NWF - NZ Windfarms

[Crackity]

Sideshow??

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

[Coles Killer]

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

[Harvey Specter]

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

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

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

[Crackity]

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

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

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

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

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

[Harvey Specter]

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

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

Excellent - should that really need a shareholder resolution though.

[Crackity]

Excellent - should that really need a shareholder resolution though.

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

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

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

The company has yet to pay a dividend.

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

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

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

[Coles Killer]

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

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

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

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

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

[BlackPeter]

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

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

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

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

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

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

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

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

[Crackity]

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

Unlisted sharetrading platform could be a reasonable compromise?

[Harvey Specter]

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