NZ Windfarms takes $31.7m impairment, wider FY loss

Te Rere Hau windfarm operator posts a wider full-year loss as sales more than double to $9.76 million.

BUSINESSDESK: NZ Windfarms, which operates Te Rere Hau windfarm in the Tararua Ranges, posted a wider full-year loss after taking an impairment charge against its assets and reporting power generation was 25% below budget.

The net loss was $24.6 million in the 12 months ended June 30, from a loss of $3.38 million a year earlier. The loss in the latest year included an impairment of assets of $30.7 million.

Sales rose to $9.76 million from about $4.1 million.

Earnings before interest, tax, depreciation, amortization and the impairment were about $2.6 million from a loss of $410,000 on the same basis in the previous year.

While NZ Windfarms had "a very poor wind year", total electricity generated rose 37% to 114,498 Megawatts and electricity revenue jumped 156% to $8.25 million, reflecting the first full year that the full complement of 97 turbines were operating.

The average price rose to $72.07/MWh from $38.46/MWh a year earlier.

Shares of NZ Windfarm last traded at 15 cents, valuing the company at $43 million. They have fallen 6.3% in the past 12 months.

As a result of the impairment, the net assets of the company fell to $74.6 million at June 30 from $99.2 million a year earlier. The decline also reflected increased depreciation, operating costs and lower-than-expected output.

NZ Windfarms uses turbines supplied by Windflow Technologies, a Christchurch-based firm that is struggling to make global sales. In October, NZ Windfarms exercised its option to acquire the Windflow business that had the contract to operate and maintain the wind farm including spare parts.

"The financial position of WTL remains a concern to directors," NZ Windfarms said today.

Early this year, NZ Windfarms began a strategic review with the aim of finding a buyer for the wind farm once it was completed. While the company has been in talks with potential buyers, those discussions haven't resulted in a concrete proposal, it says.

The company has concluded its original objective to be a developer of wind farms "no longer applies" and it is in the process of developing a new business model to reflect its position "as a single wind farm operator".

The company will not pay a final dividend.

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