NZ Windfarms interim report/results

Chairman and Chief Executive's Review For the Six Month Period Ended 31 December 2007

The past six months have seen NZ Windfarms make good progress against the programme set out in the May 2007 prospectus. Stage 2 of the Te Rere Hau wind farm Joint Venture is expected to be completed in the third quarter of 2008, approximately two months behind the original schedule. Consequently the Company can now begin turning its attention to growing and converting our pipeline of future developments into operating wind farms.

Financial Performance
Financial performance was steady for the six months to 31 December 2007 with a Net Operating Surplus before Taxation of $1,971,000 (31 December 2006 - $327,000 loss). Total assets at 31 December 2007 were $79,986,000, compared to $80,837,000 at 30 June 2007 and $11,526,000 at 31 December 2006.

The operating revenue projected in the May 2007 prospectus for the full year will not be achieved due to the delay in commissioning of the stage 2 turbines at Te Rere Hau. However the shortfall will be more than offset by higher interest income as the project delays have meant that cash for the build programme has been expended at a slower rate than projected.

Te Rere Hau Stage 1 Performance
During the period the Joint Venture experienced a number of relatively minor issues with the stage 1 turbines. This is not surprising given that we had very deliberately located stage 1 on to the windiest part of the property with the intention of robustly testing the Windflow 500 before moving onto the next stages of the development. All issues have been resolved effectively by our turbine supplier, Windflow Technology, and where appropriate, modifications have been made that are being incorporated into all future turbines.

The most significant of these issues resulted in the upgrading of all five of the stage 1 gearboxes. As a consequence of this work, a significant number of turbine operating hours were lost during the period. The resultant revenue loss of approximately $28,000 to the Te Rere Hau Joint Venture will be covered by the Windflow Technology warranty.

Te Rere Hau Stage 2
Work has continued steadily at Te Rere Hau as the Joint Venture prepares for the installation of the 28 turbines to complete stage 2 of our development. Building work has recommenced on site with the remaining site roads and the stage 2 foundations underway. Design of the new full electrical connection is now complete with construction scheduled to commence when the cable arrives in March 2008. The first of these turbines rolled out of Windflow Technology's new nacelle assembly factory in January 2008, while the first components to be transported to site will be the towers commencing May 2008, erection and commissioning of the new turbines is scheduled to commence in the second quarter of 2008.

We anticipate stage 2 will be complete and generating electricity by the third quarter of 2008, approximately two month later than originally scheduled. We expect to catch up on the build programme by moving almost immediately on to the erection of the stage 3 turbines.

Innovative Foundation Design Put to the Test
Design work and full scale testing of a new foundation design is now complete. The innovative design uses approximately 40% less concrete in each foundation as well as reducing earth works per turbine by two-thirds. In addition, it will make the process of tower erection less weather dependent. In short, the new foundations are smaller, smarter and more cost effective than the foundation design used for stage 1.

Extension to Te Rere Hau
It is no secret that Te Rere Hau is superbly suited to wind farming. In order to maximise our returns from Te Rere Hau, the Joint Venture intends seeking resource consent to add up to a further 37 turbines to the 97 turbines currently consented. In keeping with our commitment to being a responsible wind farm developer, we are undertaking discussions regarding the proposed extension with a range of stakeholders before we formally lodge our application. Meetings are underway with surrounding landowners, community groups and interested members of the general public. At these sessions we are providing information about the proposal and discussing potential effects of the proposed extension. We also plan an open day at Te Rere Hau before the application is lodged.

Mighty River Power Talks
We are continuing discussions with Mighty River Power to explore ways that we can work together on the development of distributed wind powered generation.

Shareholding in Windpower Maungatua to be Increased
The decision has been made to increase our investment in Windpower Maungatua Limited from the 16% stake we purchased in March 2007 to 50%. Windpower Maungatua holds the development rights to a promising farm in Otago and our decision to increase our investment follows positive feasibility studies conducted at the site. We put the potential capacity of the farm at about 20 megawatts, making it a little under half the size of Te Rere Hau wind farm.

New Zealand Energy Strategy & Carbon Trading
During the period the Government announced the National Energy Strategy and the Emissions Trading Scheme. These policies provide strong backing for renewable generation including wind farming which is very positive for NZ Windfarm's strategy. They are a major endorsement of renewable sources of electricity generation over polluting fossil fuel alternatives and include an objective for New Zealand to generate 90 per cent of its electricity from renewables by 2024.

Directors and Management
On 1 November 2007, Michael Stiassny and Simon Mackenzie, the Chairman and Chief Executive of Vector Limited respectively, were appointed directors. These appointments were agreed with our cornerstone shareholder, Vector Limited, as part of last year's successful capital raising.

Garry Forward was appointed as Chief Financial Officer in September 2007. Garry has worked at a senior level in a number of listed companies

Derek Walker Chris Freear
Chairman Chief Executive Officer

NZ Windfarms Limited
Results for announcement to the market

Reporting Period Six months to 31 December 2007
Previous Reporting Period Six months to 31 December 2006

Amount (000s)
Revenue from ordinary activities $NZ3,056
1282.8%
Profit (loss) from ordinary activities after tax attributable to security holder. $NZ1,320
75.3%
Net profit (loss) attributable to security holders. $NZ1,320
Percentage Change 75.3%

Interim Dividend Amount per security Imputed amount per security
Nil It is not proposed to pay a dividend. Not Applicable

Record Date Not Applicable
Dividend Payment Date Not Applicable

Comments: Refer to Chairman and Chief Executive Officer's Review.

ENDS

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