TRUST POWER

[bull....]

What years have you compared bull? Are you considering straight operating cashflow or operating cashflow divided by revenue? Can't comment too much on your proposition as I am not very clear what you are looking at. However, I do know that both Contact Energy and Mighty River power are in the middle of commissioning a major new thermal power station each. So this may have some bearing on your comparison.

Given that large capital expenditures can make operating cashflow lumpy, as a general rule I would say using operating cashflow to compare power producers would not be a good yardstick.

SNOOPY

hi snoopy I was looking at it from the operating cushion point of view because companies with a better cushion can fund growth , divs etc more easily and the years I looked at tp cushion was the best

[Snoopy]

hi snoopy I was looking at it from the operating cushion point of view because companies with a better cushion can fund growth , divs etc more easily and the years I looked at tp cushion was the best

Ah OK bull. I do note that none of the big 5 power companies seem to have had any problems financially with either upgrading existing power stations or building new ones. I don't believe TPW is building any significant new stations in NZ at least right now. Both CEN and MRP are in the process of building new geothermal stations as I write this. So that would obviously be reflected your cashflow comparisons.

SNOOPY

[Snoopy]

Thats roughly what the comcom allows Vector isn't it?

I don't follow Vector closely CJ, so I 'll take your word for it that 8.4% is regarded by the commerce commission as an acceptable return for Vector. I am not sure a Labour/Green energy minister would go with that 8.4% though. Donning my impish green cap, I would argue that Vector's assets are smaller (think power poles and wires vs dams) and more distributed and more often in need of replacement or upgrading. Think of the trend towards undergrounding of wires, etc. So Vector actually needs a higher return on capital to take into account the shorter life of their assets. The power generators should be able to survive on much less than 8.4%.

SNOOPY

[Snoopy]

I am in the process of looking at the capital expenditure verses depreciation equation for Trustpower. I am struggling a bit with the different presentation of accounts over the last 10 years. Note 13 in AR2005 shows 'capital expenditure accruals' of $0 for FY2005. AR2007 shows 'capital expenditure accruals' for FY2006 of $0 for FY2006. The equivalent figure for FY2007 is $36.793m for 'capital expenditure accruals' which is a figure of the order of what I was expecting. I say that because $36.7m is of the same order as the depreciation figures for generation equipment listed annually over the last 10 years. Yet if my looking up is correct, Trustpower spent absolutely nothing on capital expenditure for the whole of FY2006 and FY2005. This doesn't seem likely, and yet....

Anyway I would appreciate it if anyone can offer a second opinion on this.

SNOOPY

[Snoopy]

I am struggling a bit with the different presentation of accounts over the last 10 years.

One of the accounting policies that I haven't seen before in relation to a power generation company is that each year, Trustpower expenses a significant amount of 'Generation development expenditure' (E.g. page 5 AR2008). Now I can understand this if the expenditure relates to generation projects that are no longer being developed. But the fact that this happens every year with a quantum of around $10m I find very puzzling. The fact that it happens every year without fail suggests this written off expenditure relates to something else. Ordinarily I would expect such expenditure to be capitalized if it relates to a power station that is still being constructed, or improved. So I am not sure what is going on.

What I do find is that if I stack up the cumulative capital expenditure in New Zealand from FY2008 to FY2013 inclusive, against the offsetting depreciation in the accounts (assuming all of that comes from NZ assets, because Oz Assets are still in the construction phase), the capital expenditure only just exceeds depreciation. That would be fine if the cost of constructing power stations did not rise over time. For comparison the Capex spending of both Contact Energy and Mighty River Power over ten years is approximately twice depreciation. So my conclusion is that Trustpower is not setting aside enough capital to allow for the wear and tear and ultimate replacement of their NZ generation assets. If that is true, then Trustpower shareholders should be concerned in my view. However, my six years of Trustpower data is not really enough to state my fears definitively. This is why I am trying to study FY2004 to FY2008 annual results to round things out to a ten year picture.

SNOOPY

[RTM]

TPW: Trading Halt of Securities

Hmmmm...wonder what is going on ?

[dingoNZ]

TPW: Trading Halt of Securities

Hmmmm...wonder what is going on ?

Block sale of shares from Tauraunga Energy Consumer Trust - 20m shares up for grabs at a slight discount

[Joshuatree]

Not much discount by the looks and we pay1% commission.

[dingoNZ]

Quoted in the ARF @ $7.74, 4.2% discount from yesterdays price

[RTM]

Thanks...where are you getting this information ?
Can anyone access ? What am I missing ?

Yes...I have some TPW shares and so am interested.