Windlab (ASX:WND) talks 2017 results and project pipeline


by Jessica Amir

Windlab Limited (ASX:WND) CFO Rob Fisher discusses the company's key projects and project pipeline, and government support for renewable energy.

Jessica Amir: Hi I'm Jessica Amir with the Finance News Network. Here with Windlab's chief financial officer Rob Fisher.Hi Rob, welcome to the network.

Rob Fisher: Thanks Jess.

Jessica Amir: So first up, for those new to the company, just give us an introduction to Winlab.

Rob Fisher: Sure, Windlab's an international renewable energy developer, we listed on the ASX in August last year and we use technology that our founders developed at the CSIRO to find windy places around the world. We develop wind farms through construction into operations then we manage those projects and we retain interest in the projects into operations.

We make our money through development fees, that we receive when projects reach financial close, we get royalties and success fees from projects as they are successful, we also have asset management fees and distributions and profits from our operating projects.

Jessica Amir: Now to your key Queensland development projects, just start off with an introduction to Coopers Gap.

Rob Fisher: Coopers Gap is a project our team found some years ago and we sold it to AGL in 2010, now it's gonna be the biggest wind farm in Australia when it's complete, it reached financial close last August and when that happened we got a $10.3 million success fee from AGL. We don't have interest in that project anymore, we've sold out but we watch its construction and ultimate operation with close interest.

Jessica Amir: And what about Kennedy Energy Park?

Rob Fisher: Kennedy's a very exciting project that's a 60 megawatt wind solar battery hybrid, one of the first of its kind in the world, it's the first phase of our Kennedy projects near Hughenden and reached financial close in October last year. It's under construction at the moment and we expect to have Kennedy reach commercial operation and start generating in late 2018.

Jessica Amir: And now to your next project, Lakelands.

Rob Fisher: Lakelands 100 megawatt project near Cooktown in North Queensland, its approaching completion in development and in fact we got a development approval from the Queensland state government in February, earlier this month. The team's now working on finalizing connection to the grid as well as financing and off-take for the project and we're progressing towards financial close in the middle of this year.

Jessica Amir: Rob, now to finances. Congratulations, an outstanding set of numbers. What were the highlights and how did it compare to your prospectus forecast?

Rob Fisher: Windlab had a pretty strong year last year in fact we beat our prospectus statutory forecast for net profit after tax by just over $2 million. That comes off the back of $23.3 million in revenue, which is 36% more than we did in 2016. Accompanying that cash flow from operations was $12 million, which is 775% increase on 2016. In addition to that revenue we had $2.7 million in recurring revenues, which come from asset management fees from profits, profit shares from projects that are operating and from royalties.

At the end of the year we had a very strong balance sheet, we had $14 million in cash in the bank and only $4.7 million in debt.

Jessica Amir: Now to your pipeline, how many projects do you have and what really determines where you focus?

Rob Fisher: 50 projects around the world, totaling almost 7 gigawatts in capacity and we find sites that are windy, we use our technology to find the best wind resources around the world that are located close to the grid.

In Australia, we're really focused on North Queensland and that's because the wind resource in Queensland is scarce. What wind resource there is, is complementary to the solar profile, solar generation profile, in that state and also quite differentiated from the generation profile of wind and solar in the other states on the eastern seaboard.

Internationally we look for projects in markets where there's a good wind resource, where there's fundamental short and long term demand for new generation and where there's political and policy support for new renewables.

As far as our operating projects go we have the Kiata wind farm in Victoria entered commercial operation late last year and we’ll have the first full year of generation in 2018. Kennedy, as I said earlier, will generate from late in 2018 and we're very much looking forward to that site joining our operating portfolio.

Jessica Amir: A more general question now, can you give us some insights into how big the renewable energy market in Australia is really going to become?

Rob Fisher: Sure, the Australian electricity generation market has got a fundamental problem, which is that there's a lot of very old coal generators, some of those pre date, in fact many of those predate color television and they're going to have to be retired over the next 15 years and the question the country faces is how do we replace that technology or the generation fleet cheaply and reliably? Right now the cheapest form of new generation is wind, and solar follows close behind.

What we are seeing now in places like South Australia, Germany and Denmark is that you can get a lot of renewables into a grid without causing any reliability issues, so we've got both cheap technology and it is demonstrably reliable.

One thing we're learning is that storage gets cheaper and the projects like our Kennedy energy park are constructed is that the ability for the grid to take more and more renewables is increasing and we really look forward to using the things we learn at Kennedy in expending our market opportunity.

Jessica Amir: And lastly Rob, what can investors expect over the coming year?

Rob Fisher: We're focusing closely on Lakeland, finishing the development process there, and of course construction at Kennedy and as those projects hit significant milestones through the year we'll be sure to announce and keep people informed as to how the projects are progressing.

Otherwise, we'll be looking to harvest our existing portfolio over the course of the year and continue to deploy our science based approach to take advantage of the current boom in renewables, the change, the fundamental change in technology and electricity generation to maximise returns for our shareholders.

Jessica Amir: Wonderful, well thank you so much for the time Rob Fisher and well done on the results.

Rob Fisher: Thanks very much.


Jessica Amir

Finance News Network
Jessica is a senior finance journalist and presents bulletins including the Market Outlook, Market at Midday and Market Wrap. She also interviews ASX CEOs and leading fund managers. She joined FNN in January 2017 with over six years of broadcast journalism experience including with Sky News Business, ABC 1, ABC's The Business and ABC24. She’s also worked as a TV reporter for Prime 7 and WIN News. Jessica has worked in financial planning for over six years with leading wealth managers and in real estate.