNCC will rethink sinking further ratepayer money into fighting this?

Looks good, though obviously - it was always just the "noise issue". Don't know enough about the PN Councillors ... so far they came across as self interested and litigious, happy to gamble tax payers money away to serve a minority and keep lawyers happy.

It would be great, though if they show us that there is more depth about them and that they are able to engage with NWF instead of just keeping the courts busy.

Discl: Happy not to live in windy Palmy - would be annoyed with a council wasting tax payers money at the court instead of doing something sensible with it.

[JAYAY]

https://www.nzx.com/companies/NWF/announcements/258699

As I understand it the noise issue is not that NWF is in breach of resource consent but rather that the noise level has come in a bit higher than originally indicated by NWF(and WTL).
I am not sure why the environment court wants to concern themselves with anything other than the resource consent.
Have I got it right?

[BlackPeter]

https://www.nzx.com/companies/NWF/announcements/258699

As I understand it the noise issue is not that NWF is in breach of resource consent but rather that the noise level has come in a bit higher than originally indicated by NWF(and WTL).
I am not sure why the environment court wants to concern themselves with anything other than the resource consent.
Have I got it right?

Yes, but as I understand the City of Palmy saying that the original consent was based on NWF's original noise information. They are therefore not interested in what limits the law sets, but only that the noise is different to what NWF originally predicted.

[JAYAY]

Yes, but as I understand the City of Palmy saying that the original consent was based on NWF's original noise information. They are therefore not interested in what limits the law sets, but only that the noise is different to what NWF originally predicted.

Ok, why then did PNCC give consent based on a higher level? Obviously they (PNCC) were happy to provide some leeway.

Hope the environment court sees it that way.

[jonu]

Looks like the positive news is soaking in. Anything under 6 is being gobbled

[jonu]

Looks like the positive news is soaking in. Anything under 6 is being gobbled

Time to eat humble pie. Someone just made a liar/fool of me, dumping 300k at 4.8. Hopefully that's the end of it

[JAYAY]

Time to eat humble pie. Someone just made a liar/fool of me, dumping 300k at 4.8. Hopefully that's the end of it

It doesn't make sense does it. Good news and someone is prompted to give them away like that.

[jonu]

It doesn't make sense does it. Good news and someone is prompted to give them away like that.

It would appear a seller/s is unloading on the positive news, hoping the price will hold up while they do so. Everyone has their reasoning I guess. Maybe they have been looking to exit for a while.

[BFG]

I'm currently sitting under the Tararuas at Ashhurst watching the windmills spin around. Can't hear a peep. That's probably due to the howling wind and rain though! :)

Don't know what everyones complaining about, imho they are a great addition to the landscape.

[BFG]

Another beauty day in Palmerville

6581

[JAYAY]

I'm currently sitting under the Tararuas at Ashhurst watching the windmills spin around. Can't hear a peep. That's probably due to the howling wind and rain though! :)

Don't know what everyones complaining about, imho they are a great addition to the landscape.

Yes I have heard that from someone else a little while ago. I must take a trip down there and check for myself. Makes you wonder about the motives of the person doing the complaining.

[JAYAY]

https://nz.news.yahoo.com/a/-/top-stories/25747578/court-of-appeal-decision-disappointing-council/

What comes next?

http://www.stuff.co.nz/business/industries/64033182/legal-win-for-nz-windfarms-but-not-over-yet

Ok so environment court process to be completed then what will PNCC do if they lose?

[BlackPeter]

Hi Moosie, Thanks for report and photo! Particularly appreciated that you took that on despite the prevailing weather conditions. I know, its supposed to be summer, but I guess it doesn't feel that way ... does it?

[BlackPeter]

http://www.stuff.co.nz/business/industries/64033182/legal-win-for-nz-windfarms-but-not-over-yet

Ok so environment court process to be completed then what will PNCC do if they lose?[/QUOTE]

good question - wouldn't it be fantastic if they would accept the offer from NWF and just sit together and talk about any real or perceived issues?

[BFG]

Hi Moosie, Thanks for report and photo! Particularly appreciated that you took that on despite the prevailing weather conditions. I know, its supposed to be summer, but I guess it doesn't feel that way ... does it?

No problem. I was in the area at the time so no biggie. Te Rere Hau is further south of Ashhurst (and even more sparsely populated) so must be some pretty loud blades!

I think summer has been cancelled for Palmerston North this year...

[BlackPeter]

just quoting from the latest Meridian monthly report: "November 2014 was a record month of wind generation for Meridian in New Zealand". Should be a good sign for NWF as well - and looking into Moosies recent report - cold and windy (for Palmerston North) sounds good for NWF share holders (good wind supply and probably higher energy prices) - doesn't it?

[BFG]

I can testify that it has been very windy around here lately, forget I'm not in Wellington sometimes!

[JAYAY]

http://www.scoop.co.nz/stories/AK1412/S00334/te-rere-hau-windfarm-commitment-to-resolving-issues.htm

So there we are. I don't see how the Environment Court can do anything other than endorse the High Court/COA decision.

[BlackPeter]

Meridians latest operations report is out. Clearly a different company, but as wind generator (next to other things) operating in the same market and conditions.

https://www.nzx.com/files/attachments/206762.pdf

What I found interesting are slide 6, showing that they (Meridian) received in the 6 months to Dec 2014 significantly higher prices than in the comparable period in the year before (up 61.7%) and that the overall amount of NZ wind generated electricity did rise in the same period from 660 to 739 GWh (i.e. by roughly 12% - slide 8).

Sounds all good - maybe this is the reason for NWF getting a bit stronger this year?

Discl: holding ... and obviously interested in winning the stock picking competition :p

[BlackPeter]

Somehow I had this funny feeling ...

Operational data for the first half of this year are out ... revenue (for first 6 months) up 53.4%, average electricity price up 42%, improved turbine availability - all good :t_up:. I think this will blow the SP out of the water :)

https://www.nzx.com/files/attachments/206783.pdf

[noodles]

Meridians latest operations report is out. Clearly a different company, but as wind generator (next to other things) operating in the same market and conditions.

https://www.nzx.com/files/attachments/206762.pdf

What I found interesting are slide 6, showing that they (Meridian) received in the 6 months to Dec 2014 significantly higher prices than in the comparable period in the year before (up 61.7%) and that the overall amount of NZ wind generated electricity did rise in the same period from 660 to 739 GWh (i.e. by roughly 12% - slide 8).

Sounds all good - maybe this is the reason for NWF getting a bit stronger this year?

Discl: holding ... and obviously interested in winning the stock picking competition :p
What a fantastic post. NWF up 15%. Nice work!

[Jantar]

The increase in earnings for the first six months of the current financial year is more than the total loss for the full year last financial year. Could NWF even declare a small profit this year?

[Bobcat.]

It depends on the weather...as well as the amount of maintenance under way on lower cost generators, both of which impact the spot price and thereby NWF's revenue and profit.

Re the spot price, buying power each month on market through https://secure.powershop.co.nz/ gives me a good prompt re NWF's share price movements.

Discl: holding with a target of around 12cps (provided they resolve their court case with PNCC, otherwise unlikely to rise above 9cps IMO). NTA (for what it's worth) is about 15cps.

[Jantar]

It depends on the weather...as well as the amount of maintenance under way on lower cost generators, both of which impact the spot price and thereby NWF's revenue and profit.

Re the spot price, buying power each month on market through https://secure.powershop.co.nz/ gives me a good prompt re NWF's share price movements.

Discl: holding with a target of around 12cps (provided they resolve their court case with PNCC, otherwise unlikely to rise above 9cps IMO). NTA (for what it's worth) is about 15cps.

Weather - New Zealand is currently being affected by both an El-Nino, and a positive Southern Annular Mode, so expect it to remain dry in the east, but with regular top-up rainfall into the southern lakes. Sothern storage is likely to remain below normal. Waikaremoano (GNE) and Taupo (MRP) inflows are likely to remain below normal. Winds are likely to remain strong from the west.

Maintenance - According to Transpowers POCP data shows that at least one of CEN's large CCGT's will remain out of service until very late in the financial year.

So no power shortages, but sustained higher prices until late autumn.

Discl: Holding a very small number of shares.

[BlackPeter]

interesting article (though old ...). If the story still holds, than you wonder why NWF and the Palmerston North City Council haven't been able to accommodate the early morning noise problems of one (1!) resident. Buying his house (at a reasonable price), reducing power generation in the early morning hours (when power is cheap anyway), or - as you say, helping to soundproof his house ... everything would have been cheaper than the long and for everybody costly legal battle.

[Jantar]

......
The generation with the lowest marginal cost is hydro, wind and geothermal. I understand most windfarms cost around $20 MWh vs $60 MWh for TRH but TRH is still cheaper than the combined cycle gas turbine that Jantar notes Contact Energy has in preservation next year. Chris Sadler's speculation on power prices that you refer to Bobcat are inappropriate for a CEO and in error, you don't need to take a CCGT off for maintenance for most of a year - they can be available 90% of the time. He should know this given his involvement with TCC but then again he never managed to get it running.
.......
You are quite correct about cost of generation. I think what Bobcat was referring to was they way that the New Zealand Electricty Market (NZEM) works and the way wind generation must be offered into the NZEM. All wind generation is offered at $0.01, and as such it becomes a price taker. Wind (like all other low price offered generation) gets paid the nodal price. All generators offer their generation into the market in 48 half hour trading periods per day, and at up to 5 price tranches. Themal generators offer by unit, and hydro (and wind) offer by node. Typically run-of-river hydro and minimum load on thermal units is offered at a very low price; the amount of energy a company needs to generate to cover its retail and cfd book is offered at a low price and the remainder is offered in tranches at or above the short run marginal price. All of these energy offers are combined into a stack, and the final price is determined at the point where the actual demand meets the offered generation. The generator offered at this price is the marginal generator.

If any generation in that stack, that would normally be less than the discovered price, is removed then higher priced generation will be dispatched and the nodal price will increase. Thus, when referring to lower cost generation he wasn't refering to lower cost than wind, but rather, lower cost than the marginal generator.

Discl: I am an electricty trader, but won't say which company I'm with. :)

Edit: Should have added that I concur with PSE about NWF management. It has a potential well above what is currently being realised.

[JAYAY]

:)

Edit: Should have added that I concur with PSE about NWF management. It has a potential well above what is currently being realised.

Jantar, you and PSE obviously know stuff that I don't.
However my impression is that the management have been hamstrung by PNCC litigation and have put considerable effort into resolving the issues. They have had to tread carefully and play it as diplomatically as possible. You may be being unfair to them.
Can you please elaborate on the "potential well above what is currently being realised".

[Jantar]

Jantar, you and PSE obviously know stuff that I don't.
However my impression is that the management have been hamstrung by PNCC litigation and have put considerable effort into resolving the issues. They have had to tread carefully and play it as diplomatically as possible. You may be being unfair to them.
Can you please elaborate on the "potential well above what is currently being realised".
The potential gains have nothing to do with the legal battles, but more to do with the trading function. NWF could increase their income through more active trading. In fact looking back through their market offers I'm not even sure that they have a professional trader, nor is there any indication that their CEO understands how the market works.

[JAYAY]

. Bottom line is that a well managed company doesn't trade at 30% of book value.

I think that the main reason for the low share price is that a highly political situation has existed, hopefully to be resolved before much longer, scaring the punters away.
I think that with guys like Michael Stiassny and Simon Mckenzie on the board, incompetent management would be dealt with quick smart.
Those guys are just as keen as we are to see NWF live up to its potential.

[Harvey Specter]

Bottom line is that a well managed company doesn't trade at 30% of book value.if it is trading at such a discount to build cost, why hasn't TPW or one of the other big gentailers taken it over. Overhead costs could be eliminated completely as it run by their existing staff.

[JAYAY]

if it is trading at such a discount to build cost, why hasn't TPW or one of the other big gentailers taken it over. Overhead costs could be eliminated completely as it run by their existing staff.

I hardly think the major shareholders are going to let that happen. Not at such a bargain basement price.

[Jantar]

I'm watching the electricty market on a quiet saturday night, and can see one of NWF's problems very clearly.

MELCA are generating 1451 MW of which 62 MW is from wind, but all from the coastal wind farms near Wellington.
CEN are generating 888 MW of which 82 is from a GT peaking unit.
GNE are generating 835 MW, of which 605 MW are from Huntly. 1 coal unit and their CCGT.
MRP are generating 720 MW of which 45 is from Southdown.
TPW are generating 85 MW, but none from wind.
NWF is not generating a single MW.

The wholesale price at Bunnythorpe is $104, and windfarms in general are earning almost nothing.

Because of the way the market is structured, when the wind blows, wholesale prices are low. When the wind doesn't blow wholesale prices are high. NWF management needs to learn how to take advantage of these situations, rather than suffer when wind generation is low.

[Baa_Baa]

if it is trading at such a discount to build cost, why hasn't TPW or one of the other big gentailers taken it over. Overhead costs could be eliminated completely as it run by their existing staff.

Harvey, with respect no company can take over an existing customer base and eliminate the acquired company's overheads. There may be efficiencies available for sure, but there is a ratio of staff-to-customers that must be retained, hence importing increased operating costs. Wouldn't know whether its a viable acquisition target though.

[Jantar]

Baa baa this company has no customers except the wholesale electricity market. We need maintenance staff not so many expensive managers, most of these can be improved and the huge amount of cash on the balance sheet can be extracted.
To a gentailer the company is worth much more than 15c as they can sell power to customers rather than getting fleeced by Jantar on the wholesale market :)
Jantar if you have a solution to intermittent generation there is a fortune to be made, I would think management's assumption of a 15% discount to average price is a reasonable one? As the overcapacity in the market calms down in the next 3-5 years we should see NWF generating for 50 bucks, selling for 80 bucks and paying a dividend? Doesn't NWF have to offer in at 0 and take whatever people will pay, like I say don't know much about the market so appreciate your thoughts.
All wind generation is offered into the market at $0.01 and is therefore a price taker on the wholesale market. There are plenty of ways to hedge that intermittent generation to make it profitable, otherwise Trustpower and Meridian would not be interested in it.

[JAYAY]

All wind generation is offered into the market at $0.01 and is therefore a price taker on the wholesale market. There are plenty of ways to hedge that intermittent generation to make it profitable, otherwise Trustpower and Meridian would not be interested in it.

I know next to nothing about hedging except that it comes at a cost and that the Company has investigated doing it in the past.
Maybe it is just not economic in the small company situation.

[Jantar]

I know next to nothing about hedging except that it comes at a cost and that the Company has investigated doing it in the past.
Maybe it is just not economic in the small company situation.
I suspect that the only hedges they investigated would have been CFDs. They would likely not have been economic for wind generation. There are other forms of hedging that would be. Pioneer Generation manage to hedge thier wind farms, and they are only 1/6 th the size of NWFs.

[JAYAY]

I suspect that the only hedges they investigated would have been CFDs. They would likely not have been economic for wind generation. There are other forms of hedging that would be. Pioneer Generation manage to hedge thier wind farms, and they are only 1/6 th the size of NWFs.

I am sure they would have investigated the options thoroughly.

[Traderx]

I suspect that the only hedges they investigated would have been CFDs. They would likely not have been economic for wind generation. There are other forms of hedging that would be. Pioneer Generation manage to hedge thier wind farms, and they are only 1/6 th the size of NWFs.

Hi Jantar

The benefit that pioneer, MEL, TPW have in operating their windfarms is that when the wind is blowing they can conserve water to use at a later date/hour. There are some limitations to this (for example some run of river hydros have limited flexibility). However at its core this is the attraction of a wind/hydro portfolio. This means those companies can more effectively trade/hedge their windfarms.

There is one solution to this, NWF sells itself to someone or sells its output in totality to another market participant. As a "stranded" asset it is worth less than within a portfolio of other assets (much more so than a standalone hydro, goethermal or gas plant would be).

I'd say takeover would be the best option as NWF are operating from a weak position on any power purchase agreement.

NWF should work on getting the operational performance up and mechanical/legal issues sorted and then it should begin to attract interest at current valuations.

disc - do not hold.

[Jantar]

Hi Jantar

The benefit that pioneer, MEL, TPW have in operating their windfarms is that when the wind is blowing they can conserve water to use at a later date/hour. There are some limitations to this (for example some run of river hydros have limited flexibility). However at its core this is the attraction of a wind/hydro portfolio. This means those companies can more effectively trade/hedge their windfarms.

There is one solution to this, NWF sells itself to someone or sells its output in totality to another market participant. ......
There is another solution. A swaption agreement with a small "stranded" hydro operator, and there are a few around.

[Jantar]

Looks like a few more punters are seeing the value in NWF. Over a million shares changed hands yesterday and a couple of further trades today. Maybe a few more have seen NWF generating at close to full load and over $90 per MW during the past week or so. :D

[BFG]

Looks like a few more punters are seeing the value in NWF. Over a million shares changed hands yesterday and a couple of further trades today. Maybe a few more have seen NWF generating at close to full load and over $90 per MW during the past week or so. :D

Wind has picked up the past few days here in Manawatu compared to very still past few weeks.

[Jantar]

Right now they are generating 0 MW at a price of $163. :(

However they did have a very good spell just over a week ago when they were consistantly over 25 MW at very good prices.

[Harvey Specter]

Right now they are generating 0 MW at a price of $163.
Why would that be? Winds too strong/weak or major fault.

[PSE]

One of the biggest problems with the farm is that it only generates 130GWh rather than the 180GWh that was intended at the site. 5.5m.s low wind cut in sorry.

http://www.windflow.co.nz/products/the-windflow-500-technical-specifications
180GWh was expected for a 10m.s site as we have on the top of the Tararuas, a great site.

http://www.windflow.co.nz/pdf-folder/misc/Windflow%20Brochure%20Mar%2007.pdf
That 180 GWh was 40% of 97 500kw turbines running all the time 48.5MW ×24 x 365 x 40% from the power output graph in the brochure. Aha - never trust a glossy brochure :)

[JAYAY]

Too calm Harvey, too strong is very strong.
Picks up at 5.7m.s or around 20kph as I say all the turbines available there have been no key component failures. Little bit of wind now just starting a few turbines.

http://203.114.161.10/trh.htm

Thanks for that PSE. I never realised that little chart was available.
What is the difference between Net Power and Net Energy?

[PSE]

Energy is the sum or integral of power over time. MW hours is the energy we sell rather than the power we generate at any one monent.
The chart sometimes has a bug so the net energy resets but you will normally see the energy accumulating if we have a good windy period.

[JAYAY]

Energy is the sum or integral of power over time. MW hours is the energy we sell rather than the power we generate at any one monent.
The chart sometimes has a bug so the net energy resets but you will normally see the energy accumulating if we have a good windy period.

Got it. Thanks.

[JAYAY]

...A further hearing in the Environment Court was held in October to determine declarations sought earlier by the Council as to whether the company was compliant with the specific sound level conditions in the original consent. The result of this hearing is expected in early 2015.

Early 2015 has come and gone. What are these environment court wallies up to.
Why does it take so long to reach a decision.

[Antipodean]

This may be worth a read.

https://www.surveyors.org.nz/Category?Action=View&Category_id=655 (https://www.surveyors.org.nz/Category?Action=View&Category_id=655)

Palmerston North City Council v New Zealand Windfarms Ltd _ [2014] NZCA 601
Keywords: Court of Appeal; resource consent; conditions; noise; interpretation

In accordance with the majority, the appeal was dismissed. The council was ordered to pay NZWL costs for a standard appeal on a band A basis.

Still waiting for further info however.

[BlackPeter]

This may be worth a read.

https://www.surveyors.org.nz/Category?Action=View&Category_id=655 (https://www.surveyors.org.nz/Category?Action=View&Category_id=655)

Palmerston North City Council v New Zealand Windfarms Ltd _ [2014] NZCA 601
Keywords: Court of Appeal; resource consent; conditions; noise; interpretation

In accordance with the majority, the appeal was dismissed. The council was ordered to pay NZWL costs for a standard appeal on a band A basis.

Still waiting for further info however.

This decision was mentioned as well in the HY report (Feb 24):

"After the period end, the Court of Appeal ruled in NZ Windfarms' favour in
relation to the appeal by the Palmerston North City Council of an earlier
High Court decision. The High Court had ruled that the company was not in
breach of Condition One of the original consent granted by the Council for
the Te Rere Hau wind farm. Following the Court of Appeal decision that
ruling stands and no further action is expected in this matter. We still
await the Environment Court decision in relation to other declarations sought
by the Council in relation to compliance with the noise conditions of the
consent."


I would have thought that it would have deserved a bit more "fanfare" ... but sometimes am I not sure either, whether the directors are really interested in getting the SP up?

[JAYAY]

I agree PSE. I am optimistic that patience will be rewarded.

Thanks also Antipodean for the reference to the COA judgement. It took a couple of readings to get my head around it. The court referred to a precise number of 800 objections and yet they went all vague in stating further on that a "large number" of people living on the boundaries of the windfarm were affected.
What does a "large number" mean. Anything from 1 to 800 I suppose.
For all we know it could be 790 of the complaints from one person.
As I understand it there are very few people living on the boundaries so I am surprised that the illustrious and highly esteemed judges would accept a such a vague reference to "a large number" of people.
I have also heard that when you are standing on the boundaries you can hardly hear the turbines for the sound of the wind.
I must take a trip down there and check for myself.

[BlackPeter]

Third quarter generation figures due in a couple of weeks, any of you jokers keen to make a bet what it will look like?
I see meridian wind averaged a 43% capacity factor in january and february (a typical value) so assuming 13% less or a 30% capacity factor for TRH we would be looking at 30GWh and I reckon an average price of $70/MWh.
Just having a bit of a guess really but with these rough assumptions I come to $2.1 million revenue for the quarter against 1.6m in cash operating costs.
This should lead to an increasing cash balance but the company has been using it to build up spares, replacements for the generators that shouldn't be failing.
I suspect they are close to their requirements here. If we get a fourth quarter with around $3m income then the company may be in a position to start paying a dividend of say $1m.
If not this year then 2016 seems likely, as they get more confident in the company's positive operating cash flow and the improved turbine reliability.
Its pretty frustrating stuff for long term holders but when the dividend finally does come I will be looking at quite a large cash windfall. Shareprice should then follow as the market realises its potential.

just looking into Meridians numbers (they are typically a day or two earlier than NWF):

https://www.nzx.com/files/attachments/211279.pdf

Looks like the last quarter was pricewise a quarter of two half's as they like to say.

Great power price in January, not so great (but still acceptable) in March.
Wind generation over the quarter a tick (1.4%) up on last year.

Based on this I would expect for NWF as well a slight improvement on top of the already quite promising Q2 numbers (might give the SP another wee prod?).

More interesting is in my view what the last quarter will bring. Hydro storage levels are well below average (which should be good for the price), though I am not sure whether I understand why the power price was in March 2015 so much lower than in March 2014. Can't be due to lack of irrigation pumps running (or did the restrictions kick in?) .. but anyway the power consumption did increase over the last 12 months. Funny that.

Anyway - optimistic for Q3 and cautiously optimistic for Q4.

Discl: holding (NWF)

[Jantar]

What are the Directors trying to hide?

The announcement to the NZX today is:
"NZ Windfarms Limited (“NWF”) has recently been asked by a small group of shareholders for clarification of, and additional information on, a number of key issues.
A response has been provided which brings together information previously provided by NWF in shareholder reports, annual meeting presentations and market announcements.
A summary of our response is available on our web site www.nzwindfarms.co.nz."

However going to their website does not give any indication of what those questions are, or of the response. If it is there it is so well hidden that they obviously don't want to answer.

[JAYAY]

What are the Directors trying to hide?

The announcement to the NZX today is:
"NZ Windfarms Limited (“NWF”) has recently been asked by a small group of shareholders for clarification of, and additional information on, a number of key issues.
A response has been provided which brings together information previously provided by NWF in shareholder reports, annual meeting presentations and market announcements.
A summary of our response is available on our web site www.nzwindfarms.co.nz."

However going to their website does not give any indication of what those questions are, or of the response. If it is there it is so well hidden that they obviously don't want to answer.

It is in a fancy new version of a PDF file that I can't get into.

[JAYAY]

I can't get into that PDF file. I have been trying new downloads of Adobe reader to no avail.
Has anyone else been able to read it.

[gmatt]

I've tried too ...... can't read it either.

[Baa_Baa]

Summary of Response to Queries from Shareholders - 17 April 2015
Changes to TRH Output Estimates
The likely output from the Te Rere Hau wind farm has been modelled throughout the initial planning, construction, and commercial operating phases of the project. This modelling process utilised the available wind resource information and the expected performance characteristics of the WF500 turbines, and applied accepted industry modelling tools to determine the likely output. In May 2009 the company advised the market of an independent assessment by Parsons Brinckerhoff of the average energy yield of 153GWh for the project as it was finally configured. Following an initial assessment of the actual performance of the completed farm this output assumption was reduced to 130GWh. Shareholders were advised of the reduced output assumption, and the reason for this reassessment, in the Interim Result released to the NZX at the end of August 2013.
NWF believe that the WF500 turbines are not meeting the power output contracted for in the turbine Sale and Purchase Agreement (“SPA”) entered into with Windflow Technology (“WTL”). NWF have notified WTL of their performance concerns, as required by the terms of the power curve warranty in the SPA. NWF have also instigated an action to recover the cost of the underperformance under the dispute resolution procedures in the SPA. Shareholders were advised of this action in the Progress Update released to the NZX in early June 2014. The 2014 Annual Report released in late August 2014 also advised of the action being taken against WTL.
The shareholders also sought additional information on the published difference in capacity factors between the Te Rere Hau wind farm and neighbouring wind farms. The comparison of capacity factors with other wind farms is in NWF’s view misleading as the WF500 turbine design is significantly different to traditional 3 blade turbines. The WF500 turbines installed at Te Rere Hau are optimised for high wind running, having a smaller swept area relative to 3 bladed turbines producing the same 500kW output. WTL’s Newsletter No. 31 released publicly in June 2011 discusses the underlying reasons for this disparity in capacity factors between turbines of different designs in more detail.
Maintenance Costs
NWF has incurred increased operating costs since stepping in and taking over the operation at Te Rere Hau in October 2011. These cost increases are due to ongoing failures of key components (e.g. pitch bearings, generators and gearboxes). The SPA provides for a five year warranty period following commissioning of each turbine plus an additional two year extended warranty for any component replaced or repaired in years four and five of the warranty period. NWF has ensured that this warranty is preserved by requiring WTL to specify the nature of repairs to and/or replacement of failed components. As a result NWF has recovered the majority of the additional costs incurred from WTL.
The costs recovered from WTL have been reported as a separate line item in the Statement of Comprehensive Income in the published accounts since the Annual Report for the financial year to 30 June 2012. The increase in operating costs as a result of these 3


arrangements was one component of the asset impairment included in the Annual Report for the financial year to 30 June 2012. The preliminary announcement released in late August 2012 advised the market of this impairment and the CEO’s presentation to the AGM provided further detail of the quantum of the operating cost increases. Subsequent published accounts and CEO presentations to the AGM have kept the market informed of the level of cost recoveries from WTL, the operating cost performance achieved, and the effect of these costs on the asset carrying value.
NWF has now instigated an action against WTL seeking to recover the full cost of remedying those failures that NWF believe are covered under the general warranty against defects contained in the SPA. Shareholders were advised this action was being taken against WTL in the Annual Report released in late August 2014.
Separate to the above process, NWF has sought independent expert advice where appropriate to determine the root cause of failures and to identify improvements to, or replacements for, the failed components.
Intermittency and Potential Additional Revenue Stream
NWF continues to review the potential to provide additional services that could provide an additional revenue stream. The current assessment is that fundamental design features of the turbines installed and a number of electricity market rules for wind generators as they currently stand do not make these options commercially attractive at this time.
Noise Litigation
Following complaints from nearby residents the Palmerston North City Council (“PNCC”) has taken a number of actions against NWF in a range of Courts. In October 2014 the Environment Court held a three day hearing to determine whether NWF is complying with the specific noise level conditions of the existing resource consent. The Court’s determination should be received shortly.
Throughout this protracted legal process NWF has offered to meet with the PNCC and the concerned residents to explore alternative approaches. There have been no processes proposed that have promised any likelihood of success and NWF has therefore been required to defend its performance in the Courts. To date the expert advice to NWF is that it continues to operate within the sound level window allowable under its existing consents.
Organisational Overhead Costs
NWF incurs costs for governance and senior management of approximately $700,000 per annum. NWF’s management and the Board regularly review the cost of operating the company and have taken every opportunity to reduce these costs. The costs presently being incurred are considered necessary to manage and govern a listed entity, and address the ongoing operational, commercial, and legal issues NWF has, in an appropriate manner.

[JAYAY]

Thanks baa baa, How did manage to access that?
Do we have to have windows 8 or something.

[Baa_Baa]

No problems here, not sure what you need to do, I have a Mac.

[BlackPeter]

No problems here, not sure what you need to do, I have a Mac.

I had no problems to access the release with a Windows 7 system and using Chrome ...

[JAYAY]

I had no problems to access the release with a Windows 7 system and using Chrome ...

That's what I am using, but couldn't get in.
Downloaded Foxit and am now in.
Nothing really in the announcement we didn't already know.

[kiora]

I can't get into that PDF file. I have been trying new downloads of Adobe reader to no avail.
Has anyone else been able to read it.

You could download,a version developed by NZ company
https://www.notablepdf.com/
I have been using it for a while & working well
Can convert PDF into word document as well

[BlackPeter]

Agreed, a time wasting announcement from management re-hashing publicly available information in a new and complicated pdf format lol.
The quarterly result was 1.8 million I think, excellent prices but very poor winds not great but could have been worse.
Fingers crossed for the next period, hydro at 66% of average - we need dry and windy please :p

Thanks for mentioning the quarterly results - nearly feels they wanted to hide them, releasing them on a Friday evening - 3 minutes before the NZX was closing for the weekend (and sort of hidden by the earlier - quite tired "shareholders update"). Doubt whether many people noticed this second news release last Friday.

For those who missed them - here they are: https://www.nzx.com/files/attachments/211527.pdf

Year to date revenue up +16.7% (compared to 2014), and this despite low wind over the last 3 months ... not too bad. Agree - windy and dry for the next 3 months would be good, though obviously we shouldn't be too selfish (considering the suffering farmers). Maybe some rain in the farming areas (but not in the mountains) would be o.k.?

[In4a$]

https://www.nzx.com/companies/NWF/announcements/263403

New release on enviorment court rulings today. Looks all good to me.:)

[BlackPeter]

Environment Court decision out:

https://www.nzx.com/companies/NWF/announcements/263403

While the court agreed with the PN city council that "that the noise emissions from NWF’s wind turbines at the Te Rere Hau wind farm have known special audible characteristics when measured in the near field", did they reject all other declarations sought by the city council - particularly related to applying a "penalty of 5dBm for measurements, related to the method to take the measurements and related to rejecting some of NWF's measurement results ..

The company is pleased with the outcome:

NWF is pleased that the Court has agreed with NWF’s expert advice and remains committed to working with the Council and the local community on constructively resolving issues concerning noise, rather than further litigation. The extensive litigation to date has cost both parties a significant sum of money without advancing the practical resolution of the issues raised.


Living in hope (as long suffering shareholder) but as well feeling for the less litigious citizens of PN. Wouldn't it be nice, if they both stop to throw huge amounts of money at lawyers and courts and start instead a more fruitful discussion?

Hoping as well that the PN city councillors at some stage have to pay for all the rate payer money they wasted - and if it is just payback at the next local election.

[JAYAY]

Living in hope (as long suffering shareholder) but as well feeling for the less litigious citizens of PN. Wouldn't it be nice, if they both stop to throw huge amounts of money at lawyers and courts and start instead a more fruitful discussion?

Hoping as well that the PN city councillors at some stage have to pay for all the rate payer money they wasted - and if it is just payback at the next local election.[/I]

Talking about the "less litigious citizens of PN". From time to time I look up the Manawatu Standard to see if there has ever been any reporting on the councils's money wasting antics.
It would seem to me that PNCC and the Manawatu Standard have been keeping the ratepayers in the dark. I can't help wondering if the council has been led by the nose by self interested lawyers keeping the pot on the stove. You are on the pig's back if you are the council's law firm. Feeding from the ratepayer trough.

[JAYAY]

Not sure why you are "disappointed in NWF board and management" PSE.
You must be referring to something in history that I know nothing of.
Right now I am pretty pleased with them.

[BlackPeter]

Not sure why you are "disappointed in NWF board and management" PSE.
You must be referring to something in history that I know nothing of.
Right now I am pretty pleased with them.

Well, I guess its all relative. If we consider that this company started in their IPO (9 years ago) with $75M shareholder capital, supplemented by the subsequent 2010 8 for 3 capital rise of $31.5M. They never paid a dividend and turned the initial capital plus capital rises into a now $17M market cap. Thats a capital loss of nearly 85% over 9 years.
(edit: checked the numbers and amended as appropriate ...)

Yes, there have been a number of factors the board was not able to control (like e.g. the carbon credits basically turning to custard), and being the development sandpit for the not so successful NZ inventor Windflow didn't help either.

Still - I have my doubts, whether the board did always their best with the hand dealt to them. Their ongoing results are clearly telling a different message.

Discl: holding - and yes, I think that the share is currently undervalued (at less than 16% of original shareholders capital). Believe however that a different board could improve the companies value.

[JAYAY]

Whoa PSE/ I am a relatively new NWF shareholder. My comments that you know more than me were meant as an acknowledgement that you have more knowledge of the company history than I do which you obviously do. And I respect you for that. There was never any implication that you were trading on inside information.
Latest developments are a positive for me. That's all I am saying.

[ratkin]

On a recent trip to Cornwall i noticed less wind farms than previously. What was new from my last visits was countless fields filled with solar panels. Why do we not have them here? After all we get more sun than them.
Have a feeling it was due to some european subsidy for farmers, but not sure

http://www.theguardian.com/environment/2014/oct/21/are-solar-farms-really-hitting-british-food-production

[JAYAY]

On a recent trip to Cornwall i noticed less wind farms than previously. What was new from my last visits was countless fields filled with solar panels. Why do we not have them here? After all we get more sun than them.
Have a feeling it was due to some european subsidy for farmers, but not sure

http://www.theguardian.com/environment/2014/oct/21/are-solar-farms-really-hitting-british-food-production.

I guess someone will do it here when the numbers stack up.

[Harvey Specter]

.

I guess someone will do it here when the numbers stack up.if you already have a high voltage cable for the wind farm, adding solar panels along a fence line could stake up quicker?

[jonu]

No worries JAYJAY just making sure, i am a bit firey by nature :)
Solar panels cost 27c/kWh vs windfarms costing 9c kWh and can use the existing cabling network at TRH which is 33kV. Solar panels provide no power in winter when nz demand is highest so are a total waste of space, also rains a lot in most major nz centres.

I'm no expert on this stuff, but I recently had a look at a friend's off grid power supply which consisted of integrated solar and diesel generator. He deliberately avoided a wind turbine due to likely maintenance issues, even though he is in a windy coastal location. He told me 1/3 of his solar panels were of a super sensitive type that generated well even on dull days. Also that heat had nothing to do with it. A bright day in winter was just as good as summer (just shorter).

[BlackPeter]

I'm no expert on this stuff, but I recently had a look at a friend's off grid power supply which consisted of integrated solar and diesel generator. He deliberately avoided a wind turbine due to likely maintenance issues, even though he is in a windy coastal location. He told me 1/3 of his solar panels were of a super sensitive type that generated well even on dull days. Also that heat had nothing to do with it. A bright day in winter was just as good as summer (just shorter).

Actually - solar panels are more effective when the outside temperature is low. However - as you rightly observed, the number of sunshine hours is lower in winter - and at least as important: the intensity of the sun is much lower (due to the lower angle with which the sun rays come through the atmosphere).

Part of my dissertation (many years ago) looked into the efficiency of solar panels - and while the technology has improved since than, the physical characteristics of sunlight have not. The solar energy hitting the ground in our geographic location (say between 40 and 45 degrees South) is (per hour) on a misty autumn or winter day about 1% of the energy hitting the same area on a sunny day in summer.

Quite hopeless technology, if you need your power during winter, even if you invest into some storage for a days consumption (very expensive). What you would need is storage to cover basically for the full winter - and this technology is not yet available (well, you obviously could pump lots of water uphill and store in a lake - if you have enough space and water ...).

And the other thing - as PSE rightly highlighted .. solar energy costs are still something like 25 to 30 cts per kWh, wind energy is something like 7 to 8 cents, and hydro energy can be as cheap as 3 cents per kWh. Why would anybody in their right mind install solar as long as they can connect to the grid? Unless obviously - their solar gets subsidized by everybody else, which drives power prices for everybody else into the sky?

[Harvey Specter]

Why would anybody in their right mind install solar as long as they can connect to the grid? Unless obviously - their solar gets subsidized by everybody else, which drives power prices for everybody else into the sky?Because in part they are comparing the cost they can generate onsite to the price they have to pay to import it which includes not just the generation cost, but the transmission, distribution and retail costs and potentially the profit margin from 4 different operators.

So you cant just compare the relative generation costs, you have to compare the generation to retail cost.

[BlackPeter]

Because in part they are comparing the cost they can generate onsite to the price they have to pay to import it which includes not just the generation cost, but the transmission, distribution and retail costs and potentially the profit margin from 4 different operators.

So you cant just compare the relative generation costs, you have to compare the generation to retail cost.

Sure - this is as long as some other poor sucker keeps subsidizing the network costs for the solar freeloaders. Lets assume that everybody goes solar and lets say that this could cover half of the electrical energy needed in NZ. The network cost wouldn't drop by a cent, as long as all these solar freeloaders keep sucking the same amount of electricity out of the net on a cold winter evening. Its just that everybody else than would need to pay twice the cost per (grid originated) kWh of power (given that people draw in this example only half the amount of energy out of the grid, but the cost for the grid maintenance didn't change).

No net savings to the country, just higher power prices for everybody using grid power (no matter how you calculate it). solar is just cheaper as long as a non solar majority is subsidizing the free loaders.

Obviously - we could just remove the solar freeloaders totally off the grid. If they manage to store enough of the energy they need throughout the winter onsite (or find during winter an alternative supply - e.g. diesel?), than they aren't free loaders anymore - however they will find out very soon that they have to pay an arm and a leg for their self containedness ...

[Harvey Specter]

Blackpeter - agree. I forgot to point out that this is a virtuous circle. As solar gets cheaper, and more people get it, the grid power price will increase (as you point out) so more will get solar ...

Not sure if I posted this here yet: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11436175

Why would someone in Hawaii need over $50k of solar! Some utilities are trying to charge a fixed monthly fee to those who feed into the Grid. One utility asked the regulator for a $50 fee by only got approved to charge $4.90!!

[Snoopy]

On the money again Blackpete,
We paid for a windfarm that would generate 180GWh per annum with cash operating costs of $30 per MWh but we got a windfarm that generates 130GWh for $60 which management expects can generate for $51 per MWh.
Thats about $6,400,000 per annum lost, more or less.
Three groups are to blame for the massive waste of shareholder capital which reduces the productive capacity and empoverishes our whole society as well as shareholders directly.
1. Windflow for designing a substandard turbine.
2. NZ windfarms for not knowing their business and holding Windflow to account.
3. Shareholders for not knowing their business and not holding NZ Windfarms management to account.



(written on the Arrium thread)
Power prices may go either way, NWFs cash costs are $51MWh and it is unlikely that the market would be below that for a number of years but if it was then NWF would have to burn my beautiful cash on the balance sheet it would take years and years because there is so much.
When there is too much water then gas turbines shut down when there is not enough they fire up again and keep the market in balance, not sure what you mean by a mismatch of generation capacity to demand beyond that which we have already faced/are facing. If Tiwai shuts down a CCGT will be scrapped, analysts predict a levelling in electricity prices at current levels for a few years and an agreement reached to keep Tiwai and a CCGT operational for a few more years.


I am referring to a mismatch of generating capacity to end line (retail) customers, directly signed up to NWFs books. NWF does not have any retail customers. The bigger gentailers have a natural hedge because small retail customers pay a fixed price for their power regardless of the short term wholesale price. This allows the likes of Meridian to remain higly profitable, even when there is plenty of water in the hydro lakes. No such 'hedge' is available to NWF.

SNOOPY

[Jantar]

....... No such 'hedge' is available to NWF.

SNOOPY

In fact there are a number of hedge products available to NWF. Most of them would be revenue negative, however I can think of at least two methods of hedging that would be beneficial to NWF. NWF, having no controllable generation or load, cannot justify employing a full time trader, and so are probably unaware of the different types of hedge products being used by the other generation companies.

[Jantar]

PM sent. May be too close to commercially sensitive for public discussion.

[Jantar]

I see SALT have become a significant shareholder and now hold 6.8% of the company. Obviously they see some upside here. https://www.nzx.com/companies/NWF/announcements/263921

[BlackPeter]

Great sign they bought in ... and yes PSE - I agree, they might be a very useful ally. All good.

[Crackity]

My reading of this announcement is Salt have taken responsibility for the management of AMP Capital holding. This may see a change of sentiment as AMP have been the big sellers over the last 12 months.....

[BlackPeter]

My reading of this announcement is Salt have taken responsibility for the management of AMP Capital holding. This may see a change of sentiment as AMP have been the big sellers over the last 12 months.....

You are right - this will teach me to read page 2 of a SSH as well, before commenting. Still - I think there is hope.

[Crackity]

3 million crossed at 5.0 cents after official trading.....

[BlackPeter]

3 million crossed at 5.0 cents after official trading.....

Interesting - a bit above 1% of all shares. Might result in a SSH-notice.

[Crackity]

Maybe PSE has decided to max out his platinum card!

[Crackity]

Yes and no - it means the broker had the buyer and seller as clients - it is slightly unusual in it did not go through the NZX trading platform and was at a price outside the bid/ask spread....

[BlackPeter]

Interesting - a bit above 1% of all shares. Might result in a SSH-notice.

OK - so SALT was the seller of the 3 Million shares - pity that, and I hoped they want to help us to bring the board up to scratch ... still open is: who did buy them?

[Crackity]

Good question BP - very sloppy disclosure by Salt as well - surely when you are disposing of shares you are not ' beginning to have a substantial shareholding' and it cannot be ' normal on market trading activity ' if the sale price is outside the bid / ask spread - the only trade that day was at 5.2 cents for 4000 shares and there were buyers at 5.2 and 5.1 all day....

[winner69]

Good question BP - very sloppy disclosure by Salt as well - surely when you are disposing of shares you are not ' beginning to have a substantial shareholding' and it cannot be ' normal on market trading activity ' if the sale price is outside the bid / ask spread - the only trade that day was at 5.2 cents for 4000 shares and there were buyers at 5.2 and 5.1 all day....

You piqued my interest in such carry on

Salt have completed the right form (a disclosure of movement of 1% .....)

I see nothing unusual about the trade ... offered 3 million shares for sale and a willing buyer was prepared to take the lot, albeit a bit od the discount to the perceived market price. Was there enough 'on market. (your term) to take 3 million shares? Doubt it myself and just imagine the carnage if they did sell this many 'on mrket'

You see off market crossings all the time

[Crackity]

Have a look at their Annexure A - happy to be corrected but I think it is misleading.

[Harvey Specter]

Have a look at their Annexure A - happy to be corrected but I think it is misleading.Yea - the numbers are (probably) right but looks like the words used - 'normal on market trading' and 'beginning too' is sloppy.

[winner69]

Well whatever Salt have sold 3 million shares and now Salt / BNP Paribus / AMP or whoever own 5.793% of NWF

So all honky dory ....until they find buyer for the next 3 million shares on the block

[Crackity]

Indeed - phone Anthony on (09) 9677276 if you want to buy 16,688,133 shares....

[Crackity]

The Salt sell down of the AMP holding continues - at this rate they will all have a new home by July.....

[Crackity]

Another million plus through this morning ( presumably AMP / Salt ) - price firming - nearly all traded at 5.5c

[Crackity]

And another million and a half today by 4pm

[Apathy]

NZX still seems like the wild west to me, .

Best comment of the day.

[Crackity]

2% of the shares traded today - AMP / Salt now well under the 5% threshold.....

[Harvey Specter]

If salt are selling, who is buying. Without them, the price would be drifting up?

[Crackity]

My chart says rising price and volume.....

[Crackity]

Maybe it is a company that has the investment philosophy's that centres on the belief that the New Zealand and Australian share markets have peculiar characteristics that lead to market inefficiencies that can be exploited over time to deliver superior risk-adjusted returns.

[Crackity]

Hi PSE - maybe post that on the WTL thread as well - unloved since Mar 2014!

[Jantar]

The past 8 weeks have been interesting as far as wind generation is concerned. Probably not too good for NWF, but favourable for Meridian and Trustpower. The larger than normal equinotic fronts that came through in late April/early May re-charged hydro levels and lowered the wholesale electricity price. This meant that wind was relatively strong, but coupled with lower than normal prices.

My view is that by the end of this month NWF will have had a positive cashflow for the quarter, but reduced NPAT. It depends on what management have used the income for as to whether it will be good news going forward. Ongoing litigation is not helping the situation, but if management decide to just bite the bullet and concentrate on core activities then the outlook may be much rosier.

[Crackity]

Hi PSE - NWF will almost always have an accounting loss under current structure - they have $2.6 million depreciation charge annually...however this is only an accounting entry - cash flow statement should be much better to look at.... In some ways it is a lovely business - it makes accounting losses and cash profits. Best wishes - C

[Jantar]

Good news from their 4th quarter report. Financial YTD 2015, 2014, % change


Revenue from electricity sales - $

7,657,000

6,887,000

+11.2

[Antipodean]

Good news from their 4th quarter report. Financial YTD 2015, 2014, % change


Revenue from electricity sales - $
7,657,000
6,887,000
+11.2




Not to bag a good revenue bump (I'm a holder myself and pleased), but the increase in FY actual generation was only 0.3% despite a 2.3% increase in turbine availability (average).

What actually bumped the revenue was the increase in the average electricity price (+10.8%), something outside NWF's control.

So FY 2015 was a good year for NWF compared to FY 2014, but not due to anything they have implemented.

[Edit] - Link to announcement: https://nzx.com/companies/NWF/announcements/267031

[Jantar]

Not to bag a good revenue bump (I'm a holder myself and pleased), but the increase in FY actual generation was only 0.3% despite a 2.3% increase in turbine availability (average).

What actually bumped the revenue was the increase in the average electricity price (+10.8%), something outside NWF's control.
....
True,

And next FY, being a predicted strong El Nino, will probably see greater generation, at lower prices.

[BlackPeter]

True,

And next FY, being a predicted strong El Nino, will probably see greater generation, at lower prices.

Greater generation - yes, but why lower prices? According to the recent IMF paper on El Nino years (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11445771) can we expect higher wind AND higher energy prices (due to less hydro power and more need for irrigation pumps). Not sure whether I ever envisaged using percy's phrase for this particular stock, but it might be fair to say "we are well positioned ..."

discl: holding;

[Jantar]

Greater generation - yes, but why lower prices? According to the recent IMF paper on El Nino years (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11445771) can we expect higher wind AND higher energy prices (due to less hydro power and more need for irrigation pumps). Not sure whether I ever envisaged using percy's phrase for this particular stock, but it might be fair to say "we are well positioned ..."

discl: holding;
El-Nino means more westerlies, and in turn that normally means more rainfall in the southern hydro lakes. I would refer you to a 1994 paper that you can find in Google Scholar. That paper emphasises the positive link between El-Nino and increased river flows. However, to be fair, there is another paper under review at present that de-emphasises that link and shows that river flows are more aligned with the PDO. The PDO is also positive so we can still expect more westerlies and rain over spring and summer and hence lower energy prices.

McKerchar, A. I., and C. P. Pearson. "Forecasts of seasonal river flows using Southern Oscillation Index." Journal of Hydrology (NZ) 32.2 (1994): 16-29.

[BlackPeter]

El-Nino means more westerlies, and in turn that normally means more rainfall in the southern hydro lakes. I would refer you to a 1994 paper that you can find in Google Scholar. That paper emphasises the positive link between El-Nino and increased river flows. However, to be fair, there is another paper under review at present that de-emphasises that link and shows that river flows are more aligned with the PDO. The PDO is also positive so we can still expect more westerlies and rain over spring and summer and hence lower energy prices.

McKerchar, A. I., and C. P. Pearson. "Forecasts of seasonal river flows using Southern Oscillation Index." Journal of Hydrology (NZ) 32.2 (1994): 16-29.

sort of makes sense, though the IMF paper states:


El Nino events ... lead to higher demand for coal and crude oil as less electricity is generated from thermal power plants and hydro-dams.

Water demand for irrigation use also rises, which drives up energy prices further, and crude oil prices "sustain a statistically significant and positive change following an El Nino shock" of almost 14 per cent after four quarters.

which makes sense as well. I guess some of the researchers / scientists must be wrong - but how can this be, I always thought they all are infallible;)?

Lets wait until next year and we might be wiser ...

[Bobcat.]

Either way, I'm happy to hold. My stock in NWF makes for a nice hedge against any higher spot prices that I might need to pay to keep my family warm, clean and well fed...

http://www.powershop.co.nz/

[Poet]

Can anyone throw some light on the situation with the finance lease (which I think is related to the internal reticulation infrastructure of the farm)

Seems that the total liability for the next 15 years is on the balance sheet at $9.3m. This is secured by way of bank guarantee. The bank guarantee is itself secured by $6.5m cash term deposit along with all other assets of company.

My question is - how on earth this situation has come about as it seems to make absolutely no commercial sense from NWF's perspective ? Is there likely to be some financial milestone that would enable this guarantee to be removed thus freeing up the $6.5m

[Poet]

Hi Poet, the company is tied into a horrible lease to buy agreement for the 33kV distribution network and 33/.4kV transformers (97 off). We pay $1m a year I think there is 15 years to go, would have to check I can't remember.
The 6.5m bond is required under the contract so I expect it will be freed up them but it's a very long time away.
For those with a long enough horizon, the distribution network will be paid off making the second (and subsequent?) twenty years of operation cheaper.
Not happening anytime soon though.

Thanks PSE, what a ludicrous arrangement!

I'm presuming (maybe unreasonably) that the guarantee is limited to the total outstanding on the balance of the lease. So guarantee will reduce as the 15 years ticks over ie in 10 years from now, outstanding balance will be say $5m thus releasing $1m of the cash. Long time to wait though, you'd think that it might be worthwhile financing some other way and paying the powerco lease early (maybe at a small discount, wonder why they couldn't renegotiate this to the satisfaction of both parties- hmmm?)

[Crackity]

The Salt sell down of the AMP holding continues - at this rate they will all have a new home by July.....


6 million plus traded today - nearly all crossed off market at 5 cents - Salt / AMP must be almost out - wonder if there is a substantial shareholder ( 5 % plus ) notice coming from the buyer?

[Jantar]

6 million plus traded today - nearly all crossed off market at 5 cents - Salt / AMP must be almost out - wonder if there is a substantial shareholder ( 5 % plus ) notice coming from the buyer?
I was pleased to add a few more at a relatively cheap price today. Now 10% of my portfolio.

[PSE]

Awesome quote from securities analysis, bit random but have to share it.
"..it is a notorious fact however, that the typical american shareholder is the most docile and apathetic animal in captivity"
Nothing has changed on the one since 1934.

[BlackPeter]

Another dissapointing result with a cash loss and another cash loss forecast in 2016.
As I have said the legal action is not over although management seems to mislead shareholders in the annual report the following statement is found in the notes to the accounts.

The Environment Court has provided a decision on the remaining declarations sought by PNCC which related to special audible characteristics and alleged non-compliance. Of the four declarations sought only one, relating to the presence of special audible characteristics, was granted. The other three were declined. Two on the basis of uncertainties in the consent condition wording, and one on the basis that NZ Windfarms was in compliance or non-compliance had not been proved. The Court also reconfirmed its earlier finding that the Council was entitled to review the conditions of consent and that any such review could address the uncertainties in the consent condition wording. At the end of the year the Consent issues are, therefore, still not completely resolved. Further discussions with the PNCC have been proposed as a means to resolve the remaining issues. However if an agreed process or compromise cannot be reached NZ Windfarms anticipates the PNCC will instigate an action under section 128 of the Resource Management Act due to the inaccuracies identified in the original Application for Environmental Effect for the Te Rere Hau wind farm. This action, if instigated by the PNCC, will likely result in a number of the noise conditions of consent being amended. Alternatives to the section 128 review include NZ Windfarms applying to amend the conditions of consent itself under section 127 or lodging a new resource consent application for the existing wind farm.

Clearly nothing is solved, after four years of running the windfarm still doesn't have an agreed resource consent. Management is hopeless. Trying to sell a reduced loss as if losses are a good thing.

Unfortunately - you are absolutely correct.

The current board and management are responsible for destroying during the last decade (before I forget ... happy 10th birthday NWF) more than 85% of all invested shareholder capital. No dividend was paid during this time.

Looking into the operating cost of the wind farm: I guess at least they managed for the first time to get them (just) below $50 / MWh (this is just operation and maintenance, depreciation and interest are extra) - if we add these cost, than we end up this year with a total cost of $64.56 per generated MWh (which obviously is no good, if we have to sell them cheaper).

European Wind farms (of comparable size) would typically cost between USD13 ... USD25 - i.e. NZ$20 to NZD$39 per MWh to operate and maintain (plus a similar amortisation / depreciation like NWF) - i.e. we are roughly $20 per MWh more expensive in generating power than an average European wind farm would be.

The board seems to be quite unconcerned: The standard message is that they can't control wind or power prices ... and there is so far little evidence for their capabilities of effectively controlling admin cost and or legal cost (though - it obviously always could be worse).

Sure - on the bright side ... power futures are rising ($80 / MWh in 2017) - i.e. even if they do nothing they might manage to generate from 2017 a (small) profit. It would however be nice if we could see the board trying a bit harder to do the best with the cards dealt to them - and at this stage I am not convinced, that they did everything they could to optimise the technical efficiency (appreciating that they bought a dog from Windflow) ... and I am wondering whether the admin cost are appropriate given the size of the operation.

AGM-date and director nominations must be out soon ... this is an opportunity to give them a wake up call.

[BlackPeter]

interesting volume and share price seems to hold ... somebody wants in?

[Jantar]

The current board and management are responsible for destroying during the last decade (before I forget ... happy 10th birthday NWF) more than 85% of all invested shareholder capital. No dividend was paid during this time

Looking into the operating cost of the wind farm: I guess at least they managed for the first time to get them (just) below $50 / MWh (this is just operation and maintenance, depreciation and interest are extra) - if we add these cost, than we end up this year with a total cost of $64.56 per generated MWh (which obviously is no good, if we have to sell them cheaper). ......

With Contact closing Otahuhu this month, Mighty River closing Southdown in 2 months, Genesis closing the older Huntly units within 2 years, that is more than 1000 MW being removed from the system in the very near future. Forward prices are already starting to factor in an increase in average prices.

I see that the NPAT loss is very very close to total Director's fees, and only 2 of the 5 directors are listed as shareholders. The directors don't care whether NWF ever makes a profit as they get paid anyway, and have no personal stake in the company. Maybe we need a motion at the SHM that directors fees be tied to the company profit. No profit, no fees. This year there would have been a profit of $40,000 except for the directors fees, so I would suggest total directors fees should not have been more than $800 (2%).


interesting volume and share price seems to hold ... somebody wants in? Yes, someone was very happy with today's announcement :)

[Crackity]

AGM - 24 Nov - put it in your diary!

[kiwi_on_OE]

Re directors, two are Vector representatives (own 22%), so I'm not surprised they don't own shares in their own right.

I'm a bit surprised that the top 5 employees earn about half (285k, 165k, 145k, 135k, 125k) of the 1.7m emp exp. And 421k of admin seem like a lot of staples and paper clips.

[Crackity]

Re directors, two are Vector representatives (own 22%), so I'm not surprised they don't own shares in their own right.

I'm a bit surprised that the top 5 employees earn about half (285k, 165k, 145k, 135k, 125k) of the 1.7m emp exp. And 421k of admin seem like a lot of staples and paper clips.

Very astute observations kiwi on OE. The Directors seem to have a preference for a Rolls Royce solution when maybe a second hand Subaru would work just as well....

Got a ticket to see Fiji beat England? :)

[Jantar]

Re directors, two are Vector representatives (own 22%), so I'm not surprised they don't own shares in their own right.

I'm a bit surprised that the top 5 employees earn about half (285k, 165k, 145k, 135k, 125k) of the 1.7m emp exp. And 421k of admin seem like a lot of staples and paper clips.
The issue on directors representing Vector is a bit cloudier than that. Only one of them has his director's fees paid to Vector, the other receives them directly. This would make it appear that Vector only has one delegated director which would be in line with their 22% holding. The other is there in his own right, but not a fully independent director.

[Traderx]

This is a good point, how many of these employees are climbing turbine towers in the rain and have particular skills related to windfarms? I suspect they are mainly bureaucrats. Maybe a lot of airfares from Auckland to Palmerston North for the CEO Chris who joined NWF straight from Vector I understand.

Where is this company's plan to sell themselves? Clearly one small underperforming windfarm does not a company make. Audit, board, management, CEO/CFO cost etc for one fairly piddling asset to cover. This should be rolled into an existing generation business asap. I suspect it would be worth significantly more than current market cap but not sure why this isn't happening.

Could the board with shareholder approval sell the asset and then wind up the company? Do shareholders need to start agitating?

disc: do not hold.

[Crackity]

Huge crossing at the end of day....wonder what's up?

28 million odd shares - 10% of company approx....

[Jantar]

Huge crossing at the end of day....wonder what's up?

28 million odd shares - 10% of company approx....

Only two holders are big enough to sell that many in one go: Vector, or Nikko. The main point of interest will be who was the buyer?

[Crackity]

Only two holders are big enough to sell that many in one go: Vector, or Nikko. The main point of interest will be who was the buyer?

Nikko dipped their toes in the selling pool last week
- I pick them :) as sellers

buyers - hmmm - interesting

[PSE]

Presumably the buyer is not interested to splurge out who they are on the internet but a substantial shareholder notice will be issued forthwith.

Windflow issued their preliminary results on 14 September and say they are in negotiation with NWF on a settlement of their dispute.
It concerns me that the company's gearing ratio is 94%, Shareholders Equity of $1 million is 5.3% of total assets, the company has never made a profit on average a 4 million dollar loss per annum over the last 9 years.
This year the company would have gone in to negative equity but for a write up in the value of assets on the assumption that the grid to the Orkney islands will be upgraded to prevent curtailment, they say there are no new customers, govt. funding in the UK has gone dry, prices in NZ are too low, US sales have fallen through but maybe they can sell some in the pacific.
If the going concern assumption was not taken the company would have substantial negative equity it says, not in the start of the thing but in note 31 to the financial statements.

This company has a liability to NZ Windfarms for component failures under the warranty and the power output dispute. I think WTL should have been wound up many years ago and not permitted to continue to trade themselves so far beyond the point where they could pay their creditors.
The whole thing makes a mockery of NZ listing rules, it's bad enough to lose $40 million shareholders entrusted you with but to keep operating like this is I think beyond the pale.
All the time Geoff has continued to draw a very nice salary for himself thank you very much, and $5,000 commission per turbine.
Business as usual out here in the Wild West.

[Jantar]

Presumably the buyer is not interested to splurge out who they are on the internet but a substantial shareholder notice will be issued forthwith.

.
We now know who the buyer is: Robert Alexander Stone, a private investor from Singapore. He was already the 4th largest shareholder so obviously can see something happening.

[Crackity]

We now know who the buyer is: Robert Alexander Stone, a private investor from Singapore. He was already the 4th largest shareholder so obviously can see something happening.

Bob to his friends - maybe he reads sharetrader :) he bought 18 million of the 28 million traded on Friday by Nikko - 10 million went elsewhere....

[Harvey Specter]

Bob to his friends - Sideshow??

[Crackity]

Sideshow??

Maybe he will tell us Harvey - up to season 3 of suits now!

[Jantar]

And now Nikko are out of NWF completely. Another 18,437,134 sold at 5.6 & 5.4

[Crackity]

And now Nikko are out of NWF completely. Another 18,437,134 sold at 5.6 & 5.4

Will be an interesting AGM on 24 Nov is my next prediction :)

[BlackPeter]

Will be an interesting AGM on 24 Nov is my next prediction :)

I think you might be right ...;)

[Crackity]

I think you might be right ...;)

LET Securities of Wellington bought most of yesterday's shares and have 19.9 million shares( just under 7% ) though I note the following from their disclosure

Nature of relevant interest(s): Non-beneficial holder as proposed general partner of a proposed limited partnership.

Hmmmm - interesting....

and Bob ( not Sideshow as far as I know....) bought a few more and is up to almost 14%.....

- I think Vector may possibly not be in the drivers seat for much longer? Time this company made its shareholders some money :)

[Jantar]

LET Securities of Wellington bought most of yesterday's shares and have 19.9 million shares ( just under 7% ) and Bob ( not Sideshow as far as I know....) bought a few more and is up to almost 14%.....

- I think Vector may possibly not be in the drivers seat for much longer? Time this company made its shareholders some money :)
That will be good. Maybe even get directors who have a personal stake in the company, and not demand such high directors' fees.

[Coles Killer]

By my rough calculations from their annual report, the top 5 employees in their management team (CEO, CFO, General Manager, Site Supervisor and one other) earn more than $830k between them. The 5 board members (!?) earn $200k between them. The total employee expense for the company is $1692k, so most of the money NWF spend on staff gets hoovered up before anyone involved in actually looking after the turbines gets paid.

[Harvey Specter]

So if a big generator took them over and cut out those salary/director costs of ~$1m, them using a PE of 10, that would increase the value of the company by 10m!

This company is too small to be listed* and should really be delisted (or ideally, taken over).

* given it is not a growth company and its selling price is determined by the market and volume generated determined by wind, it should really try to minimize all costs not directly related to keeping those turbines turning. Seriously, if this company wasn't listed, there is no reason why the CEO, CFO, GM and one of the Directors couldn't be the same person (only need three directors - one executive, one shareholder representative (ideally governance specialist) and one independent (ideally engineer).

[Crackity]

So if a big generator took them over and cut out those salary/director costs of ~$1m, them using a PE of 10, that would increase the value of the company by 10m!

This company is too small to be listed* and should really be delisted (or ideally, taken over).

* given it is not a growth company and its selling price is determined by the market and volume generated determined by wind, it should really try to minimize all costs not directly related to keeping those turbines turning. Seriously, if this company wasn't listed, there is no reason why the CEO, CFO, GM and one of the Directors couldn't be the same person (only need three directors - one executive, one shareholder representative (ideally governance specialist) and one independent (ideally engineer).


Harvey I believe the following shareholder resolution has been accepted by the company for shareholders to consider and vote on at the AGM .....

Shareholders request the Board prioritise the identification of ongoing cost savings to enable the payment of a maiden dividend in 2016"

[Harvey Specter]

Harvey I believe the following shareholder resolution has been accepted by the company for shareholders to consider and vote on at the AGM .....

Shareholders request the Board prioritise the identification of ongoing cost savings to enable the payment of a maiden dividend in 2016"Excellent - should that really need a shareholder resolution though.

[Crackity]

Excellent - should that really need a shareholder resolution though.

You'd think it should be self explanatory wouldn't you! :)

This may be the statement that goes with the resolution .....

This year is the fourth year of full operation of the Te Rere Hau windfarm and the tenth anniversary of New Zealand Windfarms Ltd as a listed company.

The company has yet to pay a dividend.

As noted in the Chairmans Review dated 26 August 2014 -
"There is a continuing difference between the market capitalisation of the Group and the net asset value of the assets on the balance sheet. The Directors believe the reason for the gap is that the market capitalisation is being driven by recent historic performance and a lack of dividend payments resulting in weak market demand"

From this statement it is clear the Directors recognise that a dividend payment ( and ideally ongoing dividend payments) should result in share price growth.

Under the current structure the company is a price taker for electricity produced and thus revenue is dependent on factors mainly outside the influence of the Board. However the Board can directly increase profitability by reviewing and reducing the ongoing cost base of the company.

[Coles Killer]

So if a big generator took them over and cut out those salary/director costs of ~$1m, them using a PE of 10, that would increase the value of the company by 10m!

This company is too small to be listed* and should really be delisted (or ideally, taken over).

* given it is not a growth company and its selling price is determined by the market and volume generated determined by wind, it should really try to minimize all costs not directly related to keeping those turbines turning. Seriously, if this company wasn't listed, there is no reason why the CEO, CFO, GM and one of the Directors couldn't be the same person (only need three directors - one executive, one shareholder representative (ideally governance specialist) and one independent (ideally engineer).

How would shareholders (myself included) buy or sell shares if it was de-listed? I'm all for reducing the cost by delisting if possible but I'm just wondering how it would work...

What irritates me the most about some of the overhead cost from the directors is that for example, Vicki Buck appears to have been on the board since 2005? Might be wrong there, but from my quick sample of the annual reports 2005 / 2011 / 2015 she's a director in all of them, and the whole time the company has been busy destroying shareholder value. I mean honestly, what do you have to do to get yourself voted OFF a board in NZ?

[BlackPeter]

How would shareholders (myself included) buy or sell shares if it was de-listed? I'm all for reducing the cost by delisting if possible but I'm just wondering how it would work...

What irritates me the most about some of the overhead cost from the directors is that for example, Vicki Buck appears to have been on the board since 2005? Might be wrong there, but from my quick sample of the annual reports 2005 / 2011 / 2015 she's a director in all of them, and the whole time the company has been busy destroying shareholder value. I mean honestly, what do you have to do to get yourself voted OFF a board in NZ?

Hi CK, good question (how to trade shares in a de-listed company) - and the answer is: it is difficult (though not impossible) - you just would need to sell or buy your shares privately (TradeMe / newspaper ad anyone)? Obviously - a much more difficult and less transparent market place and hardly any investor protection. As well much more difficult to establish what a fair price would be.

On the other hand ... I took from a recent meeting with some board members that they put the annual listing costs (and I assume related compliance costs) for NWF at roughly $1 million. I haven't checked this number, but if it is true, than this alone would be the difference between NWF writing a loss every year or making a profit and being able to pay dividends. Question is - what do shareholders prefer - a loss making company which is easy to trade, or a money making company, which pays dividends, but is more difficult to trade? I haven't yet made up my mind on this myself, but it is a question worthwhile asking.

Best solution for NWF shareholders would be probably for some larger company just buying NWF out while paying a realistic price ... but than, the number of suitors are obviously limited and they so far don't seem to queue up. If there is anybody who is interested, than they have lots of time to wait (e.g. for the final conclusion of the still not fully resolved court battle with City Council and neighbourhood related to noise issues and resource consent).

Referring to your comments on Vicky Buck ... yes, it is hard to see which (if any value) she added over the last decade to the company, but the same question can probably be asked for many political board placements. On the other hand - at least she put at some stage some of her own money where her mouth is - she bought some 130k shares at a time when the share price was much higher than today (must have bought around $1 per share (Ouch), but can't be sure about the exact price ...). This makes her on the current NWF board the director with the highest personal stake in the company ... quite ridiculous - isn't it? The only other director with some shares in NWF is Derek Walker ... and he holds roughly half of what Vicky is holding. the others never bothered to buy ...

Anyway - AGM coming up, and Vicky's latest 3 year term is coming to a conclusion. Obviously - I don't know, whether she stands again, but there will be this time some alternatives to fill the board vacancy. Given the current mood under shareholders, she might be out by 5pm on AGM day - who knows?

Discl: holding (more shares than Vicky ...) and with an interest in the outcome of this years board elections;

[Crackity]

Hi CK, good question (how to trade shares in a de-listed company) - and the answer is: it is difficult (though not impossible) - you just would need to sell or buy your shares privately (TradeMe / newspaper ad anyone)? Obviously - a much more difficult and less transparent market place and hardly any investor protection. As well much more difficult to establish what a fair price would be.




Unlisted sharetrading platform could be a reasonable compromise?

[Harvey Specter]

Is someone accumulating - price seems to be steadily rising on no news.

[Crackity]

Is someone accumulating - price seems to be steadily rising on no news.

Maybe it is in play? :)

[Harvey Specter]

Maybe it is in play? :)Volumes not that big, lower than average from what I can tell but someone is willing to push up the price.

[BlackPeter]

Is someone accumulating - price seems to be steadily rising on no news.

We have seen a couple of SSH notices recently. I assume these people do see value in the company (though not necessarily with the current board ...). Maybe they still are working on increasing their voting power?

[Jantar]

We have seen a couple of SSH notices recently. I assume these people do see value in the company (though not necessarily with the current board ...). Maybe they still are working on increasing their voting power?
Or perhaps it is the current board trying to increase their voting power in the face of threats to their positions on the board :D

[BlackPeter]

Or perhaps it is the current board trying to increase their voting power in the face of threats to their positions on the board :D

You mean they would want to up their overall voting power from the low base of roughly 200k shares among all of them (this obviously excludes Vectors shares, they are owned by the company ...) ?

Possible - but wouldn't they need to notify if directors buy shares?

[Harvey Specter]

You mean they would want to up their overall voting power from the low base of roughly 200k shares among all of them (this obviously excludes Vectors shares, they are owned by the company ...) ?

Possible - but wouldn't they need to notify if directors buy shares?vector can't move as it is already over 20% (without making a takeover) and directors would have to disclose any purchase sale.

[Coles Killer]

vector can't move as it is already over 20% (without making a takeover) and directors would have to disclose any purchase sale.

I wonder how much Vector have lost on NWF? Can't be pretty.

[Harvey Specter]

I wonder how much Vector have lost on NWF? Can't be pretty.They bought 15m at $1.10 and then another $7m worth in the rights issue so about ~$24m. Current market value of $4.1m

[Coles Killer]

Ouch. Long term investment then :-). What was a company like Vector thinking buying into a wind farm with bleeding edge turbines anyway? All of the gentailers are conspicuous by their absence from this venture.

[BlackPeter]

Ouch. Long term investment then :-). What was a company like Vector thinking buying into a wind farm with bleeding edge turbines anyway? All of the gentailers are conspicuous by their absence from this venture.

Agreed - the turbines had plenty of teething problems - and the jury is still out, whether they are by now fully understood and sorted, though there are some positive indications related to the first part .. as well that they are working through the resolution.

Otherwise - I think the question should be: Why didn't Vector run this wind farm in a much ore efficient way? If you look at it - two out of the five board positions are filled with Vector directors (Simon MacKenzie and Michael Stiassny) and Chris Saddler (the CEO) comes out of the same stable (ex-Vector man).

There are obviously plenty of things which could be improved, but just for starters ..

Integrating NWF into Vector (without changing anything else) would save the separate listing costs (roughly one million according to a recent chat I had with one of the board members). This alone would make the company profitable.
Re-organising NWF alone (by reducing the bureaucratic management overhead) could probably save some 300 to 400k and make it profitable.
Turbines are still operating below the designed power output. Increase the power output by just 10 percent (quite conservative and still ways below the designed power output - 30% should be possible) and the wind farm is profitable;
Come to a peaceful agreement with city council and neighbors and save (roughly) 500k pa in lawyer and court cost - and hey, the wind farm would be profitable.
Not to mention the (probably not just in hindsight) crazy lease agreement for the line equipment - paying basically more than 10% for another 15 years or so ...
Obviously - there are other things which could be improved as well - but just tackling one of the issues above would turn this company from a money drain into a cash cow.

Not sure, what Vectors strategy is - and speculating on it might bring me into dangerous waters ... Do your own speculation!

So many things to do ... and it appears the current (de facto Vector dominated) board decided to wait instead for more wind and higher electricity prices ... maybe not the best strategy ...

[Coles Killer]

Agreed - the turbines had plenty of teething problems - and the jury is still out, whether they are by now fully understood and sorted, though there are some positive indications related to the first part .. as well that they are working through the resolution.

Otherwise - I think the question should be: Why didn't Vector run this wind farm in a much ore efficient way? If you look at it - two out of the five board positions are filled with Vector directors (Simon MacKenzie and Michael Stiassny) and Chris Saddler (the CEO) comes out of the same stable (ex-Vector man).

There are obviously plenty of things which could be improved, but just for starters ..

Integrating NWF into Vector (without changing anything else) would save the separate listing costs (roughly one million according to a recent chat I had with one of the board members). This alone would make the company profitable.
Re-organising NWF alone (by reducing the bureaucratic management overhead) could probably save some 300 to 400k and make it profitable.
Turbines are still operating below the designed power output. Increase the power output by just 10 percent (quite conservative and still ways below the designed power output - 30% should be possible) and the wind farm is profitable;
Come to a peaceful agreement with city council and neighbors and save (roughly) 500k pa in lawyer and court cost - and hey, the wind farm would be profitable.
Not to mention the (probably not just in hindsight) crazy lease agreement for the line equipment - paying basically more than 10% for another 15 years or so ...
Obviously - there are other things which could be improved as well - but just tackling one of the issues above would turn this company from a money drain into a cash cow.

Not sure, what Vectors strategy is - and speculating on it might bring me into dangerous waters ... Do your own speculation!

So many things to do ... and it appears the current (de facto Vector dominated) board decided to wait instead for more wind and higher electricity prices ... maybe not the best strategy ...

Increase the power output by 10%? 30%??? You're telling me that there is a way to get those turbines to make more power? Forgive my skepticism but surely if it were that easy... they would have done it already?

[Jantar]

Increase the power output by 10%? 30%??? You're telling me that there is a way to get those turbines to make more power? Forgive my skepticism but surely if it were that easy... they would have done it already?
Increasing the turbine output is not difficult. Power is simply Torque x Rotational Speed. The speed is pretty well fixed, but the torque can be increased by changing the pitch of the blades. The downside is that although more power may be obtained it would likely be over a smaller range of wind speed, and may therefore result in lower energy output overall.

Also, with the Windflow turbines there is a complex coupling that ensures that the blades are equally stressed, and it may be that this is where some of the power loss is coming from. PSE would be able to answer this better, but unfortunately the Mod told him to go away (Banned).

[James108]

Increasing the turbine output is not difficult. Power is simply Torque x Rotational Speed. The speed is pretty well fixed, but the torque can be increased by changing the pitch of the blades. The downside is that although more power may be obtained it would likely be over a smaller range of wind speed, and may therefore result in lower energy output overall.

Also, with the Windflow turbines there is a complex coupling that ensures that the blades are equally stressed, and it may be that this is where some of the power loss is coming from. PSE would be able to answer this better, but unfortunately the Mod told him to go away (Banned).

Yea sure, increasing the turbine output is as simple as 6th form physics.

[Jantar]

Yea sure, increasing the turbine output is as simple as 6th form physics.Well, a touch more complex in practice, but the basic principle is only high school level.
In our company we are having that very debate at the moment. Some hydro turbines are due for new runners. Do we go for more efficiency (more power) over a smaller flow range, or do we opt for more flexibility to cope with more wind generation at reduced efficiency (less power), or do we replace with exactly the same as we have now?

[BlackPeter]

Increase the power output by 10%? 30%??? You're telling me that there is a way to get those turbines to make more power? Forgive my skepticism but surely if it were that easy... they would have done it already?

Hi CK, interesting you don't comment on the other savings opportunities I mentioned. If you are holding - are you happy for the board splashing your money away?

Anyway - skepticism is always good ... particularly towards a board destroying over the last 10 years roughly 90% of shareholders money.

So lets look at what the board told us .... and what the facts are:

From the 2013 annual report:

Output is modelled on volumes of 130.000 GWh, a reduction from 2012 which applied 152.765 GWh, being the P50 (average expected generation) measurement from the Parsons Brinkerhoff Power modelling. This reduction reflects an initial assessment of reduced power curve performance and varying turbine outputs as a consequence of location.

The board promised us (based on the report of some industry specialists) an average annual power output for this wind farm of nearly 153 GWh pa.

The board revised their opinion in 2013 down to 130 GWh pa (I couldn't find more in-depth information than above given about their change in opinion)

The wind farm produced in the last 4 years (of full time production) an average of 116.5 MWh pa - and the peak production was 123 GWh in FY2015;

Which means the wind farm runs in average at 76.5% of designed power output and / or 90% of for whatever reason revised power output.

Still think that a 10% (or higher) increase would be that unachievable?

Sure - apparently the wind came over the last 4 years from the wrong direction ... apparently not long enough to establish a means value - and who knows how long this ill-spirited mood of mother nature might continue. The board didn't tell us which period of time is long enough to reach "average" wind conditions - i.e. as far as I am concerned they can tell us the next 10 years (or until they exhausted all shareholder funds) that unfortunately the time period is not long enough to reach average wind conditions).

What I don't see them doing is to adapt our wind farm to the existing wind conditions (instead of waiting for an average which might never eventuate) - and as others already stated on this thread - it wouldn't be rocket science to do that.

Some changes might be quite cheap ... and others (e.g. modifying blades / different gear boxes) quite expensive. However - given that we have 97 turbines ... nobody would stop them to at least trial promising solutions with initially a small number of turbines. I hear Windflow developed in the meantime an improved generation of turbines (PSE pointed this out when he was still around) - maybe something worth a trial or an opportunity to learn from?

[BlackPeter]

Operational data for the first quarter released:

https://www.nzx.com/files/attachments/222651.pdf

Electricity produced down compared to last year (-0.9%)
Power price down (-3%)
however - pleasing to see the
Turbine availability up to 97.3%.

Glad to see availability going up - I think this is the best number ever ... sort of indicting that they might be on the right track with replacing key turbine components ...

However - another quarter with below average wind flow ... it might need a lot of wind to get this wind farm at any stage into the calculated "average" conditions. Reducing the cost (e.g. for the huge administrative overhead, reviewing alternative solutions to ongoing litigation and reviewing the need for ongoing NZX listing) might be a safer option to bring the company into the black.

[Jantar]

......
Sure - apparently the wind came over the last 4 years from the wrong direction ... apparently not long enough to establish a means value - and who knows how long this ill-spirited mood of mother nature might continue. The board didn't tell us which period of time is long enough to reach "average" wind conditions - i.e. as far as I am concerned they can tell us the next 10 years (or until they exhausted all shareholder funds) that unfortunately the time period is not long enough to reach average wind conditions).......

This is where the board and management of NWF keep making the same mistake in their planning. In anything to do with climate or hydrology (wind is from climate) then mean data should never be used. It is median data that is important. I do not have the operating parameters for the WF500 turbines, so I shall use Meridians Vestas as an example.

The Vestas start producing power at a wind speed of 5 m/s and self feather at 20 m/s (18 - 72 kmh) and produce their best output at 19 m/s. The site has a median wind speed of 15 m/s. So lets say that over a 10 day period the wind speed in m/s is 75, 10, 10, 10, 10, 10, 9, 8, 5, 0. That would give a mean wind speed of 15.1 m/s which is perfect and should have produced 4900 MWh. But there would only have been 720 MWh of electricity produced as the wind was only above mean a single time and even then was too strong. On 2 days it was too light. The median wind speed of 10 m/s would have shown this much better as 720 MWh produced.

I admit I have cherry picked numbers to illustrate the example, but in general terms the true mean wind speed will only be exceeded on around 33% of occasions and will always overestimate the median by a significant amount. So it doesn't matter "which period of time is long enough to reach "average" wind conditions ...... that unfortunately the time period is not long enough to reach average wind conditions" The wind farm will never perform to average wind conditions.

I should add that Meridian and Trustpower both employ full time hydrologists/climatologists and do not make this rookie mistake. NWF is not big enough to employ someone in this capacity full time, but they should at least ask for assistance in this matter.

[Harvey Specter]

I should add that Meridian and Trustpower both employ full time hydrologists/climatologists and do not make this rookie mistake. NWF is not big enough to employ someone in this capacity full time, but they should at least ask for assistance in this matter.Given the turbines are already installed, is there any point. The wind will blow or it wont. A climatologist will just be another cost.

[Jantar]

True. But a one-off consultation on wind speed measurement, forecasting and statistical application may allow the board and management to get their forecasts, and hence planning, more accurate. They will continue to make a loss if they are planning on xxx MWh per year when the real number is 20% less than that.

[Harvey Specter]

True. But a one-off consultation on wind speed measurement, forecasting and statistical application may allow the board and management to get their forecasts, and hence planning, more accurate. They will continue to make a loss if they are planning on xxx MWh per year when the real number is 20% less than that.Maybe but it doesn't take an expensive consultant to say we have never generated more than 110Gw so that should be our forecast. Stretch goals based on increasing availability and maybe efficiency depending on what the engineers are planning for that year. Unless you are planning on giving God a bonus, then no point having stretch goals for wind speed and direction. Run it lean and only try to control things you can control.

[BlackPeter]

Interesting volume and SP increase (up to 7 cents) today. I am sure the AGM will be interesting ....

[Crackity]

Interesting volume and SP increase (up to 7 cents) today. I am sure the AGM will be interesting ....

What date is it again BP - must put it in my diary :)

[BlackPeter]

What date is it again BP - must put it in my diary :)

November 24, 3 pm - somewhere in Auckland. They didn't specify the venue yet ... maybe they want to wait to fathom the interest - they might need a larger place this time ;) - or maybe a smaller place, if some of the people who used to accumulate keep buying.

Anyway - I booked my tickets - i.e. will be there (subject of course to god's will and Air New Zealand's discretion ...).

[Crackity]

maybe they want to wait to fathom the interest - they might need a larger place this time ;) - or maybe a smaller place, if some of the people who used to accumulate keep buying.
.

Ho ho ho :) - wouldn't dream of missing the fun!

[Coles Killer]

BP, I didn't mention your other points because they make sense - but I still question the 10-30 percent improvement in power output, because to my mind you were referring to the approx 130GWh output of the station each year, rather than the power output at any given instant, correct? (Technically speaking GWh is energy rather than power thank you Jantar et al.). So in other words it should meet the 150GWh designed for, but my point is that this is a phenomenal improvement over present performance, so how can this be achieved in practice?

[BlackPeter]

BP, I didn't mention your other points because they make sense - but I still question the 10-30 percent improvement in power output, because to my mind you were referring to the approx 130GWh output of the station each year, rather than the power output at any given instant, correct? (Technically speaking GWh is energy rather than power thank you Jantar et al.). So in other words it should meet the 150GWh designed for, but my point is that this is a phenomenal improvement over present performance, so how can this be achieved in practice?

Look CK, I am not an expert in wind mill design and optimisation - and if I would be, than I have still no access to the design information for the NWF wind farm which I would need to make improvement suggestions ...

And - yes, we are talking about electrical energy generated per year. Easily distinguishable if looking a the unit. GWh would be power (well, this would be lots with a 500kw turbine ...;)), GWh p a would be electrical energy generated per year.

What I am saying is that highly paid experts actually predicted a much higher annual energy output for this wind farm than it actually delivers. The original technical report suggested an output of in average more than 150 GWh per year, the board reduced this number some years later to in average 130 GWh per year, and the actual delivered energy output is in average (over the last 4 years) 116.5 GWh pa.

I think it would be worthwhile to understand why the wind farm delivers significantly less power than it has been designed for - and so far I haven't seen a plausible answer. Did you?

Why do you think that the designed energy output is so far off from the real numbers? Experts not worth their money in the first place - or alternatively some design issues which could be mitigated? I don't know (yet), but in practice it might be a bit of both ... and only after understanding the reasons can you (or I) make sensible and economically feasible improvement suggestions.

[BlackPeter]

different company ... but interesting to look at Meridians monthly numbers:

https://www.nzx.com/companies/MEL/announcements/271793

Of particular interest: increasing power demand (+1.8% on September 2014 and +2.3% on last 12 months) as well as power futures for 2019 trading at a premium to the (already improved) 2018 futures.

As well - national hydro storage now below long term average (though just slightly) and inflows well below average - this might give power prices a notch up if we are looking forward to a long and dry El Nino summer (as Niwa claims ...).

[gmatt]

Interesting volume and SP increase (up to 7 cents) today. I am sure the AGM will be interesting ....

Even more interest today .... "buyer" numbers well up .... think you're right about the AGM

[Harvey Specter]

Behind the NBR paywall:


Canada-born kiwi Robert Stone has bought almost 10% of New Zealand Windfarms [NZX: NWF (https://nzx.com/markets/NZSX/securities/NWF)] since June, stock exchange disclosures show.
http://www.nbr.co.nz/article/former-oil-worker-builds-13-stake-nz-windfarms-th-p-180734

[Crackity]

Behind the NBR paywall:

Or you could have read it here a month ago Harvey :)

http://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by BlackPeter http://www.sharetrader.co.nz/images/buttons/viewpost-right.png (http://www.sharetrader.co.nz/showthread.php?p=592686#post592686)
I think you might be right ...;)



LET Securities of Wellington bought most of yesterday's shares and have 19.9 million shares( just under 7% ) though I note the following from their disclosure

Nature of relevant interest(s): Non-beneficial holder as proposed general partner of a proposed limited partnership.

Hmmmm - interesting....

and Bob ( not Sideshow as far as I know....) bought a few more and is up to almost 14%.....

- I think Vector may possibly not be in the drivers seat for much longer? Time this company made its shareholders some money :)

[Crackity]

Maybe it is in play? :)


Yes Crackity - maybe it is? :)

[BlackPeter]

Sounds like they managed to settle at least one of their long ongoing litigation concerns:

https://www.nzx.com/files/attachments/223785.pdf

Still subject to the approval from WTL shareholders, but it sounds like a win - win to me:

NWF gets 1 million dollars in cash plus convertible notes worth 10% of WTL as full and final settlement of the warranty issues. Obviously not covering all the cost (well, depends on how much 10% of WTL proves to be worth ... 70k at current market cap), but getting something out of WTL is better than getting nothing. Both companies can now focus on moving forward (instead of on litigation) and I can't see how an improved relationship between turbine supplier and turbine users could be anything else than beneficial for both.

Good they concluded this case ... consent issues next?

[Jantar]

It is now only 21 days to the NWF annual meeting and so far there is still no mention of the location. Nor any mention of the Agenda, lodging of proxies etc.

What is the minimum period for this?

[BlackPeter]

It is now only 21 days to the NWF annual meeting and so far there is still no mention of the location. Nor any mention of the Agenda, lodging of proxies etc.

What is the minimum period for this?

Last time I checked it was 2 weeks. As well notice on NZX plus putting the info in the mail is sufficient to keep the deadline - no matter, how long the mail needs to arrive.

Though obviously - companies are allowed to give more notice ... and many do.

Having said that - last year the notice went out 3 weeks prior to the meeting. If they stick to this roster, than the notice should be out today or tomorrow.

[Crackity]

Annual meeting - same place as previous - notice of meeting is recommended reading for shareholders! New directors with technical skills standing for election and a resolution that the board is requested to prioritize cost savings to enable payment of a maiden dividend in 2016......

[Crackity]

Trustpower will pay up to $125 million for local power company King Country Energy.
The King Country electricity generator and retailer has about 17,500 customers from Hamilton to Taumarunui and Turangi, and owns four hydro power stations in the region as well as one near Palmerston North.
Between them they generate an average of 191 gigawatts a year.

Based the on the same notional price paid per GW of generation NWF which generated 127gw in the year to June could be valued at 83 million ( or 28.8cps ) - possibly more if Edison did the valuation :)

food for thought eh

[gmatt]

Annual meeting - same place as previous - notice of meeting is recommended reading for shareholders! New directors with technical skills standing for election and a resolution that the board is requested to prioritize cost savings to enable payment of a maiden dividend in 2016......

The existing Board is certainly not looking for new blood!!! Surprising reading ....... I would think the 2 new nominees are just what the company needs (and they are large shareholders).

[Crackity]

The existing Board is certainly not looking for new blood!!! Surprising reading ....... I would think the 2 new nominees are just what the company needs (and they are large shareholders).

The existing board also doesn't support the resolution proposed ( reprinted below...) - seems like it should be a no brainer to me:)

Shareholders request the Board prioritise the identification of ongoing cost savings to enable the payment of a maiden dividend in 2016"

[Jantar]

The existing board also doesn't support the resolution proposed ( reprinted below...) - seems like it should be a no brainer to me:)

Shareholders request the Board prioritise the identification of ongoing cost savings to enable the payment of a maiden dividend in 2016"
The fact that they reject that resolution means they are not qualified to be on the board.

[Crackity]

Meridian Energy chief executive Mark Binns says a new wind farm is one of the options on the table if the country's biggest electricity generator can't convince Genesis Energy to keep open two ageing gas and coal-fired electricity plants at the Huntly power station.

Read more: http://www.3news.co.nz/nznews/meridian-energy-mulling-wind-farm-possibility-2015111214#ixzz3rEuU3veq

hmmm . Interesting.....:)

[Poet]

Meridian Energy chief executive Mark Binns says a new wind farm is one of the options on the table if the country's biggest electricity generator can't convince Genesis Energy to keep open two ageing gas and coal-fired electricity plants at the Huntly power station.

Read more: http://www.3news.co.nz/nznews/meridian-energy-mulling-wind-farm-possibility-2015111214#ixzz3rEuU3veq

hmmm . Interesting.....:)

Hey Crackity, maybe you could let them know where there is an under-priced existing wind farm with resource consent already in place for another 50 (or is it more than 50?) turbines:)

[Joshuatree]

I kinda think Meridian know about the existence of NZW and that it isn't just some farty sheep strung along the ridges on a wire letting rip onto some whirligig wind toys worn on roving shepherds heads:(

[Baa_Baa]

I kinda think Meridian know about the existence of NZW and that it isn't just some farty sheep strung along the ridges on a wire letting rip onto some whirligig wind toys worn on roving shepherds heads:(

You called? Sheeple don't do wind toys JT, too risky could breakdown, or be mired in legal stuff, or be minded by a greedy shepherd. Just keep the grass mown to a nice even consistency beneath the turbines, even the farty ones. lol.

[Poet]

Interesting article (paid, I'm afraid) by Tim Hunter in today's NBR

[Crackity]

Arguably, it is normal that a highly exclusive, self-selecting group might develop characteristic shared behaviours – that is simply the nature of highly exclusive, self-selecting groups.
When the behaviours are positive and useful, it’s all to the good but exclusive, self-selecting groups must be alive to the risk of a negative, self-perpetuating spiral.
That’s why it’s so good to see efforts being made to refresh the ranks of board directors with more diverse appointments.
Still, it remains difficult to break into the directors’ club without an introduction, so Hunter’s Corner was disappointed to see a hostile reaction from the board of NZ Windfarms [NZX: NWF (https://nzx.com/markets/NZSX/securities/NWF)] when two keen shareholders put their hands up for nomination.
The NZX-listed company has been a disappointment for most of its life, having floated at $1 a share in December 2005 as a vehicle for the construction of a windfarm using innovative turbines made by Christchurch company Windflow Technologies.
The shares were trading last week at about 9c, up from recent lows around 5c as investors have sniffed a faint air of hope after its last annual result.
Among them is Singapore-based investor Robert Stone, who has bought 28 million shares since July to take his stake to 10.3%.
Another opportunist is LET Securities, a private investment vehicle involving local investors Deepak Gupta and John Southworth, which bought 20 million shares in September.
We’ll come to the opportunity in a moment but first let’s consider the NZ Windfarms annual meeting, which takes place on November 24 (http://www.sharetrader.co.nz/x-apple-data-detectors://9)in Auckland.
It’s a routine assembly in some respects, with shareholders due to vote on the auditor’s fees and the re-election of incumbent directors Vicki Buck and Michael Stiassny – the latter a representative of 22% shareholder Vector.
New resolutions
However, there are three other resolutions – two from shareholders putting themselves up for election to the board and a third from a shareholder asking the board to prioritise cost savings so a maiden dividend can be paid in 2016.
You can feel their exasperation. It takes a lot for small shareholders to get as far as that.
The company was launched with much optimism about green energy and the potential for Windflow’s two-bladed turbines, but their installation on windswept slopes of the Tararua Ranges revealed serious flaws and years have been spent wrangling over warranties and noise levels.
Share capital invested of $107 million has turned into a business with a current market capitalisation of just $25m.
Shareholder Heiko Mueller-Cajar, an electrical engineer and former senior manager with Tait Electronics, has had enough and thrown his hat into the ring for a seat on the board, arguing, with some justification, that he could hardly have done much worse than those already there.
He is joined in his candidacy by another electrical engineer and shareholder Samuel Viskovic, who describes his professional expertise as the maintenance, inspection and fault investigation of power stations.
On the face of it, they look like motivated and skilled people who might well have some fresh ideas but the incumbent board unanimously recommended shareholders vote against them.
Led by Derek Walker, chairman since the float of NZ Windfarms in 2005, the board said there was a “lack of robustness in the appointment process” and “the additional positions are unwarranted.”
It recommended shareholders support the re-election of Mr Stiassny and Ms Buck.
Mr Stiassny can be seen as a fixture on the board for reasons of hard-boiled expertise and shareholder representation but Hunter’s Corner is struggling to see why Ms Buck should be preferred over the new candidates.
Given the choices available, shareholders are capable of deciding for themselves who to vote for and it would be better for the board to refrain from expressing a preference. And if they are worried about having too many directors, simply ask shareholders to reduce the number permitted in the constitution.
Cleaving to the clique
Surely it is better to encourage shareholder participation and representation than cleave to the consensus of a self-appointed clique.
Be that as it may, the dissidents may have timed their run well. After destroying large wads of value over the years NZ Windfarms looks to be approaching a turning point.
Its last annual report noted the yawning gap between its share price and asset value – the balance sheet gives net tangible assets at June 2015 of 21c a share – and suggested the company’s performance looked likely to start justifying the balance sheet values. If so, the upside from here is substantial.
Meanwhile market talk is hinting at the possibility of a transaction for the company, although its nature is unclear.
It has certainly been relatively costly for such a small windfarm to operate as a standalone listed company, so a takeover could make sense. Whether Vector is keen to continue its wind farm experiment is another matter.
You could forgive the company for wanting to wash its hands of the whole thing, although its interest in battery technology has a potential outlet in windpower.
Quarterly data for NZ Windfarms show it persistently gets well below the wholesale price for its power because it has to sell when the wind blows, not when customers want it. Over the past three years that discount has averaged about 18%.
If the windfarm could be plugged into viable battery storage, that weakness is eliminated.
Suddenly, this exclusive, self-selecting board is starting to look interesting.


thanks Poet ;)

[Crackity]

Oops - should have highlighted this bit below from the article ....it would not surprise me at all if Vector sold their holding pre AGM ( triggering a takeover ) as a face saving measure for the incumbent board members - their Chairman not being re-elected to the board of a company they have a 22% shareholding in may be embarrassing. Or maybe it will be water off a ducks back? Answers coming soon ;)


Meanwhile market talk is hinting at the possibility of a transaction for the company, although its nature is unclear.

[Crackity]

I do believe NWF is going over 10c today.....

hmmmm, interesting ;)

[Crackity]

Currently a seller at 50 cents - even I think that is a bit high :)

[Grimy]

I only need it to get to 24 cents to break even...........

[Jantar]

I only need it to get to 24 cents to break even...........
I'm thinking of selling half my holding. Then the other half will have cost me $0.00

[Crackity]

I only need it to get to 24 cents to break even...........

Agm next week Grimy - make your vote count and who knows ;)

[Grimy]

Voted online earlier in the week.

[Crackity]

Voted online earlier in the week.

Nice work Grimy :)

I note the share price is up to 11.5 cents on reasonable volume.

Hmmm, interesting ;)

[Jantar]

https://www.nzx.com/companies/NWF/announcements/273932
I hope that means two new directors are in. The writing on the wall was too great for the two retiring directors and it appears they didn't want to wait for the vote.

Hoping this is congratulations to the two new directors.

[Crackity]

Results of AGM voting -

No Directors were re-elected or elected so the Board is now 3 members.


NZ Windfarms Limited (“NWF”) advises the results of resolutions from the Shareholders AnnualMeeting held in Auckland on Tuesday 24 November 2015.
As previously advised, Vicki Buck and Michael Stiassny advised that they would retire as directors ofthe Company at the conclusion of the Annual Meeting and not seek re-election. ConsequentlyResolutions 2 and 3 in the Notice of Meeting were not put to the meeting.
The results of the polls held on the remaining resolutions were:




Resolution


For


file:///page1image9064
file:///page1image9520 Against


file:///page1image11136 file:///page1image11560 % For


Result




1


Remuneration of Auditor
That the Board be authorised to fix theauditor's fees and expenses for thefinancial year ending 30 June 2016.


199,580,669


97,900


99.95


Carried




4


Election of Director
That Heiko Mueller-Cajar be elected as aDirector.


file:///page1image24200 17,178,835


144,665,274


10.61


NotCarried




5


Election of Director
That Samuel Viskovic be elected as aDirector.


47,242,905


file:///page1image33688
152,719,069


23.63


NotCarried




6


Shareholder Resolution
That the Board prioritise theidentification of ongoing cost savings toenable the payment of a maiden dividendin 2016.


125,698,304


71,055,738


63.89


Carried








Will be interesting to see what happens next ;)

[Harvey Specter]

Given the low vote for the new directors, it would have been interesting to see if Stiassney and Buck would have got through. Only 3 will be good to cut costs but assume they will now look for someone new to fill the void.

[Jantar]

Resolution 6 being carried is effectively a vote of no confidence in the entire current board. It is merely stating what should be any board's duty of care, yet the current board recommended that it not be carried.

[Crackity]

Resolution 6 being carried is effectively a vote of no confidence in the entire current board. It is merely stating what should be any board's duty of care, yet the current board recommended that it not be carried.

I think you are correct Jantar.

This play is only up to the end of Act 2 - Act 3 still to come....;)

[Joshuatree]

So how will this next act play out in what time frame and who can activate it, major shareholders?Thanks.

[Crackity]

So how will this next act play out in what time frame and who can activate it, major shareholders?Thanks.

Well Josh

1. who knows . Maybe Vector will sell their 22% stake triggering a takeover / maybe Vector will bid for the rest of the company ( also triggering a takeover ) / maybe a holder with more than 5% will call a Special General Meeting and attempt to remove the existing Board / maybe the existing Board will cut costs and start paying dividends to shareholders.

2. Generally the time between Acts is time for an ice cream or 2

3. Yes

;)

[Crackity]

Harvey - this is from PSE ( ex sharetrader)
who placed his hat in the ring to be one of the new directors.

So frustrating.
Maybe we should tell Harvey that we actually had a great victory.
1. We gave the cornerstone shareholder of an underperforming company a humiliating xxxxxx by xxxxxxx off the board. Directors don't resign the day before the AGM.
(Is it legit to withdraw a resolution the day before it is to ne voted on at the AGM?)
2. 67% of shareholders voted and are holding their directors to account. What's a typical agm turnout?
3. Vector votes it's shares against any independant directors, so the numbers don't tell the story. I had more than 50% of non vector shareholders.
4. If a new board was proposed rather than activist directors on a hostile board the resolutions to elect would likely have found more support.
Under the circumstances the level of support was overwhelmingly positive for change. This company is going to start working for it's shareholders so all the resolutions were a great success.

PSE - thought I should redact your more 'colourful' bits.....see ya round ;)

[Joshuatree]

Fantastic guys thats great news doing what you have, congrats all being assertive and using your voices/votes.:t_up:ice creams all round (act two)are good lickers.

[Harvey Specter]

I wasn't meaning disrespect - just saying with Vectors vote, the incumbent might have survived. Wouldn't have been a good look though.

Still it was a good effort from those who tried and while they weren't 'successful', ultimately they have changed the course of the company so was a success.

[JAYAY]

I was at the AGM and waited until until I heard the two new would be directors speak before I filled in the voting form.
The two newbies did not get my vote. I could not imagine either them representing NWF and dealing with the difficulties NWF has faced.
Give me Michael Stiassny any day. You can have all the engineering degrees in the world and it won't make you a good director.

[BlackPeter]

I was at the AGM and waited until until I heard the two new would be directors speak before I filled in the voting form.
The two newbies did not get my vote. I could not imagine either them representing NWF and dealing with the difficulties NWF has faced.
Give me Michael Stiassny any day. You can have all the engineering degrees in the world and it won't make you a good director.

Hi Jayay,

We probably agree that Michael Stiassny was not the worst of the directors sitting on the NWF board - bad luck for him, that his number was up.

On the other hand - if you think that Michael Stiassny is such a fantastic director - he was on the NWF board for at least the last 8 (or was it 10?) years and had for the better part of this time through Vector de facto control of the board (if you count Chris as ex Vector man into the Vector team). Isn't this enough time for a good director in full control to do his magic?

The company destroyed during his directorship roughly 80 percent of share holder capital. Is this how you recognise a good director? Sure - Michael Stiassny is one of the rock stars in the NZ board world (and he has several times per week a performance in a board room close to you) - and you might think about rock stars what you want. One of his problems is that he holds that many director positions (must be close to 30), that I am wondering how much time he can put into a dust corn like NWF.

Maybe NWF does not need a rock star, but just somebody who has the time to do the work ...

Anyway - AGM is over, market interest seems to drop for the time being ... and we are all waiting for the next act of the drama ...

[Crackity]

Southern Generation buys North Island power station for $100m|


Last updated 18:34 03/12/2015
BEN MACK AND PHIL MCCARTHY
1 (http://i.stuff.co.nz/business/74612659/southern-generation-buys-north-island-power-station-for-100m#comments)

http://static2.stuff.co.nz/1449131878/104/13314104.jpgInvercargill MP Sarah Dowie, PowerNet chief executive Jason Franklin and Pioneer Generation chief executive Fraser Jonker celebrate the opening of the Pioneer Generation Flat Hill Wind Farm near Bluff in August.
JOHN HAWKINS/FAIRFAXNZ


Southern Generation has bought a hydroelectric power station in the Bay of Plenty for about $100m, adding to its two existing windfarm assets.
Southern Generation consists of southern lines companies The Power Company Ltd (TPC) and Electricity Invercargill Ltd (EIL), and Central Otago-based Pioneer Generation Ltd, and is a generation investment partnership.
The purchase of the Aniwhenua hydro-electric power station in the Bay of Plenty, following a sale agreement with Nova Energy, adds to Southern Generation's two existing southern windfarms at Mt Stuart, near Milton and Flat Hill, near Bluff, and was understood to be a deal worth about $100m.


that combination of a wind generation asset ( or two ) and a hydro generation asset in one portfolio seems very sensible to me - and I note they are at opposite parts of the country :)

hmmm, interesting ;)

[Harvey Specter]

Southern Generation buys North Island power station for $100m
From what i saw, Aniwhenua was a dog. Very little storage capacity so effectively a run of the river hydro. My guess is if the deal way worth anywhere close to 9 figures, Nova would had to have been offering a very generous power purchase agreement.

NWF would generate similar levels of electricity at about 1/5 the purchase price.

[JAYAY]

http://www.stuff.co.nz/manawatu-standard/opinion/74819741/opinion-manawatu-looks-like-new-zealands-wind-farm-capital

Have a look at this. A glimpse at the politicking going on. Oponents include a former mayor, a former city councillor and the council's own lawyer seems to be getting involved with his own personal opinions. A nice little earner for him keeping the pot on the stove.

[BlackPeter]

http://www.stuff.co.nz/manawatu-standard/opinion/74819741/opinion-manawatu-looks-like-new-zealands-wind-farm-capital

Have a look at this. A glimpse at the politicking going on. Oponents include a former mayor, a former city councillor and the council's own lawyer seems to be getting involved with his own personal opinions. A nice little earner for him keeping the pot on the stove.

Interesting article - thanks for sharing.

It is a disgrace that the three major wind farm operators around Palmerston north can't even agree on a common industry proposal re noise profile and no building zones. Highly unprofessional behaviour. Obviously - it is not all NWF's fault - they have of the three the smallest financial clout, but it casts serious doubts over the social and political competence of all three operators. Coming with an agreed industry proposal to a plan hearing would have been common sense, instead of choosing to present a picture of dissent.

I assume NWF's board was over the last 12 months or so too busy with stone walling, than to worry about talking with their peer operators and the city council. Hey - why would they? Much more fun to use shareholder funds to drag it afterwards all through the courts.

Not so sure what the excuse of the other operators is?

[BlackPeter]

Q2 financials out.

https://www.nzx.com/files/attachments/228378.pdf

Output basically stable (makes you wonder about the much higher but never reached long term average they computed for the IPO). Availability stable 96.7% sounds ok-ish and is certainly better than it used to be (thank god), however average power price dropped compared with first HY 2015 by 8.4%, resulting in an 8.6% drop in revenue. Ouch.

Only things left for shareholders is to hope for better power prices (and they might come) and a better board ... time will tell, whether the new shareholders suss something out, and whether it is good for all of us.

[Poet]

Some progress

Positive cashflow for 1/2 year
NPAT increased on back of written back impairment charges
Board review completed, new members and new chair.

Unresolved though, are the resource consent issues (although there now seems to be a way forward) and the lease financing arrangements.

Anyway IMO moving in the right direction now

https://www.nzx.com/companies/NWF/announcements/278394

[BlackPeter]

Some progress

Positive cashflow for 1/2 year
NPAT increased on back of written back impairment charges
Board review completed, new members and new chair.

Unresolved though, are the resource consent issues (although there now seems to be a way forward) and the lease financing arrangements.

Anyway IMO moving in the right direction now

https://www.nzx.com/companies/NWF/announcements/278394

True, we have seen worse. Shouldn't however be too impressed by the "one off" profit.

The $1 million full and final payment from Windflow is just that, unless we manage to move into the treatment settlement industry;) and you can increase the valuation of your plant based on improved futures only so often ...

Their AGM promise to review the lease agreement ended (again) in a "sorry - nothing we can do".

Re the solution of the consent issues ...


We have met with the Palmerston North City Council’s advisors and now expect the Palmerston North City Council to initiate a review of our Consents under section 128 of the Resource Management Act. This process will likely include a hearing before a commissioner and submissions from interested parties.

Sure, it is good that they at least managed to meet with Council advisors ... perhaps they even talked with them? However - the described process does not sound in my view as progress - it is just what the resource management act requires. Don't need to meet the council to find that out.

Similar to somebody caught by the police saying "I met the state attorney and there will be now a process in front of the court probably involving a hearing" ... sure, good this is happening, but is this at this stage really a win for the accused?

[Jantar]

NWF 3rd quater information has been released and includes this statement:
"Electricity output for the third quarter of the 2016 financial year was 29,892 MWh, 30.7 percent above the previous corresponding period ("PCP"). The output was below forecast as it was in the PCP. Revenue from electricity sales was 5.5 percent lower than the PCP at $1.786 million, due to lower spot electricity prices. The average electricity price received from the Wholesale Electricity Market was 27.7 percent lower, at $59.75 per MWh."

When will the NWF management learn that prices and intermittent generation such as wind are inversely correllated. High wind generation causes low wholesale prices. Wind generation up; wholesale prices down; and by an almost equal amount.

https://www.nzx.com/files/attachments/233725.pdf

[BlackPeter]

Quarterly operational data are out: https://www.nzx.com/files/attachments/233725.pdf;

Output up (which is good), availability basically constant - they even managed to achieve (for the first time ever) the (after several post-planning downgrades) "planned for" annual production of 130 GWh pa. Unfortunately are the good operational data accompanied by low electricity prices (bugger), i.e. overall results down compared to last year.

Looks like the operation moves into some sort of steady state with teething problems resolved and the team knowing how to maintain the plant - however, as long as the board does not resolve the outstanding "sore thumbs" (consent issues, huge lease costs, neighbourhood conflicts, expensive management overhead, geographically dispersed team - without operational need or benefits) is the only option for long suffering shareholders probably just the usual: hope and pray!

On the other hand ... how do they say - each company has the board they deserve ... if we would want a better board we would have picked one - wouldn't we ...?

Discl: holding (too many ...) - and didn't vote for the current board ...

[Joshuatree]

NWF 3rd quater information has been released and includes this statement:
"Electricity output for the third quarter of the 2016 financial year was 29,892 MWh, 30.7 percent above the previous corresponding period ("PCP"). The output was below forecast as it was in the PCP. Revenue from electricity sales was 5.5 percent lower than the PCP at $1.786 million, due to lower spot electricity prices. The average electricity price received from the Wholesale Electricity Market was 27.7 percent lower, at $59.75 per MWh."

When will the NWF management learn that prices and intermittent generation such as wind are inversely correllated. High wind generation causes low wholesale prices. Wind generation up; wholesale prices down; and by an almost equal amount.

https://www.nzx.com/files/attachments/233725.pdf

How do they deal with that predicament Jantar; some sort of hedging, pre selling? cheers JT

[BlackPeter]

How do they deal with that predicament Jantar; some sort of hedging, pre selling? cheers JT

They don't. Hard to pre sell electricity if you can't predict whether you are able to generate at the time you sold (is the wind blowing or not) ... and hedging (basically buying an insurance contract) is too dear given the undiversified risk portfolio they have (just wind power and just one location).

A great natural hedge would be to work together with a hydro generator ... but this obviously costs money as well.

Their strategy is to tell share holders regularly that they can't control neither wind nor power prices - so far this strategy worked out for management and the board. They are still in their cushy jobs - its just the share holders who pay.

[Jantar]

How do they deal with that predicament Jantar; some sort of hedging, pre selling? cheers JT
Yes it is through hedging, but not through pre-selling as they seemed to indicate at last year's AGM. Rather it is by forward buying a hedge for around half the energy they expect to generate, and making a price gaurantee (at more than their purchase price of course) to an end user or users for that quantity, say a university or large coolstore etc. Thus there is a continuous income, even when there is no wind, and a fixed price for some of their generation even when there is a lot of wind.

Contact, MRP and Genisis all offered such hedges to the market early last year, and there were no takers. As a result both Otahuhu and Southdown have been shutdown, and it could be a while before such an opportunity is given to the market again.

[BlackPeter]

Yes it is through hedging, but not through pre-selling as they seemed to indicate at last year's AGM. Rather it is by forward buying a hedge for around half the energy they expect to generate, and making a price gaurantee (at more than their purchase price of course) to an end user or users for that quantity, say a university or large coolstore etc. Thus there is a continuous income, even when there is no wind, and a fixed price for some of their generation even when there is a lot of wind.

Contact, MRP and Genisis all offered such hedges to the market early last year, and there were no takers. As a result both Otahuhu and Southdown have been shutdown, and it could be a while before such an opportunity is given to the market again.

Interesting - just wondering where your information about NWF's hedging is coming from. Last time I talked with Chris Saddler as well as with some of the board members (prior to last years AGM) they said that they looked into hedging, but that their was no business case.

[Jantar]

Interesting - just wondering where your information about NWF's hedging is coming from. Last time I talked with Chris Saddler as well as with some of the board members (prior to last years AGM) they said that they looked into hedging, but that their was no business case.
From this quote from the Chairman's address https://www.nzx.com/files/attachments/225473.pdf
"We regularly assess whether to hedge some of our output but our analysis to date has shown that this is not likely to enhance average revenue. Because wind farm output is not controllable, traditional hedging products cannot provide the expected revenue stability that can be achieved from generators with plant that can be controlled or those with a mix of plant types. Offers received for generation following hedges have been at a substantial discount to average prices. Chris will discuss this and provide examples in his presentation. "

It shows that they have only considered "sell" hedges and not "buy" hedges. I.e. They are only looking at one side of the coin. It would never make sense for an intermittent producer to hedge output, but it certain would make sense to hedge input. They have forgotten that hedges work in two directions, but they have only looked at one of them.

[BlackPeter]

From this quote from the Chairman's address https://www.nzx.com/files/attachments/225473.pdf
"We regularly assess whether to hedge some of our output but our analysis to date has shown that this is not likely to enhance average revenue. Because wind farm output is not controllable, traditional hedging products cannot provide the expected revenue stability that can be achieved from generators with plant that can be controlled or those with a mix of plant types. Offers received for generation following hedges have been at a substantial discount to average prices. Chris will discuss this and provide examples in his presentation. "

It shows that they have only considered "sell" hedges and not "buy" hedges. I.e. They are only looking at one side of the coin. It would never make sense for an intermittent producer to hedge output, but it certain would make sense to hedge input. They have forgotten that hedges work in two directions, but they have only looked at one of them.

So, yes - he said with many words that they don't hedge. This is consistent with my information.

[Jantar]

So, yes - he said with many words that they don't hedge. This is consistent with my information.
Ah! I see we have cross communication.
NO, NWF do not hedge, but they should to deal with the situation of high intermittent generation causing the low prices. I described how that would work, but didn't intend to convey the idea that NWF actually do this already.

[BlackPeter]

Ah! I see we have cross communication.
NO, NWF do not hedge, but they should to deal with the situation of high intermittent generation causing the low prices. I described how that would work, but didn't intend to convey the idea that NWF actually do this already.

Glad we established that they don't hedge. And yes, whether they should hedge is a different question ... and I must admit that I don't understand enough of the industry to be able to false the supposed experts.

However - given that hedging is basically like buying an insurance contract could I imagine that hedging against something which is basically a normal business event (lower wind or wind at the wrong time) is either very expensive or impossible. Remember - whoever is offering the hedge is doing that only because they hope as well to get something out of it.

Happy to be convinced otherwise, but so far do I believe that Chris Saddler had a point that hedging is too dear for them.

If you believe different - why don't you just drop Chris a line? I think he and the board are at current quite motivated to make more money, if they can.

[Jantar]

........

If you believe different - why don't you just drop Chris a line? I think he and the board are at current quite motivated to make more money, if they can.
I think that giving private advice may be a conflict of interest as far as my present employer is concerned.

Hedging is more than just an insurance scheme, it is mainly a revenue leveling system that should work to benefit of both parties involved. There are a large number of hedge products available from time to time; forward contracts on the ASX are just one of them, and probably the least used.

[JAYAY]

https://www.nzx.com/companies/NWF/announcements/281644

Anyone know anything about LET Securities , Deepak Kumar GUPTA and Richard John SOUTHWORTH.

[Poet]

From NBR - behind paywall unfortunately.

Gist is that some shareholders want the board changed (ie Vector influence removed) and an operational review of how the company is being run.

http://www.nbr.co.nz/article/windfarms-investors-set-showdown-vector-th-p-188495

[kiora]

The share price won't be going anywhere until they get some of these monsters
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11632170

[JAYAY]

From NBR - behind paywall unfortunately.

Gist is that some shareholders want the board changed (ie Vector influence removed) and an operational review of how the company is being run.

http://www.nbr.co.nz/article/windfarms-investors-set-showdown-vector-th-p-188495

It beats me why anyone would want Vector influence removed.
It was Vector capital injections that saved the company.
If Vector is in there looking after their own interests (ie maximising company performance) then surely all shareholders benefit.

[Jantar]

......
If Vector is in there looking after their own interests (ie maximising company performance) then surely all shareholders benefit.
Quite correct.
So why are Vector NOT looking after their own interests?

Why are they working against the local council rather than with them?
Why would they have the CEO living and working out of Auckland when all their assets and staff (except for 2) are based in Palmerston North, and costing the company an extra office and travel and accommodation costs?
Why would they have 2 engineers based in Christchurch rather than Palmerston North and costing additional office space along with airfares and accommodation twice a month?
Why would the Vector led board base their budget on mean wind conditions (never met yet) rather than median conditions (met most years) as per industry best practice?
Why would the Vector led board vote against a shareholders' resolution asking them to merely do what is any director's basic obligations?

[BlackPeter]

It beats me why anyone would want Vector influence removed.
It was Vector capital injections that saved the company.
If Vector is in there looking after their own interests (ie maximising company performance) then surely all shareholders benefit.

Well - maybe you just need to look into history: Vector had for a long time de facto the absolute majority in the NWF board despite just holding a meagre 27 (or so) % of shares. Remember - Chris is a Vector man as well (worked for them many years and still has his office at Vector premises), and so is the new chair (working as contractor for Vector). Nothing happens at NWF against Vectors wishes.

Jantar asked a number of very good questions - but just looking into long term SP performance is it hard to pretend that the overwhelming Vector influence did any good to NWF. Sure - they might have their own agenda and a cheap NWF might feature well on that. Question is just - how good is what Vector is doing for the minority share holders?

[JAYAY]

Well - maybe you just need to look into history: Vector had for a long time de facto the absolute majority in the NWF board despite just holding a meagre 27 (or so) % of shares. Remember - Chris is a Vector man as well (worked for them many years and still has his office at Vector premises), and so is the new chair (working as contractor for Vector). Nothing happens at NWF against Vectors wishes.

Jantar asked a number of very good questions - but just looking into long term SP performance is it hard to pretend that the overwhelming Vector influence did any good to NWF. Sure - they might have their own agenda and a cheap NWF might feature well on that. Question is just - how good is what Vector is doing for the minority share holders?

Jantar's questions are loaded with assumptions. The first and last questions are hilarious.
I have no recollection of these questions being asked at the last AGM.

The point I am driving at is who are these people Gupta and Southworth who would want us to lose the clout of a cornerstone shareholder like Vector.
What makes you think these guys can do better?

[Jantar]

Jantar's questions are loaded with assumptions. The first and last questions are hilarious.
I have no recollection of these questions being asked at the last AGM.....
I'm glad you find them funny, but I would question just what assumptions you think they are loaded with?
As for them being asked at the AGM, I can't answer that for all of them as I wasn't there. But the last one was a resolution that was voted on by the shareholders and the directors had recommended that it be voted down. If you read the resolution it was asking no more than the directors prioritise costs in order to start making a profit. Isn't that a core duty of any director?

[BlackPeter]

Jantar's questions are loaded with assumptions. The first and last questions are hilarious.
I have no recollection of these questions being asked at the last AGM.

The point I am driving at is who are these people Gupta and Southworth who would want us to lose the clout of a cornerstone shareholder like Vector.
What makes you think these guys can do better?

Agreed - Jantar's questions are somewhat provocative ... however, if you know the history of the company, it is easy to see where he is coming from. I agree as well, that in some of the cases it is not easy to tell from outside whether the board acted stupid, skirting negligence or incompetent ... and there are of course as well cases which look only stupid in hindsight (e.g. the incredible lease agreement they signed). Fact is however that they didn't had a good hand with council relations, neighbours nor in cutting down the NZ wide empire they intended to build to the Palmerston North Operation, they ended up with. Ah yes - and they didn't had a good hand with some of their financial agreements either.

So - why do you want to protect a board which is reliably losing shareholder money - year after year after year?

Fact is - The Vectra led board destroyed over 10 years roughly 85% of all shareholder capital. Difficult to see how anybody else could have done a worse job.

BTW - if you have been on the last AGM, both of the gentlemen you are referring to have been there as well. And I agree, nobody knows, whether they can do better, however - their agenda might be better aligned with the agenda of other minority share holders?

I agree however, that it would be good to get some more info from them as well as from the old board, before we need to make a decision, but I certainly will give them my ear and listen ... and I must say as well that the stone walling of the old board so far didn't show any greatness or interest for the share holders - just old boyz looking after themselves.

[JAYAY]

I'm glad you find them funny, but I would question just what assumptions you think they are loaded with?
As for them being asked at the AGM, I can't answer that for all of them as I wasn't there. But the last one was a resolution that was voted on by the shareholders and the directors had recommended that it be voted down. If you read the resolution it was asking no more than the directors prioritise costs in order to start making a profit. Isn't that a core duty of any director?

The question assumes that they don't want to make a profit. That's what is funny.
Actually I think the end game for Vector is to achieve profitability to the point that the farm be sold to recoup their investment.
I don't think for a moment that Vector really wants to own a wind farm.

[Jantar]

The question assumes that they don't want to make a profit. That's what is funny......
Oh, I see. I am sorry that you saw that as an assumption. I thought it was a given. ;)

[BlackPeter]

Looks like Vector is waking up and might have even noticed that maybe not everybody under the remaining 77,89% of share holders they so far choose to ignore is happy with them running the show:

https://www.anzsecurities.co.nz/DirectTrade/dynamic/announcement.aspx?id=4146821

Sounds like a wee confidence vote, just to test the power balance. Let the games begin!

[Poet]

Looks like Vector is waking up and might have even noticed that maybe not everybody under the remaining 77,89% of share holders they so far choose to ignore is happy with them running the show:

https://www.anzsecurities.co.nz/DirectTrade/dynamic/announcement.aspx?id=4146821

Sounds like a wee confidence vote, just to test the power balance. Let the games begin!

Yes interesting times indeed.

Can someone correct me if I'm wrong but doesn't Vector have the right to appoint one director under the terms of the share subscription agreement a few years back

[BlackPeter]

Yes interesting times indeed.

Can someone correct me if I'm wrong but doesn't Vector have the right to appoint one director under the terms of the share subscription agreement a few years back

good question ... and not sure. However - so far I can remember have the Vector directors always been elected by the AGM, i.e. if they have the right to appoint one director, than so far they didn't use this right.

[Jantar]

Is there a problem with NWF's wind farm? Both Te Apiti and Tararua right next to it are generating strongly and the Wholesale price is currently $92. But NWF are generating zilch

Edit: All is good. . 15 minutes after I posted they started generating again. . http://203.114.161.10/trh.htm

[BlackPeter]

Is there a problem with NWF's wind farm? Both Te Apiti and Tararua right next to it are generating strongly and the Wholesale price is currently $92. But NWF are generating zilch

Edit: All is good. . 15 minutes after I posted they started generating again. . http://203.114.161.10/trh.htm

Looks more like a SW Glitch. Check again ... production now seems to be back to normal