Windflow Technology, the unprofitable wind turbine manufacturer, widened its first-half loss and said it needs new injections of capital.
The Christchurch-based company reported a loss of $1.5 million in the six months ended December 31, compared to a loss of $798,000 a year earlier, it said in a statement. Operating revenue rose to $2.9m from $953,000, while cost of sales jumped to $2.2m from $173,000.
Windflow Technology is reducing its activity in the UK, its largest market, to the maintenance of its existing fleet due to policy moves away from wind power. It has eight Windflow turbines in Scotland, of which the company has full or majority ownership of six. In New Zealand, where the company's turbines power the Te Rere Hau Wind Farm in the Tararua Ranges, the company says the market continues to stagnate because of an oversupply of power and weak prices for carbon in the global emissions trading markets.
The company said it was "frustrating" that it hadn't yet achieved commercial success, and "has eroded rather than accumulated shareholder value".
"Lack of a domestic market has meant that we have been unable to follow up Te Rere Hau with further projects in New Zealand," the company said in its report to shareholders. "The UK market, which seemed so promising in 2010, has been beset by political uncertainty and ever-changing policy settings.
"At the same time, the global epicentre of the wind industry has moved to China and there has been strong downward pressure on turbine prices. Thus in some ways we are back to the beginning in that the company needs new injections of capital to put it on a more solid foundation financially, while following a new business plan based on licensing and low-cost countries (LCC) supply chains."
Windflow Technology said it had discussions with potential licensees of its technology but failed to conclude a deal.
Chief executive Geoff Henderson had visited Australia and three other Pacific nations regarding demonstration turbines as the company shifts its focus away from the UK. The company believes its synchronous wind turbines have a competitive advantage over others in the wind industry, an issue it says was highlighted after a power blackout in South Australia on Septemer 28.
It said it will continue to seek licensing partners to build its designs for large overseas markets, progress sales prospects in the Pacific and Australia, and seek further capital to fund its strategy and path to profitability.
At its December 31 balance date, the company had negative equity of $4.6m and the directors said they expect to undertake capital raising in 2017.
They said there was "material uncertainty" about the group's ability to remain a going concern, contingent on it being able to generate sufficient cash to fund its overheads.
"If sufficient new sales and new licensees are not able to be achieved together with sufficient short-term shareholder support, the directors would have to re-consider the going concern assumption and take appropriate action," the company said. "If that process results in the directors concluding that the group was no longer a going concern, the net assets of the company and the group would reduce significantly and this would likely result in a material negative affect on shareholders' equity."
Shares of Windflow last traded at 1 cent on the New Zealand Alternative Index, and have lost 60 per cent of their value over the past year.