NWF - NZ Windfarms

[ratkin]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/315210/275855.pdf

Robert Stone buying $120k worth (at 14.5c) from Southworth.. .

Southworth still another 21,913,799 to offload

[blackcap]

Southworth still another 21,913,799 to offload

What makes you say that Ratkin? Do you think he is going to unload the lot?

[Well Endowed]

I find it interesting that Stone would pay 14.5c. I'd imagine he probably isn't done there- wonder whether he got any of the Vector offering at 10c or anything around recent levels?

[Dassets]

I have made it clear why I sold some. It is in the notice. I had to buy a house and needed some money. Draw your own conclusions .

[blackcap]

I have made it clear why I sold some. It is in the notice. I had to buy a house and needed some money. Draw your own conclusions .

Thanks for the clarification Dassets. The notice does not give the reason for sale so thank you for being so forthright. That makes a lot of sense.
Good to see R. Stone continuing to support the company. Nice to see some wind today in Palmerston as well.

[Dassets]

I am pretty sure it says to facilitate a property purchase. We say everything in our releases so read the half year for performance of the company.

[blackcap]

I am pretty sure it says to facilitate a property purchase. We say everything in our releases so read the half year for performance of the company.

Thank you, yes you are correct. I must get some glasses. The HY was great, thank you for the hard work and prospects forward looking so good. I note that revenues are up and costs down. A win win in my book.

[Well Endowed]

seeing some good spot prices with this wintery front passing through

https://www1.electricityinfo.co.nz/

[ratkin]

NZ Windfarms announces the appointment of Rob Foster to the Board of
Directors today. Board Chairman Stuart Bauld welcomes Foster to the board,
noting that he will bring valued skills to the company as it continues to
transform its operations.

Why do they even need all these people? A bunch of turbines that spin round in the wind, a mechanically
minded farmer could run the thing.

[blackcap]

NZ Windfarms announces the appointment of Rob Foster to the Board of
Directors today. Board Chairman Stuart Bauld welcomes Foster to the board,
noting that he will bring valued skills to the company as it continues to
transform its operations.

Why do they even need all these people? A bunch of turbines that spin round in the wind, a mechanically
minded farmer could run the thing.



I think you will find that the constitution requires a minimum of 3 directors.

[Dassets]

NZX also requires a minimum of 3 directors. It isnt just about a bunch of turbines whirling around. There is actually a business that needs to be run with everything that goes with that.

[JAYAY]

http://203.114.161.10/trh.htm

Spot price $655/ MWH and we are only generating 5 MWH
Anyone know if we are any closer to installation of LPG powered generators as mentioned at the last AGM.
Edit just had another look - price back to $80/MWH
Edit - Wed. am - price up over $900 this morning.!!!!

[Well Endowed]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/321531/283624.pdf

Solid, hopefully can build further from here. Good to see management delivering on objectives


disc: happily holding

[Grimy]

Certainly sounded like the new operating guidelines have helped.
Chances of a second dividend?

[Well Endowed]

could well be some more $$ in the coffers for divvies, things should only improve as they pay down debt further following their acquisition of the powerco asset in Sept-17.

NZ Windfarms half year revenues were $4.3m yielding an EBITDA of $2.0m for the half year to 31 December2017. With a further $3.2m in the most recent half year (Q3 1.51m & Q4 1.75m), should see a further circa $1.5m in EBITDA you'd think?

[blackcap]

could well be some more $$ in the coffers for divvies, things should only improve as they pay down debt further following their acquisition of the powerco asset in Sept-17.

NZ Windfarms half year revenues were $4.3m yielding an EBITDA of $2.0m for the half year to 31 December2017. With a further $3.2m in the most recent half year (Q3 1.51m & Q4 1.75m), should see a further circa $1.5m in EBITDA you'd think?

I reakon you could be spot on there. I like the curtailing regime, what we do not see in the revenue figures is the greatly reduced expenses side. EBITDA of $3.5m could be a go and I see no reason why another dividend cannot be paid. Although I do not think there are many imputation credits left. (good to see that their new policy of purchasing futures contracts is paying off too) Looks like John and the board are doing a great job so far in enhancing shareholder value. It was unfortunate that Vector sold their holding at 10 cents and this put a bit of pressure on the SP in the short term. But that will work itself out and long term it is a good thing as the block of shares is gone out of their hands.

[Well Endowed]

pretty good buying through this morning by NWF's standards at 13.5c.

Annual report should hit any day (last year's the 25th).

[blackcap]

pretty good buying through this morning by NWF's standards at 13.5c.

Annual report should hit any day (last year's the 25th).

I did buy a few more at 13.5 recently. Maybe in anticipation of another dividend this year? Looking at about $3.5- $4m Ebitda I am thinking and that is in a bad wind year so looking forward can see some upside.

[Grimy]

http://www.sharechat.co.nz/article/e503f7dc/nz-windfarms-forfeits-tax-losses-on-vector-departure.html

[BlackPeter]

http://www.sharechat.co.nz/article/e503f7dc/nz-windfarms-forfeits-tax-losses-on-vector-departure.html

I realize that Vector have been absolutely useless and incompetent in leading this company, but that they are such bast*rds I would not have thought: destroying many million dollars of shareholder funds (even if it was just accumulated tax losses which would have come handy in the future) just because a much more competent board is embarrassing them by demonstrating their previous incompetence - this is economic vandalism.

Anyway - glad I went out of this company when I did (though sort of missing the peak by a year).

[blackcap]

I realize that Vector have been absolutely useless and incompetent in leading this company, but that they are such bast*rds I would not have thought: destroying many million dollars of shareholder funds (even if it was just accumulated tax losses which would have come handy in the future) just because a much more competent board is embarrassing them by demonstrating their previous incompetence - this is economic vandalism.

Anyway - glad I went out of this company when I did (though sort of missing the peak by a year).

Thanks for your sentiment there BP. You are spot on about Vector. I am not going to theorise about the individual behind this but its not a hard guess. It really is a case of sour grapes. Just because a new board/management can exponentially better than they could, they could have been along for the ride, but no, lets just dump at 10 cents and leave it at that.
Anyway, happy to be on board, main entry is at the 5.5 cent mark and have been accumulating where possible since then. Looks like another dividend may be forthcoming if I am reading the annual correctly. (last year they announced it at the AGM)

[Grimy]

Anyone thinking of going to the AGM later this month in Palmy?

[blackcap]

Anyone thinking of going to the AGM later this month in Palmy?

I am going for sure.

This just out today:

https://www.nzx.com/announcements/323769

writing was on the wall I think after stories in Stuff et al.

[Well Endowed]

Presentation sort of reads like they are looking to attract a takeover, in my opinion? Interesting times ahead all the same.

"As a result of our assessment we are announcing today that the board has commenced astrategic review of our operations to assess the capital structures of the company as wellas evaluating a number of options available to us. As highlighted in my previouscomments we have made good progress over the past year and we believe that thecompany is in good health and is benefiting from the operational improvementsimplimented. We intend to consider the full range of options available to us to maximiseshareholder value and will update to shareholders in due course. The Board is currentlyconsidering proposals from parties who can act as financial advisers and assist NZWindfarms in this financial review. We will finalise an appointment in the coming days."

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/324416/287475.pdf

[blackcap]

I see we even get a mention in Stuff today:

https://www.stuff.co.nz/business/107389651/the-promise-of-nz-windfarms-dissipates-as-it-announces-a-major-review

Well Endowed, I think you may be onto something there by reading between the lines. It cannot really exist as a stand alone, but that has been signalled at past AGM's. If it were part of another operation, they would save about $1m pa in costs (Board 200k, CEO 300k, audit and accounting, NZX compliance, CFO role) and so to another operation it probably has a lot of potential.

If you read the target statement from the Tilt takeover docs and extrapolate the valuation of the NZ wind assets and apply that to NWF it would give a valuation of about $45m or 17 cents per share. Add say 6 cents as a premium for synergies, you could say NWF is worth 23 cents to a potential suitor.

The caveat to that is that TLT are not trading at their valuation range so the market is probably discounting the valuation a bit.

[Well Endowed]

Agree, I'd say somewhere around 17c-20c is a possibility, Mcap of circa $45-55m


Hard to know the value of the consents/permits in the current environment. I guess what is known is the NIMBY force is alive and well, and one would expect the low-hanging fruit (permit zones with good wind, close to population bases, not on sensitive conservation area/national parks) are likely a small list.

http://www.windenergy.org.nz/consented-wind-farms

NWF would be a reasonable bolt-on to a large operator in the area. My pick would probably be Mercury, who have the consented Puketoi & Turitea farms in the area (Dannevirke/P.North) and obviously shown a great interest in TILT with their recent partnering with Infratil. A prediction/hunch, but I suspect Mercury might be the likely suitor should NWF go down this path.

http://www.windenergy.org.nz/puketoi
http://www.windenergy.org.nz/turitea


just my opinions.

[Jaa]

I haven't been following too closely but any chance Te Rere Hau could be re-powered with bigger, more standard turbines? Could Vestas 2MW or 4MW platforms be suitable for the site?

Seems pretty clear the turbines have failed to deliver.


When the company first started operations, it assumed that it could achieve 160 gigawatts of production per year.

"This was later changed to 140 GWH and then to 130 GWH. Whilst we have occasionally operated at an annual rate close to this, it has never been achieved over a full year, so this year we again reduced it to 120 GWH, production we did not achieve this in 2018.

"The reality is that it is only by putting our plant at risk that we can achieve these higher numbers."

https://www.stuff.co.nz/business/107389651/the-promise-of-nz-windfarms-dissipates-as-it-announces-a-major-review

[huxley]

I haven't been following too closely but any chance Te Rere Hau could be re-powered with bigger, more standard turbines? Could Vestas 2MW or 4MW platforms be suitable for the site?

Seems pretty clear the turbines have failed to deliver.



https://www.stuff.co.nz/business/107389651/the-promise-of-nz-windfarms-dissipates-as-it-announces-a-major-review

I bet they could, would be a lengthy and expensive exercise though.. would that result in quite a large write down of the company’s assets? I assume they don’t own the land etc.

[blackcap]

I bet they could, would be a lengthy and expensive exercise though.. would that result in quite a large write down of the company’s assets? I assume they don’t own the land etc.

They do own the land.

It's under note 4 in the 2017 accounts valued at $3.3m

[Well Endowed]

Been some solid turnover by NWF's standards the past week or so, someone accumulating perhaps?

[blackcap]

Been some solid turnover by NWF's standards the past week or so, someone accumulating perhaps?

Having a look from time to time at the top 100 shareholders (available from broker) can be illuminating. Here is a top 20 as at 20 Sept.

1 NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LIMITED 46241058 16.0524
2 ROBERT STONE 40300000 13.99
3 LET CAPITAL NO 1 LIMITED PARTNERSHIP 21002881 7.2911
4 PHILIP LENNON 16758000 5.8175
5 KERICREST PROPERTIES LIMITED 10844988 3.7648
6 HSU-CHENG YANG 10800000 3.7492
7 CAPITAL PROPERTY GROUP LIMITED 7596661 2.6371
8 BRUCE BLAKE 6024010 2.0912
9 HEARD PARK TRUSTEE LIMITED 4390339 1.5241
10 TALLEYS GROUP LIMITED 4087461 1.4189
11 TONY WHYMAN 3555000 1.2341
12 PO-HUI CHI 3100000 1.0762
13 ROTORUATRUST PERPETUAL CAPITAL FUND LIMITED 2656062 0.922
14 ANTHONY ANSELMI & ROSS ALLEMAN 2566667 0.891
15 CRAIG BOWLER 2059056 0.7148
16 IAN DOUGLAS & BASIL COOK 1962657 0.6813
17 DAVID CORMACK & PETER CORMACK & RENU CORMACK 1750000 0.6075
19 ANTHONY GLEDHILL 1622688 0.5633
18 CUSTODIAL SERVICES LIMITED 1620263 0.5625
20 FNZ CUSTODIANS LIMITED 1423999 0.4943

[Well Endowed]

Checked against the top100 holders (dated 30/06/18). Looks like Heard Park Trustee Ltd has increased from 0.89% to 1.52% from what I can see, smaller changes across the rest with a number of the top20 there increasing their holdings slightly over the quarter.

[blackcap]

Checked against the top100 holders (dated 30/06/18). Looks like Heard Park Trustee Ltd has increased from 0.89% to 1.52% from what I can see, smaller changes across the rest with a number of the top20 there increasing their holdings slightly over the quarter.

Speaking of the devil:

https://www.nzx.com/announcements/324926

[Well Endowed]

Ha - looks like the sale route is the likely path, I still thought the likes of Mercury would be my odds on favourite given their interest in the area and wind power. definitely interesting times ahead.

[blackcap]

Ha - looks like the sale route is the likely path, I still thought the likes of Mercury would be my odds on favourite given their interest in the area and wind power. definitely interesting times ahead.

It all boils down to how much Mercury (or others) are willing to pay. If you go by the Tilt valuation of their NZ assets you are looking at about 17 cents for NWF but there are a lot of synergies available as well (like Board, CEO, admin staff, NZX compliance etc) that will ramp up the valuation. I would be hoping for at least 20 cents if I was a shareholder.

[Well Endowed]

agreed. I'd be pretty happy with an offer in the 18-20c region.

Will keep an eye on price action over the next while, I'd suspect some further accumulation given the potential upside vs current SP etc.

[blackcap]

agreed. I'd be pretty happy with an offer in the 18-20c region.

Will keep an eye on price action over the next while, I'd suspect some further accumulation given the potential upside vs current SP etc.

I think its an upside v downside play at the moment. With potentially good upside, and little downside. That is why I have been accumulating lately.

If a sale or other sort of rationalisation does not come off, then at worst you are probably looking at 11-15 cents per share in the medium to longer term.

[Well Endowed]

There has been some good buying the past couple weeks...

[Lorne Ranger]

Given there is the possibility of an el nino wind pattern this summer, how does this affect turbine operation? on first thought it seems a good thing, more wind=more power, but I assume also there is a cut off point where the turbines have to be shut down? Has there been any discussion here or indication from management about this issue yet?

[blackcap]

Given there is the possibility of an el nino wind pattern this summer, how does this affect turbine operation? on first thought it seems a good thing, more wind=more power, but I assume also there is a cut off point where the turbines have to be shut down? Has there been any discussion here or indication from management about this issue yet?

They discussed this quite a bit at the AGM. They operate when it is profitable to do so. So depending on the marginal cost of turning the turbines, they weigh that up against the wholesale price. In some conditions it is not worth running the turbines even with good spot prices but in other conditions, ie smooth north west winds you can run them whenever. It is not so much how hard the wind blows but from which quarter and the turbulence of the blow. That is what I surmised anyway. But there is a whole heap of info in the AGM slides. They have been released to market.

[Dassets]

Turbines have a curtailment program where price is a key component. If price is high then turbines are curtailed less in turbulent conditions. Mainly southerlies

[Arthur]

Maybe my calculations are wrong, but with the current prices I guess they will have made about $1 million in revenue over the last week. If the prices and wind keep up, it will be a great quarter.

[Well Endowed]

Shaping up that way, the shareprice has held up well (even before the surge in spot prices), I still suspect someone is slowly accumulating, as the turnover in the past month or two has been considerably higher than usual.

[Poet]

Maybe my calculations are wrong, but with the current prices I guess they will have made about $1 million in revenue over the last week. If the prices and wind keep up, it will be a great quarter.

They will certainly be making more than they have been over the last couple of years, but don't forget that they have at least some (maybe 30%??) of their production capacity hedged on the futures market (via CFDs probably) - this will moderate the revenue gains in this high priced environment.

[blackcap]

Maybe my calculations are wrong, but with the current prices I guess they will have made about $1 million in revenue over the last week. If the prices and wind keep up, it will be a great quarter.

I concur. If the wind and price remains today NWF will be making over $250,000 per 24 hour period. Over a week that is a heck of a lot.

As for hedging, I think they hedge about a quarter of future production, page 42 or thereabouts in the annual report states that as at 30 June the company had 149 quarterly sales contracts from Q4 2018 to Q3 2019.

Could be a very good quarterly come December. (if the wind keeps up)

[Well Endowed]

good turbine availability, mean wind speed steady above the lower curtailment levels. hopefully a few more days like this :t_up:

http://203.114.161.10/trh.htm

[blackcap]

They will certainly be making more than they have been over the last couple of years, but don't forget that they have at least some (maybe 30%??) of their production capacity hedged on the futures market (via CFDs probably) - this will moderate the revenue gains in this high priced environment.

I think they buy electricity futures contracts on the Aussie market.... page 42 of the annual report "they are openly traded on the Australian Securities Exchange (ASX). But they also trade with gentailers "The company also trades in contracts for difference with gentailers, and these are typically traded as over the counter instruments.

https://www.asx.com.au/products/energy-derivatives/new-zealand-electricity.htm

some interesting prices looking forward the next quarter too....

[blackcap]

Still looking good this morning. Pumping out 35MW reasonably consistently and the price is in the $400's at the moment. If that could go on for 24 hours we would have $336,000 for the 24 hour period. That said night prices and afternoon prices are lower. But a couple of months of highish prices and some ok wind and NWF could have a very good year. If we say an average of $300 for October and $300 for November as per futures market https://www.asx.com.au/asx/markets/futuresPriceList.do?code=ED&type=FUTURE

and average wind of about 10GB per month then in the 2 months we could produce $6m of revenue. Temper that a bit with a quarter of that being hedged at say $70? That would give us an average price of $300*.75 + 70*.25 or $242.50. So 20 GB at $242.50 is revenue of $4.85m. Am I being too optimistic here?

[Jerry]

I shall be bloody pippy if they do sell out. One buys a stock with an eye to the future, there follow years of no dividends and nail-biting as they stagger along then as soon as things smooth out and there is a prospect of good divs, they get sold out from under. :scared:


Speaking of the devil:

https://www.nzx.com/announcements/324926

[Well Endowed]

$124k worth changed hands today, bid/offer creeping up higher. looking good

[blackcap]

I shall be bloody pippy if they do sell out. One buys a stock with an eye to the future, there follow years of no dividends and nail-biting as they stagger along then as soon as things smooth out and there is a prospect of good divs, they get sold out from under. :scared:

I think the chairman explained at the AGM the rationale and that as a stand alone entity in the current market it does not really make sense for NWF to continue as is as they are more valuable to another gentailer or another entity that has another source of energy production. So it really does make good sense for them to seek a suitor.

[Well Endowed]

a continuation of the very attractive spot pricing. Shaping up to be a bumper quarter!

https://www.electricityinfo.co.nz/

[Arthur]

Futures now over $100 early next year, which is much higher than they normally receive. They might be running harder given the present revenues, but costs should not be up that much. My wildly optimistic guess is revenue of over $11,000,000 this year and a profit of $5,000,000. The last few months make a cheap takeover less likely. Disclosure - hold a token number of shares, should of topped up when they were being dumped.

[blackcap]

Futures now over $100 early next year, which is much higher than they normally receive. They might be running harder given the present revenues, but costs should not be up that much. My wildly optimistic guess is revenue of over $11,000,000 this year and a profit of $5,000,000. The last few months make a cheap takeover less likely. Disclosure - hold a token number of shares, should of topped up when they were being dumped.

I'm not sure about the last few months making a cheap takeover less likely. A takeover or buyout if it were to happen would not be cheap, it would be fairly priced. If someone came and offered 22 cents I would take that all day. Stand alone, NWF cannot expect to make more than $2m per annum in normal circumstances, and if there was a lot of water then $1m or zero profit is normal. For a company with 288m shares on issue, that makes 15 cents about fully valued. But to another gentailer etc there is more value than 15 cents and they may wish to pay more and I as a shareholder would be happy to accept.
Very happy about the current conditions, who knows, the board may wish to do a buyback or pay off those assets we bought last year.

[Well Endowed]

2 weeks away from the quarterly, featuring a period of hefty spot pricing. Share price has held up nicely and has barely moved in the past couple months during all the market instability. Have seen steady accumulation around 14c.

Hopefully we might also get an update on the October 5th announcement re: FNZC strategic review

[Blendy]

Thank you for the reminder - I'm looking forward to the quarterly update. Already a very nice green figure in my portfolio, but 14.5c is too much of a bargain to sell up yet.

[JAYAY]

I never was a fan of hedging.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/329959/294217.pdf

[Well Endowed]

disappointing they couldn't structure their hedges in such a way that they don't remove the upside from the equation.

I'm not all that familiar with the electricity market, but would be the equivalent of buying some out of the money puts, paying away the premium and leaving the upside unhedged. Looks like they've got a collar on to cover the downside premium/cost.

[Jantar]

I never was a fan of hedging.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/329959/294217.pdf
Yet this very example shows the benefit of hedging overall. Yes when prices are high there is a cost to hedge yet the revenue still increased by over $700k from the corresponding period the previous year. If the gas shortage had not happened causing spring prices to be low then that same hedge would have been a positive number to off set the potential losses of low prices.

[Dassets]

The instruments that you describe dont really exist.

[blackcap]

I have been doing some thinking around the hedging policy that NWF have and I think they have stuffed it up a bit.

I received an email from the previous CEO who said that hedging was done between 20-40% of average quarterly volume. I took this to mean 30,000MWH per quarter being about average (expected volume).
So for the December quarter I am presuming they were at the upper end of the scale and hedged about 40% of expected volume or about 12,000MWH. Unfortunately only 25,912MWH were delivered by the turbines even though 30,000MWh may have been expected.
Lets say that the average buy price of the hedge was about $75 so a total outlay of $900,000.
The average price for the 3 months was near about $205.48 (taken from Wholesale information trading system) so a shortfall of $130.48 multiplied by 12,000MWh gives us close enough to our loss of $1,565,760 (either NWF got less than $75 on the contract or they hedged more than 12,000MWH which is unfathomable in my opinion).

Unfortunately the price that we received for our electricity was not $205.48 (the average over the 3 months) but a rather lower $173.83.

I believe that NWF is in a hiding to nothing when it come to hedging. When wind resource is low, generally spot prices are slightly higher (due to less supply) and when wind resource is high, spot prices are marginally lower. That makes hedging rather difficult and counter productive.

In addition, in a bad year the spot price might be $50 (hedges taken out at $70-$75) so the upside is limited to $25 per MWH. But in good years when the price is high hedges destroy upside that is more unlimited.

I think NWF should review their hedging policy and if anything cancel it totally or keep it to a bare minimum, I would be comfortable with a maximum of 20% of expected production or a total of 6,000MWH per quarter.

Just a few random thoughts.

To add. After the AGM, directors were talking about capital initiatives and there was the mooting of a potential dividend or buy back of stock to use excess cash from the prior year good cashflow. But after having seen the loss on the hedging, I am pretty confident there would have been no cash left as margin calls, probably as early as late October and ongoing in November would have cleaned up most of the cash that NWF had.

[Arthur]

I'd like to think that is the worst quarter for value destruction with hedging. They will have had contracts in place before the prices went up, new hedging should be at higher prices. This quarter still should have made a profit around $700,000 more than the previous year's comparative. It is still possible the profit will be over $5m this calendar year.

[blackcap]

I'd like to think that is the worst quarter for value destruction with hedging. They will have had contracts in place before the prices went up, new hedging should be at higher prices. This quarter still should have made a profit around $700,000 more than the previous year's comparative. It is still possible the profit will be over $5m this calendar year.

I doubt it. From the annual report...https://www.nzwindfarms.co.nz/investments/annual-reports/annual-report-30-june-2018/view

At 30 June 2018 the Company held 149 quarterly sale contracts from Q4 2018 to Q3 2019 ranging in price from $63.20/MWh to $87.00/MWh, recognised as unrealised energy futures derivatives. These futures contracts had a mark to market value at year end of $107k. Interest rate swaps had a mark to market value of -$3k for a mark to market net position of $104k at year end.

[Dassets]

The point of hedging was to ensure in times of low prices the company didnt go bust. It also enabled the company to borrow money which it coud not without the hedging. Hedging when prices go high will always have a negative impact. But the rev was still a third up after hedging. That goes to the bottomline. That is unfortunately how it works.

[blackcap]

The point of hedging was to ensure in times of low prices the company didnt go bust. It also enabled the company to borrow money which it coud not without the hedging. Hedging when prices go high will always have a negative impact. But the rev was still a third up after hedging. That goes to the bottomline. That is unfortunately how it works.

Hi Dassets,

I understand why NWF hedge and that I do not have an issue with. It is the excessive nature of the hedging that worries me. If my math is remotely correct, 12,000 MWh or about 46% of total wind resource for the quarter was hedged. I do not see whey NWF need to hedge that much.
Also the skewed nature of the hedges lead me to believe that in the long term it is a slightly losing strategy, the synergies of guaranteed revenue notwithstanding. I do understand that in times of low prices NWF will benefit but there is more potential upside than downside. I note that futures are looking very strong out to September, I only hope that NWF have not hedged the majority of this away.
I note you use the past tense in your statement, "enabled" etc. Does that mean that future hedging may not be so aggressive in your opinion?

[Arthur]

Blackcap, I appreciate your views on this. It would be a shame if they filled their boots with hedges at 75, instead of taking opportunities to hedge at top prices when the opportunity arose (perfect hindsight I know). If the company is still taking up new hedging agreements, they should be at well north of $100. Revenue of over $10 million a year should be possible in today's environment, eventually they will roll into it. When prices revert to "normal" there will be a buffer of hedges at higher prices. The high wholesale prices have deprived the wolf of an ugly duckling. Will it have time to become a swan while the feeding is good?

[blackcap]

Blackcap, I appreciate your views on this. It would be a shame if they filled their boots with hedges at 75,?

As at 30 June 2018 that is exactly what they did:

"At 30 June 2018 the Company held 149 quarterly sale contracts from Q4 2018 to Q3 2019 ranging in price from $63.20/MWh to $87.00/MWh". Annual Report.

In other words as at 30 June 2018, circa 32,500/MWh was already hedged at between $63.20 and $87.00.

[Arthur]

Two quarters later they may have used 24,000 of those (based on your estimate of 12,000 a quarter). That leaves less than a quarter at the "old rates". They would have to have been really "unlucky" to be hedging at under a hundred now as those rates have been around or over that for many months. I'd have no objection to the hedging half the expected production at 130. They might miss abit of the top, but a healthy profit would be underwritten

[blackcap]

Two quarters later they may have used 24,000 of those (based on your estimate of 12,000 a quarter). That leaves less than a quarter at the "old rates". They would have to have been really "unlucky" to be hedging at under a hundred now as those rates have been around or over that for many months. I'd have no objection to the hedging half the expected production at 130. They might miss abit of the top, but a healthy profit would be underwritten

We shall just have to agree to disagree. I would be happy for hedging but at a reduced level. I doubt they are getting these new prices as they may have already hedged for this and the next quarter a while ago... before the prices rose. But that is conjecture on my part.

[Well Endowed]

any thoughts on Mercury taking an 'interest' in NWFs operations ?

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12216660

[Grimy]

any thoughts on Mercury taking an 'interest' in NWFs operations ?

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12216660

Sounds like they are doing their own thing completely. I guess it takes out one possible purchaser of NWF. I doubt you'd go with Vestas turbines and then saddle yourself with something completely different as well.

[Blendy]

any thoughts on Mercury taking an 'interest' in NWFs operations ?

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12216660

Yes I saw that article too, and I'm not clear on NWF's involvement? I've been hoping that it would be picked up by one of the energy companies. My first thought when I read the article was 'why didn't they buy NWF?' but I haven't looked closely enough to see if their 'interest' is that.

At least it raises the public profile of windfarms in nz...

[Well Endowed]

"first of a potential investment of upto $750m."

Still might still make sense that they look at buying out NWF if the logistics work, same region, similar infrastructure (obviously different turbines). but economies of scale, no need for the ridiculous hedging etc

[Jaa]

More like, it makes obvious the opportunity to re-power NWF with 3.6MW Vespas turbines.

Guess it would need new consents. It will happen one day...

[Grimy]

https://www.nzx.com/announcements/324926

I guess the board's update on FNZC's progress on advising them will be interesting.

[Jantar]

I have been doing some thinking around the hedging policy that NWF have and I think they have stuffed it up a bit. ….. If NWF have been selling hedges then they have stuffed it up big time. For the very reasons that you stated intermittent generators should never sell hedges, they should buy them.
Imagine if they bought hedges at $75 per MWh and the price went to $200, that is a massive profit. Yet if the price is low and came in at only $50 then the loss is limited to $25 for each MW hedged.

[blackcap]

If NWF have been selling hedges then they have stuffed it up big time. For the very reasons that you stated intermittent generators should never sell hedges, they should buy them.
Imagine if they bought hedges at $75 per MWh and the price went to $200, that is a massive profit. Yet if the price is low and came in at only $50 then the loss is limited to $25 for each MW hedged.

They have/had been selling hedges to ensure a certainty of profit/revenue. At about the $85 mark. Huge downside potential (which has caught them out big time) but also limited upside potential. To be fair the average price is $55-$75 so I can understand selling a quarter of expected production at $85.

[blackcap]

Not sure what is going on with this company but the announced shortly after the AGM last year that they would be looking at selling the assets and or the company (my words but what I inferred) and announced something similar to market not long after. A good half year later and no update.
Also note that of the board members recently appointed, Rob Foster have taken on executive roles as interim CEO. That is a bit of a red flag in my book.
I also note the "interim"... lets move on and get a new CEO, or actually do not get a CEO just an operations manager to run the company would be enough in my book for a company that produces about $8m of revenue from 1 source and has limited expenses. Time to step it up board or maybe time to get a new board?

[Well Endowed]

I still could see NWF being picked up cheaply by Mercury. Fits strategically and geographically. They seem to be most active in the renewable space also ponying up for 19.99% of Tilt too. NWF wouldn't cost the earth and might allow them to extract decent value from the asset with their gentailer customer base (and reduced restrictive hedging costs). Realistically I think a 16c a share offer would be hard to turn down for most holders here. All in my opinion of course.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12216660


but also agree, the silence here has been interesting... will wait and see

[blackcap]

I still could see NWF being picked up cheaply by Mercury. Fits strategically and geographically. They seem to be most active in the renewable space also ponying up for 19.99% of Tilt too. NWF wouldn't cost the earth and might allow them to extract decent value from the asset with their gentailer customer base (and reduced restrictive hedging costs). Realistically I think a 16c a share offer would be hard to turn down for most holders here. All in my opinion of course.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12216660


but also agree, the silence here has been interesting... will wait and see

Interesting excerpt..The 33-turbine Turitea wind farm will contribute $30 million a year to earnings, assuming an average generation price of $75/MWh.

They are paying $256m to build this thing generating income of $30m. NWF generates about $8m of earnings, so a simple dividing trick yeilds $256m/3.75) is a valuation of $68m for NWF. Divide that by 288m shares and you get a valuation of 23 cents per share. I can only think they costs of NWF are higher and off course the assets have depreciated more and some older technology, but interesting thanks for the link WE.

[Well Endowed]

No prob - Yeah Mercury option could be a long shot, but if they're looking at a $1b spend as stated in the article, definitely enough in the coffers to pick up NWF.

Do you by chance know the detail of NWF's permit? (which allows for another 56 turbines). Could Mercury in theory bypass any potential resource consent process and look to expand on the area NWF has had approved? - Problem I guess would be their different type of turbines would likely void NWF's permit...

[blackcap]

No prob - Yeah Mercury option could be a long shot, but if they're looking at a $1b spend as stated in the article, definitely enough in the coffers to pick up NWF.

Do you by chance know the detail of NWF's permit? (which allows for another 56 turbines). Could Mercury in theory bypass any potential resource consent process and look to expand on the area NWF has had approved? - Problem I guess would be their different type of turbines would likely void NWF's permit...

Looks like the board resigned and a totally new board appointed...

https://www.nzx.com/announcements/335096

[Arthur]

Looks like the board resigned and a totally new board appointed...

https://www.nzx.com/announcements/335096

Interesting. Massive value destruction with the hedge implementation. Probably could have been a useful policy if done right, so it will be interesting to see if the new board keeps them going. The have suggested that it may actually be a gain this quarter.

[Well Endowed]

and interesting to see whether they continue the 'talks'/strategic review from October?

https://www.nzx.com/announcements/324926

[blackcap]

and interesting to see whether they continue the 'talks'/strategic review from October?

https://www.nzx.com/announcements/324926

Well I see two of the new directors have substantial holdings or interests in NWF so that is interesting in itself. I wonder how they get around the independence because you need 2 independents on the board for NZX rules. Or maybe Mark Evans is site manager of Kericrest Properties Ltd and not himself the owner of Kericrest Properties Limited. That would get him around those requirements.

As at 18 October 2018 these parties had the following amounts of shares and % holding in the company.

3 3 LET CAPITAL NO 1 LIMITED PARTNERSHIP 21002881 7.2911
4 4 PHILIP LENNON 16758000 5.8175
5 5 KERICREST PROPERTIES LIMITED 10844988 3.7648

LET Capital is the Chairman designee's interest, Phil Lennon is a new director and Mark Evans is site manger of Kericrest Properties Ltd.

So good shareholder representation on the new board. Hopefully it will amount to runs on the board (pardon the pun). I like this bit in the announcement “As part of the review process we have looked to streamline the management structure. We will
have two key senior executives who effectively manage the business - Warren Koia and existing
Group Manager Operations Adam Radich – reporting directly to the board. This will not only be
more efficient but it will also save costs.”

Seems to be the way forward, never understood why NWF needed a CEO as it effectively just receives $8m per annum in power income and then there are a few maintenance issues and that is it.

[Jantar]

I was very pleased with Toby Stevenson on the board. He has a lot of experience with the electricity market and a good understanding of the way the rules work. It is a shame to see him go. Now we have no board members with NZEM experience.

[JAYAY]

Interesting. Massive value destruction with the hedge implementation. Probably could have been a useful policy if done right, so it will be interesting to see if the new board keeps them going. The have suggested that it may actually be a gain this quarter.

Apparently some hedging was a requirement to guarantee certainty in order to secure the finance to purchase the transmission assets.
I have always regarded hedging the same as gambling, the House (Hedge Fund) always wins.
In the case of the electricity market the Hedge Fund couldn't lose given the certainty of power price increases, especially given the Government's mad rush to shut down oil and gas and promote renewables.
Question is, how often do we get to renegotiate the hedging terms?

[mfd]

Apparently some hedging was a requirement to guarantee certainty in order to secure the finance to purchase the transmission assets.
I have always regarded hedging the same as gambling, the House (Hedge Fund) always wins.
In the case of the electricity market the Hedge Fund couldn't lose given the certainty of power price increases, especially given the Government's mad rush to shut down oil and gas and promote renewables.
Question is, how often do we get to renegotiate the hedging terms?

More like insurance than gambling - evening out the companies returns. They pay for the privilege but reduce the chance of catastrophy, just like buying home insurance.

The last quarterly talks about their hedging issues, early this year they backed out of the ASX futures contracts and negotiated bilateral contracts, presumably with other power companies. This means they don't have to post cash margins, which may have caught the company out before. Hopefully the new policy will be more settled.

If there had been a certainty of power price increases, they would have been fully priced into the futures market. It is not helpful to criticise a hedging policy purely with the power of hindsight.

[JAYAY]

[QUOTE=mfd;

The last quarterly talks about their hedging issues, early this year they backed out of the ASX futures contracts and negotiated bilateral contracts, presumably with other power companies. This means they don't have to post cash margins, which may have caught the company out before. Hopefully the new policy will be more settled.

[/QUOTE]

Thank you for that.
PS It is not helpful to criticise hedging policy with the benefit of hindsight.

[Grimy]

Well I wasn't expecting a dividend to turn up today 😀

[JAYAY]

Well I wasn't expecting a dividend to turn up today 

I knew it was coming but I was reminded that the sentiment at the last AGM seemed to be that paying off debt would be preferable to paying dividends that would be taxable to us.
I wonder what caused the change in sentiment.

[blackcap]

I knew it was coming but I was reminded that the sentiment at the last AGM seemed to be that paying off debt would be preferable to paying dividends that would be taxable to us.
I wonder what caused the change in sentiment.

Yeah that is true. Because when I checked my dividend I see that the company paid the RWT for the dividend. So its a cash payment made to the IRD that they in theory should not have to pay if they did a share buyback or something else with the money. So you personally have to pay no tax on the dividend but the company has done that which is a bit silly when the company is sitting on tax losses. Bit miffed about that one.

[kiwi_on_OE]

I believe they were getting some advice about what their future strategy should be ie. sell themselves. I wonder if the recent board changes are related to that. Either something is in the pipeline? Or there was disagreement amongst the board about what to do?

I note they commented at the last AGM about adding an alternative fuel source. I've wondered for some time if they've looked at some sort of energy storage system, I would hope they have. I don't know the economics but I assume batteries aren't cost effective. Obviously pumped-storage hydro would be a prohibitive project from a cost and time perspective, and that's ignoring finding a suitable location, resource consents etc. But I've wondered about something as simple as running a cable-car filled with dirt up/down the side of their hill. When electricity prices are low use the electricity to raise the cart, when prices are high lower it, generating electricity. I imagine it would be pretty cheap to build compared to a hydro dam, and should have pretty good efficiency. No doubt Shane Jones's slush fund, Callaghan Innovation and NZ Green Investment Finance would all be interested.

[JAYAY]

I believe they were getting some advice about what their future strategy should be ie. sell themselves. I wonder if the recent board changes are related to that. Either something is in the pipeline? Or there was disagreement amongst the board about what to do?


Yes, it does look a bit like that. Either the "Strategic Review" has stalled or there is a deal in the pipeline that they don't want to compromise by releasing info at this stage. AGM coming up late September. Looks like we will have to be patient until then at least.

[Well Endowed]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/338074/304059.pdf


great announcement :t_up:

[Grimy]

Certainly sounds very positive.

[kiora]

Certainly sounds very positive.

Well done to holders.Just 12-15? years too late.
A parody of errors by management?
Such a shame the issues couldn't be sorted out years ago.

[ratkin]

Hopefully the price will dip a little when the noise calms down. Want to accumulate a few but not prepared to chase it.
Anyone care to speculate at what price the company would buy at? 10c? 12c? Because until we actually see some buybacking going on it all just words.

[Well Endowed]

anyone know what their obligations are in terms of NZX disclosure? ASX stocks issue a buyback note each day of the buyback which clearly outlines purchase price.

[kiora]

Hopefully the price will dip a little when the noise calms down. Want to accumulate a few but not prepared to chase it.
Anyone care to speculate at what price the company would buy at? 10c? 12c? Because until we actually see some buybacking going on it all just words.

I thought it was god buying at .21c. I was wrong
When it floated at $1/share?

[Grimy]

I thought it was god buying at .21c. I was wrong
When it floated at $1/share?
I bought in at the beginning...…..But have managed to average down to 19 cents. Like Ratkin, I may be in for more.

[Grimy]

Well done to holders.Just 12-15? years too late.
A parody of errors by management?
Such a shame the issues couldn't be sorted out years ago.

2005-seems a long time ago. I just had a look at the prospectus.
Dividends were meant to start in 2009.
Initial share price was $1.10 if you weren't a Windflow Technology shareholder (or wanted a minimum 250,000 shares), in which case they were $1.00

[kiora]

So they are going to keep windfarm going & not sell assets
What is the right thing to do?
I always thought wind turbines are stuffed after 20 years?
When will cost of maintenance be too high?
These turbines have been going 14 years
These turbines I thought are pretty inefficient?

When would it be best to ditch them & use the resource consent for fewer,newer,taller more efficient ones?

[JAYAY]

So they are going to keep windfarm going & not sell assets
What is the right thing to do?
I always thought wind turbines are stuffed after 20 years?
When will cost of maintenance be too high?
These turbines have been going 14 years
These turbines I thought are pretty inefficient?

When would it be best to ditch them & use the resource consent for fewer,newer,taller more efficient ones?

On going maintenance means that the age becomes somewhat misleading.

[Arthur]

Gear boxes etc are replaced regularly, towers should be good for a long time. They no longer have to run them when it is high wear for little return. IMHO most of them should be almost as good at 20 as they were at 5. more into debt repayment and buybacks seems a better option to me than taxable dividends.

[Grimy]

Agreed. I would have been happy to forego the dividend and have debt paid down quicker. But companies often aren't that keen. I know there are accounting reasons but I'm old school - get rid of debt asap.

[blackcap]

Agreed. I would have been happy to forego the dividend and have debt paid down quicker. But companies often aren't that keen. I know there are accounting reasons but I'm old school - get rid of debt asap.

Especially when that debt is expensive. I do not know what it is exactly but from memory it is well above market rates. If the debt was at 3% or thereabouts I would not care about paying it down. But its not, its closer to 8 from what I can gather. So better to get rid of that.

I reackon NWF just needs to run the assets down, take all the cash it can and then scrap the turbines as they will be worthless once they do not work anymore.

[kiora]

At some stage these turbines would need to be replaced?
See 2018 maintenance schedule

Vs Are the new ones more efficient?

Then when is the optimum time to replace?

[Well Endowed]

Trading halt this morning!? :scared:

https://www.nzx.com/announcements/338257

[Well Endowed]

surely won't be NZ Windfarms making the transaction, has to be a takeover offer right? Mercury?

[Well Endowed]

"The trading halt has been put in place pending the release of a material announcement by the company regarding a transaction."

[fish]

"The trading halt has been put in place pending the release of a material announcement by the company regarding a transaction."
Thanks for posting-just cancelled my sell order at 15 cents

[JAYAY]

https://www.nzx.com/announcements/338257

Is this what we have all been waiting for?

[BigBob]

https://www.nzx.com/announcements/338257

Is this what we have all been waiting for?

If you were waiting for this...:

29 July 2019
NZX Announcement
For immediate release
NZ WINDFARMS LIMITED (NWF) AGREES A VARIABLE PRODUCTION HEDGE AGREEMENT
NWF announces it has agreed the terms of a variable production quarterly fixed price agreement for 100% of its production from 1 October 2019 to 31 December 2020. This agreement has been reached with a major NZ-based counterparty. Both the identity of the counterparty and price are commercially sensitive and remain confidential.
NWF’s Chairman, John Southworth, said the agreement reflects the changing dynamics of the wholesale electricity market and, particularly, the move to de-carbonise energy production and usage. He also said that these types of agreements will become commonplace in the future as the market moves to reflect changes in central and local government energy policy and initiatives.
The company reaffirms its EBITDA guidance for the Year Ending 30 June 2020 released last week.
The agreement is subject to normal legal documentation and credit processes.
For more information, contact:
John Southworth
Chairman
DDI: +64 21 930 451
About NZ

[JAYAY]

If you were waiting for this...:

29 July 2019
NZX Announcement
For immediate release
NZ WINDFARMS LIMITED (NWF) AGREES A VARIABLE PRODUCTION HEDGE AGREEMENT
NWF announces it has agreed the terms of a variable production quarterly fixed price agreement for 100% of its production from 1 October 2019 to 31 December 2020. This agreement has been reached with a major NZ-based counterparty. Both the identity of the counterparty and price are commercially sensitive and remain confidential.
NWF’s Chairman, John Southworth, said the agreement reflects the changing dynamics of the wholesale electricity market and, particularly, the move to de-carbonise energy production and usage. He also said that these types of agreements will become commonplace in the future as the market moves to reflect changes in central and local government energy policy and initiatives.
The company reaffirms its EBITDA guidance for the Year Ending 30 June 2020 released last week.
The agreement is subject to normal legal documentation and credit processes.
For more information, contact:
John Southworth
Chairman
DDI: +64 21 930 451
About NZ

It certainly sounds positive. it will be interesting to see what happens to the SP by the end of the day.

[Well Endowed]

well that was a bit of a non-event, certainly read like there was going to be a little more to it.. haha

[Arthur]

well that was a bit of a non-event, certainly read like there was going to be a little more to it.. haha
Risk reduced, guidance confirmed. 2020 NPAT should be about 4 or 5 million and market cap is only 42. PE of 10 compared to the ridiculous PEs of the major power companies.

[Well Endowed]

yeah fair points. Still undervalued and I'm still thinking it will be scooped up by one of the bigger players, this is just a cozy step in the right direction to that in my view.


Disc: happily holding..

[JAYAY]

https://www.stuff.co.nz/business/114579733/government-model-points-to-1000-more-wind-turbines-by-2050

Interesting. Also interesting to hear Whineray commenting that RMA needs to be revised to make it easier to upgrade turbines given rapidly changing technology.
With Mercury's clout plus the other big players, it looks like there is an increasingly good chance that the RMA could be amended accordingly.

[DoctorG]

Are these heading upwards?
Will they ever go above 0.14 cents?
What is the outlook?
PE is 8
Is it therefore, undervalued ?

[fish]

Are these heading upwards?
Will they ever go above 0.14 cents?
What is the outlook?
PE is 8
Is it therefore, undervalued ?

The value is in the eye of the beholder
Market value is this moments shareprice
Value to me is far greater
I see a rise of say 2 cents far more likely than a fall of 2 cents in the next year-the share price will be supported by the buy-back
Then there is the possibility of a takeover offer that might push the price even higher

[Blue Horseshoe]

Some bigger numbers coming in on the buy side, might be an interesting week.

[DoctorG]

I bought some late last week, and now want to get an idea of whether I have been bought a winner or not.
I bought at 0.141.
So if they go up by 2c thats fine over a year, but it would be great if they went to $2, but that is very unlikely.

[fish]

I bought some late last week, and now want to get an idea of whether I have been bought a winner or not.
I bought at 0.141.
So if they go up by 2c thats fine over a year, but it would be great if they went to $2, but that is very unlikely.

No point thinking greedy or unlikely-stay in the real world and be happy with small gains-a takeover offer by one of the gentailers makes sense and is a real possibility in the twenty to thirty cents range-it should be worth far more to a gentailer than as a stand alone company.

[fish]

Some bigger numbers coming in on the buy side, might be an interesting week.

didnt eventuate-?lack of interest?why
This is one stock which is under-researched and probably given little thought about.
I like to keep an eye on global markets and research on energy.
Reading the special Energy Issue of Bloomberg Markets August/-vol 28 issue 4 page 47 shows in graphic tables the costs of electricity generation from all sources in china/usa/uk.
The cheapest is windpower.
It is also the cleanest.
Far cheaper that CCGT which I had thought would be the cheapest in the US where gas is abundant and cheap.
Pumped hydro was expensive
Gas peakers will be needed rather than CCGT.

[Aarrgghh]

Hi everyone
After doing a small amount of research on this company and re reading the last couple of pages of forum, I think that people are underestimating the risks of investing in NWF.

Here's my opinion / conclusions - but please be aware this was not exhaustive research.

What I was hoping to see:
* Low risk company - reliable equipment - stable returns
* To be a good take over target from one of the bigger players
* Ownership of land to leave residual value after turbines become obsolete
* Good value due to lingering bad taste after hedging screw up by management

What I found
* All wind turbines are manufactured by Windflow NZ, which is in serious problems. They were at one time listed on the NZ stock exchange, now on the Unlisted market. Looking at their website Te Rerehau is the only significant project which Windflow NZ has completed. Read their last annual report, in particular the Chairmans blurb for some of the least creative, least positive notes I have seen.
* This is a problem because the turbines seem to have a reasonably high breakdown rate. Check the NWF annual report for a list of required swap out equipment. It would appear that some information in the NWF annual reports almost directly contradicts some of Windflow NZ's marketting material - for instance the claim the turbines can produce power reliably in wind up to 100kmh. In my opinion there is a significant risk to operations at Te Rerehau if (when?) Windflow NZ goes under.
* Because of this I would be very surprised if any of the other big players would be interested in NWF for takeover.
* The value of the land owned by NWF is 3 million, and 32 of the turbines are on leased land - which seems like it is another point which may be a possible risk area.
* " The consent allows for a further 56 turbines to be operated in the future but there are no plans for an extension at this time." - I believe this line from the NWF website exemplifies both the problems which NWF is having with the existing turbines, plus the complete lack of foresight management seems to have had in the past few years - How do you possibly get hedging so wrong?

What I don't know
* If there is any ties I don't know between Windflow NZ and NWF - eg ownership or management etc.

What I would like to see
* Ditch the share buy back (which to me just seems bizarre), instead use the money to develop the remaining 56 turbines on the consent the company holds - but using proven international technology to ensure security of supply in the future. We are currently in a time of low interest rates and raising electricity demand so timing is good for this. Plus as someone posted above, the government has indicated support for wind projects also.
* Once that has been done implement a schedule of swapping out the Windflow NZ turbines to the more reliable alternative as they reach end of life.

And just because I thought it pretty neat - here is the current output of the NWF turbines http://203.114.161.10/trh.htm

[Arthur]

It is not as bad as you think. The issues that you have found are historic and well known. NWF bought a whole heap of spare parts from Windflow and do all of their own repairs. The have learnt how to manage well and have lowered the maintenance costs tremendously. The new management appears to have made some awesome changes. I wish they would reduce the dividend and do more of a buyback as that is more tax effective. Debt reduction would be good too as the bank appears to have them by the balls.

[Well Endowed]

the curtailment program has reduced wear and maintenance costs, whilst increasing turbine availability.

Agreed on the dividend, would much rather they pay down the debt or further support the buyback.


a happy holder here, and actually considering another top up soon.

[Dassets]

There is no link to Windflow. NZ Windfarms sources all it's own parts. None through Windflow. It also has rights to the original IP and then to all the improvements that have been made under NZ Windfarms initiatives. This happened years ago. If Windflow fell over it would mean nothing at all.

[Aarrgghh]

I hear what you guys are saying and appreciate the effort to reply

I guess for me the bottom line is that it's a well known fact the turbines are dogs. What other reason can you give for not finishing the original planned development?

If AIA turned around tomorrow and said they had slots to land 150 planes per day but had decided to only land 95, we would all agree they were mad.

I feel this is a similar situation, and the only logical reason I can see why you wouldn't develop is because you don't want to buy more doggy turbines, and the engineering resources to support only 50 turbines isn't economic.

Which for me doesn't seem to cry out takeover target.

Genuine question though - is there any other reason why they wouldn't develop the other turbines in their consent?

[forest]

I hear what you guys are saying and appreciate the effort to reply

I guess for me the bottom line is that it's a well known fact the turbines are dogs. What other reason can you give for not finishing the original planned development?

If AIA turned around tomorrow and said they had slots to land 150 planes per day but had decided to only land 95, we would all agree they were mad.

I feel this is a similar situation, and the only logical reason I can see why you wouldn't develop is because you don't want to buy more doggy turbines, and the engineering resources to support only 50 turbines isn't economic.

Which for me doesn't seem to cry out takeover target.

Genuine question though - is there any other reason why they wouldn't develop the other turbines in their consent?

There are still great improvements made generating electricity with windmills. Future windmills are likely to generate more energie so I can see an advantage waiting for new generation models.

[JAYAY]

I hear what you guys are saying and appreciate the effort to reply

I guess for me the bottom line is that it's a well known fact the turbines are dogs. What other reason can you give for not finishing the original planned development?

If AIA turned around tomorrow and said they had slots to land 150 planes per day but had decided to only land 95, we would all agree they were mad.

I feel this is a similar situation, and the only logical reason I can see why you wouldn't develop is because you don't want to buy more doggy turbines, and the engineering resources to support only 50 turbines isn't economic.

Which for me doesn't seem to cry out takeover target.

Genuine question though - is there any other reason why they wouldn't develop the other turbines in their consent?

When the market values the shares at 14c then the arithmetic obviously does not stack up when considering putting in the remaining 56 consented turbines. Nothing to do with the quality of the turbines.

[fish]

When the market values the shares at 14c then the arithmetic obviously does not stack up when considering putting in the remaining 56 consented turbines. Nothing to do with the quality of the turbines.

Since argh kindly posted the link to the output of the turbines i have been watching it closely.
Last night 91 out of 91 turbines were operating and with good output earning over $30,000 per hour-probably more as I believe about 50% output is hedged at $180 per mwh.
I have a strong feeling they are going to double their profits this year.
We all know the risks of trying to be a prophet-its just my feeling looking at all the events we can see happening but high risk prediction.
Investing includes living with risk/reward so not for feint-hearted

[Aarrgghh]

When the market values the shares at 14c then the arithmetic obviously does not stack up when considering putting in the remaining 56 consented turbines. Nothing to do with the quality of the turbines.

What's the share price got to do with it? If anything wouldn't you be looking at the market cap?

But if the company is making money then they can decide what to do with that money surely

[JAYAY]

What's the share price got to do with it? If anything wouldn't you be looking at the market cap?

But if the company is making money then they can decide what to do with that money surely

From memory the shares listed at $1.20 and the current share price (and market cap) reflects several substantial negative impairments.

In other words the capital originally invested was not justified and the original investors lost out in a big way.
The same situation would probably apply if the company was to outlay the capital required to install the remaining 56 turbines.

[fish]

From memory the shares listed at $1.20 and the current share price (and market cap) reflects several substantial negative impairments.

In other words the capital originally invested was not justified and the original investors lost out in a big way.
The same situation would probably apply if the company was to outlay the capital required to install the remaining 56 turbines.

Times have changed Jayay in many ways-
to name a few-
turbines are now cheaper,more reliable and more efficient
Power prices are higher
Consents are in place
Turbines are only run when they are cost-efficient
The company is experienced
Carbon credits
Windpower is now cheap
It is clean.
We are in need of more energy and the government believes wind will fill the gap
The economics are much more favourable-not much more expensive than gas

[JAYAY]

I am sure the Directors will have done their arithmetic.

[Vagabond47]

I am sure the Directors will have done their arithmetic.

Well i wish they would get somebody with a science education to read their website..

"The site operates 97 Windflow Technology WF500 turbines capable of producing 48.5 megawatts of power per annum."

[fish]

Well i wish they would get somebody with a science education to read their website..

"The site operates 97 Windflow Technology WF500 turbines capable of producing 48.5 megawatts of power per annum."

Yes that website statement needs correction.
Looking at other windfarms in NZ they have turbines each capable of over 2 megawatts per hour.
And new turbines are getting more efficient.
Installing a few of the latest generation turbines-maybe 15 to twenty could double output without much of an increase in operating costs

[fish]

Just looked at the current output-17 MW at $136 MWH equals over $2000 per hour

[Snoopy]

Yes that website statement needs correction.
Looking at other windfarms in NZ they have turbines each capable of over 2 megawatts per hour.


I am not sure the quantum of power being generated is what Vagabond was on about. MegaWatts (or Watts in the most basic unit form) is a measure of the quantum of energy produced in one second. Specifically the metric unit of energy is the Joule (J). If you produce one Watt of power, that is equivalent to saying you are producing one Joule per second. Because the Joule is quite a small amount of energy, an alternative unit of energy is the 'MegaWatt Hour ' (MWh). Note the unit here is 'Megawatt Hour' NOT Megawatt per hour. One MWh is the amount of energy produced by a device with a power rating of one MegaWatt working for an hour.

The term 'Megawatt per Hour' is actually nonsensical term, because 'watt' already contains an implied energy production rate over a time frame, in this case one second. 'Megawatt per hour' (sic) implies you are measuring the power produced over one second and over one hour at the same time. IOW you are double counting the energy being produced. That is a nonsensical thing to do and just plain wrong in all circumstances.

If the website had said

"Megawatt hours of energy per annum"

instead of

"Megawatts of power per annum"

then is would have made sense.



And new turbines are getting more efficient.
Installing a few of the latest generation turbines-maybe 15 to twenty could double output without much of an increase in operating costs.


I remember chatting with the then CEO of NZ Windfarms in the early days.
The NWF turbines were originally designed on a wider 'whole of project cost' project brief. Even back then, larger turbines were more efficient once installed. But smaller turbines required less strength foundation and could be accessed by less well formed roads. So there was a significant saving in the civil construction costs to offset the lesser efficiency verses larger turbines. Being smaller turbines much was being made of the lower visual impact on the environment too.

SNOOPY

[Dassets]

Thanks for the support. We announced 2 dividends on top of the one paid in June.

[Aarrgghh]

Thanks for the support. We announced 2 dividends on top of the one paid in June.

Do you work for the company Dassets?

[Snoopy]

Do you work for the company Dassets?

A search of this thread would have given you your answer.


Hi, I was elected as a director yesterday so thank you to anyone who voted for me. On the vote against the resolutions Vector owns 63,684,362 shares. Given the vote against the resolutions (except auditor resolution) was circa 64m I will let people draw their own conclusion as to who opposed. I did the visit, by which time the wind had dropped to mere howling to allow a full visit. I personally was very impressed and it was a useful trip. It was pretty much the first time most staff had ever met shareholders so that exercise was useful for both the great staff and shareholders alike.

SNOOPY

[Aarrgghh]

Ah ha.. I clicked on their username but only two posts popped up, I'll take a closer look now. Still getting used to the forum.

[mfd]

Decent result, and the guidance suggests they got a good deal from the fixed price contract. Looks like quarterly dividends from now on, and a review while the company decides what the long term plan is. In the meantime, should be a pretty generous yield.

[Snoopy]

Ah ha.. I clicked on their username but only two posts popped up, I'll take a closer look now. Still getting used to the forum.


Click on the 'Search Thread' button at the top of this page, then click 'Advanced Search'. You will then see a box to put in a user name. Put in 'Dassets' for the user while leaving the keyword blank. You will then see all of Dassets posts on this thread come up. HTH.

SNOOPY

[fish]

Click on the 'Search Thread' button at the top of this page, then click 'Advanced Search'. You will then see a box to put in a user name. Put in 'Dassets' for the user while leaving the keyword blank. You will then see all of Dassets posts on this thread come up. HTH.

SNOOPY

I must thank you for all the help you are giving me and others

[ratkin]

Just read the report.
How can they be forecasting EBITDA of 7.5m when the previous highest was only 4.0m ??
I am not seeing what has changed to cause such a dramatic increase

[Well Endowed]

Just read the report.
How can they be forecasting EBITDA of 7.5m when the previous highest was only 4.0m ??
I am not seeing what has changed to cause such a dramatic increase


http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/338260/304291.pdf

[mfd]

Just read the report.
How can they be forecasting EBITDA of 7.5m when the previous highest was only 4.0m ??
I am not seeing what has changed to cause such a dramatic increase

Generation was around 10% lower than expected this year with average wind speed lower than the last few years, and they now have a fixed price agreement. Perhaps the fixed price works better as they no longer face the problem that when the wind blows for them, it probably blows for everyone which correlates their production with lower spot prices. I'm speculating a little, if anyone knows more please correct me.

[fish]

Generation was around 10% lower than expected this year with average wind speed lower than the last few years, and they now have a fixed price agreement. Perhaps the fixed price works better as they no longer face the problem that when the wind blows for them, it probably blows for everyone which correlates their production with lower spot prices. I'm speculating a little, if anyone knows more please correct me.

The fixed price enables more accurate estimations of earnings.
They have learned how to best use their turbines and keep them operating.
For the last few days I have learned how to check energy production from the farm and calculate the income if they were selling on the spot market prices.
Most turbines have been operating and generating energy around $2000 per hour or 50000 per day.
Operating at this level equals 18 million per year.
Of course this will not continue but it gives an approximation of potential earning with power prices averaging $100 mwh.

[ratkin]

The fixed price enables more accurate estimations of earnings.
They have learned how to best use their turbines and keep them operating.
For the last few days I have learned how to check energy production from the farm and calculate the income if they were selling on the spot market prices.
Most turbines have been operating and generating energy around $2000 per hour or 50000 per day.
Operating at this level equals 18 million per year.
Of course this will not continue but it gives an approximation of potential earning with power prices averaging $100 mwh.

one thing I found interesting was that they de commissioned some of the more inefficient (poorly placed) turbines. Why did they not just move them to a better spot?

[kiora]

one thing I found interesting was that they de commissioned some of the more inefficient (poorly placed) turbines. Why did they not just move them to a better spot?

A whole different kettle of fish.Not so simple RMA?

[Arthur]

I think that the maintenance costs of poorly located turbines probably outweighed their revenue. Wind does all sorts of strange things with direction, gusts and shear. Ground topography will have aggravated the situation. I suspect one of the advantages of the taller turbines is more consistent wind over the whole of turbine blade profile.

[Dassets]

The maintenance costs were more than revenue. Some of the turbines were sited where they were prone to turbulent winds and excessive wear. So the sensible thing to do is stop. In terms of moving turbines it would have to make financial sense. Given the cost of the base, more distribution cabling etc you couldn't justify the spend. RMA consents relate to the actual turbine. So the old unbuilt consents throughout the industry are based on old turbine technology. Draw your own conclusion about whether they will be built.

[Aarrgghh]

OK so is this the time line for the turbines?

1. Windflow sell a bunch of turbines promising high efficiency and reliability

2. Turbines don't live up to expectations

3. Rights to all IP within turbines given to Windfarm NZ

4. All links with Windflow are cut - When did Windflow sell Windfarm?

5. Windfarm NZ develop their own modifications alongside an un-named supplier to turbines to make them more reliable (and efficient?) But all IP relating to modifications is owned by Windfarm NZ

6. Windfarm NZ now running at better reliability than originally promised.

How do the modified turbines compare to what is currently available in a similar size? Although from your comments Dassets it's obvious that it would be un economic to use the original turbines in the remaining consented locations, how about modified turbines? Could the new supplier produce these if you have rights to the IP? Do you supply any IP or parts to the UK operations?

From reading further into the issue, it appears the relationship between windflow and windfarms is bad. Here's a couple of reasons I thought they were linked.

*Windfarmnz still advertises Windflow turbines on their website - https://www.nzwindfarms.co.nz/about-us/wind-turbine-manufacture
*The logos of the two companies use the same colours and fonts
*The names are reasonably similar
*Windflow once owned windfarm

[Snoopy]

OK so is this the time line for the turbines?


Aarrgghh. You may wish to go back to the very start of this thread and check out the timeline as it unfolded. This thread goes right back to the IPO time.



1. Windflow sell a bunch of turbines promising high efficiency and reliability

2. Turbines don't live up to expectations


I don't think you can lay the problems that NWF have had on the hardware. AFAIK the only catastrophic turbine failure was the test turbine built in Gebbies Pass just out of Christchurch by Windflow. Nothing as remotely catastrophic as that has occurred at the NWF site in the Manawatu.

Even the world's best turbine will disappoint if installed in a sub optimal position. I haven't followed up whether the prospectus claims on the amount of energy projected to be produced were actually matched.

My admittedly quite distant impression now is that NWFs biggest problem has been not receiving the amount of money they expected for a given amount of energy generated. The points to NWFs lack of understanding of how the power market works in NZ (by previous management I should add).

In summary, the main problems that NWF have faced are problems in implementing the business plan. There is nothing much wrong with the underlying hardware. Except that times have moved on since 2005 and the trend seems to be before bigger turbines with greater attention paid to the aerodynamics.. And that is a different design paradigm path to the one that Windflow was following fifteen years ago.



3. Rights to all IP within turbines given to Windfarm NZ


As the financial position of Windflow became more precarious, NWF moved to secure technical support for their turbines going into the future. I am surprised if that included the IP, because I recall Windflow trying to sell the IP related to the gearbox mechanism overseas once the plan of selling whole turbines seemed to have become too difficult.



4. All links with Windflow are cut - When did Windflow sell Windfarm?


NZ Windfarms was never owned by Windflow. NZ Windfarms was promoted by Windflow as a 'proof of concept' bulid. There may have been some crossover of staff in the early days. But there has never been a shareholdings link between the two.



5. Windfarm NZ develop their own modifications alongside an un-named supplier to turbines to make them more reliable (and efficient?) But all IP relating to modifications is owned by Windfarm NZ

6. Windfarm NZ now running at better reliability than originally promised.


I don't know anything about the above two points.

SNOOPY

[Dassets]

Aargh is off point. The turbines are doing what they are capable of. The company is able to generate a cash return
That cash is being returned to shareholders. If someone wants to receive that they can buy shares.The company will continue to try to improve cash generation. It isnt complicated.

[Independent Observer AUNZ]

Aargh is off point. The turbines are doing what they are capable of. The company is able to generate a cash return
That cash is being returned to shareholders. If someone wants to receive that they can buy shares.The company will continue to try to improve cash generation. It isnt complicated.
Thanks for the direct communication Dassets. I agree, in this instance (like it is many others like what I've seen at Tower and A2) sometimes the past is not an indicator of the future. Power generation is a game of cashflow and there seems plenty of cash flowing here. Hence, I'm in.

Can I just also say, I'm a new shareholder and pleased to have a director engaging in a shareholder forum like this.

[Arthur]

Solar has come down in price and may even be viable to tie into the existing infrastructure. The RMA and other bureaucracy would be a barrier, but it would be nice to be generating on those sunny, low wind days. This location would not be a first choice for stand alone solar, but with all of the infrastructure on place for collecting and distributing electricity it could be worth looking into.

[Aarrgghh]

Sorry I have to make this quick as I need to get to work.

Yes I agree, it's fantastic to have Dassets input here, and Snoopy as well of course, we appreciate both of your input. Little tidbits such as "the RMA consents relate to the actual turbine" can have quite an impact on how the company can move forward.

That said - a dismissive attitude of the turbines are making cash so stop asking questions is incredibly counterproductive. This forum is full of prospective and current share holders who want to know what the next stage of the business is. There is one passing statement in the annual report "Long-term planning will consider a range of factors including: The life expectancy of the current turbine against newer technologies when measured by financial benefit to shareholders"

Disc; as of a few days ago I hold shares in NWF


Aarrgghh. You may wish to go back to the very start of this thread and check out the timeline as it unfolded. This thread goes right back to the IPO time.


Yeah I know. I did start this but with two little ones demanding attention I'm a bit short on time. I also looked for early prospectisussus but could only find one, Is there an archive of these somewhere? I will be putting in some serious time when I get a chance



I don't think you can lay the problems that NWF have had on the hardware. AFAIK the only catastrophic turbine failure was the test turbine built in Gebbies Pass just out of Christchurch by Windflow. Nothing as remotely catastrophic as that has occurred at the NWF site in the Manawatu.

Even the world's best turbine will disappoint if installed in a sub optimal position. I haven't followed up whether the prospectus claims on the amount of energy projected to be produced were actually matched.

My admittedly quite distant impression now is that NWFs biggest problem has been not receiving the amount of money they expected for a given amount of energy generated. The points to NWFs lack of understanding of how the power market works in NZ (by previous management I should add).

In summary, the main problems that NWF have faced are problems in implementing the business plan. There is nothing much wrong with the underlying hardware. Except that times have moved on since 2005 and the trend seems to be before bigger turbines with greater attention paid to the aerodynamics.. And that is a different design paradigm path to the one that Windflow was following fifteen years ago.


What I don't know is how the turbines compare to new technology. They obviously don't compare to what was being sold.
From a recent article, " When the company first started operations, it assumed that it could achieve 160 gigawatts of production per year."This was later changed to 140 GWH and then to 130 GWH. Whilst we have occasionally operated at an annual rate close to this, it has never been achieved over a full year, so this year we again reduced it to 120 GWH, production we did not achieve this in 2018."
https://www.stuff.co.nz/business/107389651/the-promise-of-nz-windfarms-dissipates-as-it-announces-a-major-review




As the financial position of Windflow became more precarious, NWF moved to secure technical support for their turbines going into the future. I am surprised if that included the IP, because I recall Windflow trying to sell the IP related to the gearbox mechanism overseas once the plan of selling whole turbines seemed to have become too difficult.

I found this in one of the annual reports. I think it was part of a warranty claim, NTL gave NWF about a million bucks and rights to the IP, as well as rights to buy some NTL.




NZ Windfarms was never owned by Windflow. NZ Windfarms was promoted by Windflow as a 'proof of concept' bulid. There may have been some crossover of staff in the early days. But there has never been a shareholdings link between the two.

I believe NWF was originally set up as a subsidary of WTL, not sure of the exact arrangement but I guess it doesn't really matter any more.




I don't know anything about the above two points.

SNOOPY

[Independent Observer AUNZ]

Sorry I have to make this quick as I need to get to work.

Yes I agree, it's fantastic to have Dassets input here, and Snoopy as well of course, we appreciate both of your input. Little tidbits such as "the RMA consents relate to the actual turbine" can have quite an impact on how the company can move forward.

That said - a dismissive attitude of the turbines are making cash so stop asking questions is incredibly counterproductive. This forum is full of prospective and current share holders who want to know what the next stage of the business is. There is one passing statement in the annual report "Long-term planning will consider a range of factors including: The life expectancy of the current turbine against newer technologies when measured by financial benefit to shareholders"

*** some good questions followed***

Good questions, Argh. Interested in further discussion - I only have a tiny holding (in $s... it feels like a huge amount in share numbers) but with greater confidence I would buy much more given this is a sector for which I'd like to have a very strong ratio in my portfolio.

[kiora]

Windflow 500kw?
https://www.windflow.co.nz/licensing
31 Siemens turbines, each with a capacity of 4.3 megawatts,
https://www.siemensgamesa.com/en-int/newsroom/2019/01/new-siemens-gamesa-10-mw-offshore-wind-turbine-sg-10-0-193-dd

Wouldn't be replacing 1 for 1.A lot of factors to consider.As time progresses the value of turbines decreases & their other assets increase?

[Snoopy]

Yes I agree, it's fantastic to have Dassets input here, and Snoopy as well of course, we appreciate both of your input. Little tidbits such as "the RMA consents relate to the actual turbine" can have quite an impact on how the company can move forward.

That said - a dismissive attitude of the turbines are making cash so stop asking questions is incredibly counterproductive. This forum is full of prospective and current share holders who want to know what the next stage of the business is. There is one passing statement in the annual report "Long-term planning will consider a range of factors including: The life expectancy of the current turbine against newer technologies when measured by financial benefit to shareholders"

What I don't know is how the turbines compare to new technology. They obviously don't compare to what was being sold.


I don't know Dassets and I am sure he is quite capable of defending himself, but I think you are going too far here Aarrgghh. Dassets is a board member. Dassets has given us the flavour of his vision he brings to the board table. But boards are concerned with governance. Your questions on turbines are more operational matters. You need to direct them to management.



I believe NWF was originally set up as a subsidary of WTL, not sure of the exact arrangement but I guess it doesn't really matter any more.


Way back before listing you may be right. But after NWF was listed, Windflow didn't hold any shares. That is all l am saying.

SNOOPY

[nztx]

I'm also a new NWF shareholder and pleased to have Dassets as a director engaging on the forum

To confirm Aarrgghh's earlier posting -

NWF was originally set up as a 100% subsidiary of WTL (Windflow Technologies) back in 2004 (31.12.04)

WTL continued holding 3.0 m shares in NWF from Interim period 31.12.05 to 03.08.09

(originally 43.0% ; this diluted down to 3.82% interest )

The WTF holding of 5.66 m NWF shares (1.96%) as at 05.08.2010 disappeared from NWF Substantial Shareholder
listing in Reports at the 30 June 2011 Annual Report

Source: Interim & FY NWF Published Reports 31 Dec 2004 - 30 Jun 2011)

[Aarrgghh]

Honestly, my comments were not intending on attacking anyone. But I still stand behind my statement.

The way I read the following line;

"That cash is being returned to shareholders. If someone wants to receive that they can buy shares.The company will continue to try to improve cash generation. It isnt complicated."

Is basically the antithesis of DYOR, which is what this forum is all about.

One of the big decisions that Dassets will be making, along with the rest of the board in the near future is whether or not to replace the turbines, what with and how much this will cost. I have no concerns if he or his fellow board members are technically capable of doing this task - I would assume that they are capable of this. The outcome of this decision will have a massive effect on the value of our share holdings and we should be able to understand the issues involved so we can value our holdings.

For example, as indicated in the past couple of pages of this thread, the resource consent is specific for the model of turbine. I presume this means if the board want to change the turbines then they will need a new or modified resource consent. Given the historic issues with neighbours (https://www.stuff.co.nz/manawatu-standard/news/99881957/palmerston-north-wind-farm-puts-a-decade-of-complaints-behind-it) This could open the company to a lengthy and expensive environmental court case. Or maybe not, hopefully the lesson has been learned, and turbines won't be placed near residential buildings, even if that means abandoning some sites.

The alternative, not buying replacement turbines, will firstly increase operating costs as long term maintenance is scheduled (I hate to think how much it would cost to paint one of those bad boys) and essentially put an expiry date for operations at the site. As it happens, the turbines are pretty well written down now (~20 mill value for all turbines) so I guess that depreciation won't be increasing, but putting what is essentially an expiry date on the company will certainly have an effect on share price.

Just to make it crystal clear, Dassets, well done, everyone appreciates your work on on the board of NWF and we're all happy you're there. As I search deeper than my original research I see the company appears to be well run and I believe good current value.

Now you just need to work on some PR and distance yourselves from WTL to attract some more investors!

[fish]

Like you I am pleased to see that Dassets is on the board and engaging with us.
He has made it clear where the company is focused at the moment.
Snoopy has explained why we are not easily able to buy replacement turbines.
The turbines are now working much more efficiently and getting better prices so the share price should improve with good dividends.Reverse hedging is a brilliant concept that reduces risk for all parties.
No doubt sometime in the future we will need replacement turbines but we have no need for this at the present time.
Indeed it could adversely affect the share price
DaSSET HS MY FULL SUPPORT

[Dassets]

Argh,
I did not tell people to stop asking questions as you say. There is no relationship with Windflow and hasn't been one for a number of years. Our relationship with neighbours went through change about 3 years ago which saw resolution which has been on place since. I have seen no evidence of issues since that change. The turbines are not at end of life, I don't know how you came to that conclusion. At some unknown point in time is is obvious that it may make sense to repower. When that is will be based on financial outcomes for shareholders. That is it would have to be value accretive. A lot of what you talk about is past history. The company is very different to what it was 5 years ago.

[Independent Observer AUNZ]

Argh,
I did not tell people to stop asking questions as you say. There is no relationship with Windflow and hasn't been one for a number of years. Our relationship with neighbours went through change about 3 years ago which saw resolution which has been on place since. I have seen no evidence of issues since that change. The turbines are not at end of life, I don't know how you came to that conclusion. At some unknown point in time is is obvious that it may make sense to repower. When that is will be based on financial outcomes for shareholders. That is it would have to be value accretive. A lot of what you talk about is past history. The company is very different to what it was 5 years ago.

All makes sense, Dassets.

This may be operational and/or sensitive, and sorry if its been discussed elsewhere but I think a recent take would be enlightening:

Is there any indication of average lifespan for turbines of this type coming out of the long-term planning I understand to be underway? I've heard that modern turbines are meant to average approx 25 years, but I've heard stories of some only lasting 10. Are we realistically actually talking 5 years before end of life decisions and direction need to be made? 10 years? 15 or More? I understand there are some 20 and 25 year horizons on terms of consents, etc for the land. The PPE estimates in the annual report (5 to 40 years) aren't particularly enlightening and then the mid-life refurbishment estimates suggest 40 to 45 years. To put it simply; Why is there such confidence in these turbines for such a long tail?

[Dassets]

Turbines essentially can last for as long as you want to maintain them. I think these had 25 yrs with a refurb plan in the early 2030s for a further extension of 15yrs. It is in the notes for the annual report. Then it comes down to economics aka return to shareholders against a risk profile. Who knows what consents are for brownfields developments as opposed to green fields. I am not an expert in that field but 5 yrs from the point you decide to go for a consent to operating would be optimistic. All this stuff is in the future as I said. Today is about returning cash to shareholders.

[Aarrgghh]

The turbines are not at end of life, I don't know how you came to that conclusion. At some unknown point in time is is obvious that it may make sense to repower. When that is will be based on financial outcomes for shareholders.

Why did I think that the decision to re power the farm was necessary now? From the Chairmans Review in the Annual Report just released:
"Without a clear view of the future we do not know whether we are running the current fleet for ten years or twenty years. Clearly if the fleet life is only ten years this will materially affect our settings for capital expenditure and maintenance"

10 years to withhold enough capital to allow financing a change in turbine would obviously be not enough - 20 is probably pushing it. The possible environmental court stuff would have been relevant as there is risk this could take a long time as well.

But thankfully you are correct, later in the report the refurbishment at 200k per turbine "is expected to allow the existing turbines to operate for a further twenty years up to age range of 40 and 45 years"

Also in the annual report the turbine lifespan is given as "Wind turbines – including tower, blades and components 5 to 40 years" as previously mentioned.

So good news, but again not super clear communication with three different date ranges given. We know here that WTL is not associated with NWF, but it is important that other potential investors are well aware of this as well.

And ~20 Million for refurbishment in 12 years is not to be sniffed at, obviously planning for this expense will come out with the long term plan as mentioned in the report.

[Dassets]

Argh,

You are reading way too much into things. You say a decision is required now then quote something to support your view. That quote is clear that work needs to be conducted to determine what path is sensible. It doesn't say a decision is required now. That work is a normal process. Then the rest of your conclusions are re capital are too narrow in that they assume shareholders will provide all the capital and that capital must be saved up. That is just not how business runs. Come to the AGM/ASM as a forum to understand the business.

[Aarrgghh]

haha maybe its my turn to apologise for unclear communication.

You asked how I came to the conclusion that a decision on the replacement of turbines needed to be made now, my point was that it was based off information in the Chairmans review, which states the current fleet has a life span of 10 or twenty years.

And I must admit, I did misread this line "An assumption that existing shareholderswill not provide capital to undertake redevelopment" as an indication the company was not wanting to issue more shares to fund development. Although to be fair I never said that all the capital would need to be saved up, just enough to allow financing (I'm assuming the bank won't lend 100% of the value)

I really would like to come to the AGM, but unfortunately I am currently based within 800km of the Antipode of where it will be held, so a bit far to travel I'm afraid.

[BlackPeter]

I really would like to come to the AGM, but unfortunately I am currently based within 800km of the Antipode of where it will be held, so a bit far to travel I'm afraid.

Maybe something for the board to ponder on (@dassetts - hint, hint!). While not every shareholder is on the other side of the globe - it is even for most NZ shareholders impractical to travel through the country to Palmerston North (or wherever the next AGM will be).

Other companies are able to record and publish a video of their AGM's, some even allow shareholders to remotely ask questions during AGM's. Technically this is not hard - it only requires a board who wants to support and interact with their shareholders. What about NWF?

[Independent Observer AUNZ]

Maybe something for the board to ponder on (@dassetts - hint, hint!). While not every shareholder is on the other side of the globe - it is even for most NZ shareholders impractical to travel through the country to Palmerston North (or wherever the next AGM will be).

Other companies are able to record and publish a video of their AGM's, some even allow shareholders to remotely ask questions during AGM's. Technically this is not hard - it only requires a board who wants to support and interact with their shareholders. What about NWF?


Good news BlackPeter - the Annual Meeting is in Auckland, and it is just three weeks away. See you there?

Hotel Four Points bySheraton, 110 Mayoral Drive, Auckland at 11.00am on Wednesday 25th September 2019.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/339042/305230.pdf

[BlackPeter]

Good news BlackPeter - the Annual Meeting is in Auckland, and it is just three weeks away. See you there?

Hotel Four Points bySheraton, 110 Mayoral Drive, Auckland at 11.00am on Wednesday 25th September 2019.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/339042/305230.pdf

Well, I guess this is good news for the people who live in Auckland (which is not me :t_up:). I guess my point was - no matter where the AGM happens to be, there will be shareholders who can't afford to lose a day or more to go there - i.e. setting up the AGM as video conference (hybrid AGM) would be for any listed company a great service for their shareholders.

Am I going to the Auckland AGM of NWF? Actually there was a time I used to (cheap flight, expensive taxi and a day lost), but at current my interest in NWF is more sentimental - not really worthwhile to make the trip for me ... my memories of having been a NWF shareholder are not that amazing that I need to warm them up ;);

[Dassets]

We are looking into it but it may not happen this year.

[JAYAY]

The annual report 30/6/19 shows 108 shareholders with less than 1000 shares and yet in recent weeks we have seen heaps of tiny little trades going through (Stocknessmonster).What is that all about?

[BlackPeter]

The annual report 30/6/19 shows 108 shareholders with less than 1000 shares and yet in recent weeks we have seen heaps of tiny little trades going through (Stocknessmonster).What is that all about?

Probably just a bot - unlikely to have anything to do with small shareholders ...

[blackcap]

The annual report 30/6/19 shows 108 shareholders with less than 1000 shares and yet in recent weeks we have seen heaps of tiny little trades going through (Stocknessmonster).What is that all about?

sharesies.com

[JAYAY]

sharesies.com

Ah ha. Now I get it.

[Well Endowed]

Edged above 15c today. been some good churn in the high 14c. not sure if this the buyback in full force or what their disclosure arrangements are in terms of the buyback (ASX seemingly report daily). Good to see all the same

[blackcap]

Edged above 15c today. been some good churn in the high 14c. not sure if this the buyback in full force or what their disclosure arrangements are in terms of the buyback (ASX seemingly report daily). Good to see all the same

It is not the buyback. If it were they would have to disclose this to the NZX. To date nothing has come through so so far not a share been brought back. Good to see renewed interest from investors both existing and new. Not good to see is all the dividends (sans imputation) that NWF are paying. That is really disappointing and questions will be asked at the AGM.

[JAYAY]

It is not the buyback. If it were they would have to disclose this to the NZX. To date nothing has come through so so far not a share been brought back. Good to see renewed interest from investors both existing and new. Not good to see is all the dividends (sans imputation) that NWF are paying. That is really disappointing and questions will be asked at the AGM.

I guess it is a balancing act. Some shareholders would like a cash return, others prefer to pay down debt or a buyback. A dividend as well as a buyback seems to be a happy medium. Hard to quantify the benefits but I am inclined to think that paying a dividend has had a positive effect in the share price.

[Aarrgghh]

I guess it is a balancing act. Some shareholders would like a cash return, others prefer to pay down debt or a buyback. A dividend as well as a buyback seems to be a happy medium. Hard to quantify the benefits but I am inclined to think that paying a dividend has had a positive effect in the share price.

Honestly I'm not so sure about that - The share price is up only 3% after a very positive announcement which included more dividends. I can't help feel the market hasn't seen this as positively as the board may have hoped.

Speaking of the board, I see in the voting documents they want to double the board renumeration. Is this to increase board numbers or is it a big pay rise for the existing board? The numbers don't quite add up if they're going to remain only 4 board members, and intend on lower quartile renumeration.

Here's the voting info for those interested.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/340587/307241.pdf

[fish]

I guess it is a balancing act. Some shareholders would like a cash return, others prefer to pay down debt or a buyback. A dividend as well as a buyback seems to be a happy medium. Hard to quantify the benefits but I am inclined to think that paying a dividend has had a positive effect in the share price.

The sp rise could be due to many factors-I would like it to be due to an expectation of higher profits.
For instance when i look at trh they are currently generating with 90 turbines in action earning around $4000 per hour at the going rate-this is hedged so may be receiving less.

[Independent Observer AUNZ]

Speaking of the board, I see in the voting documents they want to double the board renumeration. Is this to increase board numbers or is it a big pay rise for the existing board? The numbers don't quite add up if they're going to remain only 4 board members, and intend on lower quartile renumeration.


Yes - that's a lot of inflation! Needs explanation. Won't get my yes vote as it stands.

[blackcap]

Yes - that's a lot of inflation! Needs explanation. Won't get my yes vote as it stands.

If you take a look and read the explanatory statements it actually explains it. I may not agree with the scale and may vote against but an increase does make some sense.

[fish]

If you take a look and read the explanatory statements it actually explains it. I may not agree with the scale and may vote against but an increase does make some sense.

will be abstaining as I do not know if they are earning it.
Last increased in 2007 and they will not be increasing again for many years.
They sound as if the have asked for the ability to increase the directors fees rather than a 100% increase.
Directors have more duties and responsibilities-including risk of legal action(NZO directors take note)

BTW just looked at current generation-currently still earning over$3000 per hour.I like the new direction.

[blackcap]

will be abstaining as I do not know if they are earning it.
Last increased in 2007 and they will not be increasing again for many years.
They sound as if the have asked for the ability to increase the directors fees rather than a 100% increase.
Directors have more duties and responsibilities-including risk of legal action(NZO directors take note)

BTW just looked at current generation-currently still earning over$3000 per hour.I like the new direction.

Agreed, it has been a long time. Directors are liable and have more responsibilities these days. Maybe they are just increasing the pool to add room if another director were to come on board. However $400k is a lot for a company this size.
Other than that, like the direction that the board is taking this company and will be attending the AGM to ask some questions particularly regarding the dividend and the new agreement finalised yesterday (what it actually means)

[ratkin]

SF6 The new enemy :ohmy:

http://www.bbc.com/news/science-environment-49567197

[Independent Observer AUNZ]

If you take a look and read the explanatory statements it actually explains it. I may not agree with the scale and may vote against but an increase does make some sense.

Yes I saw the explanatory note; not enough information for my liking. Sure the exposure of directors has increased re: personal liability - but this should have always been the case regarding health & safety for example, in my view. There is no explanation for how and when the increase will be applied/adopted other than "flexibility" and also no explanation of what comparisons to which the Institute of Directors report was by reference (for example the NZX50 group is not a reasonable comparison to this organisation in my view). I know from experience it is possible to get the comparison data to tell the desired story. $60k and $100k for an organisation of this size seems fair, but there is no limitation preventing these from being upped by a further 50%+ soon after the meeting.

[Independent Observer AUNZ]

Something came up last minute for me today so I couldn't make it to the AGM. Very disappointed. Look forward to a summary de-brief from attendees on the forum.

[blackcap]

Something came up last minute for me today so I couldn't make it to the AGM. Very disappointed. Look forward to a summary de-brief from attendees on the forum.

Hi Independent Observer and others,

I just attended the AGM in Auckland. Can give a brief summary.
John Southworth the chairman spoke about what the company had achieved and future direction. Then Warren the CEO spoke of financial and operational metrics. Basically these were announced with the FY result. So go back to that if you want to see what they talked about.
John spoke of the updated revenue which was currently $3.6m for the quarter as opposed to $2m pcp.
Also said new agreement goes into effect on Monday with a major gentailer for all of production at an average of $90 for the next 5 quarters culminating at the end of 2020.
Dividend approach, no formal dividend policy. Payout of capital that is not required. Also going to conduct a buyback. A shareholder did mention he thought it would be better to do a buyback off market to help clean up the register. Comment noted.
Guidance able to be given due to the fixed price for generation. Ebitda of between 6.5 and 7.5 reaffirmed.
29.2GWh so far generated this year. Expecting 117 GWh for the year.
Introduced new board of Philip Brockie, Phil Lennon and Mark Evans. Phil and Mark are large shareholders.
New CEO spoke well. Said curtailment had been tried and tested and stopped as it was not working how they wanted it to. Ie not beneficial.
A few questions from the floor as to what the company is going to do in the future and about replacing turbines etc. No decisions have been made but the board is aware and working on all possibilities.
Tax effectiveness of dividends was questioned but at the end of the day getting cash to shareholders will be taxed one way or another. They are still paying down debt at about 900k per annum.
The board all wore NZ windfarm logo polo shirts and had brought about 80 along to give away to shareholders. They were all gone at the end of the meeting. 48 or so shareholders attended.
Questions were asked of the board as to their composition especially with regards resolution 5 that asked for a fee increase. In my opinion the board is not independent enough with 3 holding large share parcels. Which is good that their interests align with ours but some may be slightly lacking in governance experience.
John the chair explained that the board had been working hard and had attended 5 meetings in the last 2 months. This was better justification from one shareholder than citing compliance and other costs increasing for the increase in board fees.
A good meeting overall and the board were open to questions on a diverse variety of subjects. (someone asked how many birds had been killed by blades since inception. Although the answer was not know it was generally a few magpies and nothing else)
Maybe more later.

[mikeybycrikey]

Blackcap,
Thanks for that thorough summary of the meeting. Everything was clear and lots of good detail.

Just wondering what you mean when you talk about "curtailment".

[blackcap]

Blackcap,
Thanks for that thorough summary of the meeting. Everything was clear and lots of good detail.

Just wondering what you mean when you talk about "curtailment".

Under the previous regime they trialed a system where they would curtail output (ie stop the turbines spinning) when prices were lower than the marginal cost. So when prices were say $5 for a MWh of energy they would not turn the turbines. THey had some algorthm for this but they have abandoned this policy. Was in place to reduce cost of replacement of parts etc.

[Well Endowed]

Thanks Blackcap, much appreciated bud.

[blackcap]

Thanks Blackcap, much appreciated bud.

No worries. One thing I did forget to mention. In passing the CEO and Operations Manager who was there too and very articulate, indicated that they would like to do a web broadcast of the AGM in future. Lets hope they can get this over the line as it would help many who could not make Auckland.

[ratkin]

.
John the chair explained that the board had been working hard and had attended 5 meetings in the last 2 months. This was better justification from one shareholder than citing compliance and other costs increasing for the increase in board fees.
.

They lead a hard life, all work, work, work.

[blackcap]

They lead a hard life, all work, work, work.

Not the impression I had. The question was asked from the floor as to the justification for a fee pool increase (which the NZSA was voting in favour of) so just came up with reasons. Directors do have a lot of skin in the game and have been very hands on the last 3-5 months since 3 of the board effectively were removed. There have been changes at mgmt level too so directors are in almost daily contact with each other and 2 senior mgmt members. They are also not looking to raise their own fees and John Southworth the chair made a commitment not to do that, but the increase will allow room for another director to come onto the board. A move that I welcome.

[Well Endowed]

a fairly favourable writeup in the NBR (sorry paywall) for NWF. Nothing earth-shattering, although provides a little bit of detail on the hedging arrangement, price, term and justification - which in my view all seems to make good sense.

https://www.nbr.co.nz/story/nz-windfarms-more-stable-it-s-ever-been-chair-says


also worth noting Robert Stone has picked up a few million more shares to bring his holding above 14%.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/341664/308508.pdf

[Dassets]

Can I just clarify the director fee position. The individual fees will go to bottom quartile. What I committed to was that the excess in the fee pool from that level would not be used by existing directors. Thanks all for attending.

[blackcap]

Can I just clarify the director fee position. The individual fees will go to bottom quartile. What I committed to was that the excess in the fee pool from that level would not be used by existing directors. Thanks all for attending.

Thanks for the clarification Dassets. Appreciated.

[Blendy]

I haven't been paying attention - why have I received a second dividend today? Obviously grateful for this unexpected payment of course :)

[blackcap]

I haven't been paying attention - why have I received a second dividend today? Obviously grateful for this unexpected payment of course :)

Final dividend of .55cents declared at the FY and then also a Q1 20 dividend of .4 cents announced at the same time. (read the announcements :) )

[Independent Observer AUNZ]

Blackcap, you're a credit to the forum - thanks for the thorough notes and in particular the nuance on the competency of the people from your personal perspective. Wish I'd got myself a shirt now!

[fish]

Blackcap, you're a credit to the forum - thanks for the thorough notes and in particular the nuance on the competency of the people from your personal perspective. Wish I'd got myself a shirt now!

Fully agree and thank you Blackcap.
Its also so good having Dassets on this forum as well as the board.
I am really getting a good feel for this company.
Absolutely love going to trh-live and seeing the power and price generated by these turbines-really impressive and bodes well for the future.
Its my belief that NZ needs more electricity at affordable price for economic success.
When Genesis started burning coal(imported again) I sold my shares at a good profit and started looking for cleaner fuels.Mercury became a big investment and when I found that natural gas is many times cleaner than heavy oil and coal started building up my nzo shares.
Still buying clean energy shares-concentrating on NZO at present to stop oooogog stealing what is potentially this countries biggest asset in clean energy but eventually would like to become a big shareholder in windfarms

[blackcap]

Absolutely love going to trh-live and seeing the power and price generated by these turbines-really impressive and bodes well for the future.


Hi Fish and others. Just be aware that from 1st October (yesterday) the price no longer applies as NWF has gone into a fixed price contract for all of its generation for the next 5 months. The Average price is $90 over those 5 quarters there will be variance that the CEO at the AGM said roughly follows the forward curve which can be found here: https://www.asx.com.au/asx/markets/futuresPriceList.do?code=EA&type=FUTURE

[blackcap]

Someone is doing something right. Reads very well and looks like on track for the EBITDAF of between 6.5 and 7.5m

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NWF/342515/309605.pdf

[Independent Observer AUNZ]

Disappointing to see the Chair selling 15% of his shares. https://www.nzx.com/announcements/342828

[BlackPeter]

Disappointing to see the Chair selling 15% of his shares. https://www.nzx.com/announcements/342828

Well, lets face it - while the current board did an outstanding job to make this company profitable at last, I'd say that they are now well in the area of diminishing returns. Where would you expect the share price long term to go from here?

[blackcap]

The current chair does frequent this forum. He might be able to shed more light on why his entity sold a 15% stake?

[Dassets]

The current chair does frequent this forum. He might be able to shed more light on why his entity sold a 15% stake?

Sure I don't think selling some shares after owning them for 4 years is unthinkable. I sold some last year to help buy a property. I can attest that my holding remains a considerable part of my assets. I am pretty sure that having half your money in one stock still shows a commitment that wouldn't be reflected in anyone else's share portfolios. It also doesn't change what I have said about the company recently. First qtr revenue was great, the wind is blowing, we are now on fixed price. Hope that helps.

[blackcap]

Sure I don't think selling some shares after owning them for 4 years is unthinkable. I sold some last year to help buy a property. I can attest that my holding remains a considerable part of my assets. I am pretty sure that having half your money in one stock still shows a commitment that wouldn't be reflected in anyone else's share portfolios. It also doesn't change what I have said about the company recently. First qtr revenue was great, the wind is blowing, we are now on fixed price. Hope that helps.

Totally agree Dassets. I am sure some posters are making more of it than needs to be made. You retain a large holding and the company is on the right path and as you say the wind is blowing with consistent guaranteed revenues. Well done.

[RTM]

Totally agree Dassets. I am sure some posters are making more of it than needs to be made. You retain a large holding and the company is on the right path and as you say the wind is blowing with consistent guaranteed revenues. Well done.

Ditto from me as well Dassets.
Personally I would be VERY nervous about having 50% of my investments in one stock !
Good luck !

[Independent Observer AUNZ]

Totally agree Dassets. I am sure some posters are making more of it than needs to be made. You retain a large holding and the company is on the right path and as you say the wind is blowing with consistent guaranteed revenues. Well done.

Appreciate the insight, John - that level of transparency is appreciated but not expected. I wasn't intending to make a big deal of it, it did concern me without any context though.

[Well Endowed]

Mercury confirmed to be investing in full in the area, wonder if this has contributed to the recent increase NWF's value?

https://www.stuff.co.nz/business/117342459/second-stage-of-new-zealands-biggest-wind-farm-to-go-ahead

[Independent Observer AUNZ]

Mercury confirmed to be investing in full in the area, wonder if this has contributed to the recent increase NWF's value?

https://www.stuff.co.nz/business/117342459/second-stage-of-new-zealands-biggest-wind-farm-to-go-ahead

Maybe, but the volume has been tiny. It's annoying because I was hoping to buy a large parcel at 14.3 or 14.4ish.

[Well Endowed]

Good to see full year generation now available

http://203.114.161.10/trh.htm

[blackcap]

Good to see full year generation now available

http://203.114.161.10/trh.htm

Well it always was, you just needed to do some mathematics and know what the generation total was as per 30 June. But this is easier and more transparent yes. Good move and thanks John and the team.

[Grimy]

We must be getting close to the next dividend?
Didn't they say they were going to pay quarterly dividends in the last agm update?

[blackcap]

We must be getting close to the next dividend?
Didn't they say they were going to pay quarterly dividends in the last agm update?

Not sure they explicitly stated they were going to pay quarterly dividends. I took from the AGM that they would likely pay half yearly divs. But that is from memory and that was a while ago.

[Grimy]

This was what I was thinking of from last years Annual Report in June.

“We will continue to return shareholder funds over the upcoming financial year through:
- a recently announced share buyback for up to 5% of the shares on issue; and
- a quarterly dividend of 0.40 cents per share for the first quarter 2020 (pcp: nil) announced today.”

[Independent Observer AUNZ]

This was what I was thinking of from last years Annual Report in June.

“We will continue to return shareholder funds over the upcoming financial year through:
- a recently announced share buyback for up to 5% of the shares on issue; and
- a quarterly dividend of 0.40 cents per share for the first quarter 2020 (pcp: nil) announced today.”

Dassets? What's the dividend policy as it currently stands?

[Dassets]

For clarity all we have said is we will pay out excess cashflow. In terms of time frame we haven't got a stated policy on qyry or semi annual, it's still a work in process but is a priority to formalize a position. We made an announcement late last year on production data availability which is tracking our production for the current fiscal year every 30 seconds or so.

[Independent Observer AUNZ]

For clarity all we have said is we will pay out excess cashflow. In terms of time frame we haven't got a stated policy on qyry or semi annual, it's still a work in process but is a priority to formalize a position. We made an announcement late last year on production data availability which is tracking our production for the current fiscal year every 30 seconds or so.

Yes, we love the transparency of the data, John! Its just the quarterly investor updates have dried up so as a (relatively) uninformed investor I'm doing some guessing here :)



FY Net Energy (GWh)
73.685568



Given we are just over halfway through the year this looks pretty nice compared to the 117.2 GWh expected annual production. I also note that end of March figures in 2018 were 81.227 and 73.012 in 2019. All of which looks quite favorable when compared to generation so far this year...

[JAYAY]

Waiting patiently for second quarter performance stats. Last year issued 31 January.

[blackcap]

Waiting patiently for second quarter performance stats. Last year issued 31 January.

Don't think we are going to get them. I think we will get them with the HY which should be before the end of the month. They are transparent with their output though...http://203.114.161.10/trh.htm

So you can sorta figure it out yourself if you are that way inclined :)

[blackcap]

Looks like a pretty good result out just now. dividend of 0.7c which makes the HY dividend 1.1 cents. EBITDAF of $5.1m with very healthy cash flow.

[ratkin]

Looks like a pretty good result out just now. dividend of 0.7c which makes the HY dividend 1.1 cents. EBITDAF of $5.1m with very healthy cash flow.

Very nice, at least the wind keeps blowing.

[peat]

dividend of 0.7c

earnings of 2/10ths of a cent though? 0.002



Very nice, at least the wind keeps blowing.

spreading germs?

[blackcap]

earnings of 2/10ths of a cent though? 0.002




spreading germs?



Not too worried about earnings. Check out operating cashflow. Earnings in a business like this are distorted by depreciation.

[peat]

Not too worried about earnings. Check out operating cashflow. Earnings in a business like this are distorted by depreciation.

same as the hydro gentailers huh?
depreciation is a cost in that new equipment is required. Maybe with dams you can wait 50 years but I reckon wind turbines will need all the depreciation and more for capex.

[Aarrgghh]

I agree with Peat. unless the business is being run in such a way they intend on closing the doors in 15-20 years time, the expected CAPEX is a real expense.

Frustrating to see the big boys investing big in wind energy while NWF is happy to dwindle away, at least that's what it feels like from my perspective.

[blackcap]

same as the hydro gentailers huh?
depreciation is a cost in that new equipment is required. Maybe with dams you can wait 50 years but I reckon wind turbines will need all the depreciation and more for capex.

Possibly. But they did address this issue at the AGM just been. Depreciation is an accounting construct and with maintenance which is expensed the depreciation rates are overstated.

That said another scenario is to run the cashflows from the business till the assets no longer can produce and leave it there. So the 14.2 cents per share that you pay now is the value of the discounted cashflows over the next 20 years. If you can generate $5m free cash flow per annum, over 20 years discounted at today's current low rates that would still be in excess of $60m. (just did math in my head so feel free to correct) Assuming turbines can last another 20 years.

[tim23]

MCY building farm next door - why not take NWF out as well?

[Grimy]

I'm more than happy to take the dividend...….

[Grimy]

MCY building farm next door - why not take NWF out as well?

I doubt they want to be lumbered with a few orphan turbines. More trouble than it's worth to them.

[kiora]

same as the hydro gentailers huh?
depreciation is a cost in that new equipment is required. Maybe with dams you can wait 50 years but I reckon wind turbines will need all the depreciation and more for capex.

Depreciation of dams?
https://www.google.com/search?source=hp&ei=HNFYXsm2FYGZ4-EPsp2FqAc&q=concrete+strength+with+aging&oq=concrete+strenght+with+aging&gs_l=psy-ab.1.0.33i22i10i29i30.2256.15125..17190...1.0..0.1 079.12792.2-7j10j5j3j3j1......0....1..gws-wiz.......0i131j0j0i10j0i22i10i30j0i13j0i22i30j0i1 3i30j0i8i13i30j0i13i5i30.uYvyk9z1Xbc
Can concrete strength reduce after years? Theoretically, no. The hydration process, which is what the Portland cement ingredient goes through during the curing of the concrete, slows down over time. However, the chemical reaction continues for a very long time.

[blackcap]

I agree with Peat. unless the business is being run in such a way they intend on closing the doors in 15-20 years time, the expected CAPEX is a real expense.

Frustrating to see the big boys investing big in wind energy while NWF is happy to dwindle away, at least that's what it feels like from my perspective.

What is your solution then for NWF? And a sustainable one that will offer EPS accreditive returns to shareholders over the long term.

[turnip]

At the end of this BusinessDesk article (https://www.businessdesk.co.nz/article/offer-tiwai-transmission-discount-now-meridian) Meridian say that their planned Harapaki wind farm project would probably still be economic even if the Tiwai smelter closes because

... it will be connected to Transpower’s 220-kilovolt transmission link through to Contact’s Wairakei geothermal field near Taupo.

That puts it north of transmission constraints the firm expects would develop in the lower North Island should the smelter close and more cheap South Island hydro generation is delivered north. Power prices below that constraint would generally be lower.

Does anyone know where NWF's Te Rere Hau windfarm would lie in relation to those transmission constraints if they developed?

[Aarrgghh]

What is your solution then for NWF? And a sustainable one that will offer EPS accreditive returns to shareholders over the long term.

Borrow some money, build some more efficient turbines and spread fixed overheads over a larger number of turbines. I say this on the assumption that if other companies are doing this then it must be profitable.

Reduce dividends to build up a fund to do some of this (As in a plan which does not require further capital raises, nor share buy back / cap raise) and the major maintenance on existing turbines. Plan to replace them with new technology when they become EOL.

[blackcap]

Borrow some money, build some more efficient turbines and spread fixed overheads over a larger number of turbines. I say this on the assumption that if other companies are doing this then it must be profitable.

Reduce dividends to build up a fund to do some of this (As in a plan which does not require further capital raises, nor share buy back / cap raise) and the major maintenance on existing turbines. Plan to replace them with new technology when they become EOL.

Not sure if these more efficient turbines are possible on the existing infrastructure that NWF have. They were talking about this at the AGM but maybe Dassets or others can confirm.

If I am wrong and that is possible then yes they could spread that out over time and replace the existing 500MW blades with other more efficient ones. I guess we will find out more in due course. Happy to be receiving my dividend at this point in time.

[Snoopy]

There may be some argument for four blades being more efficient. Certainly the commercial prop aircraft I see tend to have four blades and not two.

However, in the case of a wind turbine the power source is 'free', so efficiency isn't the number one goal. The goal is to extract as much power as you can from the wind available, and that can but doesn't always mean working your blade at maximum efficiency.

Of course if you had four blades, then the total blade structure you are supporting would be twice as heavy, and that has other implications for costs.




Not sure if these more efficient turbines are possible on the existing infrastructure that NWF have. They were talking about this at the AGM but maybe Dassets or others can confirm.

If I am wrong and that is possible then yes they could spread that out over time and replace the existing 500MW blades with other more efficient ones. I guess we will find out more in due course. Happy to be receiving my dividend at this point in time.


Rebuilding with larger turbines is certainly possible, depending on the amount of money you wish to throw at the project.

I am going back fifteen years now, when I attended the Gebbies Pass open day on the prototype turbine in the Christchurch Port Hills. But my memory is that the smaller lighter Windflow turbine's benefits amounted to a wave that swept through all aspects of the system design. The cost saving access roads were built to a standard that would withstand only the lighter loads required when hauling up a lighter turbine and tower. The crane required to erect the turbine on site did not need to be as big. Similarly there would be an equivalent downstream saving if the turbine unit was to be removed for servicing purposes. I don't know if only lighter grade wiring was required to get that power down off the hill (although it would fit with the 'lightness' paradigm). But I don't think replacing those Windflow turbines with something larger would be a simple swap out of one unit for another. I am not even sure the existing resource consent would carry over.

SNOOPY

[Aarrgghh]

At the end of this BusinessDesk article (https://www.businessdesk.co.nz/article/offer-tiwai-transmission-discount-now-meridian) Meridian say that their planned Harapaki wind farm project would probably still be economic even if the Tiwai smelter closes because


Does anyone know where NWF's Te Rere Hau windfarm would lie in relation to those transmission constraints if they developed?

I'm guessing that would be the cook straight cable https://en.wikipedia.org/wiki/HVDC_Inter-Island. If so yes, it is above it

[Aarrgghh]

Not sure if these more efficient turbines are possible on the existing infrastructure that NWF have. They were talking about this at the AGM but maybe Dassets or others can confirm.

If I am wrong and that is possible then yes they could spread that out over time and replace the existing 500MW blades with other more efficient ones. I guess we will find out more in due course. Happy to be receiving my dividend at this point in time.

If other companies can look at planning, infrastructure, Resource Management and all the other associated costs and decide it's profitable then there must be something there.

And look, even if the company does decide to dwindle, it's still probably going to produce more dividends than current share price before it goes so seems like a reasonable bet at this stage.

[turnip]

I'm guessing that would be the cook straight cable https://en.wikipedia.org/wiki/HVDC_Inter-Island. If so yes, it is above it

I think Meridian were talking about after the current HVDC upgrades are finished, when they will be able to send a lot more South Island electricity into the lower North Island. Then the HVDC link will no longer be the main bottleneck, but other constraints will come into effect that prevent all that electricity being transmitted much further north. I just don't know what counts as "lower North Island", maybe it is just Wellington and the Hutt, or maybe it includes Palmerston North or other points further north.

It might just be the way the article was worded, but it sounded as if Meridian's Harapaki wind farm wouldn't have been economic if it just connected to the local grid at Napier, but connecting it at Taupo puts it far enough north to avoid the problem. Which makes me think NWF's Te Rere Hau windfarm might fall into the low-price side of the constraints in the event that NZAS closes.

(I hold NWF, but it is only a small part of my portfolio currently, still trying to decide whether to buy more or wait to see how things pan out.)

[turnip]

There were some odd trades this morning, almost like some buyers didn't realise NWF went ex-div today.

[Independent Observer AUNZ]

There were some odd trades this morning, almost like some buyers didn't realise NWF went ex-div today.

"Odd" in what way?