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NZ Windfarms undershoots prospectus forecast

Tuesday 27th July 2010

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NZ Windfarms' annual revenue from electricity sales more-than quadrupled to $4.1 million in the year ended June 30b but still fell well short of the $4.7 million forecast in the April prospectus for its $31.4 million rights issue.

The company is also warning of further delays which have put its anticipated construction program back by several months.

Revenue compared with just $0.8 million in the previous year. The increase reflects NZ Windfarms increasing its ownership of the Te Rere Hau windfarm near Palmerston North from 50% to 100% in December 2008 and further wind turbines being commissioned.

Electricity generation from the windfarm was 78.4 gigawatts in the June year compared to the 80.9 gigawatts forecast in the prospectus.

The company says while output and revenue for April was close to forecast, both were down in May and June with average wind speeds well below long-term averages.

“Spot electricity prices were also lower than expected over May and June due to very high hydro inflows and resultant high hydro storage levels in the South Island lakes,” it says. “The combination of these two factors meant revenue was well below forecast for these two months.”

Its average price per megawatt was $55.51 in the June quarter compared with $48.03 in the June quarter last year while the average price for the June year was $52.91, up from $40.84 the previous year.

Revenue for the June quarter was $1 million compared with $0.5 million in the same quarter a year earlier with generation output at 18.1 gigawatts, up from 10.5 gigawatts in the year earlier quarter.

NZ Windfarms says Aeolian Property, a company associated with Geoff Henderson, managing director of Windflow Technology (the company building NZ Windfarms' turbines), has served notice it will exercise an option allowing it to sell land and wind rights associated with Te Rere Hau to NZ Windfarms. The sale, the price previously set at $3.55 million, will take place in August.

NZ Windfarms chairman Derek Walker says outgoing chief executive Steve Cross had “addressed some big challenges over the period and he leaves with the company in a much stronger position.” Cross leaves on July 31 and his successor is Chris Sadler who has previously worked on a number of generation projects for Fletcher Energy and Vector, NZ Windfarms' 22.1% shareholder.

Shares of Windfarms traded unchanged at 21 cents. Windflow Technology was at 88 cents.

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