Struggling second board company Windflow Technology Ltd (NZAX: WTL) has dug itself out of a major hole with sale of its United Kingdom division to its major shareholder who, in recent years of operating struggle, had been seen as a white knight.
The company which has rationalised operations at its Christchurch headquarters and reduce its team, finished the December half year with a gross profit of $900,000, earned on revenue of $1.7 million.
Revenue for the six months was dominated by sale of Windflow UK to key shareholder David Iles which saw net revenue of $12.7 million.
Windflow said in its December half year interim report that after deducting overheads, finance costs and exchange rate effects, the company’s comprehensive income was $10 M (compared with a loss of $1.5 M in the prior corresponding period).
The company said the Windflow UK sale strengthened the consolidated balance sheet by removing a liability which had previously been the primary cause of liabilities exceeding the allowed accounting value of Windflow UK’s assets.
“Another key element of this transaction was that all outstanding redeemable convertible preference shares were converted and the liabilities to pay outstanding preferential dividends have been cancelled.”
Windflow said core revenue now comes from a management contract with Windflow UK, under which Windflow provides a range of services around the operation and maintenance of the eight Windflow 500 turbines in Scotland (six being owned by Windflow UK or its subsidiaries).
While NZ staff numbers are now aligned to supporting operations of the UK turbines, “that core group of people also have the competencies and intellectual property to address any other revenue-generating opportunities as they arise.”
Examples include licensing opportunities, supporting the US prototype of the Class 2 turbine in Texas, or supply of turbines for small or mid-size projects.
The report said: “The main activities during the half-year have been around the restructuring which has been necessary to achieve financial stability.”
With restructuring completed the company sees its prime focus on helping with management and servicing of Windflow UK.
Windflow’s share price has a lot of recovery ahead of it, having lifted to 0.7 of a cent yesterday. Linked to the debt settlement in December 1, David Iles had forgone payment of the preferential dividend owed to him of $1,656,781.