Windflow narrows first half loss, says new financing needed
Windflow Technology, the unprofitable wind turbine manufacturer, narrowed its first-half loss but says it will need to borrow from its shareholders and find new financing to remain a going concern.
The Christchurch-based company reported a loss of $2.3 million in the six months ended December 31, compared to a loss of $2.8 million a year earlier, it said in a statement. Operating revenue rose 88% to $700,000 while costs of sales increased 51% to $783,000.
As at December 31, the company had equity of $1.8 million and said there is a "significant element of uncertainty to the group's ability to remain a going concern." Its future is contingent on a mix of factors, including being able to access its shareholder loan facility and further equity injections from new or existing shareholders, further sales in the UK and other markets, new finances for more development projects, and secure a new licensee of the group's technology.
"Depending on progress with growing revenue from its various activities [licensing, engineering services, turbine sales, turbine project developments and electricity sales], the directors may or may not carry out further capital raising in 2015," the report said. "Windflow has made some progress and passed positive milestones in the half-year to 31 December 2014, albeit with some delays."
The company believes it will eventually get the traction it has sought in the UK for small-scale installations of its turbines under a British government-assisted scheme that offers a guaranteed price for electricity sold back into the UK national grid for a 20-year period. Windflow installed three turbines in late 2014 but further projects have been delayed due to a withdrawn planning process and a production gap for its turbines.
In the six-month period, growth in Scotland was offset by a setback in Texas when a customer ditched plans to enter the wind business and cancelled orders from Windflow, it said in its interim report.
In January, Windflow said it will reduce staff numbers as it focuses on the UK market for sales of its wind turbines. The company shifted its focus away from New Zealand, where oversupply of electricity has sapped demand and investment in renewable technology. Today's report says it has made six staff redundant as it restructures to cut costs, to arrest delays in finalising sales.
Shares of Windflow were unchanged at 6c on the New Zealand Alternative Index.