Big Forward Workload Secured for New Windflow Factory
6 May 2008
Windflow Technology Ltd, the New Zealand manufacturer of wind turbines has further increased forward workload for its new Christchurch factory officially opened today by the Prime Minister, Helen Clark.
It has established a strong platform for growth at the new factory and offices located at Riccarton where over 200 guests, including several energy sector leaders, were in attendance.
“The 2008 year will be a landmark one for Windflow now that we have made the major transition from batch turbine production to continuous production,” said the chairman Mr Barrie Leay.
“We have reported one of the most rewarding six months in our business history, in the half year ended 31 December 2007.
“We noted we had 44 Windflow 500 turbines either in production or scheduled into our new factory at Riccarton, Christchurch. However, since we sent the Interim Report to the printer, orders for an additional 16 turbines have taken total orders to 60. The current and forward workload is now worth over $45 million.”
Mr Leay said the turbines will be installed at the Te Rere Hau wind farm near Palmerston North where Windflow’s five original turbines show very satisfactory performance.
Windflow’s successful capital raising in December 2007 raised $5.04 million from the fully subscribed first stage of a two-stage offering.
“We have put the funding to good purpose, which is evident in the new production line, and today we showcased outstanding New Zealand mechanical engineering and world competitive technology.“
“That offer of new shares at $3 per share was a huge success, and carried a free tradeable option with every new share subscribed,” said Mr Leay. “The options are exercisable at a price of $3.30 per additional share at any time up until 30 September 2008. While the exercise date is only some 5 months away, shareholders have the opportunity to now set their financial plans in motion.
“We are very pleased with the favourable way in which Windflow shares have retained strong market value in the face of the recent market correction. Our funding is intentionally staged to spread the subscription costs for investors and to match the company’s requirements for working capital.”
“Our nacelle assembly line is stepping up to a rate of 5 turbines per month and from here we don’t expect growth to flatten off.”
“Our medium-term goal for expansion of 20 turbines per month is well within the physical capacity of the Christchurch factory and our suppliers. At 120 megawatts annually, that goal represents more than half the new generation capacity required to “keep the lights on” in New Zealand by keeping up with demand growth. “
“It is an important target for New Zealand’s economy in the context of power shortages looming for the 2008 winter.”
“As Australasia’s only wind turbine manufacturer, we are already making an important contribution to local manufacturing and the knowledge economy.”
Total revenue in the December half year of $3.40 million ($2.25 million in the prior corresponding period of 2006) mostly related to operating revenue of $2.91 million from sales of wind turbines to the NZ Windfarms/NP Power/Babcock & Brown joint venture wind farm at Te Rere Hau.
After total operating expenses of $5.65 million, a net deficit of $2.28 million was recorded (prior corresponding deficit of $0.90 million).
The chief executive/Director Mr Geoff Henderson reports steady progress on the International Electrotechnical Commission (IEC) certification process which required $816,914 in non-recurring expense during the latest half year.
“Windflow Technology has been actively pursuing sales opportunities in New Zealand and overseas markets and the rigorous IEC certification process to Class 1A (required for the windiest and most turbulent sites) is an invaluable investment in the Company’s future prospects,” said Mr Henderson. “Our part of the IEC work should be completed by Spring.”
“Now we are working up commercial manufacture we are recruiting with 36 of 42 Christchurch staff positions appointed as at the end of April. Our now wholly owned Auckland-based subsidiary Wind Blades Ltd employs another 10 staff full time.”
“During our current rapid growth phase overheads are increasing as we provide support for turbines on location, ramp up production of the Windflow 500 and develop further variants for new markets.
“While these overheads will be incurred ahead of the anticipated revenue from scaled up production, patience is required.
“We expect our total overheads to reach $5.5 million annually during the next two years but this needs to be balanced against expected revenue of $40-50 million”, said Mr Henderson.
Mr Leay said that the directors are expecting a small gross profit for the full year to 30 June 2008 but a significant accounting loss will be recorded during the present growth phase.
“The company is very busy and we are confident about our ability to grow and establish a competitive position in energy markets in New Zealand and in other countries.”
FOR FURTHER INFORMATION:
Mr Geoff Henderson
Chief Executive
Windflow Technology Ltd
Tel 03 365 8960
Mr Warren Head,
Managing Director
Head Consultants Ltd
Mobile 021 340 650