NWF - NZ Windfarms

[Getty]

Yes, I collected all of those, so no complaints.

[Southern Lad]

Big question is what the outlook is post 31 December 2020 once the current variable volume fixed price hedge runs out. Assume in the current wholesale electricity market, the current revenue per unit of output will be difficult to replicate. Didn't see any comment in today's release that gave any insights. Therefore, be cautious buying on the strength of the current dividend yield.

[ratkin]

Great result, only wish I owned more of them. Only downside is that bits fall off in the wind. Below industry average on reliability, but still have done very well. Record prices etc for the electricity, but can that be maintained?

[nztx]

Big question is what the outlook is post 31 December 2020 once the current variable volume fixed price hedge runs out. Assume in the current wholesale electricity market, the current revenue per unit of output will be difficult to replicate. Didn't see any comment in today's release that gave any insights. Therefore, be cautious buying on the strength of the current dividend yield.

I see a section where this to be renegotiated in the reports released today

- From the CEO's Report - Page 8 in the 2020 Accounts:

'Variable Volume Fixed Price Agreement

We will look to renegotiate our VVFPA
over coming months. We are confident
this mechanism continues to be the best
way to manage electricity price risk for
our business. However an inflection point
exists, where below a certain price level,
the Board would favour other electricity
price hedging tools and strategies over a
VVFPA. '



Sure - there may be some risks with Tiwai potential closing etc on the sector, but I cant see domestic demand & in the NI
particularly declining. The excess Tiwai production is at the wrong end of the other island, so effect may be minimal

[nztx]

Great result, only wish I owned more of them. Only downside is that bits fall off in the wind. Below industry average on reliability, but still have done very well. Record prices etc for the electricity, but can that be maintained?

Good points .. The Board need to be congratulated on the NWF results achieved over the past year

[Arthur]

They regularly replace the moving components so should last a long time. Blades may be an issue at some stage, but I doubt replacing them will be uneconomic.

[ratkin]

They regularly replace the moving components so should last a long time. Blades may be an issue at some stage, but I doubt replacing them will be uneconomic.

Yeah and it is not like they will all fail at the same time, should not be too difficult to keep them spinning.

[Southern Lad]

I see a section where this to be renegotiated in the reports released today

- From the CEO's Report - Page 8 in the 2020 Accounts:

'Variable Volume Fixed Price Agreement

We will look to renegotiate our VVFPA
over coming months. We are confident
this mechanism continues to be the best
way to manage electricity price risk for
our business. However an inflection point
exists, where below a certain price level,
the Board would favour other electricity
price hedging tools and strategies over a
VVFPA. '



Sure - there may be some risks with Tiwai potential closing etc on the sector, but I cant see domestic demand & in the NI
particularly declining. The excess Tiwai production is at the wrong end of the other island, so effect may be minimal

Thanks for the CEO Report extract TX. Sounds to me that there is an inherent warning that the pricing available for a new VVFPA might not be attractive and NWF might need to look at other hedging products. The variable volume aspect of the current hedge removes a lot of risk, whereas with a fixed volume hedge the uncertainty of wind conditions and turbine reliability can mean that NWF comes unstuck.

i’m no expert but some of the future NI pricing in the market publications like the one below don’t fill me with confidence that a new VVFPA will be at the same price as the existing one that only has four months to run.

https://www.energylink.co.nz/sites/d...7%20Aug-20.pdf

[Southern Lad]

The continued sell down by large shareholders, including those who sit in the board, raises the question as to whether other shareholders should follow their lead.

The current directors have served long suffering shareholders well through improving the hedging arrangements and therefore creating a period of strong operating cashflow. This has enabled good dividends to be paid, albeit not tax efficiently due to tax losses meaning there are no imputation credits available.

Those major shareholders deserve the same opportunity as all other shareholders to sell down their shareholding’s to take advantage of the current trading. However, my read is that its a signal that the future won’t be as rosy.

[blackcap]

The continued sell down by large shareholders, including those who sit in the board, raises the question as to whether other shareholders should follow their lead.

The current directors have served long suffering shareholders well through improving the hedging arrangements and therefore creating a period of strong operating cashflow. This has enabled good dividends to be paid, albeit not tax efficiently due to tax losses meaning there are no imputation credits available.

Those major shareholders deserve the same opportunity as all other shareholders to sell down their shareholding’s to take advantage of the current trading. However, my read is that its a signal that the future won’t be as rosy.

I concur, and till about a month ago was very concerned about futures pricing. But recently the next 4-5 quarters are looking pretty strong so it is possible that they negotiate a relatively positive contract going forward.

https://www.asx.com.au/asx/markets/f...EA&type=FUTURE