We completed the year with no recordable incidents. Keeping everyone safe remains our number one priority.

Similar documents
NZ WINDFARMS LIMITED INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

GLAXOSMITHKLINE 32 ND ANNUAL JP MORGAN HEALTHCARE CONFERENCE Simon Dingemans CFO. Tuesday, 14 January 2014

Precarious to prosperous: Tackling income volatility in Canada. Bharat Masrani Group President and Chief Executive Officer, TD Bank Group

FCA Second Annual Public Meeting

Goldman Sachs Presentation to Bernstein Strategic Decisions Conference

SG Fleet Group LIMITED

Bats Global Markets, Inc.

Q CONFERENCE CALL. Prepared remarks from: David L. Dunkel, Chairman and CEO Joseph J. Liberatore, President David M.

Cautionary statement This document contains statements that are, or may be deemed to be, forward-looking statements with respect to NEST Corporation

In this example, we cover how to discuss a sell-side divestiture transaction in investment banking interviews.

Computershare 2017 Annual General Meeting

How multi-technology PPA structures could help companies reduce risk

portfolio is located primarily in eastern Canada and Washington State.

Cerner Corporation Third Quarter 2018 Earnings Conference Call October 25, 2018

Introduction. I hope you find it helpful. Do get in touch if you have any other questions, or want to give Vestd a try. Thanks,

FROM 12 TO 21: OUR WAY FORWARD

PennyStockProphet.com:

Accelerating the Shift to Digital

INFIGEN ENERGY 2017 ANNUAL GENERAL MEETING. 22 November 2017

Sainsbury's Bank Wednesday, 02 May pm Debt Investor Call Transcript

Pandora (P) Web IV Update Conference Call December 16, 2015

August 7, Fellow Calix stockholders:

Good morning shareholders, Board members, ladies and gentlemen, a warm welcome to our 15 th AGM.

Christian Sewing, Chief Executive Officer, Deutsche Bank AG. Remarks at the Deutsche Bank Global Financial Services Conference, New York.

Ed Clark President and CEO, TD Bank Financial Group. SCOTIA CAPITAL FINANCIALS SUMMIT 2003 September 9, 2003

ZILLOW GROUP, INC. Q EARNINGS PREPARED REMARKS. NOVEMBER 03, p.m. Pacific Time. RJ Jones, VP of Investor Relations:

EGP 2.9 BN 51.1% y-o-y. EGP 216 MN 44.9% y-o-y. EGP 92 MN 69.4% y-o-y. EGP 28 MN 46.3% y-o-y. EGP 36 MN 88.4% y-o-y.

Tilt Renewables Post Demerger Market Announcement

Tactical Gold Allocation Within a Multi-Asset Portfolio

It is therefore pleasing to report that this evolution of BOQ has continued throughout this financial year.

Aveo Records Strong Performance in FY17 and Introduces New Initiatives

Ladies and gentlemen, if we are all ready to begin I will now pass the call over to our

INFRATIL HALF YEAR RESULTS

Westpac Banking Corporation 2016 Annual General Meeting

ENMAX Corporation 2017 Q2 INTERIM REPORT CAUTION TO READER

Title: Union Bank of Nigeria 9M 2017 Investor and Analyst Conference Call. Date: Speakers: Emeka Emuwa and Oyinkan Adewale

J.P. Morgan Healthcare Conference

Building Value Through Operating and Developing Major Mining Projects. Taseko 2016 Annual General Meeting July 12,

Brookfield. Supplemental Information Q Q SUPPLEMENTAL INFORMATION 1

Thank you, Cameron, for the introduction, and good morning. We are pleased to present Axsesstoday s FY18 end of year results, and FY19 guidance.

0 $50 $0 $5 $-5 $50 $35 1 $50 $50 $40 $10 $50 $15 2 $50 $100 $55 $45 $50 $35 3 $50 $150 $90 $60 $50 $55 4 $50 $200 $145 $55 $65

AGM report for shareholders 2002

Eesti Energia Audited Financial Results for February 2018 Transcription

Jean-Claude Trichet: European financial integration

United Rentals to Acquire RSC Holdings

The Group has a portfolio of 118 investments located in the UK, France, Ireland, the Netherlands, Canada, the USA and Australia.

Annual General Meeting of CREDIT SUISSE GROUP Zurich, May 9, 2014

Interim Report Review of the financial system external dispute resolution and complaints framework

contents Page Part 1 Introduction 2 Part 2 Performance Review 3 Part 3 Analysis of Consolidated Financial Statements 29

Ventus 2 VCT plc. Strategy Note Executive Summary

SemGroup Corporation Agreement to Acquire Rose Rock Midstream Announcement

Chief Executive Officer s speech

10. Dealers: Liquid Security Markets

Sapphire Wind Farm Community Co-Investment Frequently Asked Questions (FAQs) December 2018

FY2018 Results CEO and CFO conference call script

SCOTLAND S FISCAL DEFICIT

Clarion Housing Group Value for Money Statement 2017

Endurance International Group Holdings, Inc. Earnings Conference Call May 6, 2014 Prepared Remarks

INVESTMENT FUNDS. Your guide to getting started. Registered charity number

MOL Group Full Year 2015 Results

ATA Inc. Fiscal 2013 Fourth Quarter and Year-end Financial Results Conference Call TRANSCRIPT May 30, 2013 at 8 a.m. ET

LIFT RETIREMENT NEWS AND INFORMATION FOR EMPLOYERS Q Chuck Furr, CFP, AIF 1201 Battleground Avenue Suite 200 Greensboro, NC 27408

AUSTRALIAN SHAREHOLDERS ASSOCIATION NATIONAL CONFERENCE. Sydney, 6 May Check against delivery

I would now like to turn over to your host, Maureen Davenport, Fannie Mae's Senior Vice President and Chief Communications Officer.

Now we would like to give the floor to Mr. Vladimir Ranevsky, CEO, who will begin the presentation. Mr. Vladimir you may proceed.

Suzlon Energy Limited Q3FY13 Results Conference Call

EZ Way Lunch & Learn Webinar Series Presented by Equitable Safety Group. Making Cents. The Business Case for Safe Patient Handling November 13, 2008

Good morning and welcome to AIA s 2018 interim results presentation. I am Lance Burbidge, Chief Investor Relations Officer.

Helping Clients Win with Digital

LETTER TO SHAREHOLDERS

12.2% FULL YEAR UNDERLYING ROE 1. CEO s Message 2016: ANOTHER STRONG YEAR NET INCOME 1 TOTAL SHAREHOLDER RETURN 2

INVESTMENT UPDATE. August 2018 PERFORMANCE UPDATE

Kevin Kelly: Thanks Julie and thanks to all of you who are taking time to participate in our call today.

ASX RELEASE. AGM Presentation Materials. 19 April Market Announcements Office ASX Limited 20 Bridge Street Sydney NSW 2000.

ATA Inc Third Quarter Financial Results Conference Call TRANSCRIPT. November 8, 2018 at 8 p.m. ET

ASSET MANAGEMENT PLANS: GETTING YOU PREPARED ROMA Conference

irobot Second-Quarter 2011 Conference Call Script

Dear fellow Shareholders:

INVESTMENT FUNDS. Your guide to getting started. Registered charity number

Good morning everyone and welcome to the presentation of our results for the six months ended dd 31 October2009.

Using Partnership Flips to Finance Renewable Energy Projects: Evaluating Tax Risks, Navigating IRS Safe Harbors

Understanding investment risk through drawdown analysis

Using Partnership Flips to Finance Renewable Energy Projects: Evaluating Tax Risks, Navigating IRS Safe Harbors

HDIL Q2 FY Earnings Conference Call. November 14, 2017

Eesti Energia Unaudited Financial Results for Q2 2017

Two-Period Version of Gertler- Karadi, Gertler-Kiyotaki Financial Friction Model. Lawrence J. Christiano

First Data Reports Second Quarter 2014 Financial Results

Dr Andreas Dombret. Member of the Executive Board of the Deutsche Bundesbank

On our last earnings call, I laid out Zillow Group s strategic priorities for 2018, which are:

Opera Limited announces third quarter 2018 financial results and initiation of share repurchase program

Origin Energy. Macquarie Australia Conference. Frank Calabria, CEO 1 May 2018

Exploiting the Inefficiencies of Leveraged ETFs

ScotWind leasing - new offshore wind leasing for Scotland

J.G. Wentworth Company. Third Quarter 2016 Earnings Conference Call. November 8, 2016

Good morning and welcome do JSL s results presentation for the 1Q17. Today here we have Mr. Fernando Simões, CEO, and Denys Ferrez, CFO and IRO.

BROOKFIELD INFRASTRUCTURE CONSORTIUM TO ACQUIRE ASCIANO LIMITED Acquisition of an A$12 billion broad-based Australian transportation company

Opening statement: Gerry Mallon, Chief Executive, Ulster Bank Ireland DAC. Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach

TTIP: Why Ireland needs it

CLICK TO EDIT. Annual Results Investor Briefing 3 May 2016

KEY GUIDE. The key stages of financial planning

Transcription:

2018 AGM CEO s Address Thank you Mr Chairman, I would like to start by summarising our key achievements in FY18. These slide behind me will be available online at the conclusion of this meeting. First and foremost, we have done a solid job of keeping everyone safe this year. As the Chairman noted, the company is profitable with an EBITDA of $4.0m for the year. We were successful in driving more than $2m of costs out of the business year on year, and in doing so, we managed to achieve exceptional turbine availability, at over 98%. I will start by dwelling a little on our health and safety performance. As you will appreciate, maintaining turbines is a complex and potentially hazardous business. We have a strong safe work culture on site, and internal and external audits give us confidence in our systems and processes. In FY18 we have broadened our focus to adopt new industry benchmarks, and we have outperformed against all metrics. We completed the year with no recordable incidents. Keeping everyone safe remains our number one priority. I would like to provide a recap of our progress over the last 18 months on the key strategic initiatives we identified in early 2017. Our curtailment regimes help to make us consistent with best practice and I have mentioned our progress in reducing costs. We have solved debate around noise emissions with the s128 process firmly behind us, and we are busy maintaining the electrical reticulation assets we purchased this time last year following your support of resolutions at the 2017 AGM. We have been very successful in working with the industry regulator, the Electricity Authority, to change both the market rules as the relate to wind energy, and in achieving interim dispensation to curtail on price. We have also been successful in managing our revenues through hedging. In early 2017 we promised you that we would get these things sorted, and that is exactly what we have done.

For FY18, we produced around 103GWh post curtailment. In the absence of curtailment our production would have been higher, but the key here is how we align production to the cost to run. That notwithstanding, FY18 was a pretty low wind year for us, underscoring the importance of financial hedging, which earnt us $450k for the year, to bring total electricity revenues to $7.6m. 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. While we have made big changes to our cost base we have more work to do in bedding these changes in, and we plan to continue to evolve our turbine management strategies. I will now touch on each of these initiatives in turn. Operating separation, that being the gap between what a turbine earns in revenue and what it costs to run in parts and servicing, is profit. However, this interplay between turbine revenue and run cost is complex. To understand cost to run, in wind farming we use the short run marginal cost, which is essentially the mechanical cost per MWh. While we can calculate an average short run marginal cost for the whole wind farm (in wind farming this typically being around $15 to $20/MWh), this is in fact a continuum with a very wide spread. In relatively calm conditions when the wind direction is optimal and we have smooth laminar flows, it can cost as little as $1/MWh or $2/MWh to run a turbine. However, when we get gusty southerlies, for example, the short run marginal cost can be as high as several hundred dollars per megawatt hour. If the market price in these conditions is, say, $50/MWh, running that turbine is costing us money this is why we have been so focussed on this issue. Clearly, curtailing turbines when cost to run is above market price is a profit imperative for a wind farmer.

However, until recently, the market rules did not permit elective curtailment on price. As I mentioned, after we undertook extensive lobbying alongside a number of gentailers, the industry regulator, the Electricity Authority, changed the wind offer rules, essentially permitting us to curtail on price. However, it was then unclear when the system operator, Transpower, would make the necessary physical changes to the wholesale market trading system. As such, we sought and received from the EA interim dispensation to curtail on price, and we commenced doing so early this year. It is still unclear when Transpower will make the required market changes, but we have this benefit right now, and we are confident it is proving effective. We also changed our control room provider recently, from Vector to Trustpower, both as it was commercial advantageous and as this better positions us ahead of these trading system changes. What this rules relief did was to permit us to put in place our three-axis curtailment strategy. What three-axis curtailment does is to assess wind speed and turbulence intensity in real time, and each turbine solves to a market price required to run profitably. Based on the forecast price and a number of technical constraints, the turbine either runs or shuts down. Of course, actual market price may be different from final market price, and there remain significant opportunities to refine this regime. The key question of course is whether this strategy is working. We monitor this very closely, and it is not an easy relationship to model, particularly when we are doing this to a turbine fleet that has been run hard for around seven years without the benefits of curtailment. What we can report however is that the definable directly countable savings exceed the revenue forgone by a significant margin, and this is a key contributor to our EBITDA result. One of a number of key indicators of the success of all our operating interventions, including three-axis curtailment, is major component failure rate. The decline in the failure rate of most key components over the last three years is particularly encouraging and reflects what has been achieved by the team in recent times. As these failure rates decline, we can have confidence both in the underlying quality of the turbine platform, and in our ability to operate the fleet successfully for profit.

We are continuing to gather more data with time and we will report on our progress. Of course, what is most interesting is the inverse relationship between market price and the degree of curtailment as market pricing improves, and it is forecast by most market commentators to steadily improve, less curtailment occurs, contributing to the bottom line. For the last eighteen months, the company has been engaged in a genuine process to build social license to operate. Obviously, to do this we had to put an end to noise litigation. Putting voluntary curtailment in place as quickly as we could, as a new team in early 2017, was an essential first step and a real gesture of good faith. We have refined that regime twice to make it more effective for our neighbours, and it has minimal effect on revenue as it occurs in very specific non-prevailing conditions where our neighbours are located directly downwind. What all our activities around noise have done is to give us a real opportunity to engage meaningfully with our neighbours. Almost all of them support wind farming; what the company had failed to do was to appropriately manage very specific and entirely manageable effects. We re not entirely done in getting this right, but we have come a very long way. We also recently launched a community engagement programme, where we plan to build upon our role in hosting multisport events and school visits on site to provide wider support to key community initiatives. We see our commitment to strong social behaviours as an imperative for a major infrastructure owner. We work with the local environment, local companies and local people to generate renewable energy, and we must manage all impacts of our operations to the best of our ability. In time, this will provide us with a strong social license to operate, and in doing so will give us greater long-term optionality on our site, which will be valuable. As we move into FY19, we remain focused on bedding in and locking down our operational performance. While we achieved a lot in FY18, a number of our key initiatives provided part year benefits only. Purchasing the electrical reticulation assets saved us around $500k for the FY18 year and headcount is down year on year from 16 to 11, and I believe our team is now largely right-sized. Our mechanical parts cost has come down significantly and we have eliminated noise litigation costs from our business.

Against this lower cost backdrop, turbine availability would be expected to suffer. However, we have been able to lift turbine availability from 96.1% to 98.4% year on year. I want to note my view that this is a direct function of initiatives put in place but also huge commitment from my exceptional team on site. At an operational level, we really have had an exceptional year. As I mentioned, we have eliminated over $2m of costs from our business, representing a 36% year on year reduction. For an infrastructure business this represents a very significant change. We are working on a number of initiatives to further improve operational performance. We have completed the building blocks that we hope will permit us to do this, and we are currently working on a five or six axis curtailment strategy to better refine the revenue/cost to run relationship. This will be a big focus for FY19. Our before tax profit was $0.78m, driven off a solid EBITDA result. While we have made this business sustainably profitable on an operating basis, as you will have noted in our annual report, the market continues to be an uncertain place for an independent generator. We do however see the wholesale market continuing to evolve, and we trust that this will bring some opportunity for us. As the Chairman has said, being a small independent wind farmer is a very hard place to be. We will continue to focus relentlessly on the operational initiatives I have outlined that will drive performance. These are important for the company but are even more relevant as we contemplated wider strategic options. Everything we have achieved over the last 18 months improves this positioning, and there is potential to leverage this work and our core assets to create further value. My team and I will do everything we can to support and maximize this value for the benefit of our shareholders. As always, I appreciate your patience and support as we continue the journey. Thank you. John Worth CEO