Windflow Advises Increased Loss for Year
Windflow Advises Increased Loss for Year to 30 June 2010
Wind turbine manufacturer Windflow Technology Limited (WTL) wishes to advise that it has increased the prospective loss for the year ended 30 June 2010 from the previously notified range of $5 - $6 million to $7.95 million.
This increased loss arises from additional provisions WTL has recorded in respect of the full costs of remedial work arising from the agreement reached with NZ Windfarms Limited, together with a reassessment of the Company’s warranty cost requirements for the next five years. (Explanatory note: provisions are non-cash items expensed against the Company’s Income Statement. While they are non-cash for the year in question, they represent an expectation of cash costs in future years.)
In determining the future likely warranty costs, WTL has reviewed all obligations to NZ Windfarms Limited, historical warranty cost data, and publicly available competitor information.
Commenting on the increased provisioning, CEO Geoff Henderson said, “although this review has resulted in an increased level of provisioning, I am comforted that the warranty costs relating to our new and unique technology are at the low end of international norms.”
“In the past, it has been difficult to estimate provisions for future expected warranty costs for our new and unique technology because there have not been significant numbers of turbines in operation. Now as the track record at Te Rere Hau approaches 100 turbine-years of operation, the Company can annually review the adequacy of warranty provisions based on field data. This evidence continues to validate Windflow’s belief in the long term engineering benefits of our wind turbine design.”