Trustpower cuts up to A$70M off the value of its SA windfarm 19 Nov 2015
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Trustpower cuts up to A$70M off the value of its SA windfarm, Snowtown
By Pattrick Smellie
Nov. 19
(BusinessDesk) - Trustpower downgraded its assessment of the
potential production from the second stage of its Snowtown
wind farm in South Australia by 9.4 percent, reducing
operating earnings by around A$8.5 million a year "in a year
of average wind" and cutting its valuation by as much as
A$70 million.
The Tauranga-based electricity producer,
which is controlled by Infratil, said in a statement "the
revision is due to a number of factors associated with
energy yield prediction", including "the limitations with
industry modelling tools when applied to a site of this
complexity and scale, using modern large rotor
turbines."
Trustpower's shares fell 1.9 percent to a
four-week low of $7.60. Infratil stock declined 0.6 percent
to $3.15.
Snowtown is the second-largest wind
generation facility in Australia with total installed
capacity of 370 Megawatts, according to the Trustpower
website. It was built in two phases, 2008 and 2013, at a
total cost of around A$660 million. The output reassessment
relates to the stage two development, which had been
revalued upwards by A$315 million in the latest company
accounts. The reassessment reduces expected annual
generation from 985GWh per year from the stage two
development to 892GWh.
"Trustpower expects that lower
wind production at Snowtown Stage 2 would reduce 2017
financial year earnings before interest, tax, depreciation,
amortisation and movements in the value of financial
instruments by approximately A$8.5 million in a year of
average wind," chief executive Vince Hawksworth said in the
statement. "Trustpower also expects a reduction in the
valuation of the Snowtown Stage 2 generation assets of
between A$60 million to A$70 million", applied against the
group’s revaluation reserves.
"Energy yield
modelling techniques are continuing to evolve to improve the
accuracy of prediction, informed by research and analysis by
wind industry participants and experts. Trustpower has
undertaken a comprehensive analysis in conjunction with
independent engineering advisors to better understand the
factors contributing to this revision and will apply these
learnings, along with advances in modelling techniques, to
future developments."
"Trustpower remains pleased with its investment in Snowtown Stage 2 and the value created for shareholders from this project," said Hawksworth. Trustpower had noted in its 2015 annual report earlier this year that "poor wind generation" in the second half of the last financial year at its Snowtown and Tararua wind farms had affected financial performance.
(BusinessDesk)
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