Christchurch turbine manufacturer Windflow Technology has posted a $1.23 million loss and said there is uncertainty over whether it can continue as a going concern.

The statement to the NZX by chairman Barrie Leay and chief executive Geoff Henderson said the going concern issues related to its only customer NZ Windfarms which had been withholding payments for turbines since August 17 and needed to raise capital for its business.

"If NZ Windfarms cannot raise additional funding then Windflow could have major cash flow issues,'' the statement said.

Windflow and its customer NZ Windfarms are in dispute over the requirements of the supply contracts. NZ Windfarms has been arguing the turbines it receives should be certified to International Electrotechnical Committee (IEC) standard.

Windflow has so far failed to achieve that. The statement said it had submitted the documentation at the end of July and it was being reviewed by Lloyds Register.

"As expected Lloyds Register had requested that additional information be provided '' and Windflow was now working on providing that.

The rigorous disciplines for IEC certification had added a significant amount of time to the original timetable. But the positive side of that was it had allowed Windflow to thoroughly test the reliability and safety of the many components of the turbine, the company said.

Windflow said it was confident the turbines complied with the supply contract with NZ Windfarms

"The parties are working towards a possible resolution of the matter.''

Also Windflow may have to pay NZ Windfarms a small sum- ''a few tens of thousands of dollars in January 2010" - to compensate for the wind turbines at the Te Rere Hau wind farm near Palmerston North not being available 95 per cent of the time for the first half of calendar 2009.

For the year to June 2009 Windflow's revenue was $29.52 million compared with $10.99 million the previous year. Direct production costs including turbine coast were $26.17 million compared with $10.14 million the year before. That resulted in a gross profit of $3.26 million.

Windflow has a strong balance sheet and sound cash position, the company said. At the 30 June balance date it held $11.73 million of cash deposits and had no long term debt.