Wellington Drive 2018 Interim Report

Interim Report
June 2018

Contents
Overview
1. The Wellington Business is Changing
3. Chairman and CEO Report
9. Interim Consolidated Statement of Comprehensive Income
10. Interim Consolidated Statement of Movements in Equity
12. Interim Consolidated Statement of Financial Position
13. Interim Consolidated Cash Flow Statement
14. Notes to the Interim Consolidated Financial Statements
24. Directory
® is a registered Trade Mark of Wellington Drive Technologies Ltd
There are statements in this document that are “forward-looking statements”. As these forward-looking
statements are predictive in nature, they are subject to a number of risks and uncertainties relating to
Wellington, its operations, the markets in which it competes and other factors (some of which are beyond the
control of Wellington).
All references in this document to $ or "dollars" are references to New Zealand dollars unless otherwise stated.
Wellington's financial year is 31 December.

1
INTERIM REPORT JUNE 2018
The Wellington business is changing
The Wellington business is changing rapidly, as customers’ needs and priorities progress and the
world moves ever faster towards a digital future. Food and beverage customers, while still focused
on energy efficiency and cost reduction, are increasing their efforts to acquire technologies that
will help them connect directly with consumers. Food and beverage brands are increasingly
leveraging connectivity solutions, software solutions and associated products to improve sales
revenues and margins.
Wellington is constantly adapting to these changing market
dynamics by developing new IoT (Internet of Things) solutions
such as SCS™ Connect, and energy efficient motors such as
ECR2™, for existing and new customers. Revenue from these
new products has increased fourfold in the last two years
as the company has developed IoT product lines within the
traditional bottle cooler segment and in new markets such as
supermarket display and food service.
Wellington is no longer simply a motor company. It is
developing and acquiring IoT technologies that help food and
beverage brands better manage their point of sale equipment
(including coolers) and help them grow their sales by
enabling direct connection with the consumer. Wellington is
providing actionable insights into point of sale equipment that
directly improves business performance for food and beverage customers.
New investments in IoT solutions and software services, and a focus on EC motors outside of the
traditional bottle cooler market, has led to the exploration of opportunities in the broader food and
beverage segment.
2018 will see the finalisation of the company’s 2022 Vision and a refreshed growth strategy. This
will be delivered through an expanding range of products and services, winning customers in
new adjacent markets. All of this is underpinned by the company’s core strengths in execution,
‘customer first’ driven product development, engineering expertise and customer service.
An ecosystem that delivers
Actionable Insights
2. DELIVERY INFORMATION
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Wellington’s purpose is to deliver
actionable insights and solutions
that assist our customers to improve
their business performance. We
achieve this with the development
of Internet of Things (IoT) solutions
and energy-efficient motors
for leading food and beverage
brands as well as refrigerator
manufacturers. Our personal
service, reliable products, smart
solutions and relentless pursuit of
excellence drives us and continues
to lead in the market.

2
INTERIM REPORT JUNE 2018
Products and Solutions
Wellington continues to develop a broad range of products to serve the food and beverage market,
ranging from energy efficient motors, IoT hardware and data services, and the digital solutions
needed for our customers to connect directly with retailers and consumers.
Currently Wellington’s branded product offerings include:
IoT Hardware – IoT products designed to track and manage
coolers and connect wirelessly with the consumer in front of
the cooler or food dispenser. Products include SCS™ Connect,
SCS™ Motion Sensor and SCS™ Click, all of which are used to
deliver fleet management and connectivity capability for food
and beverage brand customers.
Proximity Technology – A range of industry standard
connectivity solutions, customised to meet customers’ needs
and either embedded in Wellington hardware or offered
as standalone products through iProximity. The Company
is able to offer standalone Bluetooth beacons, Near Field
Communication (NFC) tags and QR codes based consumer
engagement solutions. The proximity technologies enable
consumers to interact with the cooler, display shelf or other
point of sale equipment, and get information and promotions
on the product they wish to purchase.
Smarter Coolers Platform - Data and reporting services
built around mobile apps. SCS™ Field, SCS™ SalesForce and
SCS™ Report provide the management platform to deliver a
range of point of sale fleet management services to customers.
Our newly released SCS™ Retailer is a retailer app that enables
store management to control and improve the performance of
customers’ in-store systems. This platform comes installed on
every SCS™ Connect and SCS™ Click sold and is integrated
with the iProximity mobile app set. Wellington has an ‘App
Centric’ approach to delivering tools to clients.
Software as a Service – the iProximity iPX™ IoT platform,
built on the Cloud, provides the enterprise system that gives
customers the ability to engage directly with the consumer,
manage large promotion campaigns, and deliver content at
‘point of sale’ in front of the cooler or food dispenser.
Energy Efficient EC Motors – The next generation ECR2
platform and the more mature ECR1, ECR82 and ECR92
platforms continue to deliver low cost, highly reliable and
efficient airflow solutions to refrigeration manufacturers.
These are electronic motors designed to improve reliability,
reduce operating costs and reduce the carbon footprint of
commercial coolers. The new ECF™ Fanpack brand is focused
on delivering a fully integrated airflow solution to supermarket
equipment manufacturers.
Standard shaded pole motors – For customers wanting the
economy of shaded pole motors, Wellington offers a range of
Q frame shaded pole fan motors under our AirMoVent™ (AMV)
brand. These motors are designed for lower cost bottle cooler
applications and are often used as a precursor to a customer
investing in ECR™ motors.

3
INTERIM REPORT JUNE 2018
Chairman and CEO Report
Financial Highlights
ü Significant revenue growth – New Zealand dollar revenue for the 6 months ended 30
June 2018 was $28.1 million, an 18% increase compared to the same period last year. This
compared to previous guidance of an increase of around 10%. Revenue in the second quarter
was $16.3 million, compared to $11.1 million for the same quarter in 2017, a 47% increase.
Second quarter revenue was the largest single quarter revenue in the company’s history.
ü Gross margin increased by $1m - Gross margin increased from $5.9 million in first half 2017,
to $6.9 million this half year at a consistent 25% rate.
ü Earnings improvement - Earnings before interest, taxation, depreciation, amortisation and
impairment (EBITDA) for the first half improved to $1.1 million compared to $1.0 million for the
same period in 2017. Earnings before interest and taxation (EBIT) improved to $0.3 million
compared to $0.2 million in 2017.
ü Loss reduced – The company made a net loss of $0.2 million for the half, an improvement on
the $0.5 million loss for the same period last year. The improvement in net loss is more than
the relative EBITDA improvement due to the cessation of preference share interest costs in May
2017.
ü Cash at $2.6 million – The company generated operating and investing cash inflows in the
first half of $0.5 million, compared to a cash outflow of $0.9 million for the same period in 2017,
a $1.4 million improvement. Cash at 30 June 2018 was $2.6 million compared to $1.6 million
at 31 December 2017. Net debt at 30 June was $0.6 million versus net debt of $1.0 million at
December 2017.

4
INTERIM REPORT JUNE 2018
ü iProximity acquisition completed – The acquisition of iProximity, an Australian based digital
marketing company, was completed on 2 July 2018.
ü IOT & New products drive growth – New products continued to gain strong uptake,
contributing 65% of sales during the half. IoT hardware grew 45% and IoT data 88% during the
half.
ü Customer wins - The company added its first dairy products customer to the portfolio,
with deliveries of the SCS Connect IoT platform starting in the first quarter. This customer is
expected to reach US$1 million of revenue by early 2019 and is an indicator of how Wellington’s
IoT solutions are being used beyond carbonated soft drink brands. The dairy sector is an
important target market for the IoT platform. This platform will help improve management of in-
store dairy coolers and facilitate improved management of food quality and loss for the industry.
Revenue
Overall revenues grew a pleasing 18% this half year. Wellington’s US$ revenue for the largest
region (the Americas) grew by 28% due to strong sales of ECR2 motors and the SCS Connect IoT
platform. The main supermarket and food display OEM customer in the USA continued to adopt
ECR2 in more of its cooling applications. Asia-Pacific revenue was flat year-on-year as regional
customers moved more slowly than expected towards IoT adoption and brands reduced their
cooler placements. EMEA region US$ revenue was down 12%, driven by lower volumes from
bottle cooler customers in markets impacted by macro-economic difficulties, such as Turkey and
Southern Europe. EMEA did, however, see significant growth in its supermarket display customer
base as ECR2 motor US$ revenues increased by 83% over the comparable period in 2017.
Revenue growth continues to
be driven by IoT and ECR2
motor product sales. In
first quarter 2018, motors
represented 66% of the
company’s US$ revenue
while IoT solutions were 29%.
In second quarter, motors
were 64% of the company’s
total US$ revenue while IoT
solutions were 32%.
Wellington is continuing to
diversify beyond its historic
reliance on the bottle cooler
EC motor market. SCS
Connect hardware sales
were 45% higher than for the
comparable period in 2017.
SCS Data revenues continued
to grow with US$0.7 million
invoiced in the half, an 88%
increase versus 2017. The ECR2 motor unit sales were 46% higher and they now surpass ECR01
motor volumes, which while lower than ECR2, did increase by 12%. Sales to the company’s two
largest supermarket and food service refrigeration customers continued to grow - together they
contributed 31% of total ECR2 motor sales.
Consistent Growth
Revenue by Business

5
INTERIM REPORT JUNE 2018
Gross profit
The company came under
price pressure in its EC motor
business towards the end of
2017 and responded to remain
competitive. Additional one-
time costs of $0.2 million, a
0.9% impact on gross margin,
were incurred to successfully
manage the global electronic
component shortage situation.
These incremental spot buying
costs ensured alternate
components were secured and
that all customer demand in the
period was met. Component
shortages are easing, but are
expected to continue well into
2019.
Operating costs
Operating costs for the period were consistent in percentage terms at 21% of revenue (1H18:
$5.9m; 1H17: $5.1m). Operating spending increased as the company continued to invest in the
skills and infrastructure required to realise strategic opportunities. This supports a broadening
product range and diversifying customer base. To support further growth an investment has been
made in talent in key areas such as customer management, marketing and software development.
Profitability was also affected by capitalisation of development time reducing by $0.4 million
as some development engineers were redeployed to modifying existing products to resolve
component shortage issues rather than development of future products.
Balance Sheet
The company generated cash in the first half. Cash at 30 June 2018 was $2.6 million compared
to $1.6 million at 31 December 2017. Net debt at 30 June was $0.6 million versus net debt of $1.0
million at December 2017. Operating cash flows for the six months amounted to $1.8 million, up
from $0.3 million for the corresponding period in 2017. Net operating and investing cash flows (or
free cash flow) amounted to $0.5 million for the six months, a $1.4 million improvement.
Inventory management continued to be a highlight with 7.6 inventory turns achieved in the six
months, compared to 4.6 turns for the same period last year. However, several customers have
recently mandated higher levels of locally held inventory to support shorter lead-times and
increased product mix, which will increase Wellington’s stock levels during the second half of the
year. In the second quarter, one of the company’s larger customers decided to extend payment
terms for all its suppliers, because of beverage brands extending their terms. This extended
payment cycle is expected to continue for the foreseeable future.
The US$0.6m loan from Meta Capital Limited was repaid on 31 May 2018. A new loan for US$0.6m
from Meta Capital was advanced on 29 June 2018 to partially fund the iProximity acquisition
settlement and support extended terms with selected customers. After the period end, a $2.5
million loan was secured from Onimeg Investments (refer detail in Outlook section below).
Margin Expansion
Gross margin $ continues to increase

6
INTERIM REPORT JUNE 2018
2018 Strategic Priorities Update
The focus for 2018 is a refresh of the company’s long-range vision and growth strategy; one that
best aligns investment and plans with the changing nature of customers’ needs and further product
offerings. Initiatives and actions are being worked on to deliver sales growth and position the
business to achieve its long term aspirational growth objectives.
The top priorities for 2018 are:
1 Complete the development of Wellington’s 2022 vision
2 Complete and leverage the iProximity acquisition to support sales growth and end market
expansion
3 Develop new market opportunities for Wellington’s IoT solutions beyond the carbonated soft
drink market
4 Commence new product development projects for IoT hardware, software and EC motors
5 Complete the upgrade of the company-wide management information system to enable
growth strategy
The company’s updated growth vision for 2022 is being finalised as part of its fourth quarter
planning cycle. The growth plans that accompany this vision are expected to include the
development new IoT and EC Motor products, developing new customers in existing food and
beverage markets and accessing new adjacent markets. IoT and digital solutions will be key
themes in the updated growth plan, underpinned by EC Motors.
iProximity field trails continue into the second half of 2019, with projects ranging from helping
customers in the ambient food sector track and manage their display shelf assets to partnering
with refrigeration manufacturers and brands on providing Apps to connect with consumers and
storekeepers.
After working through the first half on an important customer collaboration projects, in September
2018 the company was pleased to announce a collaboration with New Zealand based Skope
Industries in the development of its new ActiveCore™ Refrigeration Product range. Wellington
supported Skope in the development of its Skope Connect App and Skope enhanced
ActiveCore’s™ energy efficient credentials by using Wellington’s ECR2 motors.
Possible Adjacent MarketsCurrent Markets
Consumer Facing Refrigeration
What's next?

7
INTERIM REPORT JUNE 2018
The company has now completed an upgrade of its IT systems, include upgraded security for its
servers and data storage and a migration to Microsoft 365 Cloud based IT services. This is a first
step in ensuring the company utilises the latest and most advanced IT and information systems as
it continues to grow its revenues and provide IoT and Data services to its customers, services that
require robust data storage and security systems.
Our Apps Drive Customer Adoption

8
INTERIM REPORT JUNE 2018
Outlook 2018
Revenue for the second half of 2018 is expected to be consistent with the first half, with EBITDA

around $1 million. The previous guidance of EBITDA between $2 to 4 million is being narrowed to
between $2 to $3 million, and the achievement of a net profit remains a target. Wellington should
generate a positive operating cash flow in FY2018.
The extension of
customer payment
terms, the increased
demand for higher levels
of locally-held inventory,
the opportunity to
accelerate investment in
several high growth IoT
projects and repayment
of existing debt caused
the board to explore and
review a range of funding
alternatives to ensure a
significant rate of growth
continues.
As a result of this review,
on 3 September the
company announced
that it had secured a $2.5
million loan from Onimeg
Investments. This loan is for a 12-month term and will be used to fund the repayment of the $2
million loan from Smartshares Limited that is due to be repaid in March 2019. The Meta Capital
Limited loan of US$600,000 has also been extended to a June 2019 repayment date. With these
new facilities in place the company is well positioned to repay existing debt, manage changes in
customer payment terms and locally-held customer inventory, and to commence investment in new
IoT projects.

..................................... .....................................
Tony Nowell,
CNZM Greg Allen
Chairman Chief Executive Officer
Footnote:
EBITDA (Earnings before interest, taxation, depreciation, amortisation and impairment) and EBIT (Earnings
before interest and taxation) are non-GAAP earnings figures that equity analysts tend to focus on for
comparable company performance analysis. The company considers that EBITDA is a useful financial indicator
because it avoids the distortions caused by the differences in amortisation and impairment policies and the
impact of fair value changes. The calculation of EBITDA is set out on page 9.
Gross margin is the gross profit percentage calculated from revenue and gross profit.
Improved Earnings and Cashflow
Guidance tightened to NZ$2-3m
1.

Consolidated Interim Statement of Comprehensive
Income



Six months ended
Unaudited
Year ended
Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
Note $000s $000s $000s
Revenue
2.1,2.2
28,042 23,775 43,308
Cost of goods sold (21,127) (17,865) (32,967)
Gross profit 6,915 5,910 10,341
Other income
2.3
108 151 251
Operating expenses
2.4
(5,928) (5,060) (10,054)
Earnings before interest, taxation,
depreciation, amortisation and impairment
1,095 1,001 538
Depreciation
3.5
(153) (142) (301)
Amortisation
3.6
(673) (654) (1,245)
Impairment
3.6
- (24) -
Earnings before interest and taxation 269 181 (1,008)
Finance income
4.2
2 5 45
Finance expenses
4.2
(364) (700) (934)
Loss before income tax (93) (514) (1,897)
Income tax expense (88) (8) (83)
Loss for the period

(181) (522) (1,980)
Other comprehensive income:
Items that may be reclassified subsequently
to the profit or loss:


Exchange differences on translating operations
262 (268) (121)
Cash flow hedge
(18) 92 15
Income tax relating to comprehensive income
- - -
Other comprehensive income / (loss) for the
period
244 (176) (106)
Total comprehensive gain (loss) for the period
$63 ($698) ($2,086)

Loss for the period attributable to the
Owners of the Company
($181) ($522) ($1,980)
Total comprehensive gain (loss) attributable
to the Owners of the Company

$63 ($698) ($2,086)

Basic earnings per share – cents
2.5
(0.07) (0.20) (0.77)
Diluted earnings per share – cents
2.5
(0.07) (0.20) (0.77)


The above Consolidated Int erim Statement of Comprehensive Income should be read in conjunction with the
accompanying notes.

9
INTERIM REPORT JUNE 2018
1.

Consolidated Interim Statement of Comprehensive
Income



Six months ended
Unaudited
Year ended
Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
Note $000s $000s $000s
Revenue
2.1,2.2
28,042 23,775 43,308
Cost of goods sold (21,127) (17,865) (32,967)
Gross profit 6,915 5,910 10,341
Other income
2.3
108 151 251
Operating expenses
2.4
(5,928) (5,060) (10,054)
Earnings before interest, taxation,
depreciation, amortisation and impairment
1,095 1,001 538
Depreciation
3.5
(153) (142) (301)
Amortisation
3.6
(673) (654) (1,245)
Impairment
3.6
- (24) -
Earnings before interest and taxation 269 181 (1,008)
Finance income
4.2
2 5 45
Finance expenses
4.2
(364) (700) (934)
Loss before income tax (93) (514) (1,897)
Income tax expense (88) (8) (83)
Loss for the period

(181) (522) (1,980)
Other comprehensive income:
Items that may be reclassified subsequently
to the profit or loss:


Exchange differences on translating operations
262 (268) (121)
Cash flow hedge
(18) 92 15
Income tax relating to comprehensive income
- - -
Other comprehensive income / (loss) for the
period
244 (176) (106)
Total comprehensive gain (loss) for the period
$63 ($698) ($2,086)

Loss for the period attributable to the
Owners of the Company
($181) ($522) ($1,980)
Total comprehensive gain (loss) attributable
to the Owners of the Company

$63 ($698) ($2,086)

Basic earnings per share – cents
2.5
(0.07) (0.20) (0.77)
Diluted earnings per share – cents
2.5
(0.07) (0.20) (0.77)


The above Consolidated Int erim Statement of Comprehensive Income should be read in conjunction with the
accompanying notes.

10
INTERIM REPORT JUNE 2018
2.

Consolidated Interim Statement of Movements in Equity
Share Accumulated Other Total
capital losses reserves equity

Note $000s $000s $000s $000s
Unaudited for the six months ended 30 June 2018
Equity at beginning of period 123,608 (114,106) (2,367) 7,135
Adjustment arising on adoption of NZ
IFRS 15
- (19) - (19)
Comprehensive income:
Loss for period
- (181) - (181)
Other comprehensive income:
Exchange differences on translation
operations
- - 262 262
Cash flow hedge
- - (18) (18)
Income tax relating to other
comprehensive income
- - - -
Total comprehensive income - (181) 244 63
Share option compensation expensed - - 8 8
Contributions of equity net of costs
4.3
- - - -
Equity at end of period $123,608 ($114,306) ($2,115) $7,187


Unaudited for the six months ended 30 June 2017
Equity at beginning of period 117,192 (112,126) (2,317) 2,749
Comprehensive income:
Loss for period
- (522) - (522)
Other comprehensive income:
Exchange differences on translation
operations
- - (2 68) (268)
Cash flow hedge - - 92 92
Income tax relating to other
comprehensive income
- - - -
Total comprehensive income - (522) (176) (698)
Share option compensation expensed

- - 47 47
Contributions of equity net of costs
4.3
6,416 - - 6,416
Equity at end of period $123,608 ($112,648) ($2,446) $8,514


3.

Consolidated Interim Statement of Movements in Equity - continued
Share Accumulated Other Total
capital losses reserves equity

Note $000s $000s $000s $000s
Audited for year ended 31 December 2017
Equity at beginning of period 117,192 (112,126) (2,317) 2,749
Comprehensive income:
Loss for period
- (1,980) - (1,980)
Other comprehensive income:
Exchange differences on translation
operations
- - (121) (121)
Cash flow hedge - - 15 15
Income tax relating to other
comprehensive income
- - - -
Total comprehensive income - (1,980) (106) (2,086)
Share option compensation expensed

- - 56 56
Contributions of equity net of costs

6,416 - - 6,416
Equity at end of period $123,608 ($114,106) ($2,367) $7,135



The above Consolidated Interim Statement of Movements in Equity should be read in conjunction with the
accompanying notes.

11
INTERIM REPORT JUNE 2018
3.

Consolidated Interim Statement of Movements in Equity - continued
Share Accumulated Other Total
capital losses reserves equity

Note $000s $000s $000s $000s
Audited for year ended 31 December 2017
Equity at beginning of period 117,192 (112,126) (2,317) 2,749
Comprehensive income:
Loss for period
- (1,980) - (1,980)
Other comprehensive income:
Exchange differences on translation
operations
- - (121) (121)
Cash flow hedge - - 15 15
Income tax relating to other
comprehensive income
- - - -
Total comprehensive income - (1,980) (106) (2,086)
Share option compensation expensed

- - 56 56
Contributions of equity net of costs

6,416 - - 6,416
Equity at end of period $123,608 ($114,106) ($2,367) $7,135



The above Consolidated Interim Statement of Movements in Equity should be read in conjunction with the
accompanying notes.

12
INTERIM REPORT JUNE 2018
4.

Consolidated Interim Statement of Financial Position




Unaudited

Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
Note $000s $000s $000s
Current Assets
Cash and cash equivalents 2,589 1,157 1,563
Trade and other receivables
3.1
17,822 11,450 11,690
Derivative financial instruments

- 57 6
Inventories
3.2
3,486 4,133 3,025
Total current assets 23,897 16,797 16,284

Non-Current Assets
Plant and equipment
3.5
1,228 918 948
Intangible assets
3.6
7,337 6,076 6,931
Investments
3.7
175 - -
Total non-current assets 8,740 6,994 7,879

Total assets 32,637 23,791 24,163

Current Liabilities
Trade and other payables
3.3
19,472 12,426 12,703
Deferred income
2.2
1,426 446 526
Provisions
3.4
423 316 377
Borrowings – current portion
4.1
2,980 26 591
Derivative financial instruments

125 - -
Total current liabilities 24,426 13,214 14,197
Non-Current Liabilities
Borrowings
4.1
177 1,521 2,007
Deferred income
2.2
847 542 824
Total non-current liabilities 1,024 2,063 2,831
Total liabilities 25,450 15,277 17,028


Net assets $7,187 $8,514 $7,135

Equity

Contributed equity
4.3
123,608 123,608 123,608
Accumulated losses

(114,306) (112,648) (114,106)
Other reserves

(2,115) (2,446) (2,367)
Total equity $7,187 $8,514 $7,135



The above Consolidated Interim Statement of Financial Position should be read in conjunction with the
accompanying notes.

13
INTERIM REPORT JUNE 2018
5.

Consolidated Interim Cash Flow Statement



Six months ended
Unaudited
Year ended
Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
Note $000s $000s $000s
Cash flows from operating activities
Receipts from customers exclusive of
GST/VAT
23,313 22,361 41,406
Payments to suppliers and employees
exclusive of GST/VAT
(21,134) (21,540) (40,605)
Interest received 2 5 45
Interest paid (290) (288) (522)
Taxation (paid) / received (101) 23 (24)
Net GST/VAT received / (paid) 4 (250) 957
Net cash inflow from operating activities 1,794 311 1,257
Cash flows from investing activities
Payments for plant and equipment (374) (108) (260)
Payments for intangible assets (725) (1,134) (2,358)
Payment – deposit for iProximity acquisition (163) - -
Proceeds from sale of plant and equipment - 4 -
Net cash outflow from investing activities (1,262) (1,238) (2,618)
Cash flows from financing activities
Cash proceeds from share issues, net of
issue costs

- (12) (13)
New loan drawdowns
4.1
1,143 - 1,083
Loan repayments
4.1
(848) - -
Finance lease borrowing

251 - -
Finance lease repayments

(20) (14) (25)
Net cash inflow from financing activities 526 (26) 1,045

Net increase / (decrease) in cash and cash
equivalents
1,058 (953) (316)
Cash and cash equivalents at the beginning of
the financial period
1,563 2,099 2,099
Effect of exchange rate movements on cash (32) 11 (220)
Cash and cash equivalents at end of period $2,589 $1,157 $1,563



The above Consolidated Interim Cash Flow Statement should be read in conjunction with the accompanying
notes.

14
INTERIM REPORT JUNE 2018
6.

Notes to the Interim Financial Statements
for the six months ended 30 June 2018

1. Basis of preparation

1.1 General Information
Wellington Drive Technologies Limited (the “company”) and its subsidiaries (together the “group”) develop,
manufacture, market and sell energy saving, electronically-commutated (EC) motors, connected controllers and
fans for worldwide use.
The company is a limited liability company incorporated and domiciled in New Zealand. The address of its
registered office is 21 Arrenway Drive, Rosedale, Auckland 0632. The company is registered under the Companies
Act 1993 and is an FMC reporting entity under Part 7 of the Financial Markets Conduct Act 2013. The financial
statements have been prepared in accordance with the requirements of Part 7 of the Financial Markets Conduct Act
2013 and the NZX Main Board Listing Rules.
These interim financial statements do not include all the notes and disclosures set out in the annual report. As a
result, this report should be read in conjunction with the annual financial statements for the year ended 31
December 2017.
These consolidated interim financial statements have been approved for issue on 29 August 2018 and have not
been audited.

1.2. Accounting Policies
These consolidated interim financial statements have been prepared in accordance with generally accepted
accounting practice in New Zealand. They comply with New Zealand International Accounting Standard 34: Interim
Financial Reporting and International Accounting Standard 34: Interim Financial Reporting. The group is a for-profit
entity for the purposes of financial reporting.

Other than as disclosed below, all significant accounting policies adopted in the preparation of these consolidated
interim financial statements have been applied on a basis consistent with those used in the audited financial
statements of the group for the year ended 31 December 2017.

Application of NZIFRS 15 Revenue from Contracts from Customers – Application of NZIFRS 15 which
became effective on 1 January 2018 resulted in a contract with an overseas distributor being treated as an
agency service contract instead of a principal goods purchase and sale contract. This resulted in a reduction
in revenue and cost of sales for the six months ended 30 June 2018 with an adjustment to accumulated
losses brought forward for the impact on prior periods.

Application of NZIFRS 9 Financial Instruments – Application of NZIFRS 9 which became effective on 1
January 2018 had no impact on these financial statements.

(a) Going concern convention
The group reported a loss after tax of $181,000 (2017: $522,000) and cash flows inflows from operating activities of
$1,794,000 (2017: $311,000) for the six months ended 30 June 2018. As at 30 June 2018, the group had cash of
$2,589,000 (2017: $1,157,000) and net assets of $7,187,000 (2017: $8,514,000). As at 30 June 2018, the group
had excess current liabilities over current assets of $529,000. On 2 July 2018 the group paid A$1.1 million on
closing the acquisition of iProximity.
The group is forecasting to be EBITDA profitable in 2018, is targeting the achievement of a net profit and is
forecasting to generate cash inflows from its operating activities. Forecasts include judgements and estimates over
key assumptions relating to future revenue growth, gross margins, operating costs and capital expenditure. It
should be noted that by their very nature forecasts include inherent uncertainty and actual results may vary from
those forecasts.

15
INTERIM REPORT JUNE 2018
7.

The company has since balance date received an offer of funding which will enable the repayment of the
Smartshares Limited loan on due date. The offer is for a $2.5 million loan repayable in September 2019. Meta
Capital has also offered to extend the repayment date of its loan into 2019. It is the considered view of the
Directors that the Group will have access to adequate resources to meet its ongoing obligations for at least a period
of 12 months from the date of signing these consolidated financial statements.
On this basis, the Directors have assessed it is appropriate to adopt the going concern basis in preparing its
financial statements.

(b) Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the currency of the
primary economic environment in which the entity operates (“the functional currency”). The company’s functional
currency is US Dollars because its purchase and sale of product is mainly denominated in US Dollars.
The consolidated interim financial statements are presented in New Zealand dollars, rounded to the nearest
thousand, which is the group’s presentation currency. The presentation currency remains New Zealand dollars due
to the company’s shareholder base being concentrated in New Zealand.

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INTERIM REPORT JUNE 2018
8.

2. Results for the period

2.1 Segment information
(a) Reportable segments
At 30 June 2018, the group is organised on a global basis into one operating segment – the marketing, sale,
manufacture and development of electric motors and associated electronics and software. The interim financial
statements therefore reflect the results and financial position of the segment.
(b) Geographical segments
The group operates in three main geographical areas, alt hough it is managed on a global basis.

Six months ended Year ended
30 Jun 2018 30 Jun 2017 31 Dec 2017
Revenue by Destination $000s $000s $000s
Americas
24,043 19,395 35,939
Asia / Pacific (APAC)
1,962 2,005 3,562
Europe / Middle East / Africa (EMEA)
2,037 2,375 3,807
Total
$28,042 $23,775 $43,308
Revenue is allocated above based on the country in which the customer is located.

2.2 Revenue
Six months ended Year ended
30 Jun 2018 30 Jun 2017 31 Dec 2017
$000s $000s $000s
Product revenue
27,858 23,633 43,081
Services revenue
184 142 227
Total
$28,042 $23,775 $43,308

Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and
services, excluding GST / VAT, rebates and discounts and after eliminating sales within the group.
Sale of Goods – sales are recognised when legal title or possession is transferred to the buyer which is usually
when delivery of the goods to the customer takes place.
Sale of services – revenue from the provision of services is recognised when services are rendered to the buyer.
The company has received income in previous years amounting to USD 212,000 in connection with the
development of a new motor product. This income has been deferred and will be recognised in the income
statement when the motor development is completed and products are sold pursuant to a licence agreement. The
company has also received revenue of USD 672,000 in the period (June 2017: USD 372,000) from the sale of data
services for its SCS Connect product. That income also has been deferred and will be recognised in the income
statement over the service period. Service periods range from 1 to 10 years.

2.3 Other income
Six months ended Year ended
30 Jun 2018 30 Jun 2017 31 Dec 2017
$000s $000s $000s
Net foreign exchange gains
106 126 215
Other
2 25 36
Total
$108 $151 $251

Net foreign exchange gains arise from normal trading activities except for the 6 months to 30 June 2017 when the
amount included a $61,000 gain arising from the revaluation of the mandatory convertible preference shares which
converted into ordinary shares in May 2017 (Year ended 31 December 2017 – a $60,000 gain).

17
INTERIM REPORT JUNE 2018
9.

2.4 Operating expenses

Six months ended Year ended
30 Jun 2018 30 Jun 2017 31 Dec 2017
$000s $000s $000s
Employee benefits
4,258 3,882 7,810
Rental expense relating to operating leases
159 143 270

2.5 Earnings per share

Earnings per share (‘EPS’) is the amount of post-tax profit attributable to each share.
Basic EPS of a loss of 0.07 cents (June 2017 – loss of 0.20 cents) is calculated by dividing the loss attributable to
equity holders of the company of $181,000 (June 2017 - $522,000) by the weighted average number of ordinary
shares on issue during the year of 257,041,576 (June 2017 – 256,939,967).
Diluted EPS of a loss of 0.07 cents
* (June 2017 - loss of 0.20 cents) reflects any commitments the group has to
issue shares in future that would decrease EPS. The weighted average number of ordinary shares is compared
with the number of shares that would have been issued assuming the exercise of share options.
As at 30 June, the following instruments existed that are, or were, potentially dilutive of future earnings per share,
but were not included in the calculation of diluted EPS for that year because the effect in that year would have been
antidilutive:

Numbers of shares 30 Jun 2018 30 Jun 2017 31 Dec 2017
Part paid shares
12,703,070 12,703,070 12,703,070
US employee share options
1,914,601 1,914,601 1,914,601
* The June 2018 weighted average number of ordinary shares on issue for the purpose of the diluted EPS calculation includes
18,897,928 ordinary shares being the maximum number of ordinary shares that may be issued for deferred consideration
pursuant to the acquisition of iProximity (refer to note 5.3).

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INTERIM REPORT JUNE 2018
10.

3. Operating assets and liabilities

3.1. Trade and other receivables

30 Jun 2018 30 Jun 2017 31 Dec 2017
$000s $000s $000s
Trade receivables
16,948 10,608 11,146
Provision for doubtful debts
(113) (104) (107)
Net trade receivables
16,835 10,504 11,039
Prepayments
316 239 325
VAT/GST refunds due
585 620 259
Income tax refund due
14 1 22
Other receivables
72 86 45

$17,822 $11,450 $11,690

3.2. Inventories

30 Jun 2018 30 Jun 2017 31 Dec 2017
$000s $000s $000s
Finished goods – at cost
2,661 2,726 2,271
Work in progress – at cost
639 1,176 549
Raw materials – at cost
281 299 267
Less inventory provisions
(95) (68) (62)
Total inventories
$3,486 $4,133 $3,025

3.3 Trade and other payables
30 Jun 2018 30 Jun 2017 31 Dec 2017
$000s $000s $000s
Trade payables
17,840 11,375 11,233
Employee entitlements
887 807 1,179
Income tax payable
- - 49
Accrued expenses
745 244 242

$19,472 $12,426 $12,703

3.4 Provisions
30 Jun 2018 30 Jun 2017 31 Dec 2017
Warranty provisions $000s $000s $000s
Carrying amount at start of period
377 253 253
Additional provisions recognised
118 168 300
Amounts used
(95) (93) (175)
Exchange adjustment
23 (12) (1)
Carrying amount at end of period
$423 $316 $377

The group sells products with warranty periods of up to five years. The terms of the warranty provide that the group
will repair or replace items that fail to perform satisfactorily. A provision is recognised based on historical data and
average levels of repairs and warranty claims experienced by the group. It is expected that the provision will be
utilised within one year as any product failures are typically exhibited within one year of sale.

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INTERIM REPORT JUNE 2018
11.

3.5 Plant and equipment
30 Jun 2018 30 Jun 2017 31 Dec 2017
$000s $000s $000s
Net book amount at start of period
948 999 999
Additions
374 108 260
Depreciation
(153) (142) (301)
Disposals
- - -
Exchange adjustment
59 (47) (10)
Net book amount at end of period
$1,228 $918 $948


Depreciation
Plant and equipment
117 107 229
Office equipment, furniture & fittings
36 35 72

$153 $142 $301

Sale of plant and equipment
Gain on disposal
$- $4 $-

Capital commitments
Capital commitments contracted for at 30 June 2018 amounted to $169,000 (June 2017 $179,000)


3.6 Intangible assets
30 Jun 2018 30 Jun 2017 31 Dec 2017
$000s $000s $000s
Net book amount at start of period
6,931 5,914 5,914
Additions
725 1,134 2,358
Amortisation
(673) (654) (1,245)
Impairment
- (24) -
Exchange adjustment
354 (294) (96)
Net book amount at end of period
$7,337 $6,076 $6,931


Amortisation and impairment
Amortisation of intangible assets
$673 $654 $1,221
Impairment of intangible assets
- $24 $24


3.7 Investments
On 28 February 2018 the company signed an agreement with iProximity, an Australian based innovative proximity
marketing solutions and consumer intelligence company. The agreement is an option expiring 28 August 2018 and
allows the company to acquire all the shares in iProximity. On 22 May 2018 the company gave notice that it will
exercise its option. See also note 5.3 for the impact.

20
INTERIM REPORT JUNE 2018
12.

4. Capital and financing costs

4.1 Borrowings

30 Jun 2018 30 Jun 2017 31 Dec 2017
$000s $000s $000s
Current portion

Loan facility – Smartshares Limited
2,000 - -
Loan facility – Meta Capital Limited
890 - 564
Finance leases
90 26 27

$2,980 $26 $591


Non-Current portion

Loan facility – Smartshares Limited
- 1,500 2,000
Finance leases
177 21 7

$177 $1,521 $2,007

Loan facility – Smartshares Limited
In September 2016 the company secured a $2 million unsecured loan facility from Smartshares Limited (formerly
SuperLife Limited), a shareholder. The loan facility initially had a one year term. In June 2017 the company agreed
with the lender an extension of the facility to March 2019. Int erest is payable quarterly at 15.75% pa (14.75% until
September 2017). The facility has been drawn down to $2.0 million at balance date. A $20,000 annual revolver fee
is payable.

Loan facility – Meta Capital Limited
In November 2017 the company secured a USD 600,000 unsecured loan facility from Meta Capital Limited, a
company related to a director. USD 400,000 was drawn down in December 2017 and USD 200,000 in January
2018. The loan was repaid in May 2018. A new unsecured loan facility was entered into in May 2018 and USD
600,000 drawn down in June 2018. The loan is repayable in December 2018. Interest is payable at 12.5%.

4.2 Finance income and expenses
Six months ended Year ended
30 Jun 2018 30 Jun 2017 31 Dec 2017
$000s $000s $000s
Finance income

Change in fair value of embedded option
- - -
Other interest income
2 5 45

$2 $5 $45
Finance expense

Convertible preference shares:

-Amortisation of liability
- 329 329
-Preference shares coupon
- 125 82
-Change in fair value of embedded option
- 126 126

- 580 587
Interest payable to Smartshares Limited
155 110 244
Interest payable to Meta Capital Limited
49 - 8
Other interest
160 10 145

$364 $700 $934

21
INTERIM REPORT JUNE 2018
13.

4.3 Contributed equity


30 Jun 2018
Shares
30 Jun 2017
Shares
30 Jun 2018
$000s
30 Jun 2017
$000s
Ordinary shares – fully paid (a)
257,097,352 257,097,352 123,571 123,571
Ordinary shares – partly paid (b)
12,703,070 12,703,070 37 37
US employee share options (c)
1,914,601 1,914,601 - -
Total shares and options on issue
271,715,023 271,715,023 $123,608 $123,608


(a) Ordinary shares – fully paid

30 Jun 2018
Shares
30 Jun 2017
Shares
30 Jun 2018
$000s
30 Jun 2017
$000s
Opening balance of ordinary shares on issue
257,097,352 231,684,047 123,571 117,155
- Mandatory convertible preference shares that
converted to ordinary shares in May 2017 at
25.5 cents each
- 25,211,740 - 6,429
- Part paid shares exercised
- 201,565 - 19
- NZX charges relating to these transactions
- - - (32)
Ordinary fully paid shares on issue at period end
257,097,352 257,097,352 $123,571 $123,571
All ordinary shares are authorised and have no par value. Ordinary shares entitle the holder to participate in
dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on
shares held.


(b) Ordinary shares – partly paid

Six months ended

30 Jun 2018
Shares
30 Jun 2017
Shares
30 Jun 2018
$000s
30 Jun 2017
$000s
Partly paid shares on issue at start of period
12,703,070 12,904,635 37 37
Issued
- - - -
Exercised
- (201,565) - -
Ordinary part paid shares on issue at period end
12,703,070 12,703,070 $37 $37

(c)
US employee share options (numbers)

30 Jun 2018 30 Jun 2017
Options outstanding at start of period
1,914,601 1,914,601
Granted / Exercised
- -
Outstanding at end of period
1,914,601 1,914,601

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INTERIM REPORT JUNE 2018
14.

5. Other information

5.1 Related party transactions
(a) Directors
The names of persons who are directors of the company are on page 24.

(b) Key management personnel and compensation
Key management personnel compensation is set out below.
Key management personnel comprises of the
Directors, the Chief Executive Officer (CEO) and all the senior executives that report directly to the CEO.
Six months Six months
ended ended
30 Jun 2018 30 Jun 2017
$000s $000s
Salaries, fees and other short term benefits
987 1,007
Share based remuneration
4 35
Directors remuneration
70 70
Total
$1,061 $1,112

(c) Employee share based remuneration
Equity settled, share based compensation is provided to employees via the Wellington Partly Paid Share Scheme
and Wellington Employees Share Option Plan. The fair value of the employee services received in exchange for the
grant of part paid shares or options are recognised as an expense over the vesting period. The proceeds received
net of any directly attributable transaction costs are credited to share capital when the partly paid share proceeds
are received or options are exercised.

(d) Meta Capital Limited loan
Meta Capital Limited is a company associated with a director, Mr J McMahon. Note 4.1 sets out details of the
agreements with Meta Capital Limited and the amounts outstanding at balance dates. Interest paid / payable to
Meta Capital Limited is disclosed in note 4.2.

(e) Smartshares Limited loan
Smartshares Limited is a substantial security holder. Note 4.1 sets out details of the agreements with Smartshares
Limited and the amounts outstanding at balance dates. Interest paid / payable to Smartshares Limited is disclosed
in note 4.2.

5.2 Contingencies and commitments
There are no material contingent liabilities or assets (June 2018).

5.3 Subsequent events
On 28 February 2018 the company signed an agreement with iProximity, an Australian based innovative proximity
marketing solutions and consumer intelligence company. The agreement is an option expiring 28 August 2018 and
allows the company to acquire all the shares in iProximity. The consideration for the acquisition if the company
exercises its option includes both up-front payments and three year cash and share-based earn out targets as
follows:
a. Payment of a non-refundable deposit of A$150,000, in consideration of the option;
b. A$1.1m in cash on closing (i.e. at exercise of the option);
c. Payment of up to a further A$500,000 based on meeting specified EBIT targets (for iProximity’s existing
business) for FY2018 and FY2019; and
d. The future issue to the Vendors of fully paid ordinary shares (“Consideration Shares”) in the capital of
Wellington in tranches based on meeting specified EBIT targets for the business purchased for the period
ending 31 December 2020 (as to 50% of the shares) and also based on Wellington’s SCS™ Connect
System controller sales performance for the same period (as to the other 50% of the shares).
Consideration Shares not “earned” by 31 December 2020 are forfeited.

23
INTERIM REPORT JUNE 2018
15.

On 22
nd
May the company gave notice that it will exercise its option to acquire all the shares in iProximity Pty
Limited (iPX) on 2 July 2018. A$1,100,000 was paid on 2 July 2018. The maximum number of Consideration
Shares that may be issued to the Vendors (i.e. assuming 100% achievement of EBIT and SCS™ sales objectives)
is 18,897,928.
The acquisition was completed on 2 July 2018. The accounting for the acquisition is currently under review and is
not completed.

5.4 Reconciliation of loss for the period to net cash inflow from operating activities



Six months ended
Unaudited
Year ended
Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
$000s $000s $000s


Loss after taxation for the period (181) (522) (1,980)

Adjustments for:
Depreciation, amortisation and impairment 826 820 1,546
Gain on disposal of plant & equipment - (4) -
Share based payments 8 47 56
Amortisation of borrowing - 329 329
Change in fair value of embedded option - 126 126
Inventory provision movements 33 (3) (9)
Doubtful debt provision movements 6 (44) (41)
Provision for warranty movements 46 63 124
Net foreign exchange differences (4) (313) 181
Increase in trade and other receivables (6,138) (2,391) (2,634)
Increase in deferred income 923 397 759
(Increase) / decrease in inventories (494) (669) 445
Increase in trade and other payables 6,769 2,475 2,355
Net cash inflow from operating activities 1,794 $311 $1,257

24
INTERIM REPORT JUNE 2018
16.

Directory
Directors
Tony Nowell, Chairman
Dr Lisbeth Jacobs
John McMahon
Gottfried Pausch
Senior Staff
Greg Allen, Chief Executive Officer
Steven Hodgson, Senior Vice President Commercial
David Howell, Chief Technical Officer
Howard Milliner, Chief Financial Officer
Marc Tinsel, Head of Manufacturing
Peter Barnes, Global Quality Leader
David Burden, VP IoT Products and Marketing Solutions
Ali Karahasanoğlu, Sales Director, Europe / Eurasia
Erick Layseca-Flores, Business Development Manager, Americas
Gerardo Gonzalez, VP Intelligent Systems Business Unit
Clayton Thomas, Sales and Marketing Director Asia-Pacific
Ron Jackson, Secretary
Phone/Fax
Ph: 64-9-477 4500
Fax: 64-9-479 5540
Internet
Website: www.wdtl.com
Email: info@wdtl.com
Addresses
21 Arrenway Drive, Rosedale
North Shore City 0632, New Zealand
PO Box 302-533, North Harbour
Auckland 0751, New Zealand
Registered Office
21 Arrenway Drive, Rosedale
North Shore City 0632, New Zealand
Auditor
PricewaterhouseCoopers
188 Quay Street, Auckland, New Zealand
Share Registry
Computershare Investor Services Ltd
Private Bag 92119, Auckland 1142
New Zealand

25
INTERIM REPORT JUNE 2018

Interim Report June 2018
www.wdtl.com

WT9080