Another green energy company about to collapse?

Green energy companies around the world are dogs, mostly they require the industry they are in or themselves to be heavily subsidised by the government.

In the US there have been spectacular failures like Solyndra, which had the backing of President Obama.

Here in New Zealand another green energy company is failing, and this one had, or still has former Green co-leader Jeanette Fitzsimons as a shareholder…which in and of itself is interesting because she was front and centre in axing a water project int eh South Island and pushed instead wind technology…which she held shares in.

The auditor of New Zealand’s only turbine maker Windflow Technology says it has not received enough information from the company to form a view on whether it is a going concern.

Auditors from accountancy firm KPMG said in Windflow’s annual report 2014 that there were “multiple uncertainties” for the Christchurch company in the future.

And there was a limit to obtaining audit evidence about the outcome of future events.

But as far as it appeared from the examination of Windflow’s records, proper accounting records had been kept, KPMG said

Windflow’s directors continue to prepare accounts on a going concern basis but acknowledge “a significant element of uncertainty” over the company’s future in the annual report.  

The company had assumed in its budgets that there would have been a steady flow of orders from the United Kingdom this year but there had been delays in that because of grid issues in the UK and Windflow’s lack of profile there.

The future of the company hinges on bringing in enough cash to fund the operation which is making small two-bladed 500-kilowatt turbines for its subsidiary companies in the United Kingdom to sell.

In July it lost a key customer when General Dynamics SATCOM Technologies ended its licence agreement with Windflow just before GD SATCOM was due to start paying royalties.

Windflow reported a loss of almost $5 million for the year to June 30, 2014 and has not made a profit in its 14 years of operation. Its losses total $42.5m in the 14 years.

Expat Kiwi investment banker David Iles, who lives in New York, has been the company’s lifeline through loans and several purchases of preference shares which have saved the company from tipping into insolvency.

The preference shares are classed as equity because Windflow has the choice of turning them into ordinary shares.

An example of Iles backing the company was shown again early this month when he bought $125,000 of preference shares that was needed to fund the $113,731 dividend on the preference shares.

Iles owns the majority of preference shares so he was paying for more preference shares so Windflow could pay him and a few others the dividend owed on the preference shares.

Iles is now the largest shareholder in the company and the largest holder also of preference shares.

In the June 2014 year the company recorded $2.24 million in revenue including $1.3m in sales of turbines and components to customers, most of them its own subsidiaries, and $641,000 in licensing revenue.

Its operating costs were $7.2 million resulting in an almost $5m loss.

When you find yourself digging a hole like that it is best usually to put down the shovel and give up and instead of digging start constructing a ladder.

The company is a dog…a lame one with mange and fleas. Put it down.

 

– Fairfax

 


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