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Summary
- NZ Windfarms reported a strong 1HYFY21 result and is poised to deliver on its FY21 guidance.
- The Company is in sustainable energy and is in line with NZ’s sustainable energy commitment.
- Variable volume fixed price agreement (VVFPA) is a big plus for the company that provides predictability around future revenues.
NZ Windfarms Ltd (NZX:NWF) is a wind farm energy specialist, which gets its revenues from the sale of clean energy. It generates energy from its Te Rere Hau wind farm. There are 92 turbines in the wind farm with a capacity of 46MW of clean energy to power 16,000 homes.
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For the first half of FY21, NWF’s financial performance has been robust with EBITDAF of NZ$3.2 million. This is in line with the expectations and affirms full-year guidance. Even the net electricity price including the effect of realised hedging was NZ$83.09 MWh. Half-year electricity generation was 64.9 GWh. Half-year electricity price as well as half-year EBIT, were the second highest in the Company’s operating history. The better-than-expected half-year performance was due to cost control, capital management and the company’s variable volume fixed price agreement (VVFPA). The VVFPA provides predictability around revenues in the future.
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Operating performance: During the first half of FY21, the Company was able to achieve improvements across all its operational areas. The Company faced minimum disruptions due to COVID-19 and focused on improving its operational performance with regard to supply-chain management and equipment replacement.
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Dividend distributions:
Even though it is a small-caps company, it rewarded its shareholders with unimputed dividend payouts from the cash buffer held even during the COVID-19 period. The Board even freed up cash for a 0.40 cps dividend, which was paid on 31 December 2020. The Company is devising a formal dividend policy.
Outlook for full-year performance
In the second half and for the full year, it expects to achieve its EBIT guidance as expected. With the completion of the company’s second VVFPA, the company is advancing its strategy of becoming a reliable and transparent yield generator for the shareholders. The announcement about Tiwai point medium-term future will also generate demand in the medium term.
Besides, governments’ ongoing commitments to renewable and clean energy is a big boost for NWF.
In view of all these factors, NWF is poised to meet its 1 December 2020 EBIT guidance in the range of NZ5.7 million to NZ$6.3 million. Even the operating conditions have been on track as expected, therefore, the Company will report the expected results for FY21.
