NWF - NZ Windfarms

[BlackPeter]

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

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

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

[Jantar]

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

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

[BlackPeter]

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

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

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

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

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

[Jantar]

........

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

I think that giving private advice may be a conflict of interest as far as my present employer is concerned.

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

[JAYAY]

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

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

[Poet]

From NBR - behind paywall unfortunately.

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

http://www.nbr.co.nz/article/windfar...or-th-p-188495

[kiora]

The share price won't be going anywhere until they get some of these monsters
http://www.nzherald.co.nz/business/n...ectid=11632170

[JAYAY]

From NBR - behind paywall unfortunately.

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

http://www.nbr.co.nz/article/windfar...or-th-p-188495

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

[Jantar]

......
If Vector is in there looking after their own interests (ie maximising company performance) then surely all shareholders benefit.

Quite correct.
So why are Vector NOT looking after their own interests?

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

[BlackPeter]

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

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

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