Ann: Daily share buy-back notice - Appendix 3E, page-5

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prhb

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06/06/18

17:19

Post #: 33539464
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Originally posted by prhb ↑

In my view, we are experiencing growing pains.

This year the contracted Twh in USA has more than doubled, which requires significant investment - demonstrated below.

The USA business Opex for this year is $22m on 6.3Twh of contracted load.
The Australian business Opex is $22m on 19Twh of contracted load.

Calculating this, Australia has an opex of $1.16 per Mwh, and the USA has $3.49 per Mwh.
While the US market may differ from Australia, I expect the US opex to fall relative to sold Twh over time, and to arrive somewhat closer to Australian margins.

While the margin compression in the USA has been unexpected, the margins are not markedly different from some of the historic margins in the Australian business.

Other costs are also growing pains - the growth of hedge books, and finance charges are to be expected.

The predicted slight growth in Twh to just over 7 next year seems to possibly be a prudent management of cashflow, allowing stabilisation before the next phase of growth.

Jon Stretch said that they are at least half way across the river, and can see the other side to profitable operations.

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Some further ...

A couple of months before the recent announcement, Jon was speaking, and said words to the effect that....it will take a few more results before....we have built enough scale to get our Opex down....and have our trading operating effectively to give us the gross margins that we require...

The current price is not a pleasant place to be, but they appear to think their strategy is still valid, and I am still tagging along for the ride.

EPW Price at posting: $1.40 Sentiment: Hold Disclosure: Held
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Ann: Daily share buy-back notice - Appendix 3E, page-5

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MinRes's Ellison knows he screwed up – for that reason, hunt for new Chair to be sped up

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

Pan Asia rebranding to 'clear confusion' after bagging $35M for Chile projects

Chaos reigns markets – so let's take stock of where we're at ahead of December