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Windflow targeting $5-6 million loss

Wednesday 12th May 2010

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Production delays caused by the dispute between Windflow Technology and New Zealand Windfarms will push Windflow to a larger than expected loss of between $5 million and $6 million this year, Windflow managing director Geoff Henderson said today.

While no previous profit guidance had been issued, the company made a $1.45 million loss in the year to June 30, 2009, and a somewhat larger loss than that had been signalled.

Key now to the company's fortunes is securing orders from new customers following completion by year-end of the 16 remaining Windflow 500 turbines required for Windfarms' Te Rere Hau windfarm in the Manawatu.

At present, Windfarms is Windflow's only confirmed customer for its pioneering two-bladed turbines, and remaining production will keep Windflow's manufacturing facility in work until the end of the calendar year.

Next most likely cab off the rank is MightyRiverPower's Long Gully proposed windfarm behind Wellington, which has been granted resource consents and is subject to a single remaining appeal. MRP, which owns 20% of Windflow, has not as yet indicated its timeframe for building Long Gully, a 12.5 megawatt, 25 turbine development.

In a statement to the NZAX, Henderson said resolution of its dispute with Windfarms over certification of its turbines had removed the "fundamental uncertainty" tag that had hung over both companies in recent months. 

However, Windflow had held off ordering some of the more expensive elements of the remaining turbines, creating an eight to 10 week delay for delivery.

Their delivery would be delayed till the new financial year, with the consequent impact on profitability in the current period.

“Naturally we find this disappointing," said Henderson. "Instead of the planned forward momentum, we must now work hard to rebuild."

The company was receiving regular expressions of interest in the Windflow 500 turbine from both New Zealand and offshore, "65 of which have been operating at above 95% availability for the last five months now at Te Rere Hau and are establishing a very good track record on the windy and turbulent ridge-tops of that site”, Henderson said.

Windflow shares were unchanged at 98 cents, and had not traded this morning following the announcement.

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