Wellington Drive Independent Research Report

EASTBOURNE  ADVISORY  LIMITED    1  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
 
 
Analyst:  Andrew  Mortimer  
Email:  agbmortimer@gmail.com  
Mobile:  +64-­‐(0)27-­‐457  5730  
Date:  23  March  2017  
Wellington  Drive                  
 
Well  “Beyond  the  Motor”  
 
Ticker:  WDT    
Price  
($):0.235  
Market  Cap  
($m):$53.4  
 
52-­‐wk  Range:  
$0.08  -­‐  
$0.265  
n Under  the  leadership  of  Greg  Allen  over  the  past  five  years,  a  strategy  to  
improve  market  diversification  and  volumes  through  expanding  geographical  
markets,  developing  new  advanced  motors  and  connected  refrigeration  
controllers,  improve  margins  through  supply  chain  cost  reduction,  and  reduce  
operating  costs  and  inventory  turn  has    met  with  considerable  success.  
n Under  this  strategy  Gross  Margins  have  improved  from  5.0%  FY11  to  24.0%  
FY16  and  resulted  in  the  delivery  of  a  modest  maiden  EBITDA  surplus.    
n Frequent  capital  raisings  since  listing  have  been  exhausting  for  investors  but  
there  is  now  significant  light  at  the  end  of  the  tunnel  with  the  company  
expecting  significant  growth  in  profitability  over  the  medium  term  on  the  basis  
of  recent  new  product  launches.  
n In  FY17  the  company  expects  further  very  significant  revenue  growth  and  
earnings  growth  as  customer  wins  and  the  adoption  of  new  products  occurs.  
Revenue  growth  is  expected  in  the  range  of  30-­‐40%  and  EBITDA  likely  in  the  low  
millions  (we  forecast  $2.6m).    
n WDT  recently  announced  the  signing  of  customer  terms  &  conditions  for  SCS™  
Connect  with  a  very  large  unnamed  global  consumer  brand  that  may  come  on  
stream  during  FY17.  However  we  note  the  timing  and  quantum  of  revenue  
growth  is  difficult  to  forecast  and  is  likely  to  be  lumpy  near  term  as  new  
customers  on-­‐board  and  existing  customers  adopt  WDT’s  new  products.  
n Electric  motors,  and  the  systems  they  drive,  are  the  largest  single  consumer  of  
electrical  power.  Changing  consumer  behaviour,  government  incentives  and  
regulations  are  expected  to  fuel  very  strong  (double  digit)  growth  for  energy  
efficient  motors  for  the  foreseeable  future  according  to  industry  research.    
n The  company’s  new  strategy  goes  well  beyond  specialised  electric  motors  
where  the  market  is  relatively  fragmented,  commoditised  and  price  sensitive.    
It  has  been  extended  to  include  proprietary  connected  smart  refrigeration  
controllers  and  cooler  fleet  management  software,  taking  the  company  into  the  
Internet  of  Things  (IoT)  sector  –  where  there  is  increased  opportunity  to  add  
value  for  customers  and  margins  are  significantly  more  attractive.  
n Assuming  the  company  is  successful  and  meets  its  expectations,  it  will  create  
significant  shareholder  value  in  our  view.  Nevertheless  while  early  indicators  
are  positive,  WDT  must  remain  innovative  and  ahead  of  the  pack  in  what  
remain  very  competitive  markets,  particularly  for  motors  and  an  investment  
carries  significant  risk  given  it  is  in  the  early  stages  of  a  turnaround.  
n At  the  current  share  price  of  23.5c  the  market  appears  to  be  implying  
significantly  lower  margins,  lesser  volume  growth  or  lower  pricing  or  a  
combination  relative  to  our  expectations  all  else  being  equal.  

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    2  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Investment  Fundamentals
   
Executive  Summary  
Founded  in  1986  and  listed  in  2001  and  coming  from  a  very  long  period  of  losses    and  
associated  capital  raisings,  investors  may  now  recapture    lost  value    and  more  as  the  
company  guides  to  a  period  of  significant  growth  and  profitability. The  company  has  
raised  $117.2m  of  capital  since  listing,  incurred  accumulated  losses  of  $112m  and  had  
closing  equity  of  $2.7m  FY16.  We  understand  around  50%  of  shareholders  by  number  
are  small  investors,  many  of  whom  have  been  significantly  diluted  over  the  years.  
As  a  backdrop,  ever  rising  energy  prices,  increasing  awareness  about  the  benefits  of  
using  energy  efficient  motors,  increasing  concern  over  greenhouse  emissions  and  
Government  incentives  and  regulations  will  push  the  demand  for  energy  efficient  
motors  and  controllers  in  low  power  requirement  applications.  Electric  motors,  and  the  
systems  they  drive,  are  the  largest  single  consumer  of  electrical  power.  In  aggregate,  
they  use  twice  as  much  energy  as  lighting  applications.  Industry  research  points  to  very  
strong  growth  rates  for  energy-­‐efficient  motor  systems.    
In  the  case  of  SCS  Connect  adoption,  this  is  mainly  driven  by  the  accelerating  demand  
for  connecting  industrial  equipment  (in  this  case  commercial  coolers)  to  the  internet,  
gathering  Big  Data  from  fleets  of  equipment,  increasing  the  intelligence  of  the  
equipment  and  improving  the  sales  and  cost  performance  of  the  fleet  through  
deploying  cloud  based  software  and  reporting  tools  to  assist  operating  teams  in  making  
better  business  decisions  (the  Internet  of  Things  or  IoT).  Gartner  Inc.  forecast  6.4bn  
“things”  would  be  connected  in  2016  (supporting  total  service  spending  of  US$235bn)  
rising  to  20.8bn  “things”  by  2020  (growth  of  15%-­‐20%  per  annum)  and  that  consumer  
uses  will  continue  to  account  for  the  greatest  number  of  connected  things,  while  
enterprise  will  account  for  the  largest  spending.  
WDT  had  earlier  flagged  and  then  achieved  a  modest  EBITDA  profit  for  FY16  and  
management  has  expectations  for  strong  growth  in  revenues  and  earnings  thereafter.  
Prior  to  2012  WDT  had  historically  not  been  profitable  for  a  variety  of  reasons  including  
high  costs  of  production,  poor  manufacturing  economics  in  the  ventilation  market,  
carrying  of  excess  inventory,  the  ordering  of  significant  quantities  of  product  that  were  
not  demanded  by  the  market  as  EC  motor  adoption  was  still  in  the  very  early  stages,  a  
lack  of  scale  and  a  general  lack  of  operational  focus.    
 
 
 
Financial'and'valuation'metrics
Year'to'31'December
Adjusted(Earnings(($m)
EPS(Adjusted((c)
EPS(Growth((%)
P/E((X)
EV/EBITDA((X)
Net(DPS((c)
Imputation((%)
Net(Yield((%)
Gross(Yield((%)
Source:(Company(data,(estimates
2015A2016A2017F2018F2019F
F2.9(F2.5(0.53.15.9
NAF1.0(0.21.22.2
NANAF120%495%84%
NAF24.0(119.620.110.9
NANA25.613.88.6
NA0.00.00.00.0
NA0.00.00.00.0
NANA0.00.00.0
NANA0.00.00.0

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    3  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
These  issues  have  been  addressed    since  2012.  The  company  now  has  a  customer-­‐
centric  strategy  versus  a    ‘build  it  and  they  will  come’  strategy,  a  completely  new  
approach  to  managing  product  demand  and  supply,  and  a  new  supply  chain  model  
with  low  cost  factories  in  Vietnam,  Malaysia  and  China  that  has  significantly  
improved  its  working  capital  position  with  receivables  and  payables  near  matched.  
Inventory  turnover  has  improved  from  ~3X  to  ~8X  between  2014  and  2016.  
A  strategy  to  improve  product  cost  and  thus  margins  through  improvements  in  the  
supply  chain  and  reduce  operating  costs  has  been  met  with  great  success  with  Gross  
Margins  improving  from  5.0%  FY11  to  24.0%  FY16  with  further,  albeit  smaller,  
improvements  in  motor  margins  expected  in      FY17.  The  company  is  targeting  motor  
margins  of  25%  which  is  understood  to  be  in  line  with  tier  1  manufacturers.  The  rollout  
of  new  technologies  (e.g.  SCS™  Connect  controllers)  with  higher  margins  should  see  
group  margins  continue  to  increase  over  the  medium  term  even  as  lower  margins  on  
motors  stabilise.  
The  SCS™  (SCS  stands  for  Smart  Control  Solutions)  controller  system  has  been  three  
years  in  development  with  its  first  sales  made  in    1H16  .    The  company  has  high  
ambitions  for  its  success  in  the  market  near  term. SCS™  Connect  offers  a  cloud-­‐based  
cooler  fleet  management  solution  to  customers  who  need  to  connect  industrial  devices  
to  the  Internet.  The  SCS™  Connect  System  unlocks  the  business  information  sitting  in  a  
customers’  cooler  fleet  and  lets  customers  use  that  data  to  improve  commercial  and  
operational  performance.  
Wellington’s  new  strategy  is  to  deliver  solutions  to  solve  customers’  refrigeration  
energy  consumption,  system  control  and  fleet  management  problems  through  the  
development  of  Advanced  Motor  and  Intelligent  Control  Solutions.  Wellington  terms  
this  strategy  “Beyond  the  Motor”.    
The  company’s  strategy  is  now  much  more  than  motors  where  the  market  is  relatively  
fragmented,  commoditised  and  price  sensitive  and  has  been  extended  to  include  smart  
controllers  and  software  where  margins  are  more  attractive.  
WDT  see  its  customers  as  beverage  bottlers  (who  are  the  ultimate  consumer  of  the  
product),  brands  (who  steer  what  technology  they  adopt  in  their  coolers)  and  OEMs  
(who  actually  manufacture  product  into  coolers  and  ship  to  the  bottler).  In  essence  the  
primary  customer  is  a  bottler,  but  the  transactional  customer  is  the  OEM.  Over  the  last  
two  years  the  company  has  added  supermarket  and  food  service  refrigerator  
manufacturers  to  its  primary  target  customer  list  –  with  the  ultimate  consumer  of  the  
product  being  large  international  supermarket  brands  and  restaurant  chains.  
WDT  is  mainly  a  B2B  company  and  doesn’t  sell  through  distributors  at  any  scale,  
although  does  have  two  smaller  distribution  relationships  (in  the  UK  and  USA).  
Consequently,  most  sales  are  direct  and  WDT  has  a  small  global  sales  force.  
WDT  supports  two  of  the  largest  consumer  branded  food  and  beverage  retailers  in  the  
world  and  a  number  of  large  beer  brands  and  global  refrigeration  original  equipment  
manufacturers  (OEMs).    Two  large  global  beverage  brands  are  currently  driving  the  
largest  share  of  EC  motors  and  SCS™  controller  growth.      The  two  largest  direct  
customers  are  OEMs  who  support  these  branded  food  and  beverage  retailers.  Both  
OEM  customers  also  support  major  beer  brands,  ice  cream  brands  and  supermarket  
display  case  customers,  providing  a  channel  to  market  for  WDT  to  access  these  
customers.    
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    4  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
WDT’s  functional  currency  is  the  USD.  Its  main  currency  exposure  is  to  its  short  NZD  
position  arising  from  its  NZD  denominated  cost  base  estimated  at  around  NZD  $5m  per  
annum.  
Recent  customer  wins,  and  new  brand  relationships  forged,  are  likely  to  see  revenue  
diversification  begin  to  emerge  in  the  current  year  and  beyond  as  those  new  customers  
and  brands  adopt  the  new  products  WDT  has  launched  in  the  market  place.    
Assuming  the  company  is  successful  and  meets  its  expectations,  it  will  create  significant  
shareholder  value  in  our  view.  Nevertheless,  while  early  indicators  are  green,  WDT  
must  remain  innovative  and  ahead  of  the  pack  in  what  remain  very  competitive  
markets.  
We  have  not  assumed  any  dividends  being  paid  over  the  forecast  period  for  two  main  
reasons;  first  is  that  with  substantial  tax  losses  available,  dividends  may  not  be  imputed  
for  the  foreseeable  future  and  any  capital  return  would  be  more  likely  through  a  buy-­‐
back  or  share  cancellation  in  our  view.    
Secondly,  and  more  importantly,  the  company  still  has  product  expansion  opportunities  
and  cash  generated  may  be  applied  to  further  product  development.  
Catalysts  for  Share  Price  Performance
n Announcement  of  contract  wins  for  SCS™  and/or  ECR2  beyond  current  market  
expectations.  
n Earnings  announcements  ahead  of  guidance.  
n Increased  “marketing”  of  the  new  WDT  story  to  increase  investor  knowledge.  
n Further  margin  improvement  beyond  market  expectations.  
n New  product  launches  and  expansion  of  new  product  platforms.  
n Implementing  a  dividend  policy  (although  tax  losses  mean  the  company  would  
not  be  able  to  pay  imputed  dividends,  so  more  tax  efficient  distribution  
methods  such  a  share  buybacks  may  be  more  appropriate).  
n Corporate  activity  in  the  sector.    
About  The  Company  
Wellington  was  founded  in  1986,  as  Clark  Automotive  Developments  Ltd.  The  company  
specialized  in  power  electronics,  including  Inductive  Power  Transfer  technology.  It  also  
developed  a  novel  design  of  ironless,  slotless  BLDC  motor,  which  was  patented  in  1989.  
In  1996  the  company  changed  its  name  to  Wellington  Drive  Technologies  Ltd,  as  it  
changed  its  strategy  to  focus  on  EC  motors  and  their  applications.  
From  the  late  1990s  until  the  mid  2000's,  Wellington  operated  primarily  as  a  technology  
development  company,  working  with  manufacturers  in  the  appliance  and  other  
industries  to  license  and  apply  its  EC  motor  technology.  By  this  time,  the  original  
patents  had  been  superseded,  and  Wellington's  technology  was  based  on  new  
developments  in  low-­‐iron  slotless  motors  and  control  systems.  The  company  listed  on  
the  New  Zealand  Stock  Exchange  in  2001.  
Wellington  began  manufacturing  its  own  EC  motors  in  2001.  By  the  mid  2000s  it  was  
primarily  manufacturing  and  selling  motors  under  its  own  brand,  and  technology  
licensing  was  becoming  a  secondary  activity.  Its  first  products  were  targeted  at  the  
domestic  ventilation  market.    In  2011  the  company  withdrew  from  the  ventilation  
market  due  to  the  poor  economics  of  its  “make  to  order”  approach.  
 
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    5  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
In  2004  WDT  added  refrigeration  fan  motors  to  its  product  range,  under  the  "ECR"  
brand.  Since  that  date,  WDT  has  supplied  over  7  million  ECR  motors  with  the  guidance  
to  near  term  profitability  driven  through  a  substantial  strategic  and  operational  clean-­‐
up  led  by  CEO  Greg  Allen,  who  has  cut  costs  of  production,  cleared  excess  and  
unwanted  inventories,  increased  the  scale  of  the  company’s  marketing  plans  and  
developed  innovative  technology  for  new  markets.    
In  2011,  the  company  decided  to  focus  solely  on  its  commercial  refrigeration  business  
and  withdraw  from  the  ventilation  market;  and  to  develop  a  range  of  "beyond  the  
motor"  technology  products  specifically  for  the  commercial  refrigeration  industry.  
Associated  with  a  simplification  of  the  business  the  company  now  has  a  customer-­‐
centric  strategy,  improved  its  margins  through  cost  control  including  restructuring  its  
supply  chain  and  has  significantly  improved  its  working  capital  position  with  receivables  
and  payables  near  matched.  Inventory  turnover  has  improved  from  ~3X  to  >7X  
between  2014  and  2016.  
The  product  range  now  includes  airflow  solutions,  cloud  connected  refrigeration  
controls,  and  telemetry  and  refrigeration  fleet  management  software.  Wellington  has  
closed  its  Singapore  office  and  now  outsources  manufacturing  to  suppliers  in  Vietnam,  
China  and  Malaysia.    The  company  has  offices  in  3  countries  (and  representation  in  a  
further  7),  and  manages  supply  chain,  logistics  and  R&D  from  its  headquarters  in  
Auckland,  New  Zealand.    
Core  Strategy  
WDT’s  key  strategy  is  to  go  beyond  the  fragmented  commoditised  and  price  sensitive  
motor  sector  to  providing  solutions  to  the  commercial  refrigeration  market.  The  
commercialisation  of  its  IoT  based  SCS  Connect  technology  to  deliver  valuable  
information  to  owners  and  operators  of  commercial  refrigeration  fleets  should  deliver  
significant  revenue  and  margin  growth.      
WDT  currently  has  high  customer  concentration  risk  with  two  major  OEM  customers  
comprising  57%  of  FY16  revenues  (in  2012  there  was  only  one)  although  the  number  of  
end  customers  has  increased;  as  a  result  another  key  strategy  is  to  diversify  its  revenue  
streams  by  both  increasing  the  number  and  type  of  customers  it  sells  to  and  
geographies  it  operates  in.  In  this  respect,  the  company  is  endeavouring  to  foster  new  
supermarket  display  case  and  food  service  cooler  customer  relationships.    
The  company  also  believes  it  can  further  improve  its  supply  chain,  albeit  it  has  already  
picked  the  low  hanging  fruit  in  terms  of  cost  reduction  through  the  step  changes  
already  undertaken.    
The  SCS™  Connect  System  
The  SCS™  product  has  been  three  years  in  development  and  its  first  sales  were  made  in  
1H16.  SCS™  Connect  offers  a  cloud-­‐based  solution  to  customers  who  need  to  connect  
industrial  devices  to  the  Internet.  It  effectively  unlocks  the  business  information  sitting  
in  a  customer’s  cooler  fleet  (that  has  not  been  previously  accessible)  and  lets  customers  
use  that  data  to  improve  commercial  and  operational  performance.  SCS™  allows  the  
customer  to  track  assets,  simplifies  maintenance,  predicts  and  diagnoses  faults  in  the  
equipment,  improves  energy  consumption,  provides  connectivity  that  can  manage  
coolers  in  the  field  and  allows  customers  to  monitor  cooler  activity  and  relocate  coolers  
where  utilisation  is  low.    
WDT  manages  the  telemetry  data  and  provides  tools  to  allow  the  customer  to  monitor  
their  fleet,  or  can  feed  the  raw  data  to  the  customer  for  their  own  analysis.    

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    6  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Where  WDT  provides  data  solutions  for  the  customer,  WDT  currently  derives  small  
additive  annuity  revenue  streams.    
SCS™  controls  have  an  automatic  power-­‐saving  standby,  saving  up  to  40%  of  energy  
consumption  compared  to  an  electronic  thermostat.  They  also  feature  other  advanced  
energy  saving  features  such  as  LED  light  dimming  and  fan  speed  adjustment,  letting  
OEMs  optimise  the  control  of  any  cooler.    
For  the  security  of  recorded  and  traceable  food  storage  conditions,  SCS™  Connect  
controllers  log  several  months’  of  temperature  and  performance  data,  which  is  
viewable  via  a  smartphone  application  or  at  the  desktop.  
Wellington's  SCS™  refrigeration  controls  also  have  a  built-­‐in  iBeacon.  iBeacon®  is  
Apple's  name  for  a  small  Bluetooth  transmitter  (beacon)  which  can  be  used  to  trigger  
Apps  in  the  smartphones  of  people  who  pass  nearby.  Although  the  name  and  technical  
specification  are  Apple's,  the  beacons  can  be  made  by  anyone,  and  work  with  most  
modern  smartphones,  whether  Apple  or  Android.    
Because  Apps  react  to  the  specific  locations  of  beacons,  marketers  can  target  shoppers  
with  offers  or  information  that  relates  specifically  to  where  they  are  or  what  they're  
doing  (providing  the  potential  for  location  based  marketing).  In  return,  marketers  can  
learn  about  users'  behaviour  and  habits.  Because  the  SCS™  controller  is  mains  voltage  
powered,  it  lasts  the  life  of  the  cooler,  and  the  iBeacon  never  runs  out  of  battery.    
To  make  the  best  use  of  an  iBeacon,  the  customer  needs  to  know  where  it  is.  This  lets  
them  target  marketing  activity  to  specific  brands,  stores,  or  geographies,  and  build  the  
best  picture  of  consumer  behaviour.  Wellington's  SCS™  Connect  identifies  its  location  
as  part  of  the  fridge  installation  process,  and  sends  the  location  to  the  SCS™  database.    
Conventional  iBeacons  are  not  interactive:  communication  from  the  iBeacon  to  the  
phone  is  one  way  only.  Because  the  SCS™  beacon  is  also  a  Bluetooth  connection  to  the  
fridge  control,  it  potentially  allows  interactive  behaviour  between  the  fridge  and  the  
phone.  For  example  the  fridge  lights  could  blink  when  the  App  beeps,  telling  the  
customer  why  they  are  being  beeped  at.  Or  the  SCS™  Connect  could  send  a  message  to  
the  phone  when  the  door  is  opened,  telling  the  marketer  whether  their  message  has  
really  generated  a  sale.    
SCS  Connect  also  support  Google’s  alternative  to  iBeacon,  called  Eddystone.  Eddystone  
has  some  different  features  than  iBeacon,  such  as  the  ability  to  operate  via  the  user’s  
web  browser  (i.e.  without  the  need  to  download  an  app)  and  to  pass  limited  device  
status  data.  The  majority  of  WDT’s  customers  are  currently  iBeacon.    
It  is  understood  that  Wellington  is  researching  a  number  of  new  wireless  technology  
platforms  to  further  advance  the  connectivity  of  its  SCS  Connect  and  expand  the  service  
offerings  available  to  its  customers.  These  technologies  may  take  it  beyond  Bluetooth  
to  emerging  ‘always  on’  communication  technologies.  Wellington  intends  to  invest  in  
advanced  connectivity  solutions  as  part  of  its  long  range  research  and  product  
development  plans  –  something  that  is  well  ‘beyond  the  motor’.  
WDT  Energy  Efficient  EC  Motors  
While  there  has  been  some  customer  resistance  to  purchasing  EC  motors  due  to  their  
higher  capital  cost  (around  US$16-­‐20  versus  $4-­‐6  for  a  traditional  shaded  pole  motor)  
and  in  spite  of  having  a  short  pay-­‐back  period  and  very  attractive  economics,  new  
energy  regulations  around  the  globe  are  likely  to  stimulate  higher  demand  over  the  
medium  term.    
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    7  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
In  the  USA,  Federal  Department  of  Energy  (DOE)  regulations  effective  in  2017  are  
targeting  commercial  “reach-­‐in”  cooler  energy  usage  reductions  of  30%-­‐50%,  numbers  
which  are  achievable  with  a  WDT  motor  solution  (it  is  understood  this  is  further  
improved  when  a  refrigerator  is  controlled  with  the  SCS  Connect).    Further  as  OEM’s  
move  away  from  HCFC  refrigerants  and  instead  use  less  complex  hydrocarbons  (like  
propane),  they  tend  to  adopt  EC  motors  as  they  migrate.
EC  (Electronically  Commuted,  or  Electronically  Controlled)  motors  are  electric  motors  
which  have  permanent  magnets  on  the  rotor  and  use  electronics  to  control  the  voltage  
and  current  applied  to  the  motor.    
EC  motors  have  no  brushes  and  therefore  avoid  the  sparking  and  shorter  life  of  brushed  
motors.  Because  they  have  electronics  controlling  the  stator,  and  do  not  need  to  waste  
power  inducing  the  rotor  field,  they  give  better  performance  and  controllability.    
EC  motors  are  used  today  in  many  fractional-­‐horsepower  applications  where  high  
motor  efficiency,  reliability,  and/or  controllability  are  desired.  
Refrigeration  accounts  for  up  to  half  of  the  electricity  use  in  a  typical  supermarket  and  
because  of  the  risk  of  product  damage,  reliability  and  performance  are  critical.  
In  most  cases  EC  motors  use  from  less  than  one  third  to  one  half  of  the  electricity  used  
by  the  traditional  "shaded  pole"  induction  motors  used  in  the  ventilation  and  
refrigeration  industries,  which  translates  into  lower  operating  costs  and  short  payback  
periods.  
EC  motors’  high  efficiency  also  means  that  the  motors  run  “cool”,  and  dramatically  
reduce  the  amount  of  waste  heat  produced.  Reduced  waste  heat  at  the  evaporator  
motor  level  also  typically  results  in  reduced  operation  at  the  compressor  level,  which  
allows  further  energy  savings.  Also,  running  cooler  improves  the  life  of  highly  loaded  
motor  parts  like  windings  and  bearings.  
EC  motors  also  have  a  wider  operating  range  than  traditional  induction  motors,  which  
means  that  one  EC  motor  can  replace  a  number  of  induction  motor  models.  In  this  way,  
the  number  of  models  required  by  a  typical  customer  is  significantly  decreased,  which  
decreases  and  simplifies  inventory.  This  is  the  main  reason  why  EC  product  lines  usually  
include  less  motor  models  than  their  induction  counterparts.  
Because  the  motor’s  operation  is  controlled  by  software,  EC  motors  allow  customers  to  
optimize  and  integrate  the  motor,  fan  and  controller  with  the  application,  and  to  
include  features  like  data  communications,  constant  volume  control,  variable  speed,  
etc.  
EC  motors  are  also  quieter  (an  important  consideration  in  multi-­‐motor  environments  
such  as  supermarkets),  have  longer  design  life  and  generally  require  less  maintenance.  
As  a  general  rule  of  thumb,  shaded  pole  motors  range  from  15-­‐25%  efficiency.    This  
means  for  every  Watt  used  to  generate  airflow,  another  4-­‐5  Watts  are  wasted  as  heat.  
Permanent  split  capacitor  motors  range  from  30-­‐50%  efficiency  and  EC  motors  achieve  
60-­‐75+%  efficiency.    
Payback  analysis  involves  many  factors  such  as  the  local  electricity  rate,  duty  cycle  of  
the  motors  (and  in  conjunction  with  compressors),  lifetime  failure/replacement  costs,  
efficiency  of  the  air  movement  and  operating  conditions.      
 
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    8  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
For  high  duty  cycle  applications  such  as  refrigeration  fans,  payback  can  be  as  short  as  a  
few  months,  while  for  low  duty  cycle  applications,  energy  savings  may  not  be  a  driver  
for  moving  to  EC  motors.  As  noted,  in  general  EC  motors  cost  2-­‐4x  the  price  of  an  
equivalent  size  AC  motor,  however  the  total  cost  equation  often  comes  out  in  favour  of  
the  EC  motor.  
As  an  example,  changing  remote  or  integral  (plug-­‐in)  display  cases  to  use  WDT  ECR  
motors,  with  efficiency  up  to  70%,  can  reduce  electricity  consumption  by  over  two  
thirds.  This  leads  to  a  cost  saving  of  $45  or  more,  per  motor  per  year  (based  on  a  power  
cost  of  $0.11/kWh).  Payback  can  be  measured  in  months.    
WDT  ECR  motors  are  tested  to  a  design  life  of  over  10  years,  so  replacement  and  
warranty  costs  can  be  reduced  also.  
WDT’s  new  ECR2  motors  give  very  low  levels  of  motor-­‐induced  noise  and  vibration  and  
as  much  as  4.5dBA  less  than  other  EC  motors.  WDT  ECR  motors  can  be  programmed  in  
place,  allowing  individual  cabinets  to  be  tuned  to  maximum  performance  once  
installed,  and  can  be  combined  with  the  SCS™  refrigeration  controller  to  control  fan  
speeds  in  real  time.  Further,  the  ECR2  model  can  still  operate  efficiently  under  extreme  
conditions.  
To  cater  for  customer  demand  for  non  EC  motors,  Wellington  also  sells  a  rebranded  
Chinese  manufactured  shaded  pole  motor,  mainly  to  China  based  customers,  a  market  
where  EC  motors  have  a  low  penetration  rate.  
About  the  Markets  
The  Market  for  Motors    
Ever  rising  energy  prices,  increasing  awareness  about  the  benefits  of  using  energy  
efficient  motors  and  smart  refrigeration  controllers,  increasing  concern  over  reducing  
greenhouse  gas  emissions  and  an  increase  in  government  incentives  and  regulations  
will  push  the  demand  for  energy  efficient  motors  and  control  solutions  in  commercial  
refrigeration  applications.    
Energy-­‐efficient  motors  are  manufactured  with  higher  quality  raw  materials  and  newer  
technologies  that  comply  with  the  energy-­‐efficiency  standards.  In  addition,  changing  
regulatory  policies,  along  with  incentives  offered  by  the  governments  to  support  energy  
saving  products,  have  increasingly  incentivised  OEMs  to  switch  to  newer  technologies.  
The  maintenance,  operation  and  energy  costs  of  energy  efficient  low  horsepower  
motors  contribute  significantly  towards  the  life  cycle  costs,  resulting  in  higher  demand  
by  end  customers,  for  better  energy  saving  products.    
The  global  electric  motor  sales  market  size  (all  motors)  was  estimated  to  be  around  
US$91.75bn  in  2015  and  is  expected  to  grow  at  a  CAGR  of  6.38%  during  2015-­‐2020  
according  to  MarketsAndMarkets  research.  
Electric  motors,  and  the  systems  they  drive,  are  the  largest  single  consumer  of  electrical  
power.  In  aggregate,  they  use  twice  as  much  energy  as  lighting  applications,  which  are  
the  next  largest  user,  according  to  a  working  paper  by  International  Energy  Agency  
(IEA)
1
.    
It  is  estimated,  electric  motors  and  the  systems  they  drive  account  for  approximately  50  
percent  of  total  global  energy  consumption,  which  equates  to  about  6  billion  metric  
tons  of  CO2  a  year.  
 
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    9  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
 
 
These  numbers  highlight  why  efforts  to  increase  motor  energy  efficiency  are  a  priority  
among  industrialized  countries  worldwide.  Motor-­‐efficiency  performance  standards  
(MEPs)  from  multiple  countries,  including  the  U.S.  and  Europe,  as  well  as  potential  end-­‐
user  energy  and  cost  savings,  are  the  key  drivers  accelerating  demand  for  energy-­‐
efficient  motor  drives.  Most  developed  countries  already  have  energy  standards  in  
place  while  expectations  are  most  developing  nations  to  have  standards  by  2018.  
MarketsAndMarkets  estimate  the  total  Global  Energy  Efficient  Motors  Low  Horsepower  
market  to  be  around  US$35bn  in  2016  (this  is  the  market  segment  where  WDT  can  
compete)  and  growing  at  a  CAGR  of  ~12%  p.a.  Of  that,  refrigeration  accounts  for  
around  US$3.7bn,  which  is  WDT’s  current  focus.  
Technavio’s  research  analysis  predicts  the  global  brushless  DC  motors  market  to  grow  
steadily  at  a  CAGR  of  around  13%  during  its  forecast  period  2016-­‐2020,  similar  to  and  
supporting  that  forecast  by  MarketsandMarkets.    
 
 
#########
Source'International'Energy'Agency'(IEA)
Source'International'Energy'Agency'(IEA)

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    10  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
The  key  point  to  note  is  that  electric  motor  markets  are  very  large  and  expected  to  
grow  strongly  and  while  WDT  participates  in  only  a  small  fraction  of  the  market  
currently,  there  may  be  high  value  adjacent  markets,  which  WDT  may  choose  to  enter  
in  the  future.  However  the  markets  are  very  competitive  with  a  large  number  of  
competitors  both  large  and  small.  
 
 
According  to  MarketsAndMarkets,  the  segments  where  WDT  currently  participates,  
vending  machines,  freezers  and  display  cases  are  expected  to  be  among  fastest-­‐growing  
products  over  the  five  years  from  2013  to  2018,  growing  at  CAGRs  of  17.33%,  15.70%  
and  18.0%  respectively.    
Bottle  coolers  held  the  highest  revenue  share  at  35%  in  2012  and  are  expected  to  retain  
this  dominant  share  over  the  forecast  period.    
The  total  global  low  horsepower  market  for  refrigeration  applications  is  forecast  to  be  
US$3.7bn,  growing  at  a  CAGR  15%  from  2012  to  2018  and  reaching  ~US$5bn  at  the  end  
of  the  forecast  period.  Growth  rates  by  application  were  forecast  to  be  highest  for  
display  units  and  growth  across  all  categories  of  between  10%  and  18%.  Geographically,  
growth  is  expected  to  be  14%-­‐19%  across  all  markets  with  APAC  (15.8%)  and  ROW  
(18.6%)  highest  as  infrastructure  is  built  out  driving  refrigeration  demand.    
WDT  has  only  a  small  presence  in  vending  machines  at  present  as  the  bulk  of  that  
segment  uses  smaller  DC  motors  than  WDT  currently  has  in  its  product  range.  However  
it  is  an  extremely  accessible  adjacent  segment  and  might  be  a  key  target  market  for  the  
company’s  planned  smaller  low  cost  motor.  
Global&Energy&Efficient&Motors&Low&HP&By&Application&US$bn&(Type)
Source:(marketsandmarkets




Global Energy Efficient Low Horsepower AC Motors Market
(2013 – 2018)










The global energy efficient low horsepower AC motors market revenue, for the period from
2012 to 2018, is shown in the table below.

TABLE 1

GLOBAL ENERGY EFFICIENT MOTORS: LOW HORSEPOWER AC
MOTORS MARKET REVENUE, 2012-2018 ($BILLION)

Type 2012 2013 2014 2015 2016 2017 2018
CAGR %
(2013-
2018)
FHP AC motors
17.54 18.61 19.86 21.23 22.75 24.37 26.12 7.01
1hp-3hp Energy
Efficient AC Motors
5.53 6.63 8.01 9.74 11.93 14.67 18.20 22.37
Total Market
23.07 25.25 27.86 30.98 34.67 39.04 44.32 11.91
Source: MarketsandMarkets Analysis

The overall market for energy-efficient low horsepower AC motors market is expected to grow
from $25.25 billion in 2013 to $44.32 billion in 2018 at a CAGR of 11.91% from 2013 to 2018.
The efficiency of the energy-efficient motors is 1% to 4% higher than the normal motors.
Energy-efficient electric motors have improved motor design and high quality materials in
order to reduce the motor losses, which further improve the motor efficiency. The need to
reduce wastage of electricity and reduce emissions has driven the market for energy-efficient
low horsepower AC motors in various applications.

The revenues of the global energy-efficient low horsepower AC motors by the various
applications have been tabulated below.


MarketsandMarkets
27
Global&Energy&Efficient&Motors&Low&HP&By&Application&US$bn&(Application)
Source:(marketsandmarkets

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    11  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
 
 
APAC  accounted  for  the  largest  share  of  the  market  in  2015  and  is  expected  to  grow  at  
a  CAGR  of  around  14%  during  the  forecast  period.    
For  further  illustration  of  the  size  of  the  market,  the  research  estimates  Coca  Cola  alone  
has  13m  coolers  in  market  with  the  total  global  fleet  estimated  at  30m  at  an  average  
cost  of  US$800  per  cooler  unit,  implying  capital  deployed  of  ~US$24bn  (although  this  
capital  spend  is  in  part  undertaken  by  Coca  Cola’s  independent  bottler  network).    
The  Market  for  IoT  and  Connected  Controllers  
For  SCS  Connect,  growth  is  likely  to  be  driven  around  demand  for  “the  internet  of  
things”.  The  Industrial  Internet  (of  things)  is  still  at  an  early  stage,  similar  to  where  the  
Internet  was  in  the  late  1990s.    
The  internet  of  things  refers  to  the  networking  of  physical  objects  through  the  use  of  
embedded  sensors,  actuators,  and  other  devices  that  can  collect  or  transmit  
information  about  the  objects.  The  data  amassed  from  these  devices  can  then  be  
analysed  to  optimise  products,  services,  and  operations  improving  product  sales,  
equipment  efficiencies  and  driving  down  costs.  
Growth  in  demand  for  the  Internet  of  Things  is  forecast  to  be  very  strong  with  Gartner  
Inc.  forecasting  that  from  6.4bn  “things”  connected  in  2016  (supporting  total  service  
spending  of  US$235bn),  this  would  rise  to  20.8bn  “things”  by  2020  (growth  of  15%-­‐20%  
per  annum).    
Global&Energy&Efficient&Motors&Low&Horsepower&By&Application&US$bn
Source:(marketsandmarkets




Global Energy Efficient Low Horsepower AC Motors Market
(2013 – 2018)










Some of the major energy efficiency options include cold installation, building heat loads
minimization, process heat load minimization, minimize part load operations by matching loads
and plant capacity online, and adopt variable speed drives for varying process load.

Commercial refrigeration equipment has been considered for this study. These include bottle
coolers, vending machines, freezer cabinets, and display units among others.

TABLE 22

GLOBAL ENERGY EFFICIENT MOTORS: LOW HORSEPOWER
(FHP+1HP-3HP) AC MOTORS MARKET REVENUE, BY REFRIGERATION
APPLICATION, 2012-2018 ($BILLION)

Application 2012 2013 2014 2015 2016 2017 2018
CAGR %
(2013-
2018)
Bottle coolers
0.77 0.86 0.97 1.09 1.24 1.42 1.64 13.77
Vending machine
0.07 0.08 0.09 0.10 0.12 0.15 0.17 17.33
Freezer cabinets
0.37 0.42 0.48 0.55 0.63 0.74 0.87 15.70
Display units
0.64 0.74 0.86 1.00 1.19 1.41 1.69 18.00
Others
0.34 0.36 0.40 0.43 0.48 0.53 0.59 10.30
Total
2.18 2.46 2.79 3.18 3.66 4.24 4.96 15.08
Source: MarketsandMarkets Analysis

Vending machines, freezers and display cases are expected to be among fastest-growing
products over the next five years, growing at CAGRs of 17.33%, 15.70% and 18.00%
respectively from 2013 to 2018. Bottle coolers held highest revenue share that is 35% in 2012
and is expected to retain a dominant share for the next five years as well. The global energy
efficient low horsepower AC motors market revenue of refrigeration application by the major
geographies is shown in the following table.


MarketsandMarkets
93
Global&Energy&Efficient&Motors&Low&Horsepower&By&Geography&US$bn
Source:(marketsandmarkets




Global Energy Efficient Low Horsepower AC Motors Market
(2013 – 2018)










TABLE 23

GLOBAL ENERGY EFFICIENT MOTORS: LOW HORSEPOWER
(FHP+1HP-3HP) AC MOTORS REFRIGERATION APPLICATION
MARKET REVENUE, BY GEOGRAPHY, 2012-2018 ($BILLION)

Geography 2012 2013 2014 2015 2016 2017 2018
CAGR %
(2013-
2018)
North America
0.59 0.66 0.75 0.84 0.96 1.11 1.29 14.30
Europe
0.51 0.57 0.64 0.71 0.81 0.93 1.08 13.68
APAC
0.90 1.01 1.15 1.34 1.54 1.78 2.09 15.56
ROW
0.18 0.21 0.25 0.30 0.35 0.42 0.50 18.58
Total
2.18 2.46 2.79 3.18 3.67 4.24 4.96 15.08
Source: MarketsandMarkets Analysis

The global energy efficient low horsepower AC motors market revenue of refrigeration
application is estimated to grow at a CAGR of 15.08% from 2013 to 2018, to reach $4.96
billion by the end of 2018. ROW and APAC are the fastest growing regions with CAGRs 18.58%
and 15.56% respectively from 2013 to 2018. The demand for cold storage equipment driven
by the booming infrastructure in these regions is the major driver for the market. China and
India are expected to be the major growing markets for commercial refrigeration equipment in
the next five years. APAC indicates strong growth of energy efficiency low horsepower AC
motors in refrigeration application due to overall growth in the commercial refrigeration
equipment market in the region.
5.4.1 BOTTLE COOLERS
Bottle coolers are refrigeration equipment used for commercial refrigeration of drinks,
beverage sand ice creams. They are found in a number of places like pubs, restaurants, clubs,
and so on. The increase in global incomes augmented with improved infrastructure outlook in
the APAC region will be the major driver for this market. The major components in this

MarketsandMarkets
94

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    12  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
McKinsey  Global  Institute  research  estimates  that  number  may  be  as  many  as  26bn  to  
30bn  and  that  the  impact  of  the  Internet  of  Things  on  the  global  economy  might  be  as  
high  as  $6.2  trillion  by  2025.  Vast  amounts  of  money  are  being  expended  in  the  
technology  by  both  Corporates  and  Governments  (e.g.  Cisco  has  committed  to  
spending  US$1bn  over  5  years).  
 
Obstacles  to  growth  include;  
n The  current  absence  of  industry  standards  (including  connectivity  and  API’s).  
n That  security  and  data  privacy  issues  need  to  be  addressed.  
n Many  applications  will  require  devices  that  are  self-­‐sustaining  and  rely  on  
energy  harvesting  or  long-­‐life  batteries.  
n Connectivity  loads  where  billions  of  devices  will  be  connected  at  any  one  time.  
n Some  applications  will  require  low-­‐power,  low-­‐data-­‐rate  connectivity  across  a  
range  of  more  than  20  meters,  an  area  in  which  cellular  technologies  and  Wi-­‐Fi  
often  fall  short.  
n Legacy  environments  where  brownfield  innovation  will  be  required  to  support  
existing  equipment  on  the  ground.  
n Lack  of  skilled  workers  (data  scientists).  
n Uncertainty  around  returns  on  investment.  
AT  Kearny  estimates  that  of  its  forecast  US$344bn  of  IOT  revenues  in  2020,  US$45bn  or  
13%  will  be  spent  on  sensors  and  devices  and  US$237bn  (or  69%)  on  services  and  
applications,  with  the  residual  on  infrastructure  and  platforms.    
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    13  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
While  it  seems  likely  these  obstacles  will  be  overcome,  what  is  much  less  clear  is  who  
and  which  industries  would  capture  the  value  of  this  growth.  The  chief  executive  of  CSR  
plc,  Joep  van  Beurden,  hypothesises  only  about  10  percent  of  the  financial  value  to  be  
captured  is  likely  to  be  in  the  “things”  and  the  rest  is  likely  to  be  in  how  these  things  are  
connected  to  the  Internet  (and  the  creation  of  big  data).  CSR  is  a  large,  fabless  
semiconductor  company,  previously  listed  on  the  LSE  and  since  acquired  by  Qualcomm  
for  US$2.5bn.  CSR  specialises  in  products  utilising  wireless  technologies  including  
Bluetooth  and  WiFi.  
The  technology  will  be  disruptive  and  there  will  be  winners  and  losers.  The  important  
point  to  note  is  that  with  the  SCS  Connect  controller  in  market,  WDT  has  firmly  marked  
its  territory  in  the  space,  which  we  consider  essential  to  remain  competitive.  
Margins  and  Costs  
Since  2011,  WDT’s  Gross  Margins  have  seen  steady  increases  year  on  year,  with  the  
exception  of  FY14  when  lower  volumes  in  Latin  America  conspired  to  modestly  reduce  
margins  FY14  over  FY13.    This  margin  improvement  has  been  generated  through  a  
significant  improvement  in  WDT’s  entire  supply  chain  including  outsourcing  
manufacturing  to  low  cost  manufacturing  companies,  introducing  new  competitive  
suppliers  in  Vietnam  and  Malaysia,  discontinuing  low  margin  business  lines  and  the  
development  of  higher  value  products  (e.g.  ECR2  and  SCS)  and  more  recently  the  
targeting  of  higher  value  customers  (e.g.  supermarket  refrigerator  manufacturers).  The  
company  is  targeting  motor  margins  of  25%  (in  line  with  our  forecasts)  and  expects  
margins  on  its  SCS™  controllers  to  be  higher  than  EC  motor  margins.    
At  its  interim  result  1H16,  WDT  disclosed  margins  of  22.4%  and  subsequently  25.7%  in  
the  3
rd
 quarter  and  24.0%  FY16  and  is  now  achieving  margins  in  line  with  world-­‐class  
motor  companies.    
Likewise  opex  has  been  in  steady  decline  over  the  same  period  dropping  from  $13.8m  
FY11  to  $7.4m  FY15  mainly  attributable  to  lower  staff  costs,  the  closing  of  the  
Singapore  office  (in  June  2014),  the  relocation  of  the  Auckland  office  to  cheaper  
premises  and  business  simplification  enabling  the  company  to  do  more  with  less  
people.  FY16  the  company  increased  its  investment  in  headcount  to  enable  the  delivery  
of  growth  from  its  SCS  and  ECR2  businesses  increasing  opex  to  $8.5m.  Looking  forward,  
we  expect  opex  to  correlate  with  revenue  and  profit  growth.  
 
 
 
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    14  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
 
 
The  motors  market  is  very  fragmented  with  many  global  and  regional  vendors  although  
most  specialize  by  motor  size  and/or  applications.  Vendors  are  investing  in  R&D  to  
compete  in  the  market  in  terms  of  technology  and  pricing.  They  are  facing  constant  
price  pressure  from  regional  vendors,  which  is  leading  to  a  decline  in  the  average  selling  
price  of  these  motors  globally.  Increasing  standardization  and  less  price  and  quality  
differentiation  among  competitors  is  intensifying  competition.  While  there  are  many  
motor  manufacturers,  WDT  sees  its  main  competitors  as  a  privately  owned  German  
Company,  ebm-­‐pabst,  two  subsidiaries  of  listed  American  Company  Regal  Beloit  
(Morrill-­‐USA  and  Elco-­‐Italy),  and  a  Chinese  privately  owned  motor  manufacturer,  
Weiguang.  There  are  many  smaller  scale  motor  manufacturers,  several  of  them  VC  
backed,  based  in  the  USA,  Asia  and  Europe  which  the  company  also  occasionally  
competes  against.
Some  segments  and  markets  are  more  competitive  than  others,  for  example  (ice  cream  
is  more  competitive  than  beer  and  Europe  more  competitive  that  Asia  or  LatAm)  and  so  
WDT  has  a  product  range  with  different  attributes  and  price  points  although  it  does  not  
currently  cover  all  segments.  WDT  expects  its  new  motors  in  development,  including  a  
planned  very  low  cost  EC  motor,  to  help  compete  further  in  ice-­‐cream  and  lower  end  
coolers  more  broadly  in  the  future.    
Wellington’s  new  ECR2  motor  platform  is  seen  as  providing  a  competitive  advantage  
due  to  its  industry  leading  70%  efficiency,  its  extremely  quiet  operation  (at  around  37  
dBA)  and  its  ability  to  simplify  the  customer  supply  chain  by  having  just  one  SKU  
operating  on  any  worldwide  mains  voltage.  It  delivers  all  of  these  attributes  at  a  cost  
that  delivers  value  to  its  customers.  
The  demand  for  technically  advanced  brushless  DC  motors  may  see  increases  in  the  ASP  
over  the  forecast  period.  For  a  list  of  leading  vendors  in  the  motor  market  see  appendix  
2.  
While  still  competitive,  the  connected  commercial  refrigeration  controller  market  is  
much  less  developed  and  it  appears,  anecdotally  at  least,  that  WDT  has  a  very  strong  
beachhead  product  in  the  market.  The  IoT  products  and  services  that  go  hand  in  hand  
with  the  connected  hardware  are  certainly  nascent  in  the  commercial  refrigeration  
market,  but  with  significant  investment  happening  in  IoT  infrastructure  and  Cloud  
based  data  tools  and  services  by  major  players  such  and  IBM,  Amazon,  Cisco,  Apple,  
Google,  Microsoft,  GE,  Intel,  Siemens,  AT&T  and  Vodafone  the  opportunity  to  leverage  
the  available  tools  and  provide  IoT  solutions  is  developing  quickly.  
While  there  are  a  number  of  competitor  products  in  market  (Eliwell  owned  by  
Schneider  EPA.SU,  Emerson  EMR.N,  Danfoss,  Carel,  Elstat  and  Sollatek),  feedback  from  
customers  support  SCS™  as  being  a  functionally  superior  product.    

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    15  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Longer  term  there  is  risk  from  the  bigger  players  like  Carel  and  Danfoss  upping  their  
game  and  it  is  imperative  WDT  stays  ahead  of  its  competitors  in  terms  of  innovation.  
WDT  believes  it  was  first  with  the  idea  of  using  Bluetooth  to  provide  low-­‐cost  
communications  in  the  commercial  beverage  refrigeration  market  and  hence  developed  
a  market  leadership  position.  The  technology  needs  a  lot  of  development  effort  and  
fine-­‐tuning  to  acquire  the  desired  level  of  performance  and  customer  feedback  
suggests  competing  Bluetooth  solutions  don’t  perform  as  well  at  both  a  device  and  
application  level  relating  to  accessing  the  connectivity  based  tools.    Secondly  WDT’s  
controller  hardware  is  ‘next  generation’  in  that  it  has  multiple  inputs  and  outputs  and  
hence  can  ‘drive’  or  manage  a  number  of  sophisticated  electronic  components  within  
the  refrigerator.      
Many  competing  refrigeration  controllers  are  essentially  previous  generation  hardware  
to  which  a  Bluetooth  transceiver  has  been  added  meaning  the  underlying  electronic  
and  control  capability  is  less  capable  (e.g.  WDT’s  controller  can  control  its  variable  
speed  EC  motors).    Also,  WDT’s  ‘SCS  Report’  cloud  analytics  platform,  ‘SCS  Track’  cooler  
tracking  software  and  ‘SCS  field’  smart  maintenance  tool  suite  are  generally  considered  
to  be  best  in  breed  with  many  hardware  competitors  not  providing  the  same  level  of  
platform  functionality,  which  can  be  a  major  drawback  for  some  customers  who  want  a  
single  supplier  for  both  controller  hardware  and  software.    
Current  WDT  Markets  and  share  
In  FY16,  WDT’s  revenues  were  geographically  derived  68%  from  LatAm,  13%  EMEA,  
10%  APAC  and  9%  USA/Canada.  LATAM  saw  a  strong  resurgence  FY16  from  both  new  
customers  and  existing  customers  as  LATAM  economies  improved  although  Brazil  
remained  weak.  
 
In  Asia,  WDT’s  largest  customer  market  is  Thailand  followed  by  China  (which  is  mainly  a  
shaded  pole  market).    
 
FY16%Global%Revenues%US$m%and%%
Source:(Company((((
16.6,%68%%
2.2,%9%%
2.3,%10%%
3.2,%13%%
LATAM%North%America%APAC%EMEA%

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    16  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Since  2004  the  company  has  sold  in  excess  of  7  million  motors  in  26  countries.  The  
company  has  sales  teams  in  New  Zealand,  Mexico,  Brazil,  China,  Singapore,  Turkey,  
Italy,  Canada  and  the  USA.  Customers  include  supermarkets,  food  and  beverage  brands,  
and  refrigeration  OEM’s  and  parts  distributors.  
In  2013  WDT  estimated  its  relevant  market  for  beverage  cooler  motors  was  10.5m  
units.  WDT  had  only  a  small  share  of  the  remote  cooler  market  but  around  56%  of  the  
plug-­‐in  cooler  market.  This  number  excludes  adjacent  opportunities  including  vending  
machines  ice-­‐makers,  compressors,  retro-­‐fit  and  spares.  
Manufacturing  has  transitioned  to  a  lower  cost  base  with  improved  capacity  
The  company  has  supply  chain  partner  factories  in  China,  Malaysia  and  Vietnam,  
ensuring  product  supply  is  distributed  according  to  cost  and  capability,  and  reliance  on  
one  supplier  is  reduced.    
WDT’s  long  standing  EC  motor  supplier  is  Changzhou  Match-­‐Well,  headquartered  in  
Changzhou  China.  It  is  understood  they  have  been  a  manufacturing  partner  with  
Wellington  since  2005.  In  March  2016  Match-­‐Well  opened  a  new  60,000  m
2
 factory  in  
the  Hi-­‐Tech  District  of  Changzhou  City,  China.  WDT’s  2015  interim  report  indicates  that  
this  new  facility  has  a  dedicated  factory  for  Wellington’s  motor  products  and  provides  
significant  capacity  for  growth.  
In  June  2014  WDT  transitioned  its  motor  and  controller  electronics  manufacturing  from  
a  China  supplier  to  Singapore  headquartered  electronics  manufacturing  supplier  MEI.  
MEI  produces  electronic  parts  for  Wellington  in  its  North  Malaysia  factory.  In  WDT’s  
2016  interim  report  it  stated  that  “In  the  first  half  of  2016,  MEI  scaled  production  of  the  
SCS  Connect  product  to  support  Wellington’s  new  product  launch  and  has  an  installed  
capacity  to  meet  our  customers’  requirements  throughout  2017”.  
Also  in  2014,  WDT  initiated  a  strategic  partnership  and  manufacturing  agreement  with  
East  West  Manufacturing,  headquartered  in  Atlanta,  USA.  This  partnership  included  
manufacturing  of  EC  motors  and  controller  electronics  in  East  West’s  Vietnam  factory  
and  East  West  acquiring  an  8%  shareholding  in  WDT’s  common  stock.  East  West  has  
recently  completed  a  minority  recapitalisation  with  a  large  US  based  private  equity  fund  
to  provide  growth  capital  and  assist  with  capacity  expansion  to  ensure  they  continue  to  
meet  WDT’s  growth  needs.  
As  a  result  of  these  supply  chain  changes  it  appears  that  WDT  has  implemented  
significant  capacity  for  growth.    
Opex  savings,  as  a  result  of  eliminating  internal  supply  chain  roles,  were  estimated  at  
$0.6m  and  an  unquantified  amount  of  Working  Capital  improvement  was  also  realised.  
Having  three  interchangeable  suppliers  increases  competitive  tension  across  the  supply  
base.    
WDT  now  has  three  competitive  supplier  arrangements  for  its  EC  motors,  motor  
electronics  and  controller  components.  The  moves  have  been  associated  with  margins  
improving  from  5.0%  to  22.4%  over  the  last  5  years,  through  less  inventory  waste,  
increased  production  efficiencies  and  improved  component  and  production  costs.  
The  Outlook  looks  strong  
The  Company  said  in  its  it  Annual  Report  it  is  experiencing  a  strong  start  to  the  2017  
financial  year  both  for  new  and  legacy  products  and  expects  revenue  in  the  first  quarter  
to  be  around  $NZ14m  with  an  EBITDA  profit  expected.    
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    17  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Gross  Margins  for  the  current  year  are  expected  to  be  higher  than  FY16  mainly  due  to  
the  impact  of  higher  component  volumes  reducing  per  unit  cost  (scale)  partially  offset  
by  commodity  price  increases  (copper  and  silicon).  
Early  estimates  for  the  FY17  year  are  for  revenue  growth  in  the  30%  to  40%  range  and  
(as  had  been  previously  guided),  EBITDA  profit  in  the  “low  millions  of  dollars”.  The  
company  has  premised  these  forecasts  off  an  exchange  rate  of  NZD:USD  0.70  (spot  
0.6920).  The  company  also  said  at  its  projected  cost  structure  an  “EBITDA  of  around  $2  
million  would  deliver  an  approximate  breakeven  net  profit”.    
We  understand  FY16  the  average  NZD:USD  cross  rate  was  $0.695  and  that  a  10c  
depreciation  of  the  NZD  would  have  improved  EBITDA  $1.0m  while  a  10c  appreciation  
of  the    NZD  would  have  reduced  EBITDA  $0.6m.  On  higher  forecast  USD  revenues  this  
sensitivity  will  be  likely  to  increase.  
In  FY16,  WDT  shipped  54%  of  its  annual  motor  volume  in  1H16.  For  FY17,  WDT  expects  
1H17  volumes  to  represent  around  50%  of  the  full  year  volume.  
Most  bottlers  work  on  annual  budgets  for  cooler  purchases  –  and  decide  in  the  4
th
 
quarter  what  they  will  spend  and  what  they  will  spend  their  budget  on  (coolers,  
compressors,  LED  systems,  controllers  and  motors  etc.)  and  some  volume  for  FY17  will  
have  been  allocated  already.    WDT  expects  to  close  a  number  of  deals  with  OEMs  and  
bottlers  for  the  major  brands  it  is  currently  trialling  with.    
Bottlers  will  have  largely  finalised  their  plans  for  FY17  and  ordering  OEM  coolers  to  be  
delivered  from  January  2017  onwards,  with  OEMs  in  turn  ordering  components  (motors  
and  controllers)  ahead  of  this.  With  long  lead  times  for  controllers,  logistics  around  
actual  demand  for  the  season  ahead  is  always  uncertain  with  very  large  customers  
often  leaving  orders  to  the  last  minute  meaning  suppliers  must  be  very  nimble  in  
managing  their  own  supply  of  components  and  often  have  to  invest  in  advance  in  
component  stock.    
WDT  is  currently  trialling  SCS  Connect  products  with  a  large  number  of  bottlers  with  
small  and  large  fleets  of  coolers  (those  bottlers  range  from  having  a  few  1000  to  
>100,000  deployed  coolers).  In  addition  WDT  is  developing  a  retrofit  solution  expected  
to  launch  in  2017.  Large  bottlers  may  have  300-­‐500  thousand  coolers  in  market,  which  
may  need  a  retrofit  solution.    
The  company  had  previously  provided  preliminary  guidance  for  FY17  revenue  growth  in  
the  20%  to  30%  range  (now  30-­‐40%)  with  EBITDA  in  the  “low  millions  of  dollars”  
(guidance  retained).  These  forecasts  were  based  on  SCS™  volumes  more  than  doubling  
in  FY17  (and  then  growing  by  around  50%  each  year  for  the  foreseeable  future).  
Delivering  this  growth  has  been  noted  as  potentially  requiring  additional  working  
capital  and  further  investment  in  WDT’s  skill  base  to  support  customers  and  product  
innovation  through  FY17.    
A  reasonable  Capital  Position  but  could  do  with  more  to  fund  a  quality  growth  
problem  
At  the  end  of  FY16,  the  company  had  net  cash  of  $0.6m.  During  2H16  the  company  
announced  it  had  arranged  an  expensive,  unsecured  debt  facility  for  $2m  with  its  
largest  shareholder  SuperLife  (holding  around  28%  of  WDT’s  common  equity  and  
around  71%  of  its  mandatory  convertible  preference  shares).    
 
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    18  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
WDT  has  $5.0m  of  mandatory  convertible  preference  shares  on  issue,  which  convert  to  
ordinary  equity  in  May  2017.  Treating  this  as  equity  and  excluding  cash,  net  working  
capital  stood  at  ~$1.0m.  
While  we  think  the  capital  position  is  adequate  and  the  company  expects  to  payoff  its  
facility  with  SuperLife  in  the  current  year  (it  expires  in  September  2017),  with  further  
very  strong  growth  expected  it  may  be  desirable  to  secure  further  funding.  However  
with  favourable  terms  on  receivables  and  payables,  working  capital  was  well  controlled  
FY16.    
Recent  News    
On  9  March  2017  the  company  announced  an  exclusive  partnership  with  iProximity,  an  
innovative  proximity  marketing  solutions  and  consumer  intelligence  company  based  in  
Melbourne.  
WDT  said  it  undertook  a  global  search  for  an  enterprise  capable  beacon  management  
provider  with  advanced  digital  marketing  expertise,  choosing  iProximity  as  the  best  
platform  available.  The  partnership  will  allow  iProximity’s  contextual  marketing  
technology  to  integrate  with  WDT’s  SCS  Connect  System,  giving  customers  the  ability  to  
move  from  simple  consumer  activation  to  true  consumer  engagement  at  the  point  of  
purchase  enabling  WDT’s  customers  to  sell  more  food  and  beverage  product.  
Examples  of  what  a  Wellington  and  iProximity  Smarter  Cooler  platform  can  offer  are:    
n Waking  a  consumer’s  phone  with  a  branded  message  in  store  with  an  SCS™  
enabled  Smarter  Cooler    
n Delivering  contextual,  personalised  promotions  based  on  consumer  purchasing  
habits    
n Delivering  partnering  opportunities  by  engaging  with  retail  partner  Apps    
n Driving  messages  to  digital  signage  based  on  who  is  standing  close  by    
n Building  real-­‐time  data  insights  on  consumer  actions    
n Understanding  marketing  campaign  attribution  with  complete  end  to  end  
analysis    
n Engaging  consumers  with  personalised  and  relevant  offers  driving  brand  
engagement.  
Wellington  and  iProximity  are  presently  demonstrating  the  Smarter  Cooler  technology  
internationally  to  several  prospective  clients  and  expect  to  commence  customer  trials  
in  2017.  
By  partnering  with  iProximity,  WDT  offers  a  one-­‐stop  shop.  Prior  to  this  partnership  
customers  would  have  needed  to  acquire  beacon  management  software  from  an  
alternative  supplier.  The  marketing  function  of  WDT  customers  are  only  beginning  to  
experiment  with  proximity  based  marketing  and  therefore  offering  an  integrated  
product  for  trialing  is  appealing  to  customers.  Also  iProximity’s  product  is  ‘Enterprise  
Grade’  (i.e.  capable  of  scaling  to  hundreds  of  thousands  of  beacons).      
Under  the  commercial  model  WDT  own  the  customer  relationship  and  all  commercial  
transactions  with  customers,  with  iProximity's  digital  marketing  solution  being  
delivered  through  WDT’s  SCS  Connect  Platform.          
While  the  direct  economics  are  unlikely  to  be  material  for  WDT  over  the  next  year  or  
two,  the  immediate  benefit  is  WDT’s  assertion  that  it  will  offer  best  available  proximity  
based  digital  marketing  capability,  further  strengthening  WDT’s  product  offering.The  
end  customers  phone  will  need  an  app  which  can  be  triggered  by  the  beacon.      
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    19  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
iProximity  have  developed  an  app  which  can  be  re-­‐skinned  for  customers  if  they  desire  
and  this  will  be  the  trial  format.    Longer  term,  customers  are  likely  to  become  
increasingly  sophisticated  in  the  functionality  they  will  require  and  app  development  
will  probably  in  conjunction  with  their  advertising  agencies,  marketing  divisions  etc.      
On  1  February  2017  the  company  pre-­‐announced  some  unaudited  figures  for  FY16.    
Revenue  was  $35.3m  (+44%).      EBITDA  was  positive  (we  forecast  $0.3m).  WDT  also  
reported  net  cash  on  hand  of  $0.6m  (including  $1.5m  drawn  on  the  SuperLife  facility).    
The  outlook  for  FY17  was  reaffirmed  and  the  company  continues  to  expect  an  EBITDA  
profit  for  2017  in  the  low  $  millions.  Gross  margin  for  the  year  was  24.0%  compared  to  
22.2%  in  2015.  Over  the  period  the  company  sold  1.2m  EC  motors  and  1.4m  motors  in  
total  (+33%  year  on  year).  The  new  SCS  Connect  and  ECR2  products  contributed  $6m  to  
the  Company’s  revenue.  Fourth  quarter  trading  performance  was  very  strong,  with  
revenue  of  $10m  compared  to  $6m  for  the  same  period  in  the  prior  year.  
On  6  December  2016  the  company  advised  that  a  major  global  beverage  brand  had  
approved  it  to  supply  its  SCS  Connect  solution.  The  company  stated  that  this  approval  
followed  the  conclusion  of  the  customer’s  comprehensive  technology  sourcing  process  
and  that  it  was  now  an  approved  supplier  of  connectivity  hardware  for  use  in  the  
brand’s  coolers.  The  company  also  indicated  that  it  continued  to  work  with  the  brand  
and  its  network  partners  (OEMs  and  bottlers)  to  establish  the  timing  of  programmes  to  
adopt  SCS  Connect  and  the  volumes  Wellington  will  supply  over  the  coming  twelve  
months.    
We  believe  that  this  is  a  significant  indicator  that  a  major  customer  is  about  to  order  
product  and  start  deployment  of  the  SCS  product  in  2017.  While  the  company  didn't  
disclose  the  brand  name  or  volumes  it  is  likely  that  this  announcement  supports,  at  
least  in  part,  WDT’s  expectations  for  2017  growth  and  profits.  
On  23  September  2016  the  company  advised  it  had  secured  a  $2.0  million  loan  facility  
from  SuperLife,  WDT’S  largest  shareholder  (and  a  wholly-­‐owned  funds  management  
subsidiary  of  NZX).  The  loan  facility  is  intended  to  provide  additional  working  capital  to  
support  the  company’s  growth  initiatives  and  while  expensive,  will  be  a  useful  bridge  
until  the  company  is  conventionally  bankable.  
The  key  features  of  the  loan  facility  are:    
n It  is  an  unsecured  loan  for  a  maximum  of  NZ$2.0m  to  be  drawn  as  required;    
n It  has  a  term  of  one  year  (expiry  is  in  September  2017);    
n Interest  is  payable  at  14.75%  p.a.  calculated  on  a  quarterly  basis  in  arrears;  
n A  revolver  fee  of  $20,000  allows  the  loan  to  be  repaid  and  redrawn  inside  the  
term.    
At  31  December  2016  the  facility  was  drawn  to  $1.5m.  
At  its  AGM  on  3  May  the  company  made  some  very  positive  comments  around  the  
outlook  for  the  company  and  said  it  had  “never  been  more  positive  about  the  path  to  
profitable  growth”.  
Where  it  was  more  circumspect  was  around  FY16  outcomes  and  in  particular  Gross  
Margins  lower  than  the  25%  targeted  (21.4%  reported  1H16),  through  underestimating  
the  complexity  of  the  SCS™  launch  and  delays  in  component  cost  reductions.  
The  company  described  its  three  pillars  for  growth.  These  are  firstly  developing  and  
growing  its  motor  business  with  its  recently  launched  ECR2  model  selling  well.  Secondly  
the  company is  “introducing  and  leveraging  value  chain  partners  to  improve  sales  and  
lower  costs”  with  improving  Gross  Margins  evidencing  that  success.    

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    20  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Thirdly  the  launch  of  its  cloud  connected  smart  controls  business  firstly  with  its  SCS™  
Connect  system  but  followed  by  a  broadening  of  the  product  range  of  both  hardware  
and  software.    
Requests  for  trials  of  the  SCS™  Connect  system  were  described  as  oversubscribed  and  
that  it  saw  developing  demand  in  the  “low  hundreds  of  thousands”.    
The  company  said  second  quarter  motor  volumes  were  “flexing”  as  brands  and  
manufacturers  work  out  their  demand  for  the  reminder  of  1H,  but  still  expected  2Q  
volume  to  be  well  above  2Q  FY15.    
With  the  stronger  start  to  the  year,  and  new  products  in  the  market,  USD  revenues  
were  expected  to  be  significantly  higher  in  FY16.  We  understand  the  company  expected  
to  sell  ~1.3m  motors  FY16  (actually  sold  1.4m  FY16)  and  ~50,000  SCS™  controllers  (sold  
52,000  FY16)  with  the  majority  of  those  already  committed.    
Medium  term  based  on  expected  growth  rates,  we  forecast  SCS™  volumes  to  grow  to  
around  500,000  (100,000  FY17)  and  1m  units  over  our  forecast  period.    
The  company  has  said  following  an  expected  doubling  in  volumes  FY17  and  it  expected  
50%  growth  for  the  foreseeable  future.  
The  company  said  it  needed    increased  costs  to  support  revenue  growth.  In  FY16  it  
added  new  engineering  skills  to  support  the  rollout  of  the  SCS™  Connect  solution  and  
software  skills  to  help  broaden  its  SCS™  Connect  System  offering.  With  longer  lead  
times  a  challenge,  it  may  also  be  necessary  to  hold  increased  strategic  inventories.  
The  company  said  it  expected  to  breakeven  at  the  EBITDA  level  and  its  priority  was  for  
EBITDA  profits  which  “if  demand  patterns  continue  will  see  significantly  higher  
revenues  and  could  result  in  an  EBITDA  profit  FY16”.    
It  expected  to  see  growth  in  Europe  although  there  was  some  seasonal  uncertainty  
around  sales  in  LATAM.  Cash  balances  were  expected  to  be  maintained  in  a  $1m-­‐$2m  
range  ($2.1m  reported).  
...and  its  FY16  and  beyond  Strategic  Priorities  were  to;  
n Further  improve  customer  diversification  by  expanding  the  geographical  
customer  base;    
n Develop  new  customer  relationships  and  grow  revenues  in  the  supermarket  
segment  (it  is  estimated  around  ½  the  electricity  used  in  a  typical  supermarket  
is  from  refrigeration);    
n Sell  the  new  ECR2  motor  targeting  supermarket  customers  and  bottle  cooler  
customers;    
n Sell  the  SCS™  Connect  fleet  management  solution  to  large  global  beverage  
brands  and  expand  the  marketing  process  outside  the  beverage  market;  and    
n Further  optimise  the  electronics  supply  chain  to  further  lower  costs  and  reduce  
electronic  component  lead-­‐  times  
 
 
 
 
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    21  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
In  terms  of  diversification  the  company  is  benefitting  from  the  roll  out  of  ECR2  and  
further  developing  the  market  for  SCS™  Connect.  With  ECR2,  there  are  trials  underway  
with  a  beer  company  and  a  supermarket  chain  (and  other  trials  planned),  with  the  
company’s  new  UK  distributor  noted  as  having  initial  success  with  UK  supermarket  
channels.    
East  West  is  also  completing  the  development  of  a  fan  coil  motor  for  ventilation  
applications,  with  the  assistance  of  WDT  on  electronics  design.  Sales  are  expected  FY17  
with  East  West  responsible  for  all  North  American  sales  and  marketing  activities.  At  this  
early  stage  the  success  of  this  product  cannot  be  assured.  It  is  understood  that  this  is  a  
contract  design  and  commercialisation  project  to  support  a  strategic  partner  (East  
West),  and  does  not  indicate  the  company  is  moving  back  into  the  Ventilation  space.  
In  addition  the  company  is  exploring  the  potential  for  SCS™  retrofit  technologies  and  
alternative  wireless  technologies,  opportunities  which  could  in  their  own  right  be  large  
with  attractive  margins,  although  retrofits  will  be  a  one-­‐off  exercise.    
The  company  has  forecast  SCS™  volumes  doubling  next  year  and  growing  by  50%  each  
year  after  that  for  the  balance  of  its  5  year  planning  model  (based  on  the  company  
winning  further  global  retail  brands  and  expanding  into  different  end-­‐markets).    
The  ECR2  motor  business  is  also  expected  to  continue  to  grow  as  more  supermarket  
display  OEMs  adopt  the  motor  and  as  the  company  expands  its  range  to  higher  power  
ECR2  motors.  
 
 
 
 
Improve and grow the
Electronic Motor and
Airflow Solutions
Business
Grow the
‘Cloud Connected’
Smart Controls
Business
Business processes improvement
‘Voice of the Customer’ product
development
Low cost electronics, wireless
communication and telematics

1. Improve customer
diversification by
expanding geographical
customer base

2. Develop new customer
relationships and grow
revenues in the
supermarket segment

3. Sell the new ECR2 motor,
targeting supermarket
display case
manufacturers

4. Sell the SCSConnect
solution to large global
beverage brands and
expand outside the
beverage market!
5. Optimise the electronics
supply chain to lower
costs and reduce electronc
component lead-times!
Strategic
Pillars
Priorities
Bottle-Cooler and supermarket
OEM relationships
Continuous cost reduction in the
supply chain
Diversify customer revenue streams
‘Connected’ refrigeration controllers
Operating
Disciplines
Technology and channel partnerships
Food and beverage brand
and retailer relationships
Fleet management - desktop &
mobile apps, cloud data solution

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    22  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
On  the  back  of  the  cost  structure  implemented,  and  anticipated  new  product  wins,  the    
company  expected  continued  revenue  growth  in  2017  with  EBITDA  performance  in  the  
“low  millions  of  dollars”  (our  forecast  is  $2.6m  EBITDA  FY17)  which  will  prove  that  the  
company’s  new  strategic  path  of  diversifying  its  customers  base,  improving  its  EC  motor  
business  with  the  ECR2  product  ,  partnering  with  new  suppliers  to  improve  
manufacturing  costs  and  entering  the  ‘Internet  of  Things’  space  with  the  SCS  Connect  is  
starting  to  deliver  results.  
On  10  May  2016  in  a  company  update,  the  company  reported  strong  revenue  growth  
for  the  1
st
 quarter  with  revenue  increasing  by  40%  to  NZD$9.2m  (USD    +26%  to  
USD$6.2m)  with  EC  Motor  volumes  increasing  24%  year  on  year.  It  also  said  “several  
thousand  SCS™  Connect  controller  units  were  shipped  to  a  global  beverage  customer  
under  a  multi-­‐year  agreement”.  Continued  supply  chain  cost  reductions  improved  gross  
margin  to  22.8%.  For  the  quarter  the  company  returned  an  EBITDA  profit  of  $92k  (pcp  -­‐
$231k).  
Recent  Results  
FY16  delivers  in  line  with  its  pre-­‐announcement  
For  FY16  on  revenues  of  revenue  of  $35m,  (a  44%  increase  over  the  pcp),  WDT  
delivered  its  maiden  full  year  EBITDA  profit,  with  an  EBITDA  profit  (adjusted)  of  
$325,000  which  was  a  $2.3  million  improvement  on  2015.  EBIT  improved  by  $0.5m  to  a  
$1.3m  loss,  while  the  net  loss  improved  by  $0.3  million  to  a  $2.4  million  loss.  
Of  the  44%  growth,  12  percentage  points  was  from  the  ECR2  motor,  19  percentage  
points  was  from  the  legacy  ECR01,  ECR82  and  ECR92  motors  and  13  percentage  points  
was  delivered  by  SCS  Connect.    
The  result  was  consistent  with  the  market  update  on  1  February  2017  but  provided  
considerably  more  detail.  
WDT’s  new  SCS  Connect  and  ECR2  products  contributed  $6m  to  the  reported  revenue  
and  the  Company  sold  a  record  1.4m  motors  in  2016,  including  1.2m  EC  motors,  an  
increase  of  33%  on  FY15.    
The  average  NZD/USD  rate  for  the  2016  year  of  0.695  was  relatively  flat  over  the  prior  
years  0.699.    
Fifteen  new  customers  were  added  globally  FY16  with  two  of  these  customers  being  
acquired  due  to  the  SCS  Connect  product  offering.  Most  of  these  new  customers  are  
focused  in  the  supermarket  display  case  and  food  service  market,  as  WDT  expand  
beyond  its  traditional  beverage  market  core.    
Latin  American  business  grew  revenues  by  44%  versus  FY15,  from  US$11.5m  to  
US$16.6m.    
WDT  added  two  new  motor  customers  in  the  region  and  experienced  stronger  demand  
from  existing  bottle  cooler  customers,  with  motor  volumes  growing  by  30%.    
Mexico  continues  to  be  the  companies  largest  market  and  further  growth  is  expected  in  
FY17  as  major  customers  begin  to  adopt  the  SCS  Connect  product.  
Brazil  demand  was  weak  as  a  result  of  difficult  economic  conditions  but  demand  is  now  
improving  for  the  SCS  Connect  product.;  The  rollout  of  SCS  Connect  to  a  large  food  and  
beverage  brand  in  Mexico  commenced  in  2016  and  the  company  started  working  with  
other  new  SCS  customers  in  Central  America.    
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    23  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
USA/Canada:  The  USA  and  Canada  regions  saw  130%  revenue  growth  FY16,  with  
US$2.2m  of  revenue  compared  to  $1.0m  in  FY15.  Two  new  customers  for  the  ECR2  
motor  product  contributed  the  majority  of  this  growth.  While  WDT  is  continuing  several  
SCS  field  trials  in  the  USA,  it  is  becoming  apparent  that  the  adoption  rate  for  SCS  may  
take  longer.    
Asia  Pacific  revenues  of  US$2.3m  were  up  9%  on  the  US$2.1m  reported  FY15.  Eight  new  
customers  were  won  in  the  region;  two  of  those  for  SCS  and  the  balance  for  EC  motors,  
including  several  smaller  Chinese  display  case  manufacturers.    
EMEA  revenues  grew  by  17%  to  US$3.2m  compared  to  US$2.8  million  in  FY15.  Growth  
resulted  from  three  new  customer  wins  in  Europe  and  increased  volumes  from  a  new  
Italian  customer  won  at  the  end  of  the  prior  year.  Turkish  demand  was  weak  in  the  
latter  half  of  the  year  as  a  result  of  continuing  political  and  economic  issues  in  that  
country  which  is  expected  to  continue.    
The  Gross  Margin  for  the  year  was  24.0%,  increasing  from  21.4%  in  FY15.  This  was  a  
result  of  continuing  cost  reduction  programmes  with  all  major  suppliers  and  
component  pricing  benefits  being  realised  from  increased  volumes.  Gross  Margin  gains  
were  somewhat  offset  by  pricing  reductions  needed  to  grow  share  with  large  bottle  
cooler  customers.  The  Gross  Margin  improvement  was  also  assisted  by  revenue  from  
new  products.    
Operating  costs  increased  by  15%,  from  $7.4m  to  $8.5m  as  the  company  invested  in  
more  people  to  support  SCS  Connect  software  development  and  customer  field  
support.  10  new  people  were  added  to  the  business  between  the  fourth  quarter  FY15  
and  the  end  of  FY16.  Operating  cost  as  a  percentage  of  revenue  improved  to  24%  from  
30%  in  FY15  reflecting  an  overall  increase  in  productivity.    
The  company  noted  Inventory  performance  as  an  operational  highlight  of  the  business  
with  inventory  turns  improving  to  7.8  times  from  7.0  times  in  2015.    
The  cash  balance  at  the  end  of  FY16  was  $2.1  million  with  $1.5  million  drawn  down  
under  the  SuperLife  debt  facility  for  a  net  cash  position  of  $0.6  million.  Forecasts  
prepared  by  the  Company  show  that  cash  generated  from  operations  should  be  
sufficient  to  repay  SuperLife  in  September  2017.    
The  Company  said  it  is  experiencing  a  strong  start  to  the  2017  financial  year  both  for  
new  and  legacy  products  and  expects  revenue  in  the  first  quarter  to  be  around  $NZ14m  
with  an  EBITDA  profit  recorded.  Gross  margins  for  the  current  year  are  expected  to  be  
higher  than  FY16  mainly  due  to  the  impact  of  higher  component  volumes  (scale)  
partially  offset  by  commodity  price  increases  (predominantly  copper  and  silicon).  
Early  estimates  for  the  FY17  year  were  for  revenue  growth  in  the  30%  to  40%  range  and  
as  previously  guided,  EBITDA  profit  in  the  “low  millions  of  dollars”.  The  company  has  
premised  these  forecasts  off  an  exchange  rate  of  NZD:USD  0.70  (spot  0.6920).    
The  company  also  said  at  its  projected  cost  structure  an  “EBITDA  of  around  $2  million  
would  deliver  an  approximate  breakeven  net  profit”.    
We  understand  FY16  the  average  NZD:USD  cross  rate  was  $0.695  and  that  a  10c  depreciation  of  
depreciation  of  the  NZD  would  have  improved  EBITDA  $1.0m  while  a  10c  appreciation  of  the    
of  the    NZD  would  have  reduced  EBITDA  $0.6m.  On  higher  forecast  USD  revenues  this  sensitivity  
sensitivity  will  be  likely  to  increase.  
 
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    24  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
3Q16  seasonally  lower  revenue  growth  but  on  track,  margins  strong  
Revenue  for  the  quarter  was  $6.3m  compared  to  $5.1m  in  the  pcp    (a  25%  
improvement).  EBIT  for  the  quarter  was  a  loss  of  $0.90m.  Adjusted  EBITDA  was  a  loss  
for  the  quarter  of  $0.4m  (versus  a  $0.6m  loss  in  the  pcp).  
Year  to  date  revenues  were  34%  over  the  same  period  last  year.  Gross  margins  
improved  to  23.6%  for  the  first  three  quarters  of  FY16,  from  21.9%  for  the  same  period  
last  year,  with  a  3Q16  Gross  margin  at  25.7%.  The  company  said  “Whilst  further  supply  
chain  cost  reductions  will  have  less  measurable  impact,  we  are  seeing  some  benefits  
flowing  with  overall  volume  increases”.  
Stronger  revenues  were  expected  in  4Q16  and  the  company  said  “it  is  confident  that  
the  Company  will  achieve  its  full  year  guidance  of  significantly  higher  revenues  than  
those  recorded  for  2015  and  the  possibility  of  a  modest  EBITDA  profit.  
Q3  2016  Highlights.  The  average  NZD:USD  exchange  rate  for  the  quarter  was  0.703  
compared  to  0.656  for  the  same  period  in  FY15.  
The  company  also  said  sales  were  seasonally  lower  over  the  quarter  compared  to  the  
preceding  half  but  were  continuing  to  build  growth  momentum  with  its  ECR2  and  SCS  
products  as  it  entered  the  4
th
 quarter  and  that  it  was  also  seeing  “an  uptick”  in  demand  
for  its  ECR1  motor  product  and  expected  a    strong  4
th
 quarter,  “closer  to  revenue  levels  
earlier  in  the  year”  (US$6.2-­‐US$6.4m),  and  expected  a  modest  EBITDA  profit  FY16.  It  
also  said  it  expected  to  update  FY17  guidance  as  demand  for  the  new  season  is  known.  
We  would  expect  this  to  be  late  FY16  early  FY17.  
1H16  revenue  growth  still  accelerating  and  margins  improving  
1H16  WDT  reported  further  significant  revenue  growth  with  NZ  Dollar  revenue  of  $18.7  
million,  a  38%  increase  compared  to  the  pcp.  In  US  Dollar  terms  revenue  increased  by  
25%  to  US$12.6m  from  US$10.1m.  The  period  reported  was  the  5
th
 consecutive  period  
of  USD  revenue  growth  with  the  trend  expected  to  continue.  
Gross  Margins  continued  to  climb  increasing  to  22.4%  from  20.7%  in  the  pcp  due  to  
continuing  supply  chain  cost  improvements  but  with  much  of  the  low  hanging  fruit  
already  achieved,  margin  gains  going  forward  are  expected  to  be  lower  albeit  increasing  
over  the  next  few  months.    
The  company  reported  its  maiden  positive  EBITDA  (adjusted)  of  $0.3m  compared  to  a  
$0.6m  EBITDA  loss  in  the  pcp  and  positive  operating  cash  flow  of  $0.6m  compared  to  
$0.5m  1H15.    
Operating  costs  1H16  increased  to  $4.2m  from  $3.4m  for  pcp.  The  lower  NZD:USD  
exchange  rate  meant  that  NZD  reported  amounts  for  offshore  office  costs  were  higher  
by  $0.3m.  The  remaining  $0.5m  of  the  operating  cost  increase  was  due  to  the  addition  
of  necessary  new  skills  in  engineering,  customer  management  and  field  service  to  
support  the  new  SCS™  Product  growth,  additional  marketing  costs  required  to  support  
the  development  of  Wellington’s  new  products  and  selected  salary  adjustments  to  
retain  key  skills.    
Amortisation  increased  by  $0.5m  due  to  the  commencement  of  amortisation  of  
previously  capitalised  development  costs  for  the  ECR2  motor  and  SCS™  Connect  
products  on  commercialisation.  
In  volume  terms  the  company  reported  18%  volume  growth  in  EC  motors  resulting  from  
increased  demand  in  the  Americas  and  Asia  Pacific  regions,  customer  wins  in  Europe  
and  growing  sales  of  the  new  ECR2  motor.  1H16  WDT  delivered  over  600,000  motors  to  
customers  across  26  countries.    

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    25  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
The  SCS™  product  was  noted  as  “off  to  a  strong  start”  with  24,000  units  sold  to  its  
inaugural  customer  including  data  services  and  there  was  a  continued  expansion  of  
SCS™  Connect  field  trials  in  Asia  North  America,  Europe,  Africa  and  Latin  America.  WDT  
said  the  customer  had  awarded  further  business  to  other  regions  in  the  America’s  
which  were  expected  to  begin  to  ship  1H17  and  that  further  opportunities  were  being  
explored  and  they  hoped  to  convert  to  shipments  also  in  1H17.  
As  regards  the  ECR2  motor,  the  company  said  in  addition  to  the  three  customer  wins  
reported  in  the  annual  report,  It  had  won  a  further  large  customer  for  the  ECR2  motor  
that  would  begin  volume  shipments  in  2H16,  with  annual  volumes  in  the  50,000  units  
range.  In  total  it  had  secured  customers  for  ECR2  with  an  annual  run-­‐rate  volume  of  
approximately  150,000  units  per  year.  Of  the  four  customers  won,  three  are  in  the  
supermarket  display  and  food  service  market  and  one  is  in  the  bottle  cooler  market.  
US  Dollar  revenue  growth  in  1Q16  was  26%  and  in  2Q16  24%  with  all  regions  
experiencing  growth  over  the  pcp.    
LATAM  USD  revenues  increased  20%  compared  to  2015  attributable  to  WDT  gaining  
share  with  key  customers  and  the  commencement  of  volume  sales  of  the  SCS™  Connect  
product.    
North  America  grew  119%,  attributed  primarily  to  strong  demand  for  the  new  ECR2  
motor  in  support  of  OEM’s  preparing  for  the  new  Department  of  Energy  2017  (DOE17)  
energy  standards.    
APAC  grew  16%  with  “stable”  ordering  patterns  from  major  customers.  The  Chinese  
market  in  this  region  was  noted  as  not  as  heavily  reliant  on  EC  motors  with  the  
company  focusing  on  the  support  of  the  South  East  Asian  customer  base  and  winning  
customers  for  SCS™  Connect.    
EMEA grew 43% after a disappointing FY15 attributable primarily to sales to new customers
won at the end of FY15. These customers were in the ice-cream freezer, supermarket display and
bottle cooler markets. The EMEA market continues to be the company’s most competitive, price
sensitive and politically unstable market.  
The  company  said  it  was  on  track  to  achieve  its  2016  full  year  guidance  and  was  
anticipating  further  growth  and  EBITDA  profits  in  2017  with  revenue  growth  potentially  
as  high  as  30%.  Seasonally  the  company  expects  an  EBITDA  loss  3Q16.    
The  company  said  preliminary  forecasts  for  FY17  project  revenue  growth  next  year  in  
the  20%  to  30%  range  with  EBITDA  performance  in  the  low  millions  of  dollars.  These  
forecasts  project  SCS™  volumes  more  than  doubling  and  growing  by  around  50%  each  
year  for  the  foreseeable  future.  Delivering  this  growth  was  noted  as  potentially  
requiring  additional  working  capital  and  further  investment  in  WDT’s  skill  base  through  
FY17.    
Cash  balances  1H16  were  $2.5m  on  an  improving  working  capital  position.  Inventory  
1H16  of  $4.0m,  a  $0.3m  increase  over  the  pcp  was  a  result  of  additional  inventory  to  
manage  short  lead-­‐time  orders,  and  initial  investment  in  SCS™  Connect  inventory.  WDT  
is  now  operating  at  close  to  7  inventory  turns  per  annum,  compared  to  2  turns  at  the  
end  of  2014.    
During  the  period  WDT  invested  $1.1m  in  plant  &  equipment  and  new  product  
development,  equivalent  to  pcp  and  $2.2m  FY15.    
 
 
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    26  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
FY15  a  year  of  real  improvement  
FY15  2015  the  company  reported  revenue  of  $24.6m  (US$17.4m  or  +18%)  and  a  gross  
margin  of  21.4%.  (pcp  18%).  The  NPAT  for  the  year  was  a  loss  of  $2.8m  compared  to  a  
$4.5m  in  FY14.  An  EBITDA  loss  of  $1.4m  was  a  significant  improvement  compared  to  
the  $4.0m  loss  in  FY14.  One  particular  highlight  was  the  48%  growth  achieved  in  the  
Americas.  For  the  period  the  company  was  cash  positive  to  the  amount  of  $0.8m  mainly  
due  to  improvements  in  working  capital  and  after  including  a  capital  raise  of  $2.2m,  
finished  the  year  with  $2.9m  cash.  Over  the  period  the  company  invested  $2.2m  to  
complete  the  development  of  the  ECR2  motor  and  SCS™,  a  similar  level  of  investment  
to  the  prior  year.  Operating  costs  were  $0.6m  lower  at  $7.8m  through  lower  
employment  costs  including  LTI’s  and  through  closing  the  Singapore  office  in  June  2014.  
In  the  4
th
 quarter  the  company  rolled  out  ECR2  and  SCS™  connect  products  and  
achieved  its  1
st
 orders.  In  June  2015  the  company  raised  $2.3m  by  way  of  an  
underwritten  pro-­‐rata  renounceable  rights  issue.    
Volume  growth  for  the  period  was  23%  with  1.1m  motors  shipped  compared  to  the  
prior  year’s  0.9m.  Margins  were  assisted  by  supply  chain  partners  and  margins  higher  
again  were  expected  FY16  although  revenue  growth  was  the  main  focus.  ECR01  (higher  
spec)  volumes  were  up  20%,  a  sign  proving  customers  will  pay  for  superior  
performance.  Over  the  year  the  company  picked  up  8  new  supermarket  display  case  
and  food  service  customers.    
In  South  America  the  company  regained  market  share  with  increased  investment  by  
retail  brands  in  bottle  coolers.  USA  was  flat  as  the  market  deferred  purchases  until  the  
ECR2  motor  was  launched  making  it  easier  to  comply  with  2017  energy  saving  
requirements  but  expect  growth  to  be  rekindled  in  FY16.  The  company  said  it  had  not  
had  as  much  success  selling  its  existing  EC  products  to  non-­‐bottle  cooler  and  non-­‐
supermarket  customers.    
EMEA  was  very  weak  with  revenues  down  35%  due  to  stagnant  economies  and  one  
large  customer  moving  to  dual  supply  arrangements  but  at  the  time  of  the  result,  the  
company  expected  growth  FY16.  
APAC  was  up  18%  with  new  customer  wins,  the  ability  to  transact  in  China  in  Yuan  and  
improved  distribution  through  East  West  China.  China  remains  predominantly  shaded  
pole  market.  
Sales  growth  of  legacy  motors  was  up  28%.  Operating  costs  were  noted  as  having  
halved  over  the  past  4  years.  
Over  the  period  the  company  received  regulatory  approvals  in  both  the  USA  and  
Europe  for  its  ECR2  motor  and  in  the  FY16  1
st
 quarter,  made  its  1
st
 shipments  to  the  USA  
and  to  a  larger  European  supermarket  display  case  manufacturer.  
FY14  a  year  of  improving  the  fundamentals  
FY14  saw  the  supply  chain  restructured  and  improvements  in  the  operating  cost  
structure.  Financial  results  were  disappointing  primarily  due  to  large  reductions  in  Latin  
American  demand.  For  the  year  the  company  reported  a  comprehensive  loss  of  $4.4m.  
Revenue  for  the  period  of  US$14.6m  compared  with  US$22.5m  in  the  prior  year.  
Revenues  from  Latin  America  were  46%  lower  due  to  weak  demand  from  several  
customers  mainly  due  to  the  overall  decline  in  carbonated  Soft  drink  (CSD)  volumes  due  
to  sugar  tax  issues  in  Mexico  and  restrictions  on  imports  into  Argentina  but  also  due  to  
some  loss  of  market  share.  However  the  company  said  it  was  seeing  some  regaining  of  
share  early  in  FY15.  

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    27  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
EMEA  markets  were  up  27%  on  higher  customer  demand  and  the  impact  of  gaining  a  
new  supermarket  manufacturer.  Over  the  period  the  company  commenced  new  sales  
distribution  partnerships  in  the  USA  and  South  China  and  appointed  agents  in  Australia,  
South  Africa  and  the  United  Kingdom  to  assist  diversification  geographically  and  from  
product  mix.    
Gross  Margins  were  lower  at  18.0%  (pcp  18.7%)    as  a  result  of  lower  volumes  which  
delayed  the  realisation  of  manufacturing  cost  reductions  but  the  company  reiterated  its  
25%  Gross  Margin  target.  The  Gross  Margin  in  dollar  terms  was  $3.2m  (FY13  $5.1m).    
Operating  expenses  were  $1m  lower  at  $8.4m  through  closing  the  Singapore  office,  
reducing  overhead  and  process  efficiencies.  
Delays  in  development  of  the  ECR2  impeded  growth  from  what  was  expected  from  the  
supermarket  segment  and  the  company  said  it  expected  to  ship  both  ECR2  and  SCS™  in  
2H15  (first  shipments  were  made  1H16).  
The  company  finished  the  year  with  $1.2m  cash.  Over  the  year  it  raised  $4.7m  through  
the  issue  of  convertible  preference  notes  to  fund  new  product  development,  the  
purchase  of  plant  and  equipment  and  fund  operating  cash  outflows.  
On  March  1  2015  the  company  announced  a  further  capital  raise  of  $3.2m  by  way  of  a  
pro-­‐rata  renounceable  underwritten  rights  issue.
Forecasts  point  to  strong  growth  medium  term  
The  selling  prices  of  EC  motors  and  SCS  Connect  controllers  vary  considerably  
depending  on  customer  volume  agreements  and  end  user  markets.  We  assume  the  
company  achieves  Gross  Margins  of  around  25%,  rising  to  around  30%  on  positive  sales  
mix  changes.    
Further,  for  the  EC  motor  business  which  remains  competitive,  we  assume  3%  price  
erosion  each  year  but  that  the  company  is  able  to  maintain  Gross  Margins  through  
keeping  one  step  ahead  by  achieving  cost  efficiencies.  We  understand  the  EC  motor  
market  is  not  as  commoditised  as  the  shaded  pole  motor  market  but  view  this  
eventuality  as  likely.  
We  understand  IoT  software  and  data  services  gross  margins  are  higher  than  controller  
hardware  margins  but  we  have  not  included  these  revenues  in  our  forecasts  and  WDT  
will  need  to  maintain  the  fixed  costs  of  software  development  and  support  teams  to  
support  customers.    We  understand  data  service  revenues  are  likely  to  be  relatively  
small  and  are  more  strategic  in  nature  through  assisting  in  the  sales  of  hardware  and  
the  winning  and  retention  of  customers.    
We  have  assumed  group  revenue  growth  rates  (USD)  below  the  lower  end  of  
management  estimates  of  25%-­‐40%  over  the  medium  term,  (these  rates  are  variable  as  
they  depend  on  product  mix  and  growth  rates  over  time).    
However  as  WDT  has  a  relatively  small  number  of  large  customers  –  and  a  number  of  
large  ‘potential’  customers  –  revenue  growth  can  be  ‘lumpy’  depending  on  the  timing  
of  customer  wins,  and  the  product  adoption  cycle.  Further  the  success  of  the  adoption  
of  new  products  in-­‐market  is  difficult  to  forecast  (ECR2,  SCS™,  EC-­‐L).  The  EC-­‐L  product  is  
a  lower  cost  simplified  EC  motor  product  targeted  at  lower  end  refrigerators  where  
shaded  pole  use  is  prevalent  (with  a  goal  to  covert  the  shaded  pole  usage  to  EC).  
SCS™  controller  volumes  are  assumed  to  double  in  FY17  to  104,000  units  and  then  
exhibiting  50%  growth  for  4  years  before  growth  begins  to  decline  as  the  market  
matures.  

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    28  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Motor  volumes  are  assumed  to  grow  ~32%  FY17  (33%  FY16)  as  it  cycles  a  full  year  of  
new  customers  gained  over  FY16  and  new  customers  being  on-­‐boarded  before  
declining  to  15%  per  annum  system  growth  implicitly  assuming  no  market  share  gains  
after  FY17  for  the  residual  forecast  period.  This  could  well  prove  conservative  and  we  
understand  a  number  of  bottle  cooler  customers  are  looking  to  convert  to  ECR2  motors  
given  their  superior  performance  and  when  combined  with  display  case  and  food  
service  customers  recently  won,  volume  and  revenue  growth  could  be  much  stronger  
over  the  next  two  years  at  least.    
Also  the  launch  of  the  ECR2  “FanPack”  airflow  solution  will  increase  the  addressable  
market  for  motors,  particularly  in  the  supermarket  display  case  segment.  We  assume  
SCS™  controller  volumes  grow  100%  in  FY17  before  the  growth  rate  reduces  to  50%  per  
annum  over  the  medium  term  in  line  with  guidance.  We  note  that  WDT’s  customer  
agreements  are  typically  not  exclusive  in  nature,  and  volumes  will  be  highly  dependent  
on  orders  from  agreements  recently  made  with  bottlers  and  whether  they  will  be  
specified  into  coolers  for  the  FY17  northern  summer.  Revenue  growth  under  these  
assumptions  is  a  CAGR  of  20%  over  the  total  forecast  period  (tail  end  volume  growth  is  
assumed  to  mature).    
The  recently  acquired  ability  to  sell  in  local  currency  in  China  is  likely  to  assist  sales  in  
that  market  through  the  establishment  of  a  legal  presence.  Wellington  also  has  the  
ability  to  sell  in  Mexican  Peso,  Euros  and  Turkish  Lira,  with  legal  presences  set-­‐up  in  
these  regions  also.  Wellington  offers  local  currency  sales  to  specific  customers  in  these  
regions  and  uses  hedging  strategies  to  manage  risk.  
 
Terminal  year  volumes  (2025)  are  forecast  at  4.8m  motor  units    and  ~0.9m  SCS™  units  
(FY16  ~1.4m  motor  units,  ~50,000  SCS™  units).  The  company  was  reported  in  the  media  
as  saying  it  would  probably  sell  five  times  as  many  ECR2  units  FY17  as  it  did  FY16  
(98,000)  with  our  forecast  FY17  total  motor  volume  standing  at  1.8m  compared  to  FY16  
volumes  of  1.4m  .  We  understand  that  over  the  longer  term  the  company  has  
aspirations  for  sales  of  between  1.5m  and  1.6m  SCS™  controllers  and  therefore  our  
assumptions  are  significantly  lower  than  the  expectations  of  the  company.  Our  
forecasts  correspond  to  only  a  small  share  of  the  addressable  market.  
FY17  we  expect  a  further  step  up  in  opex  to  around  $10m  p.a.  as  the  company  provides  
further  in  market  support  for  its  controller  product  (training  and  engineers)  although  
we  understand  there  may  also  be  a  one-­‐off  step-­‐up  in  warranty  provisions  given  the  
new  products  in  market.  Also  we  suspect  some  other  aspects  of  overhead  have  been  
starved  in  recent  years  and  may  require  some  catch-­‐up.  We  assume  two  thirds  of  Opex  
is  NZD  denominated  and  one  third  is  USD  denominated,  corresponding  with  the  ratio  
disclosed  in  the  2015  annual  report.  
 
Forecast)Revenue)Track)($m)Forecast)Gross)Margin)Track)(%)
Source:(EAL(EstimatesSource:(EAL(Estimates
0"
50"
100"
150"
200"
2014A"2015A"2016A"2017F"2018F"2019F"2020F"2021F"2022F"2023F"2024F"2025F"
WDT)Global)Revenues)($m))
WDT"Global"Revenues"($000)"
CAGR"20%"
15%"
17%"
19%"
21%"
23%"
25%"
27%"
29%"
31%"
2014A"2015A"2016A"2017F"2018F"2019F"2020F"2021F"2022F"2023F"2024F"2025F"
WDT)Gross)Margin)%)
WDT"Gross"Margin"%"

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    29  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Depreciation  is  assumed  at  NZD  $0.3m  per  annum  in  line  with  the  recent  run-­‐rate.    We  
assume  product  and  patents  etc.  cost  the  company  around  NZD  1.4m  p.a.  cash  with  
development  amortised  over  5  years  and  assume  steady  state  amortisation  of  $1.2m  
p.a.    
We  have  modelled  our  revenues  and  margins  in  USD  which  assume  while  significant  
sales  are  made  outside  of  the  USA,  the  underlying  sales  pricing  currency  in  our  view  is,  
in  the  main,  the  USD.  Our  FY16  NZD:USD  assumption  is  $0.69  and  long-­‐run  assumption  
is  for  a    cross  rate  is  $0.63  (as  per  Credit  Suisse  forecasts).  We  understand  the  main  
currency  exposure  is  overhead  incurred  in  New  Zealand  at  around  NZD  400k  per  month  
(the  USD  is  the  company’s  functional  currency).  
The  Company’s  guidance  for  30%-­‐40%  revenue  growth  is  premised  off  an  NZD:USD  
exchange  rate  of  0.70  which  is  similar  to  our  FY17  exchange  rate  assumption.  
We  assume  the  mandatory  convertible  notes  preference  shares  are  converted  in  FY17  
based  on  the  prescribed  ratio  and  using  the  current  share  price  this  would  result  in  a  
further  26.8m  shares  being  issued  (assuming  conversion  based  on  a  $0.235  share  price).  
At  valuation,  this  would  result  in  a  conversion  ratio  of  1:1  or  the  issue  of  25m  new  
ordinary  shares  with  SuperLife  hold  71%  of  these  securities.  What  is  evident  is  that  
SuperLife  will  have  increased  control  if  the  exercise  is  executed  off  a  low  share  price  
(see  Appendix  for  conversion  ratios)  at  different  share  prices.    In  addition  to  these  
mandatory  convertible  shares  there  are  12.9m  partly  paid  shares  issued  at  between  
5.2c  and  18.2c,  1.9m  options  with  exercise  prices  in  the  range  of  5.6c  and  18.2c  that  we  
have  adjusted  for  their  dilution  in  our  forecasts  and  valuation.    
We  have  not  assumed  any  dividends  are  paid  over  the  forecast  implicitly  assuming  cash  
generated  is  retained,  in  our  view  any  cash  distribution  would  be  by  way  of  a  capital  
distribution  given  the  company’s  tax  position  (no  imputations  and  significant  tax  
losses).    
We  have  assumed  a  Weighted  Average  Cost  of  Capital  (WACC)  of  12.9%.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    30  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
   
 
 
 
 
WDT$Income$Statement$($m)
Year$to$31$March
WDT$Revenues
Other$Revenues
Total$WDT$Revenue
Total$COGS
Total$Gross$Margin
Non$operating$income
Operating$Expenses$
Total$EBITDA
Depreciation
Amortisation
EBIT
Finance$Costs$(Revenues)
PBT
Tax
Reported$NPAT
Non$recurring$items
Underlying$NPAT
Underlying$Earnings
EPS$c
Underlying$EPS$c
Dividend$per$share$c
Payout$Ratio
Net$Debt/EBITDA$(X)
EBITDA$Margin$(%)
Gross$Margin$%
Revenue$Growth
Shares$on$issue$(m)
Cumulative$Tax$Losses$utilised$($m)
Source:(Company(data,(estimates
$
2015A2016A2017F2018F2019F
24.635.347.255.165.3
0.00.00.00.00.0
24.635.347.255.165.3
19.326.834.640.147.2
5.38.512.615.018.1
0.70.00.00.00.0
7.58.510.010.511.1
R1.50.02.64.47.0
0.30.30.30.30.3
0.11.21.21.21.2
R1.9R1.51.13.05.6
0.91.10.6Y0.1Y0.3
R2.9R2.50.53.15.9
0.10.00.00.00.0
Y2.9Y2.50.53.15.9
0.00.00.00.00.0
R2.9R2.50.53.15.9
R2.9R2.50.53.15.9
Y1.1Y1.00.21.22.2
R1.1R1.00.21.22.2
0.00.00.00.00.0
0.000.00%0%0%
Y4.86Y289.62.6Y0.74Y1.26
Y6%0%5%8%11%
21.4%24.0%26.7%27.2%27.8%
38%44%34%17%19%
260$$$$$$$$$$$260$$$$$$$$$$$260$$$$$$$$$$$260$$$$$$$$$$$260$$$$$$$$$$$
Y$$$$$$$$$$$$Y$$$$$$$$$$$$0.14$$$$$$$$$$1.00$$$$$$$$$$2.65$$$$$$$$$$
Revenue$growth$
between$30Y40%$FY17.$$
$
Guidance$for$EBITDA$
in$the$low$$m's$
At$$2m$EBITDA$the$
company$
$expects$to$breakeven$
WDT$Cashflow$Statement$($m)
Cash$Flow$Analysis
EBITDA
Net$Working$Capital
Operating$Cashflow
Net$Interest
Tax$Paid
Other
Free$Cashflow
Maintenance$Capex
Expansion$Capex
Intangibles
Divestments
Investments
Investing$Cashflow
Distributable$Cashflow
Gross$Dividends
Minority$interests/$Other
Equity$Issues/Redemptions
Change$in$Net$Debt
Opening$Cash
Change
Closing$Cash
Source:(Company(data,(estimates
2015A2016A2017F2018F2019F
L1.50.02.64.47.0
0.00.2H0.5H0.4H0.5
L1.50.22.14.16.6
H0.3H0.3H0.60.10.3
H0.1H0.10.00.00.0
H0.10.00.00.00.0
L2.0L0.21.44.26.9
H0.2H0.3H0.3H0.3H0.3
0.00.0H0.20.00.0
H2.0H1.9H2.2H1.9H1.9
0.00.00.00.00.0
0.00.00.00.00.0
L2.2L2.2L2.7L2.2L2.2
L4.2L2.4L1.32.04.7
0.00.00.00.00.0
0.00.00.00.00.0
0.00.00.00.40.8
L4.2L2.4L1.32.55.5
L3.3L2.3L5.40.83.3
H4.2H2.4H1.32.55.5
H7.5H4.7H6.73.38.8

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    31  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
 
Note  the  Term  Liabilities  amount  from  FY14  through  FY16  consists  of  WDT’s  mandatory  
convertible  preference  shares.    In  FY17  these  convert  to  ordinary  shares  resulting  in  the  
value  transferring  to  Net  Equity.  
Valuation    
Unsurprisingly  valuation  is  strongly  dependent  on  assumed  revenue  growth,  volumes  
and  margins  and  the  following  tables  demonstrate  key  sensitivities  with  our  base  case  
valuation  centralised.    
At  the  current  share  price  of  23.5  cps  and  even  following  the  strong  share-­‐price  
appreciation,  the  market  appears  to  be  implying  significantly  lower  margins,  lesser  
volume  growth  or  lower  pricing  or  a  combination  relative  to  our  expectations  all  else  
being  equal.  
 
Further  given  most  revenues  have  the  USD  as  the  underlying  transactional  currency,  
earnings  are  sensitive  to  changes  in  the  NZD:USD  but  we  note  there  is  a  partial  hedge  
with  manufacturing  performed  offshore  and  inputs  USD  denominated.  We  have  
assumed  all  COGS  are  USD  denominated  and  40%  of  operating  expenses  with  the  
remainder  mainly  NZD.  
 
 
 
WDT$Balance$Sheet$($m)
Year$to$31$March
Cash
Receivables
Inventories
Other2Current
Plant2and2Equipment
Intangibles
Deferred2Tax
Total$Assets
Payables
Other
Term2Liabilities
Total$Liabilities
Net2Equity
2015A2016A2017F2018F2019F
2.92.10.83.38.8
5.99.012.014.016.7
3.73.54.75.56.5
0.00.00.00.00.0
1.01.01.21.21.2
5.35.96.97.68.3
0.00.00.00.00.0
18.821.525.731.741.5
7.810.914.617.020.2
0.20.30.30.30.3
5.27.50.00.00.0
13.218.714.917.320.5
5.62.810.814.421.1
Book$Value$Per$Share$$
Source:(Company(data,(estimates
0.020.010.040.050.08
2
Sensitivities
(Motors(Margin(%
0.4410.00%15.0%20.0%25.0%30.0%35.0%40.0%
SCS(Controller(Margin(%25.0%0.050.170.290.330.420.500.58
30.0%0.100.220.340.370.460.540.62
35.0%0.150.270.390.400.480.580.66
40.0%0.200.320.350.440.520.600.69
45.0%0.250.370.390.480.560.640.73
50.0%0.300.330.420.500.590.670.76
55.0%0.350.370.460.540.630.710.80
Source:(estimates
Sensitivities
(Motors(Volumes((Growth)
(0.445.0%8.0%11.0%14.0%17.0%20.0%23.0%
SCS(Controller(Volumes((Growth)20.0%0.080.140.200.280.360.370.45
30.0%0.140.190.260.330.340.410.49
40.0%0.230.280.350.340.400.470.54
50.0%0.370.340.380.440.500.560.64
60.0%0.440.490.540.580.640.710.79
70.0%0.650.690.740.800.860.910.99
80.0%0.971.011.061.091.151.221.30
Source:(estimates

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    32  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Under  our  base  case  assumptions  our  DCF  valuation  is  44cps  As  noted  above  this  
effectively  assumes  stable  price  points  and  margins  for  SCS™.  Motor  volume  growth  is  
in  line  with  industry  research  estimates  for  market  growth  (from  2018)  and  near  term  
SCS™  volume  growth  is  in  line  with  management  expectations  although  top-­‐out  at  a  
lower  number  than  the  company’s  ambitions  (0.9m  units  vs.  1.5m-­‐2.0m).  Of  this  44cps  
value  and  based  on  our  profit  track,  the  utilisation  of  tax  losses  account  for  7cps  of  this  
value.    Based  on  spot  exchange  rates,  our  valuation  declines  to  39cps.  
At  the  current  share  price  of  23.5cps  (and  fully  diluted)  under  our  forecasts,  the  
company  grows  into  its  share  price  FY18  where  the  implied  multiples  appear  around  
fair    (P/E  16.7).  At  valuation  this  is  pushed  out  to  FY19-­‐FY20.    Note  that  these  P/E  
multiples  are  on  an  untaxed  basis  given  WDT’s  tax  loss  position.  While  we  note  the  
share-­‐price  is  at  a  substantial  discount  to  our  base  case  valuation,  we  do  not  expect  it  
to  fully  close  the  gap  in  the  near  term  but  to  be  associated  with  further  evidence  of  
high  levels  of  earnings  growth.  
 
 
Comparable  Company  Multiples  (see  Appendix  2)  
While  many  of  the  companies  contained  in  the  appendix  are  large  and  much  more  diversified,  
what  is  evident  are  the  surprisingly  high  multiples  being  applied  by  the  market  given  relatively  
low  forecast  growth.  Revenue  growth  (median)  CAGR  is  flat  and  EPS  in  the  high  single,  low  
double  digits.  Also, apart from a few outliers, multiples are relatively tightly clustered.  
Calenderised  to  31  December,  on  a  P/E  basis  the  universe  selected  is  on  a  median  P/E  
of  ~21X  FY16  declining  to  16.3X  FY18.  Implied  EBIT  multiples  are  also  elevated  at  16.4X  
FY16  declining  12.5X  FY18.    
These  multiples  compare  with  Bloomberg  1-­‐year  blended  forward  on  the  S&P  500  
Industrial  Index’s  EPS  which  implies  a  12m  FWD  PE  of  16.4x  (calendarised  to  
10/10/2017  rather  than  a  December  Y/E).  
Key  Risks
n Two  major  customers  (defined  as  customers  representing  10%  or  more  of  
revenues),  each  account  for  revenues  of  $7.3m  and  $6.5m  respectively  of  total  
revenues  FY15  or  56%  (2014:  three  customers  each  with  revenues  of  $3.9m,  
$3.4m  and  $3.3m  or  60%)  illustrating  a  key  risk  and  the  strategic  rationale  to  
diversify  across  more  customers  and  into  product  areas  other  than  motors.    
n The  company  is  small  in  scale  and  therefore  must  be  innovative  to  compete,  as  
it  is  unlikely  to  be  able  to  compete  directly  on  cost  to  manufacture.  
n Most  of  the  company’s  direct  competitors  are  significantly  larger  with  the  
resources  and  capabilities  to  potentially  disrupt  WDT’s  current  business.  
 
Valuation)metrics
At Share Price2016A2017F2018F2019F2020F

EV/EBITDA-3714.523.313.78.65.7
EV/EBITA-41.252.820.310.96.6
P/E-24.0119.620.110.96.5
At Base Case Scenario

EV/EBITDA-7004.943.925.816.210.7
EV/EBITA-77.799.538.320.512.4
P/E-45.1224.537.720.512.3
Source: EAL estimates

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    33  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
n The  electric  motor  market  in  particular  is  very  competitive  and  while  volumes  
are  growing  strongly,  may  be  subject  to  price  erosion    
n The  IoT  market  opportunity  and  large  and  growing  rapidly.  The  company  may  
be  driven  by  customers  to  quickly  broaden  its  portfolio  to  stay  current  in  this  
market,  thus  driving  the  need  for  additional  unforecasted  development  costs.  
n Currently  the  company  has  limited  cash  resources  to  cater  for  expected  growth  
and  unexpected  demands  placed  on  it  my  large  multinationals  and  may  need  to  
raise  further  capital  in  the  future.  
n With  most  sales  transacted  in  foreign  currencies  and  a  large  proportion  of  
expenses  NZD  denominated,  a  strong  NZD  may  impact  the  company’s  
competitiveness  and  earnings.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SWOT%Analysis
StrengthsWeaknesses
Strong'culture'of'innovationRelatively'small'scale'relative'to'competitors
Potentially'leading'edge'products'in'marketCurrently'heavily'exposed'to/overreliant'on'few'customers
Product'volume'and'revenue'growth'currently'very'strongNot'well'capitalised
Strong'governance'and'managementGrowth'may'need'to'be'met'with'increased'investment
Operating'costs'relatively'fixed'therefore'high'leverage'to'revenue'growthConsiderable'currency'risk'with'most'product'sold'offshore
Good'relationships'with'large'and'valuable'customersBreadth'of'product'portfolio
Much'improved'supply'chain'network'
OpportunitiesThreats
New'energy'efficiency'regs'are'driving'increased'demand'Motors'now'off'patent
Only'have'small'market'share'in'large'marketsMotor'market'very'fragmented'market'with'many'participants
Some'opportunity'to'improve'motor'marginsSCS'controllers'has'less'competion'than'motors'but'still'has'several'
Growing'SCS'volumes'will'improve'revenues,'margins'and'earningslarge'and'strong'potential'competitors
Growing'SCS'volumes'will'diversify'riskMust'stay'ahead'of'the'competition'with'innovative'product
ECR2'motor'should'improve'market'share'in'cooler'and'supermarket'channels
New'channel'development'opportunities
Adjacent/new'market'opportunies
Potential'for'industry'consolidation
Source:(Company,(Eastbourne(Advisory(Limited

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    34  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Appendix  1-­‐  Directors,  Key  People  and  Major  Shareholders  
Greg  Allen  –  Chief  Executive  Officer    
Mr  Allen  was  appointed  CEO  of  Wellington  Drive  in  November  2011.  Prior  to  joining  
Wellington  Mr  Allen  spent  23  years  working  internationally  leading  business  
development,  supply  chain  and  manufacturing  organisations  in  Europe,  North  America  
and  Asia.  He  is  an  experienced  operational  and  business  leader,  having  previously  been  
responsible  for  the  Industrial  and  Green  Technology  business  unit  for  Celestica,  a  highly  
regarded  multinational  supply  chain  services  provider.  Prior  to  Celestica  Mr  Allen  led  a  
Canadian  public  company  focused  on  VOIP  products  and  also  held  senior  roles  with  
global  contract  manufacturing  and  engineering  services  companies.  Originally  from  
New  Zealand,  and  with  a  technical  background  gained  from  six  years  in  the  New  
Zealand  armed  forces,  Mr  Allen  brings  to  Wellington  a  broad  market  experience  
covering  many  industrial  segments  such  as  telecommunications,  aerospace,  capital  
equipment,  consumer  products  and  enterprise  computing.  Greg  has  bought  significant  
focus  to  the  WDT  since  his  arrival,  simplifying  the  company  with  a  more  cohesive  
strategy,  diversifying  away  from  motors,  reducing  operating  costs,  driving  stock-­‐turn  up  
and  as  a  corollary  promoting  revenue  and  margin  growth.  
Tony  Nowell,  CNZM  Chairman    
Mr  Nowell  was  appointed  a  director  of  Wellington  in  March  2010  and  Chairman  in  
December  2010.  He  is  an  experienced  company  leader  in  major  New  Zealand  and  
international  businesses  and  also  Chairs  Scion  (the  Forest  Research  Institute  of  New  
Zealand)  and  the  Omega  Lamb  Primary  Growth  Partnership  between  the  New  Zealand  
Government  and  Primary  Industry  participants.  He  is  a  board  member  of  New  Zealand  
Food  Innovation  (Auckland),  Food  Standards  Australia  New  Zealand,  and  the  Export  
Advisory  Board  of  Business  New  Zealand.  Mr  Nowell  is  also  a  New  Zealand  
representative  on  the  APEC  Business  Advisory  Council.  He  was  formerly  Deputy  Chair  of  
Leadership  New  Zealand  and  Chief  Executive  of  Zespri  International,  and  Griffin’s  Foods  
Limited.  Prior  to  returning  to  New  Zealand  business  in  2000  from  an  extended  period  of  
international  business  experience,  Mr  Nowell  was  Regional  Vice  President  of  Sara  Lee  
Asia,  President  Director  of  Sara  Lee  Indonesia  and  President  Director  of  L'Oreal  
Indonesia.  
Dr  Lisbeth  Jacobs    
Dr  Jacobs,  a  native  of  Belgium,  holds  a  PhD  in  Materials  Engineering  from  the  University  
of  Auckland  and  a  Master  of  Science  in  Materials  Engineering  from  the  Katholieke  
Universiteit  Leuven,  Belgium,  where  she  also  completed  a  post  graduate  degree  in  
Business  Studies.  Dr  Jacobs  has  also  completed  the  Executive  General  Management  
programme  at  CEDEP-­‐  INSEAD,  France.  Dr  Jacobs  is  currently  General  Manager  
International  at  UniServices,  a  wholly  owned  subsidiary  of  The  University  of  Auckland.  
In  this  role  Dr  Jacobs  is  responsible  for  all  commercial  activities  that  the  University  of  
Auckland  undertakes  outside  of  New  Zealand  and  Australia.  She  is  also  a  member  of  the  
board  of  Energia  Potior,  a  Joint  Venture  between  UniServices  and  Yunca  which  delivers  
technology  solutions  to  the  global  aluminium  industry.  Before  taking  up  her  current  
role  Dr  Jacobs  was  Director  Strategy  &  Development  at  The  Icehouse,  following  a  13  
year  international  career  with  Belgian  corporate  Bekaert,  a  world  market  and  
technology  leader  in  steel  wire  and  steel  cord  products  and  applications.  Dr  Jacobs  is  
Honorary  Consul  of  Belgium  since  August  2013.    
 
 
 

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    35  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Gottfried  Pausch    
Mr  Pausch  currently  serves  as  an  independent  director  of  McKay  Ltd  in  Whangarei,  
Blackhawk  Tracking  Systems  Ltd  in  Auckland  and  as  Executive  Chairman  of  Aucom  
Electronics  Ltd  in  Christchurch.  Mr  Pausch  was  the  former  CEO  at  Actronic  Technologies  
and  an  Executive  in  Residence  at  The  Icehouse,  following  a  22  year  career  with  German  
engineering  and  electronics  conglomerate  Siemens,  one  of  the  world’s  leading  suppliers  
of  a  wide  range  of  products,  solutions  and  services  in  the  field  of  technology,  which  
included  the  roles  of  CEO  Siemens  Energy  Services  Ltd.  and  Managing  Director  of  
Siemens  New  Zealand.    
John  McMahon    
Mr  McMahon  has  over  twenty  years’  experience  in  the  Australasian  equity  markets,  
predominantly  as  an  equity  analyst  covering  a  range  of  industries  including  
telecommunications,  media,  gaming  transport  and  industrials.  He  was  a  former  Head  of  
Research  and  Head  of  Equities  for  ABN  AMRO  NZ  and  was  Managing  Director  of  ASB  
Securities  for  three  years.  John  now  manages  his  own  investment  portfolio  through  
Sydney-­‐based  Auro  Investment  Management  and  is  Chairman  of  NZAX-­‐listed  Solution  
Dynamics  Ltd  (SDL).  He  has  a  Bachelor  of  Commerce  (Honours),  an  MBA  and  is  a  CFA  
(Chartered  Financial  Analyst)  charter  holder.  John  has  significant  credibility  having  been  
instrumental  as  chairman  in  the  early  stage  turnaround  of  SDL.NZ.  
Significant  Shareholders  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ShareholderNumber-(m)%-of-shares-on-issue
SuperLife)Trustee)Nominees)Ltd)63.827.5%
Harbour)Asset)Management)Ltd)13.65.9%
East)West)Manufacturing)LLC)10.64.6%
Wairahi)Trust)9.44.1%
John)McMahon9.13.9%
Graham)Trustees)Ltd8.13.5%
Source:(Company

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    36  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Appendix  2-­‐  Comparable  Companies  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company(NameABB#LtdNidec#CorpAmetek#IncRegal#Beloit#CorpDanaher#CorpEmerson#Electric#CoJohnson#Electric#Holdings#LtdMinebea#Co#LtdOmron#CorpRockwell#Automation#IncSchneider#Electric#SEUQM#Technologies#IncWEG#SACrompton#Greaves#LtdKirloskar#Electric#Company#LtdSource:(EAL(Estimates,(Bloomberg
Market(Cap
Domicile
(Local($mn)
319Dec916
319Dec917
319Dec918
319Dec916
319Dec917
319Dec918
319Dec916
319Dec917
319Dec918
Switzerland
50,409
#########
#
22.1x
19.2x
15.3x
14.4x
12.8x
11.6x
10.9x
10.2x
9.2x
Japan
2,771,530
####
#
28.6x
25.1x
21.9x
n.a.
n.a.
n.a.
14.5x
13.4x
11.9x
USA
11,096
#########
#
20.7x
19.1x
16.4x
14.9x
13.9x
13.3x
12.6x
11.8x
11.2x
USA
2,735
###########
#
13.9x
12.7x
12.2x
16.4x
11.9x
10.4x
8.7x
7.7x
6.9x
USA
54,035
#########
#
22.0x
20.1x
18.2x
20.8x
18.6x
17.7x
15.4x
13.9x
12.2x
USA
33,914
#########
#
18.0x
17.4x
15.6x
12.2x
12.1x
11.3x
9.9x
9.7x
9.0x
Hong#Kong
17,559
#########
#
90.6x
81.3x
77.5x
76.9x
65.7x
63.8x
48.7x
43.8x
42.8x
Japan
401,164
#######
#
11.4x
11.4x
11.1x
n.a.
n.a.
n.a.
6.3x
6.0x
5.4x
Japan
804,483
#######
#
19.0x
18.1x
16.3x
n.a.
n.a.
n.a.
8.1x
7.7x
6.9x
USA
15,489
#########
#
20.2x
19.4x
17.9x
13.9x
14.0x
13.3x
12.3x
12.4x
11.6x
France
36,770
#########
#
17.3x
15.7x
14.4x
13.2x
12.2x
11.1x
10.7x
9.8x
9.0x
USA
29
################
#
Z4.3x
Z5.6x
Z24.2x
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
USA
29,026
#########
#
24.8x
21.7x
18.6x
25.1x
20.0x
16.5x
19.6x
16.2x
13.8x
India
48,165
#########
#
25.4x
17.7x
13.8x
23.6x
15.1x
12.6x
13.0x
10.2x
8.1x
India
4,360
###########
#
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
23.5x
21.0x
17.5x
(
23.1x
19.6x
18.2x
(
14.7x
13.3x
12.2x
20.4x
18.6x
15.9x
(
15.7x
14.0x
12.9x
(
12.3x
10.2x
9.2x
Source:(EAL(Estimates,(Bloomberg
Calendarised(P/E
Calendarised(EV*(/(EBIT
Calendarised(EV*(/(EBITDA

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    37  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
Appendix  3-­‐  Mandatory  Convertible  Notes  Dilution  Scenarios  
































SL#Convertible
Other#Convertible
SuperLife#Holding
Holding#(m)
Holding#(m)
Share&Price&(c)
10
18.0
7.19
11
18.0
7.19
12
18.0
7.19
13
18.0
7.19
14
18.0
7.19
15
18.0
7.19
16
18.0
7.19
17
18.0
7.19
18
18.0
7.19
19
18.0
7.19
20
18.0
7.19
21
18.0
7.19
22
18.0
7.19
23
18.0
7.19
24
18.0
7.19
25
18.0
7.19
26
18.0
7.19
27
18.0
7.19
28
18.0
7.19
29
18.0
7.19
30
18.0
7.19
Source:(Company(data,(estimates;(SL=SuperLife
SL#new
Other#holder#new
Total#new
SL#existing#
SL#new#total
Conversion#Ratio
ordinary#Shares
ordinary#shares
ordinary#shares
ordinary#Shares
ordinary#shares
&
2.50
45.1
18.0
63.0
63.8
108.8
2.27
41.0
16.3
57.3
63.8
104.7
2.08
37.5
15.0
52.5
63.8
101.3
1.92
34.7
13.8
48.5
63.8
98.4
1.79
32.2
12.8
45.0
63.8
96.0
1.67
30.0
12.0
42.0
63.8
93.8
1.56
28.2
11.2
39.4
63.8
91.9
1.47
26.5
10.6
37.1
63.8
90.3
1.39
25.0
10.0
35.0
63.8
88.8
1.32
23.7
9.5
33.2
63.8
87.5
1.25
22.5
9.0
31.5
63.8
86.3
1.19
21.5
8.6
30.0
63.8
85.2
1.14
20.5
8.2
28.6
63.8
84.3
1.09
19.6
7.8
27.4
63.8
83.4
1.04
18.8
7.5
26.3
63.8
82.6
1.0
18.0
7.2
25.2
63.8
81.8
1.0
18.0
7.2
25.2
63.8
81.8
1.0
18.0
7.2
25.2
63.8
81.8
1.0
18.0
7.2
25.2
63.8
81.8
1.0
18.0
7.2
25.2
63.8
81.8
1.0
18.0
7.2
25.2
63.8
81.8
&
&
Total#ordinary
Super#Life
shares#post#conversion
Control
294.7
37%
289.0
36%
284.2
36%
280.2
35%
276.7
35%
273.7
34%
271.1
34%
268.8
34%
266.7
33%
264.9
33%
263.2
33%
261.7
33%
260.3
32%
259.1
32%
258.0
32%
256.9
32%
256.9
32%
256.9
32%
256.9
32%
256.9
32%
256.9
32%

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    38  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
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EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    39  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.  
n •  EBIT
1
loss for Q1 of $381k impacted by non-cash amortisation charges and

EASTBOURNE  ADVISORY  RESEARCH    23  March  2017  
EASTBOURNE  ADVISORY  LIMITED    40  
Eastbourne  Advisory  Limited  does  not  warrant  the  accuracy  of  any  information  or  forecasts  in  this  report.      
Recommendations  may  not  be  appropriate  and  investors  must  consider  their  own  circumstances  and  seek  independent  advice.