The chairman of New Zealand Windfarms Ltd (NZX: NWF) Stuart Bauld told this week’s annual general meeting that the company was evaluating a number of options which one report indicated may include selling the Te Rere Hau wind farm in the central North Island.
Bauld said the company was now profitable from the need to rationalise and make improvements.
The board is considering appointing a financial adviser for this review.
During the year, without warning, key shareholder Vector Ltd (NZX: VCT) sold its entire 22% stake in the company and this had an immediate negative impact on the share price. It also had an impact on the financial statements as it resulted in us losing our shareholding continuity and “with that a large amount of tax losses.”
He said the result of a loss of accumulated tax losses was to turn a pre-tax profit of $780,000 into an after-tax loss of $14.747 million. The losses forfeited were $58 M, but the carry forward balance was now a “much more manageable” $20.4 M. NZ Windfarms will not be a taxpayer in the foreseeable future.
Bauld said that looking back it was interesting that when the company started, it assumed that it could achieve 160 GWH of production per annum. This was later changed to 140 GWH and then to 130 GWH. While the company has occasionally operated at an annual rate close to this, it has never been achieved over a full year, so it revised the target down to 120 GWH pa.
“We have reached the point where it is clear that the company can consistently produce a modest profit and a modest cash flow, but is never going to be a major player in the industry,” Bauld said.
However, the company has a good location, good resource consents and now a good relationship with neighbours.
NZ Windfarms chief executive John Worth said the company had been able to reduce costs by $2 M.
He said in the new financial year the company broadened the focus to adopt new industry benchmarks, and “we have outperformed against all metrics.”
The company has been successful in working with the industry regulator, the Electricity Authority, to change both the market rules as they relate to wind energy, and in achieving interim dispensation to curtail on price.
“We have also been successful in managing our revenues through hedging,” Worth said.
He said while FY18 was a fairly low wind year – underscoring the importance of financial hedging – the company had total electricity revenue for the year of $7.6 M.
“Electricity price for the year was quite good at a shade under $70/MWh, which when hedging gains are included improved to around $74/MWh.
“We have an ambitious work programme for the year, focussed around four workstreams. We are looking to continue to build separation between revenue and cost to run and we continue to work on our consents and in building social license to operate.”
Worth said that following dealing with the Electricity Authority for changes, it was still unclear when Transpower will make the required market changes.
Sources: nzresources.com; businessdesk.co.nz