Growing losses for wind turbine maker

Christchurch turbine manufacturer Windflow Technology has posted a half-year loss of $1.63 million, 50 per cent higher than the previous half-year loss of $1.08m.

Revenue for the six months to December 31, 2009, was $13.6m, 15 per cent up on the previous half's $11.8m. Production costs rose nearly 18 per cent in the half year to $12.7m compared with $10.8m in the previous half. The company produced a gross profit of $903,000.

The company's available cash has sunk to $2m from $9.7m in the previous half and that was due, the company said, to an expected cash outflow, the dispute with New Zealand Windfarms and timing of production issues.

For the full year to June 30, 2010, Windflow expects to produce a net loss similar to last year's $1.2m. Production for the June 2010 year is also expected to be similar.

Windflow's financial statements were prepared on the assumption the company is a going concern.

Its only customer is former subsidiary NZ Windfarms. Windflow said that company's board had expressed confidence it could raise additional funding to complete its Te Rere Hau wind farm in the Manawatu, for which Windflow is supplying the turbines. Te Rere Hau had 65 turbines operating at 93 per cent availability.

The international norm for companies using turbines from long-established manufacturers was 94 per cent in the first year of operation.

Windflow had to pay NZ Windfarms a $41,453 warranty payment because the availability came under 95 per cent.

Windflow said it and its suppliers had corrected the issues.

It was working to qualify alternative suppliers for many of the key turbine components. The concerns about design difference with NZ Windfarms had been addressed and quantified by an independent expert. Since then, NZ Windfarms had paid the outstanding amounts. The two companies were making good progress on negotiating an agreement to resolve any design differences and about delays to stage four of Te Rere Hau.

With regard to International Electrotechnical Certification (IEC) for the turbines, Windflow had submitted final IEC calculations to Lloyds Register in July 2009. Lloyds Register had issued the design appraisal document for the Windflow blades. The appraisal documents for the nacelle, covering almost all major components, and the tower were expected within weeks. These would complete the package of three appraisal documents required by Lloyds Register to complete the design evaluation part of IEC-type certification.

Windflow has been working on certification for four years.

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