Interim Result Announcement

Template
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 17 October 2019


Results for announcement to the market
Name of issuer Wellington Drive Technologies Limited
Reporting Period 6 months to 30 June 2020
Previous Reporting Period 6 months to 30 June 2019
Currency New Zealand Dollar
Amount (000s) Percentage change
Revenue from continuing
operations
$20,484 -38.5%
Total Revenue $20,484 -38.5%
Net profit/(loss) from
continuing operations
($787) n/a
Total net profit/(loss) ($787) n/a
Interim/Final Dividend
Amount per Quoted Equity
Security
No dividend will be paid
Imputed amount per Quoted
Equity Security
n/a
Record Date n/a
Dividend Payment Date n/a
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
-$0.002 -$0.017
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
See Interim Report June 2020
Authority for this announcement
Name of person

authorised
to make this announcement
Howard Milliner
Contact person for this
announcement
Howard Milliner
Contact phone number 0275870455
Contact email address Howard.milliner@wdtl.com
Date of release through MAP

27/08/2020

Unaudited financial statements are included within the June 2020 Interim Report accompanying
this announcement.

---

®
is a registered Trademark of Wellington Drive Technologies WT 9440

Wellington Drive Technologies Ltd
P: +64 9 477 4500 E: info@wdtl.com
21 Arrenway Drive, Rosedale, Auckland 0632
PO Box 302-533 North Harbour, Auckland 0751, New Zealand
www.wdtl.com
27 August 2020
Market Announcement


Wellington Drive Technologies 2020 first half results

Wellington Drive Technologies (Wellington and the Company), a leading provider of Internet of Things (IoT)
solutions and energy efficient motors to the retail food and beverage industry, today released its unaudited
financial statements for the six months ended 30 June 2020. The Company’s Interim Report, with
management discussion and analysis, can be found on the NZX website, under the Ticker NZX:WDT at
https://www.nzx.com/instruments/wdt.

Revenue for the six months ended 30 June 2020 was $20.5m, a 38.5% decrease over the same period last
year. The result includes a $1.1m operating expense reduction versus the same period last year as result of
cost reduction measures implemented to mitigate the impact of COVID-19 on the business. The Company
expanded its gross margin percentage and achieved an EBITDA
1
surplus of $1.14m compared to $2.45m
last year and a net loss of $0.79m, down $1.51m on the same period.

Metric $ H1 2020 H1 2019 Change
Revenue $20.5m $33.3m -38.5%
Wellington Connect™ IoT revenue $8.0m $13.5m -40.6%
ECR
®
2 motor revenue $7.6m $11.2m -32.0%
ECR legacy motor revenue $4.2m $7.6m -45.3%
Gross profit $6.2m $8.6m -27.6%
Gross margin % 30.3% 25.8% +4.5%
Operating expenses net of other income $5.1m $6.1m -17.2%
EBITDA
1
$1.14m $2.45m -53.6%
EBIT -$0.55m $1.27m -143.3%
Profit (loss) -$0.79m $0.72m -$1.51m
Operating cash flows $0.72m $1.11m -34.8%

Results for the first half reflect COVID-19 related supply chain constraints in the first quarter and the
weakening of customer demand in the second quarter due to customer factory closures, food and beverage
brand equipment spend reductions and government mandated regional restrictions. The Company acted
quickly to mitigate those impacts, with a range of cost reduction and cash initiatives that included board and
management compensation reductions, companywide salary reductions, capital spend deferrals,
renegotiated supplier terms and a successful pro-rata rights issue.

WT 9440

The initiatives were implemented with a parallel objective to maintain Wellington’s core operational
capabilities and new product pipeline options, so the Company is ready to resume the positive performance
trend seen in recent years once customers start to come back online.

CEO Greg Allen commented; “We are managing through an unprecedented disruption in demand, directly as
a result of the global COVID-19 pandemic. Throughout this period our team has focused on the health and
safety of all and the Company’s stakeholders, reduced costs to mitigate financial impact and continued to
support new product and customer activity to ensure we come back as strong as ever when the market
normalizes. The recent introduction of our new Connect Monitor retrofit device for commercial cooler and
ambient applications, that provides connectivity and data solutions for installed equipment, is an example of
how the Company is maintaining core capability and continues to innovate despite the uncertainty created by
the pandemic.”
About Wellington Drive Technologies:
Wellington is a leading provider of IoT solutions, cloud-based fleet management platforms, energy-
efficient electronic motors and connected refrigeration control solutions. It serves some of the world’s
leading food and beverage brands and refrigerator manufacturers and offers proximity-based marketing
for Smart Cities to the Australian market. Wellington’s services and products improve sales, decrease
costs and reduce energy consumption. Headquartered in Auckland with a global reach, Wellington is
listed on the New Zealand stock exchange under the ticker symbol NZ:WDT
For further information visit www.wdtl.com

EBITDA
1
(i.e. Earnings before interest, taxation, depreciation, amortisation and impairment) is a non- GAAP
earnings figure that equity analysts tend to focus on for comparable company performance analysis.
Wellington considers that it is a useful financial indicator because it avoids the distortions caused by
differences in amortisation and impairment policies.


Contact:

Greg Allen Howard Milliner
Chief Executive Officer Chief Financial Officer
Phone +1-778-238-6494 +64 27 587-0455

---

Interim Report 2020 Wellington Drive Technologies Ltd



Contents
1. Business highlights
2. Chairman and CEO Report
10. Consolidated and Condensed Interim Statement of
Comprehensive Income
11. Consolidated and Condensed Interim Statement of Movements
in Equity
13. Consolidated and Condensed Interim Statement of Financial
Position
14. Consolidated and Condensed Interim Cash Flow Statement
15. Notes to the Interim Consolidated Financial Statements
34. Directory






____________________________________________
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.
References to the Company are to Wellington Drive Technologies Limited
Wellington’s financial year end is 31 December.

Interim Report 2020 Wellington Drive Technologies Ltd

1
Business highlights

Interim Report 2020 Wellington Drive Technologies Ltd

2
Chairman and CEO Report
Late in the first quarter of 2020 Wellington began to see the initial impact of the COVID-19
pandemic and acted quickly to manage what began as supply chain disruption and, subsequently
developed into a slowing of customer demand. Many of the Company’s customers are in the
Americas, a region that is currently being hit hard by the pandemic

The focus from late in quarter one has been to prepare for, and manage through, the impact of
COVID-19 on Wellington’s business. The Company has firstly aimed to ensure the safety of staff,
suppliers and customers, and has then taken operational decisions and actions to manage the
expected subsequent economic impact. The key objective is to maintain Wellington’s core
operational capabilities and new product pipeline options, so the Company is ready to resume the
positive performance trend seen in recent years, once customers start to come back online.

Results for the first half reflect both the significant weakening of customer demand in the second
quarter, plus actions taken to mitigate the impacts of COVID-19, while maintaining core capability
and key customer relationships.

Metric $
2020

2019 Change
Revenue
$20.5m $33.3m -38.5%
Wellington Connect™ IoT revenue
$8.0m $13.5m -40.6%
ECR
®
2 motor revenue
$7.6m $11.2m -32.0%
ECR legacy motor revenue
$4.2m $7.6m -45.3%
Gross profit
$6.2m $8.6m -27.6%
Gross margin %
30.3% 25.8% +4.5%
Operating expenses net of other income
$5.1m $6.1m -17.2%
EBITDA
1

$1.14m $2.45m -53.6%
EBIT -$0.55m $1.27m -143.3%
Profit (loss) -$0.79m $0.72m -$1.51m
Operating cash flows $0.72m $1.11m -34.8%



Note 1: EBITDA (i.e. Earnings before Interest, Taxation, Depreciation, Amortisation and Impairment) is a non-
GAAP earnings figure that equity analysts tend to focus on for comparable company performance analysis. The
Company considers that it is a useful financial indicator because it avoids the distortions caused by the
differences in amortisation and impairment policies.

Interim Report 2020 Wellington Drive Technologies Ltd

3
Revenue
Revenue for the first half was $20.5m, a 39% decrease compared to the same period last year.
The shortfall occurred in the second quarter and came entirely from COVID-19 related reductions
in customer demand, related country and customers’ factory closures and reductions in
equipment capital spend by major food and beverage brands.
First quarter performance was an improvement on last year as the Company successfully
managed through the initial supply chain challenges caused by COVID-19. The second quarter,
however, was severely impacted. Revenue for Q2-2020 was $5.1m compared to $17.5m for the
same quarter in 2019, a 71% decrease.



COVID-19 related demand reductions have impacted all products. Wellington’s ECR2 motor and
IoT products represent 74% of second half revenues compared to 73% for the same period last
year.
Wellington Connect IoT
Revenue billings from Connect IoT products and services, including Connect SCS hardware, data
services and iProximity software was $8.0m compared to $13.5m the prior year. Invoicing of IoT
data services decreased 51% from $1.7m to $0.8m.
$0.6m of data billings were recognised for the half year compared to $0.4m for the same period
last year. Data services are multi-year contracts and revenue is recognised progressively over

Interim Report 2020 Wellington Drive Technologies Ltd

4
the term of the contract, typically from five to ten years. The amount of unrecognised IoT data
services revenue held on the balance sheet on 30 June 2020 was $4.8m.
The Company continued to successfully market its iProximity digital marketing solutions, including
responding to several RFQ’s on point of sales connectivity and smart restaurant menu’s using its
new Q-TAG, QR-Code / Near Field Communications (NFC) products.
Wellington ECR motors
Wellington shipped 420,000 ECR motors in the first half, down 44%. Around 60% of these motors
were the high performing ECR2 motor. Wellington has recently won new supermarket business
in Turkey and the UK for its ECR2 Fanpack product, a high-performance fan assembly specifically
designed for supermarket applications, with 25,000 units shipped year to date, a 308% increase
over 2019.

Sales regions
Americas
Wellington’s revenue for the Americas region was $16.3m, a 44% decline which all occurred in
the second quarter. There are early indications that demand in the USA is starting to recover,
with steady demand for the Company’s medical refrigeration motor product from customers not
directly related to beverage coolers. Demand in Latin America remained at lower than normal
levels as the majority of Wellington’s beverage cooler manufacturing customers are running
significantly reduced operations.

Asia Pacific (APAC) and EMEA (Europe, Middle East and Africa)
Asia-Pacific revenue was $1.7m, consistent with first half 2019. The Company saw continued
steady first-half demand from its Australasian and Chinese customers.

Wellington was pleased to see a long time South East Asian customer, which historically only
purchased old technology shaded pole motors, starting to implement EC motor technology in a
new cooler application.

EMEA region revenue was $2.4m, also consistent with 2019, with increases in supermarket
business in Turkey and the launch of Connect SCS business for a major beer brand in its African
market. These increases were offset by COVID-19 related reductions from Wellington’s Western
European customer base.

Interim Report 2020 Wellington Drive Technologies Ltd

5
Gross margin and gross profit changes

Gross profit reduced by $2.4m to $6.2m solely caused by lower revenues. Gross margin
improved to 30.3% from 25.8% reflecting the impact of higher margin data and iPX revenue
recognition, reduced volume related customer rebates and planned unit cost reductions.

IoT solutions contributed 57% of gross profit with ECR2 motors at 24% and legacy EC motors at
14%.

Interim Report 2020 Wellington Drive Technologies Ltd

6
Operating costs
Operating costs for the period amounted to $5.7m, compared to $6.1m for the same period in
2019

Prior to the COVID related hiring freeze, the Company was continuing to invest in new growth-
related skills, and January and March period saw nine new staff added, bringing the total staff
numbers to 95, compared to 86 at 30 June 2019.

In May 2020 the Company agreed a cost reduction program with directors and staff, resulting in a
total salary and board fees reduction of $1.6m for the balance of 2020.

The Company received a total of $0.7m in wage and salary support from the New Zealand
government, $0.1m under the US Paycheck Protection Program and received payments under
Australian and Singapore wage support programs. These payments are in respect of periods
through to August 2020 and accordingly $0.6m has been recognised in other income in respect of
these programs. Net operating costs after deducting other income was $5.1m compared to $6.1m
for the comparable period last year.

Profit performance
EBITDA
1
for the first half was $1.1m compared to $2.4m for the same period in 2019. This
includes a $0.6m gain arising from a change in fair value of the contingent consideration payable
for the acquisition of iProximity Pty Limited (fair value change). EBITDA
1
excluding this fair value
change was $0.5m.
The Company recorded a net loss for the period of $0.8m, down $1.5m compared to the same
period last year. This result for the first half was after a $0.5m charge for the impairment of
previously capitalised patent and development costs.

COVID-19 actions
Wellington’s first priority was to ensure the safety of its staff and all of its stakeholders. The
Wellington team recognised early in the pandemic the need to enhance its already strong health
and safety process. The Company implemented a range of new health and safety policies in all
its offices, following local government and health authority guidelines. These included complete
travel bans, remote working, social distancing, gloves and masks, hand hygiene equipment and
self-quarantine processes.

Wellington also moved quickly to reduce costs and manage its cashflow in response to COVID-
19, implementing a broad range of measures:

Interim Report 2020 Wellington Drive Technologies Ltd

7
• a hiring freeze from March for the balance of 2020
• international travel was halted, even when allowed by certain countries
• deferred $2m of capex spend, whilst maintaining investment in critical new products such
as Connect Monitor, Connect Network and SCS series 2
• negotiated extended payment terms with major suppliers
• applied for and received wage support where available and eligible in countries that the
Company employs staff
• directors, the CEO and staff all agreed to salary reductions ranging from 100% for the
Chairman, 50% for other directors, 30% for the CEO, 25% for senior executives and 10% to
20% for other staff.
• furloughs and alternative work arrangements for some staff.
The board and management are continually reviewing financial scenarios and actions that may be
necessary as the Company manages through the ongoing COVID-19 economic impact on its
customers and the countries where it does business.

Working capital
Operating cash inflows for the six months amounted to $0.7m. Investing cash outflows amounted
to $1.7m, meaning a net cash outflow before financing activities of $1.0m (2019 cash outflow of
$0.5m). Trade and other receivables reduced $4.9m and trade and other payables reduced by
$4.1m compared to 31 December 2019.

The second quarter saw significantly lower trading volumes and as the pandemic developed in
the Americas, it increasingly appeared this trend would continue into the third and possibly fourth
quarter, resulting in a significantly disrupted and lower-than-normal revenue year. On 1 May 2020
the Company announced a number of cost reduction actions and that it was exploring a range of
further initiatives to support it through the period of lower revenues. Through the second quarter
the Company delivered the following capital initiatives:

• Negotiated extended payment terms with major suppliers
• negotiated a $0.5m increase in its bank trade finance facility (from $2.0m to $2.5m) and
during the period the Company borrowed an additional $0.5m under this facility.
• In June 2020, the Company announced it was launching a pro-rata 1:3 rights issue to
raise $5.4m. The issue was well supported and the proceeds, received in July, is
expected to enable the Company to operate through the balance of 2020 and into 2021,
in conjunction with continued cost control actions and assuming a moderate level of
market and revenue recovery.

Interim Report 2020 Wellington Drive Technologies Ltd

8
Cash at 30 June 2020 was $3.1m compared to $3.5m at 31 December 2019. The amount owing
under the bank trade finance facility at 30 June 2020 was $2.1m compared to $1.4m at 31
December 2019.

Marketing and product development
The Company’s development activities continued during the NZ COVID-19 lockdown, with the
launch of new Connect IoT solutions expected later in 2020 and revenue contribution
commencing in 2021. The development team is also expanding the ECR2 motor range with the
launch of its higher powered ECR2+ motor expected early in 2021, for display case and food
service refrigeration applications.

Wellington’s product roadmap includes broadening its IoT hardware to include connected devices
for retrofit applications, cellular based technologies for applications that require constant
connectivity and Bluetooth beacons for marketing applications. Several new user applications,
including mobile apps and software development projects are underway to support customers as
they launch their new consumer interactive coolers and to enter new markets such as medical, ice
cream freezers and food service equipment.

Several early partnership discussions are underway with the goal of expanding the Company’s
IoT product portfolio and market opportunities in food and beverage coolers. New product
marketing programmes have been launched to support the Company’s product strategy, including
a comprehensive online marketing campaign for its ECR2 motor in the US market, with a focus on
medical refrigeration and food service equipment manufacturers.

Governance
Gottfried Pausch, previously a non-executive director, has assumed an up to two days a week
interim role as Auckland-based Executive Director. Mr Pausch is assisting the New Zealand team
as they work through COVID-19 strategies and look for new improvement opportunities and
strategies. This is an interim arrangement until the CEO and management team are able to more
freely travel to customers and global offices and there is more clarity around post-COVID market
conditions.

Greg Allen continues as Group CEO, reporting to the Board, maintaining responsibility for
leadership of the global Wellington organisation and the Company’s overall results.

2020 outlook
The Company’s customers are still impacted by regional and government responses to COVID-19
and to most food and beverage brands deferring equipment capital expenditure decisions.

Interim Report 2020 Wellington Drive Technologies Ltd

9

The Company expects third quarter revenue at similar levels to the second quarter, but it is still
too early to form a view on likely volumes for the fourth quarter and 2021. Accordingly, the
Company maintains its position that no revenue or profit guidance can be provided.

Wellington continues to focus on a number of priorities to effectively manage through COVID-19
and ensure the Company emerges in a strong position:

• Defer and minimise operating costs and capital expenditure to preserve cash.
• Retaining viable product development and sales capability to enable resumption of
business on the basis that operating conditions begin to normalise during the fourth
quarter of 2020.
• Continuing to develop and launch critical new IoT hardware and software products to
ensure increased revenue options once demand normalises.
• Strengthen marketing activities for Wellington’s solutions in new markets and with new
customers.

As operating conditions in Wellington’s various markets continue to evolve, the Board will amend
its strategy and focus to seek out revenue opportunities and manage for risk and stakeholder
value.

Interim Report 2020 Wellington Drive Technologies Ltd
10
Consolidated and Condensed Interim Statement of
Comprehensive Income



Six months ended
Unaudited
Year ended
Audited
30 Jun 2020 30 Jun 2019 31 Dec 2019
Note $000s $000s $000s
Revenue
2.1,2.3
20,484 33,314 61,719
Cost of sales (14,270) (24,731) (45,085)
Gross profit 6,214 8,583 16,634
Other income
2.4
623 8 18
Operating expenses
2.5
(5,701) (6,144) (12,433)
Earnings before interest, taxation,
depreciation, amortisation and impairment
1,136 2,447 4,219
Depreciation
3.5
(328) (272) (585)
Amortisation
3.6
(901) (768) (1,800)
Impairment
3.6
(456) (139) (323)
(Loss) / profit before interest and taxation (549) 1,268 1,511
Finance income
4.2
6 14 19
Finance expenses
4.2
(228) (520) (890)
(Loss) / profit before income tax (771) 762 640
Income tax expense (16) (40) (192)
(Loss) / profit for the period

(787) 722 448
Other comprehensive income:
Items that may be reclassified subsequently
to the profit or loss:


Exchange differences on translating operations
(121) (60) (322)
Other comprehensive loss for the period

(121) (60) (322)
Total comprehensive (loss) / income for the
period
($908) $662 $126

(Loss) / profit for the period attributable to
the Owners of the Company

($787) $722 $448
Total comprehensive (loss) / income
attributable to the Owners of the Company
($908) $662 $126

Basic earnings per share – cents
2.6
(0.24) 0.28 0.17
Diluted earnings per share – cents
2.6
(0.24) 0.25 0.16


The above Consolidated and Condensed Interim Statement of Comprehensive Income should be read in conjunction
with the accompanying notes.

Interim Report 2020 Wellington Drive Technologies Ltd
11
Consolidated and Condensed 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 2020
Equity at beginning of period 130,228 (114,738) (2,383) 13,107
Comprehensive income:
Loss for the period
- (787) - (787)
Other comprehensive income:
Exchange differences on translation
operations
- - (121) (121)
Income tax relating to other
comprehensive income
- - - -
Total comprehensive income - (787) (121) (908)
Share option compensation
expensed

- - - -
Contributions of equity net of costs
4.3
54 - - 54
Equity at 30 June 2020 $130,282 ($115,525) ($2,504) $12,253


Unaudited for the six months ended 30 June 2019
Equity at beginning of period 123,627 (115,186) (2,067) 6,374
Comprehensive income:
Income for the period

- 722 - 722
Other comprehensive income:


Exchange differences on translation
operations
- - (60) (60)
Income tax relating to other
comprehensive income

- - - -
Total comprehensive income

- 722 (60) 662
Share option compensation
expensed

- - 4 4
Contributions of equity net of costs

428 - - 428
Equity at 30 June 2019
$124,055 ($114,464) ($2,123) $7,468

Interim Report 2020 Wellington Drive Technologies Ltd
12
Consolidated and Condensed 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 2019
Equity at beginning of period 123,627 (115,186) (2,067) 6,374
Comprehensive income:
Income for period
- 448 - 448
Other comprehensive income:
Exchange differences on translation
operations
- - (322) (322)
Income tax relating to other
comprehensive income
- - - -
Total comprehensive income - 448 (322) 126
Share option compensation expensed

- - 6 6
Contributions of equity net of costs

6,601 - - 6,601
Equity at 31 December 2019 $130,228 ($114,738) ($2,383) $13,107



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

Interim Report 2020 Wellington Drive Technologies Ltd
13
Consolidated and Condensed Interim Statement of
Financial Position




Unaudited

Audited
30 Jun 2020 30 Jun 2019 31 Dec 2019
Note $000s $000s $000s
Current Assets
Cash and cash equivalents 3,062 1,835 3,459
Trade and other receivables
3.1
9,933 19,240 14,791
Derivative financial instruments

64 - 56
Inventories
3.2
4,828 4,404 4,797
Total current assets 17,887 25,479 23,103

Non-Current Assets
Plant and equipment
3.5
2,524 2,702 2,658
Intangible assets
3.6
12,821 11,864 12,147
Total non-current assets 15,345 14,566 14,805

Total assets 33,232 40,045 37,908

Current Liabilities
Trade and other payables
3.3
11,775 18,825 15,838
Contract liability
2.3
1,140 877 1,044
Provisions
3.4
432 554 468
Derivative financial instruments

- 25 -
Borrowings
4.1
2,332 5,127 1,697
Total current liabilities 15,679 25,408 19,047
Non-Current Liabilities
Borrowings
4.1
1,230 1,465 1,364
Contract liability
2.3
3,692 3,366 3,374
Contingent consideration

378 2,338 1,016
Total non-current liabilities 5,300 7,169 5,754
Total liabilities 20,979 32,577 24,801

Net assets $12,253 $7,468 $13,107

Equity

Contributed equity
4.3
130,282 124,055 130,228
Accumulated losses

(115,525) (114,464) (114,738)
Other reserves

(2,504) (2,123) (2,383)
Total equity $12,253 $7,468 $13,107


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

Interim Report 2020 Wellington Drive Technologies Ltd
14
Consolidated and Condensed Interim Cash Flow
Statement



Six months ended
Unaudited
Year ended
Audited
30 Jun 2020 30 Jun 2019 31 Dec 2019
Note $000s $000s $000s
Cash flows from operating activities
Receipts from customers exclusive of
GST/VAT
24,731 33,607 66,563
Payments to suppliers and employees
exclusive of GST/VAT
(24,217) (32,176) (63,432)
Interest paid
4 4.2
(216) (520) (872)
Interest received
4.2
6 14 19
Taxation paid 71 (290) (601)
Net GST/VAT received 347 473 1,310
Net cash inflow from operating activities 722 1,108 2,987
Cash flows from investing activities
Payments for plant and equipment
3.5
(64) (139) (411)
Proceeds from disposals of plant and
equipment

41 - 12
Payments for intangible assets
3.6
(1,706) (1,450) (3,347)
Net cash outflow from investing activities (1,729) (1,589) (3,746)
Cash flows from financing activities
Cash proceeds from share issues, net of
issue costs
4.3
54 428 5,757
New loan drawdowns
4.1
4,509 3,506 8,328
Loan repayments
4.1
(3,965) (2,589) (10,844)
Finance lease borrowing
4.1
- 140 175
Finance lease repayments
4.1
(144) (140) (282)
Net cash inflow from financing activities 454 1,345 3,134

Net (decrease) / increase in cash and cash
equivalents
(553) 864 2,375
Cash and cash equivalents at the beginning
of the financial period
3,459 933 933
Effect of exchange rate movements on cash 156 38 151
Cash and cash equivalents at end of
period
$3,062 $1,835 $3,459



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

Interim Report 2020 Wellington Drive Technologies Ltd
15
Notes to the Interim Financial Statements
for the six months ended 30 June 2020

1. Basis of preparation

1.1 General Information
Wellington Drive Technologies Limited (the “Company”) and its subsidiaries (together the “group”) develop Internet
of Things (IoT) solutions and manufacture, market and sell energy saving, electronically commutated (EC) motors,
connected controllers and fans for worldwide use.
The Company is a limited liability incorporated and domiciled in New Zealand. The address of its registered office is
21 Arrenway Drive, Rosedale, Auckland 0632 New Zealand. 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 2019.
These consolidated and condensed financial statements have been approved for issue by the Board of Directors on
26 August 2020 and have not been audited.
1.2 Summary of Significant Accounting Policies
Basis of preparation
These consolidated and condensed financial statements of the group have been prepared in accordance with
generally accepted accounting practice in New Zealand. The group is a for-profit entity for the purposes of financial
reporting. These consolidated and condensed financial statements comply with New Zealand International
Accounting Standard 34: Interim Financial Reporting.
All significant accounting policies have been consistently applied to all the years presented, unless otherwise stated.
Comparative amounts for 2019 were required to be restated to account for the acquisition of iProximity Pty Limited.
See note 5.1 for details of the adjustments made to the 2019 comparatives.
Entities reporting
The financial statements are for the consolidated group which is the economic entity comprising of Wellington Drive
Technologies Limited and its subsidiaries.
Historical cost convention
These financial statements have been prepared under the historical cost convention except for derivative financial
information and contingent consideration which is measured at fair value.
New standards, amendments and interpretations not yet adopted
There are no new accounting standards, amendments and interpretations issued that are mandatory for future periods
that are likely to have a material impact on the financial statements prepared by the Company.
Going concern assumption
The group has reported a loss for the period ended 30 June 2020 of $787,000 (2019 - profit of $722,000) and the
operating cash inflow was $722,000 (2019 – cash inflow $1,108,000). COVID-19 has had an impact on the group’s
trading performance in the period and difficult trading conditions are expected to continue through 2020 and into
2021. The Company has acted to conserve cash, has secured an increase to its banking facilities and in July 2020,
raised $5.4m through a 1:3 rights issue. The Company will continue to manage cash tightly during the period of
uncertainty.

In assessing the adoption of the going concern principle in the preparation of the financial statements, the Directors
have reviewed a future cash flow forecast to 31 December 2021. The Directors have also considered downside

Interim Report 2020 Wellington Drive Technologies Ltd
16
scenarios which reflect the impact of reduced demand in Q4 2020, Q1 2021 and full year 2021 on revenues and the
planned mitigating actions.

In preparing the downside scenarios, the following key assumptions and mitigating actions were analysed:
• Q3 2020 and Q4 2020 revenues at similar levels to Q2 2020 (so 75% below the same quarters in 2019)
• 2021 full year revenue 30% below 2019, with Q1 2021 at 50% of Q1 2020
• Forecasting close to zero sales of its new IoT products in 2021
• Capital expenditure limited to that required for new product launches in the next 6-9 months, and various
capex spend deferral scenarios assessed
• Staff cost reductions implemented as necessary and including potential continuation of salary reductions,
furloughs, restructuring and non-cash settlement of remuneration entitlements.
• Extension of supplier terms by agreement
• Considered access to new and/or increased loan facilities or new equity capital

The forecast and downside scenarios include judgments and estimates over key assumptions relating to customer
demand, future revenue, gross margins, operating costs, cash flows and capital expenditure and the ability to manage
those costs and cash flows to respond to changes that might arise between actual and forecast cash flows over the
forecast period.

It is possible, given the uncertain nature of customer and government responses to COVID-19 outbreaks, that the
economic environment may change rapidly and the mitigating cash and cost actions available to the Company may
not be adequate to fully alleviate the potential negative impacts on Wellington’s business. Customers extended
payment terms as a result of COVID-19 and the current environment increases the risk of customer default, although
the Company holds trade credit insurance cover.

The board believes that, given the recent support it has seen during its last two rights issues, and ongoing support
from its retail banking partners, that if needed it could rely on financing support to ensure any interim funding
requirements were supported.

Given the nature of the judgments and estimates noted above and management’s ability to take mitigating actions, 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 and condensed financial
statements.

On this basis, the Directors have assessed it is appropriate to adopt the going concern basis in preparing its financial
statements.
Critical accounting estimates
Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. Covid-19 has
clearly had an impact on the business operations, initially impacting supply chain and then office closures and more
significantly, customer demand reductions.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
detailed in the following notes to the financial statements:
Area of estimation
• Going concern – forecasts – note 1.2
• Development costs and goodwill impairment – note 3.6
• Probability of contingent consideration targets being achieved – note 5.1
• Trade receivables – doubtful debts and expected credit losses – note 3.1

Interim Report 2020 Wellington Drive Technologies Ltd
17
2. Results for the period

2.1 Segment information
An operating segment is a component of an entity that engages in business activities from which it earns revenues
and incurs expenses, whose operating results are regularly reviewed by the chief operating decision maker and for
which discrete financial information is available.

The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer supported by the management team who
report directly to the CEO.
(a) Reportable segments
The group is now organised on a global basis into two operating divisions – Motors and IoT. These divisions offer
different products and services and are managed separately because they require different technology and marketing
strategies. The group’s chief executive officer reviews the financial performance of each division at least monthly.
Each division is a reportable segment.
There are varying levels of integration between the segments. There are engineering and sales staff that support
both segments as well as shared logistical and quality management services.
Information related to each reportable segment is set out below:

June 2020
Motors
$000s
IoT
$000s
Unallocated
$000s
Total
$000s
Revenue
12,496 7,988 - 20,484
Cost of goods sold
(9,805) (4,465) - (14,270)
Gross profit
2,691 3,523 - 6,214
Gross profit %
21.5% 44.1% 30.3%
Other income
218 238 167 623
Operating expenses
(1,251) (1,656) (2,794) (5,701)
EBITDA
1,658 2,105 (2,627) 1,136
Depreciation
(120) (30) (178) (328)
Amortisation and impairment
(235) (1,113) (9) (1,357)
Loss before interest & taxation
$1,303 $962 ($2,814) ($549)


Non-current assets

Property, plant and equipment
775 183 1,566 2,524
Goodwill
- 3,154 - 3,154
Intangible assets
4,450 5,054 163 9,667
Total non-current assets
$5,225 $8,391 $1,729 $15,345

Interim Report 2020 Wellington Drive Technologies Ltd
18
June 2019
Motors
$000s
IoT
$000s
Unallocated
$000s
Total
$000s
Revenue
19,858 13,456 - 33,314
Cost of goods sold
(15,802) (8,929) - (24,731)
Gross profit
4,056 4,527 - 8,583
Gross profit %
20.4% 33.6% 25.8%
Other income
- - 8 8
Operating expenses
(913) (1,550) (3,681) (6,144)
EBITDA
3,143 2,977 (3,673) 2,447
Depreciation
(87) (21) (164) (272)
Amortisation & Impairment
(314) (592) (1) (907)
Profit before interest & taxation
$2,742 $2,364 ($3,838) $1,268


Non-current assets

Property, plant and equipment
603 140 1,959 2,702
Goodwill
- 3,219 - 3,219
Intangible assets
4,426 4,109 110 8,645
Total non-current assets
$5,029 $7,468 $2,069 $14,566


December 2019
Motors
$000s
IoT
$000s
Unallocated
$000s
Total
$000s
Revenue
37,704 24,015 - 61,719
Cost of goods sold
(30,870) (14,215) - (45,085)
Gross profit
6,834 9,800 - 16,634
Gross profit %
18.1% 40.8% 27.0%
Other income
- - 18 18
Operating expenses
(2,252) (3,564) (6,617) (12,433)
EBITDA
4,582 6,236 (6,599) 4,219
Depreciation
(199) (47) (339) (585)
Amortisation & Impairment
(789) (1,334) - (2,123)
Profit before interest & taxation
$3,594 $4,855 ($6,938) $1,511


Non-current assets

Property, plant and equipment
703 215 1,740 2,658
Goodwill
- 3,223 - 3,223
Intangible assets
4,059 4,737 128 8,924
Total non-current assets
$4,762 $8,175 $1,868 $14,805

Interim Report 2020 Wellington Drive Technologies Ltd
19
(b) Geographical segments
The group operates in three main geographical areas, although it is managed on a global basis.

Six months ended Year ended
30 Jun 2020 30 Jun 2019 31 Dec 2019
Revenue from external customers by geographic areas $000s $000s $000s
Americas

16,379 29,170 53,457
Asia / Pacific (APAC)

1,701 1,663 4,485
Europe / Middle East / Africa (EMEA)

2,404 2,481 3,777
Total

$20,484 $33,314 $61,719
Revenue is allocated above based on the country in which the customer is located. APAC revenue includes
$114,000 (2019: $73,000) from New Zealand customers.

30 Jun 2020 30 Jun 2019 31 Dec 2019
Total non-current assets $000s $000s $000s
Americas

26 29 34
Asia / Pacific (APAC) – mainly in New Zealand

15,242 14,461 14,687
Europe / Middle East / Africa (EMEA)

77 76 84
Total

$15,345 $14,566 $14,805

Total non-current assets are allocated based on where the assets are located.

2.2 Seasonality of operations
Revenues and operating profits are generally expected to be higher in the first six months of a calendar year, lower
in the 3
rd
quarter due to customers in the northern hemisphere shutting down for summer holidays and increasing
again in the 4
th
quarter. Revenues and operating profits in the 4
th
and 1
st
quarters of a calendar year can be impacted
by the timing of the China New Year holiday.

Interim Report 2020 Wellington Drive Technologies Ltd
20
2.3 Revenue
Six months ended Year ended
30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Sales of goods revenue

19,882 32,898 60,780
Services revenue

602 416 939
Total

$20,484 $33,314 $61,719

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. The group disaggregates
revenues from contracts by geographical regions.

(a) Sale of Goods

The group manufactures and sells a range of energy efficient motors and IoT hardware to the food and beverage
market. Sales are recognised when control has transferred to the buyer which is usually when delivery of the goods
to the buyer pursuant to the Incoterms that apply is fulfilled, and there is no unfulfilled obligation that could affect the
customer’s acceptance of the products. Delivery occurs when the products have been delivered in accordance with
the pre-agreed Incoterms between the group and the buyer, the risks of obsolescence and loss have been transferred
to the buyer, and either the buyer has accepted the products in accordance with the sales arrangement, the
acceptance provisions have lapsed, or the group has objective evidence that all criteria for acceptance and
performance obligations under the contract with the customer have been satisfied.
Some of the sale of goods are subject to CIF (Cost, Insurance and Freight) Incoterms. The group considers these
freight and insurance services to be a distinct service. For these sales, the total sales price is allocated to the separate
performance obligations, being the product and the insurance and freight costs. Further, the group considers itself
an agent only in the provision of the freight services. Revenue for the CIF element is recognised only to the extent
of the margin for providing the agent services. However, there are limited sales under CIF terms and the impact on
revenue is estimated to be minor.
The group has in-market distributors in China and Brazil to supply goods to buyers in those markets who require local
delivery. These distributors transact as agents. The group is the principal in these transactions. Sales of product are
recognised when these distributors deliver the product to buyers at which point control passes to the buyer.
Products may be sold with retrospective volume rebates based on aggregate sales over a 12 months period.
Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume
rebates. Accumulated experience and customer knowledge are used to determine the rebate amounts using the
expected value method and revenue is only recognised to the extended that it is highly probable significant reversals
will not occur. The liability to pay volume rebates is recognised (included in trade and other payables) in respect of
sales made until the end of the reporting period.
No element of financing is deemed present as the sales are made with a credit term of 30 - 120 days which is
consistent with market practice. A receivable is recognised when the goods are delivered as this is the point of time
that the consideration is unconditional because only the passage of time is required before the payment is due.

(b) Sale of services

Associated with the supply of IoT hardware, the group supplies a range of data, and reporting services, all installed
on every SCS Connect and SCS Click sold and are distinct services from the sale of goods. Revenue from the
provision of such services is recognised when services are rendered to the buyer. Contracts typically cover a period
from hardware supply of anywhere from 1 to 10 years, dependent on customer requirements. Contracts specify the
price for the provision of the services. Revenue from such contracts is recognised on a straight-line basis over the
contract term because the customer receives and uses the benefits simultaneously.
The group received revenue in previous years amounting to $US212,000 in connection with the development of a
new motor product. This revenue was deferred as a contract liability at 30 June 2019. During 2019, the Company
reached agreement with its development “partner” that the amount received be regarded as a contribution to the

Interim Report 2020 Wellington Drive Technologies Ltd
21
Company’s capitalised development cost. Accordingly, $331,000 was reclassified to intangible assets at 31
December 2019 as a reduction of the asset book amount.

Six months ended Year ended
Contract liabilities 30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Carrying amount at start of period 4,418 2,972 2,972
Invoiced in the period 819 1,682 2,723
Recognised in revenue (602) (416) (939)
Reclassified to intangible assets - - (331)
Exchange adjustment 197 5 (7)
Carrying amount at end of period $4,832 $4,243 $4,418

Current portion 1,140 877 1,044
Non-current portion 3,692 3,366 3,374
$4,832 $4,243 $4,418

2.4 Other income
Six months ended Year ended
30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Covid-19 government subsidies

618 - -
Other income

5 8 18
Total

$623 $8 $18


2.5 Operating expenses
Six months ended Year ended
30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Wages and salaries and other short-term benefits

5,455 4,762 10,431
Employee share option expense

- 4 6
Employee benefits

$5,455 $4,766 $10,437



(Gain) / loss on remeasurement of contingent
consideration (see note 5.1)

($638) $11 ($467)
Capitalisation of labour and expenses to intangible
assets

($1,670) ($1,397) ($3,191)


2.6 Earnings per share

Earnings per share (‘EPS’) is the amount of post-tax profit attributable to each share.

Basic EPS of a deficit of 0.24 cents (June 2019 – profit of 0.28 cents) is calculated by dividing the deficit attributable
to equity holders of the Company of $787,000 (June 2019 – profit of $722,000) by the weighted average number of
ordinary shares in issue during the period of 322,799,268 (June 2019 – 258,335,177).
Diluted EPS for the six months ended 30 June 2020 of a deficit of 0.24 cents (June 2019 - profit of 0.25 cents) is
calculated by dividing the deficit attributable to equity holders of the Company of $787,000 (June 2019: - profit of
$722,000) by the weighted average number of shares in issue adjusted to reflect any commitments the group have
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 and achievement of
performance targets in connection with contingent consideration.

Interim Report 2020 Wellington Drive Technologies Ltd
22
At 30 June 2020, the following potentially dilutive instruments exist of future earnings per share, but are not included
in the calculation of diluted EPS, because the effect would have been anti-dilutive:

Numbers of shares 30 Jun 2020
Part paid shares 4,869,802
US employee share options 769,725
Share based contingent consideration 14,173,446

Interim Report 2020 Wellington Drive Technologies Ltd
23
3. Operating assets and liabilities

3.1. Trade and other receivables

30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Trade receivables

9,476 18,245 13,848
Provision for doubtful debts

(257) (130) (150)
Net trade receivables

9,219 18,115 13,698
Prepayments

314 408 544
VAT/GST refunds due

(3) 382 56
Income tax refund due

357 285 445
Other receivables

46 50 48


$9,933 $19,240 $14,791

The group applies the simplified approach permitted by NZ IFRS 9 which requires expected lifetime credit losses to
be recognised from initial recognition of the trade receivable. Trade receivables are written off when there is no
reasonable expectation of recovery.
NZ IFRS 9 requires the group to calculate expected credit losses on trade receivables using a provision matrix.
The group has previously determined that its credit loss experience over the period from 2013 to 2019 was 0.1% of
revenue. There have been no credit losses in the 6 months to 30 June 2020 but COVID-19 has resulted in
customers seeking extended terms and delaying payments. Trade credit insurance cover provides some protection
to individual customer limits. Recognising the increased risk, the provision for credit loss at 30 June 2020 has been
calculated at 1.5% on the uninsured amount owing for those customers assessed as higher risk. For lower risk
customers, 0.1% has been used.

3.2. Inventories
30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Finished goods – at cost

4,067 3,603 4,288
Work in progress – at cost

700 847 726
Raw materials – at cost

526 289 319
Less inventory provisions

(465) (335) (536)
Total inventories

$4,828 $4,404 $4,797

3.3 Trade and other payables
30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Trade payables 8,951 16,597 13,402
Employee entitlements 1,583 910 1,556
Accrued expenses 945 1,318 880
Other 296 - -
$11,775 $18,825 $15,838

Interim Report 2020 Wellington Drive Technologies Ltd
24

3.4 Provisions
30 Jun 2020 30 Jun 2019 31 Dec 2019
Warranty provisions $000s $000s $000s
Carrying amount at start of period

468 415 415
Additional provisions recognised

21 208 224
Amounts used

(83) (68) (170)
Exchange adjustment

26 (1) (1)
Carrying amount at end of period

$432 $554 $468


3.5 Plant and equipment
30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Net book amount at start of period

2,658 2,854 2,854
Additions

64 139 411
Depreciation

(328) (272) (585)
Disposals

(41) - (13)
Exchange adjustment

171 (19) (9)
Net book amount at end of period

$2,524 $2,702 $2,658



Depreciation


Property

103 92 187
Plant and equipment

163 123 273
Office equipment, furniture & fittings

62 57 125


$328 $272 $585


Capital commitments
Capital commitments contracted for at 30 June 2020 amounted to $104,000 (June 2019 $293,000)


3.6 Intangible assets
Restated
30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Net book amount at start of period

12,147 8,970 8,970
Restatement for acquisition accounting

- 2,327 2,327
Net book amount at start of period restated

12,147 11,297 11,297
Reclassification from contract liability

- - (331)
Additions

1,694 1,450 3,347
Amortisation

(901) (768) (1,800)
Impairment

(456) (139) (323)
Exchange adjustment

337 24 (43)
Net book amount at end of period

$12,821 $11,864 $12,147

Analysis of net book amount


Internally generated development assets

9,199 8,134 8,528
Patents

267 337 309
Goodwill

3,154 3,219 3,223
Other

201 174 87


$12,821 $11,864 $12,147

Interim Report 2020 Wellington Drive Technologies Ltd
25

Additions in the six months to 30 June 2020 include $1,670,000 for internally generated development costs and
$24,000 for patents, trademarks and software. Payments for intangible assets in the period amounting to $1,706,000
are included in the Consolidated and Condensed Interim Cash Flow Statement.
Internally generated development costs include $2,981,000 for projects underway and not complete at balance date.
This cost is not yet being amortised.
Impairment losses have been recognised as follows:
• Patent costs – $44,000 - The carrying value of patents which are expiring and will not be renewed.
• Internally generated development costs - $412,000 - the carrying value of costs for the development of a
SCS Connect retrofit device. Demand for the product has not eventuated and it is likely that the new Connect
Monitor battery retrofit device due for launch in late 2020 will be a preferred solution for customers.

Goodwill and intangible assets with indefinite lives
Goodwill acquired through business combinations with indefinite lives has been allocated to the IoT Cash Generating
Unit (CGU) which is also an operating and reportable segment for impairment testing. COVID-19 has impacted
demand for all the Company’s products, including IoT products. The group performed an impairment test at 30 June
2020. The recoverable amount of the IoT CGU at 30 June 2020 has been determined based on a 5 year value in
use calculation using cash flow projections from the forecasts prepared for 2020 and 2021 reflecting lower demand
due to COVID-19. The pre-tax discount rate applied to the cash flow projections is 14% and cash flows beyond 2021
using a 5% growth rate. The calculation of value in use is most sensitive to assumptions on demand, gross margins,
completion and launch of new IoT products and retaining volumes to current customers. Gross margins are based
on current pricing and product costs. As a result of this analysis, management did not identify an impairment for
this CGU.

Interim Report 2020 Wellington Drive Technologies Ltd
26
4. Capital and financing costs

4.1 Borrowings

30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Current portion

Loan facility – BNZ Trade Finance

2,065 1,449 1,420
Loan facility – Meta Capital Limited

- 896 -
Loan facility – Onimeg Investments Limited

- 2,500 -
Liabilities in respect of right-of-use assets

198 222 198
Other Borrowings

69 60 79


$2,332 $5,127 $1,697



Non-Current portion


Liabilities in respect of right-of-use assets

1,084 1,216 1,180
Other Borrowings

146 249 184


$1,230 $1,465 $1,364

Loan facility – BNZ Trade Finance
In December 2018 the Company secured a $1.5m trade finance facility. The facility was increased to $2.0m in May
2019 and to $2.5m in June 2020. The facility has no term and is repayable on demand. The Company can finance
invoices to certain of its customers over a maximum 120 days term. Interest is payable on repayment at a 3% margin
above bank base lending rate.

Loan facility – Meta Capital Limited
The loan outstanding at 30 June 2019 was US$ 600,000. This was repaid in December 2019. Interest was payable
at 12.5%.

Loan facility – Onimeg Investments Limited
The loan outstanding at 30 June 2019 was $2,500,000. $1,500,000 was repaid in September 2019 and $1,000,000
was repaid in December 2019. Interest was payable at 16% pa on a quarterly basis in arrears.

Other borrowings
Comprises equipment finance and lease liabilities in respect of “right of use” assets.

4.2 Finance income and expenses
Six months ended Year ended
30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Finance income

Interest income

6 14 19


$6 $14 $19
Finance expense


Interest payable to Bank trade finance facility

53 42 85
Interest payable to Smartshares Limited

- 18 30
Interest payable to Meta Capital Limited

- 57 128
Interest payable to Onimeg Investments Limited

- 194 284
Other interest

175 209 363


$228 $520 $890

Interim Report 2020 Wellington Drive Technologies Ltd
27
4.3 Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.


30 Jun 2020
Shares
30 Jun 2019
Shares
30 Jun 2020
$000s
30 Jun 2019
$000s
Ordinary shares – fully paid (a) 323,936,592 261,726,010 130,257 124,026
Ordinary shares – partly paid (b) 4,869,802 8,930,641 25 29
US employee share options (c) 769,725 1,058,372 - -
Total shares and options on issue 329,576,119 271,715,023 $130,282 $124,055


(a) Ordinary shares – fully paid

30 Jun 2020
Shares
30 Jun 2019
Shares
30 Jun 2020
$000s
30 Jun 2019
$000s
Opening balance of ordinary shares on issue 322,707,005 257,436,000 130,202 123,590
Part paid shares and US employee options
exercised
1,229,587 4,290,010 69 436
Share issue costs - - (14) -
Ordinary fully paid shares on issue at period end 323,936,592 261,726,010 $130,257 $124,026
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 2020
Shares
30 Jun 2019
Shares
30 Jun 2020
$000s
30 Jun 2019
$000s
Partly paid shares on issue at start of period 5,810,742 12,460,638 26 37
Issued - - - -
Exercised (940,940) (3,529,997) (1) (8)
Ordinary part paid shares on issue at period end 4,869,802 8,930,641 $25 $29


(c) US employee share options (numbers)

30 Jun 2020 30 Jun 2019
Options outstanding at start of period 1,058,372 1,818,385
Exercised (288,647) (760,013)
Outstanding at end of period 769,725 1,058,372

Interim Report 2020 Wellington Drive Technologies Ltd
28
5. Other information

5.1 Acquisition of iProximity Limited
On 2 July 2018 the Company acquired 100% of the issued share capital of iProximity Pty Limited, an Australian based
innovative proximity marketing solutions and consumer intelligence company. The consideration for the acquisition
comprises up-front payments of AU$1,250,000 and three-year cash and share-based earn out targets as follows:
• AU$500,000 based on meeting specified EBIT targets (for iProximity’s existing business) for the 2018 and 2019
financial years.
• The issue of fully paid ordinary shares in the Company in tranches based on meeting specified EBIT targets for
the period ending 31 December 2020 (9,448,964 shares) and based on Wellington’s SCS Connect System
controller unit sales for the same period (9,448,964 shares).
The purchase consideration was:

$000s
Cash paid 1,367
Contingent consideration 2,327
Total purchase consideration
$3,694
As detailed above, the contingent consideration includes amounts that potentially were payable in cash on 31 March
2020. No payment was required. In addition, up to 18,897,928 ordinary shares in Wellington may be issued.
The acquisition date fair value of the contingent consideration arrangement of $2,327,000 was estimated by considering
the likelihood that the cash and share based targets would be achieved. The cash-based targets were considered
unlikely to be achieved and the fair value of the contingent cash consideration was estimated to be nil. The likelihood of
achieving the share-based targets was assessed and the probability adjusted number of ordinary shares to be issued
was calculated. The fair value of the share-based contingent consideration was determined by multiplying the estimated
number of shares (13,949,034 shares) by $0.15 being the price of the Company’s shares on NZX at the acquisition date.
The fair values of the assets and liabilities at the date of acquisition were as follows:

$000s
Intangible assets - platform 536
Trade and other receivables 18
Trade and other payables
(65)
Contract liabilities
(18)
Net identifiable assets acquired
471
Goodwill
3,223
Net assets acquired $3,694
Comparative figures for 2019 have been restated. Amounts for goodwill and contingent consideration at the start of the
2019 period were increased by $2,327,000, The goodwill is attributable to the synergies that arise from the Company
being able to include iProximity’s marketing solutions as part of the group’s IoT product offering. The Company expects
to be able to sell more of its IoT solutions (including SCS Connect hardware) as a result of the wider services offering.
The Company and vendor agreed during the period to an extension of time for SCS Connect share-based targets to be
achieved and an increase in the target. An additional 12 months has been added, so the final year for the targets to be
achieved is now the 2021 calendar year.
As at 30 June 2020, there was a decrease on contingent consideration of $638,000 which resulted in a fair value gain
being recognised in operating expenses for the contingent consideration arrangement, to reflect an updated view on the
likelihood of share-based targets being achieved and a decrease in the Company’s share price to $0.08 at 30 June 2020
(decreasing the value of any shares to be issued). The probability adjusted number of shares was calculated to be
4,724,482 shares.

Interim Report 2020 Wellington Drive Technologies Ltd
29

30 Jun 2020 30 Jun 2019 31 Dec 2019
Contingent consideration

$000s $000s $000s


Fair value at start of period

1,016 2,327 2,327
Part settlement during the year

- - (844)
Remeasurement recognised in income statement

(638) 11 (467)


$378 $2,338 $1,016
The acquired business contributed revenues of $37,000 and a loss of $201,000 for the six months ended 30 June 2020
($44,000 revenue and a loss of $176,000 to the group for the six months ended 30 June 2019). In addition, the proximity
marketing solutions offered by the business are integrated into Wellington’s IoT product offering and are assisting the
group to generate IoT revenue outside of the acquired business.

5.2 Related party transactions
(a) Directors
The names of persons who are Directors of the Company are on page 34.

(b) Key management personnel and compensation
Key management personnel compensation is set out below. Key management personnel comprises the Directors,
the Chief Executive Officer (CEO) and all the senior executives that report directly to the CEO.

30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Salaries, fees and other short-term benefits 738 934 1,934
Share based remuneration 0 1 2
Directors remuneration 94 83 226
Total $832 $1,018 $2,162

(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) East West Manufacturing LLC (East West), a substantial security holder in the Company, supplies goods and services
to the Company from its manufacturing facility in Vietnam and purchases product for distribution in the USA. All
pricing is on an arms-length basis.


30 Jun 2020
$000s
30 Jun 2019
$000s
31 Dec 2019
$000s
Purchases from East West 12,254 18,010 36,990
Sales to East West 364 865 1,580
Cash payments to East West 15,363 19,473 38,518
Cash receipts from East West 671 451 1,169
Trade receivable from East West at period end 159 468 466
Trade payable to East West at period end 7,527 10,701 10,636

Interim Report 2020 Wellington Drive Technologies Ltd
30

5.3 Contingencies and commitments
There are no material contingent liabilities or assets (June 2019 - $nil).

5.4 Leases
The consolidated and condensed interim statement of financial position shows the following amounts related to
leases of right of use assets:
30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Right-of-use assets

Properties 1,100 1,239 1,141
Plant and equipment 20 4 23
Office equipment, furniture and fittings 11 145 12
$1,131 $1,388 $1,176
Additions to right-of-use assets in the period
Plant and equipment - - 25
Office equipment, furniture and fittings - - 13
$ - $ - $38

30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Depreciation charge for right-of-use assets

Properties 96 92 182
Plant and equipment 3 3 7
Office equipment, furniture and fittings 2 39 1
$101 $134 $190
Interest expense on lease liabilities $44 $48 $95
Expense relating to short-term leases (included in
operating expenses)

$3 $25 $51

The consolidated and condensed interim cash flow statement shows the following amounts related to leases of right
of use assets:
Six months ended Year ended
30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Cash outflow for right-of-use leases $95 $117 $189
Lease repayments for leases previously classified as
finance leases under NZ IAS 17

$48 $23 $93

Interim Report 2020 Wellington Drive Technologies Ltd
31
5.5 Financial instruments by category

30 Jun 2020 30 Jun 2019 31 Dec 2019
$000s $000s $000s
Assets per Statement of Financial Position
Loans and receivables


Trade and other receivables 9,265 18,165 13,746
Cash and cash equivalents 3,062 1,835 3,459
Derivatives used for hedging at fair value
Derivative financial instruments 64 - 56
$12,391 $20,000 $17,261
Liabilities per Statement of Financial Position at
amortised cost


Trade and other payables 11,775 18,825 15,838
Borrowings 3,562 6,592 3,061
Liabilities per Statement of Financial Position at fair
value


Contingent consideration 378 2,338 1,016
Derivative financial instruments - 25 -
$15,715 $27,780 $19,915

Fair value estimation
The only financial instruments carried at fair value are derivatives comprising forward foreign exchange contracts and
contingent consideration.
The forward exchange contract has been classified as Level 2.
The different levels have been defined as follows:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2)
• Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs) (Level
3)
The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet
date, with the resulting value discounted back to present value. The fair value of contingent consideration in respect
of the acquisition of iProximity Pty Limited is determined using the estimated number of shares that are to be issued
to the vendors pursuant to the purchase agreement and the Company’s share price at balance date. The probability
adjusted number of shares and the Company share price at the acquisition date, 30 June 2019, 31 December 2019
and 30 June 2020 are set out in note 5.1.

Interim Report 2020 Wellington Drive Technologies Ltd
32
5.6 Maturity analysis

The amounts disclosed are the contractual undiscounted cash flows.

30 June 2020
Trade and
other payables
$000s
Borrowings

$000s
Lease
liabilities
$000s
Total

$000s
Less than 6 months 11,432 2,065 133 13,630
7 to 12 months - - 137 137
More than 12 months - - 1,227 1,227
$11,432 $2,065 $1,497 $14,994


30 June 2019
Trade and
other payables
$000s
Borrowings

$000s
Lease
liabilities
$000s
Total

$000s
Less than 6 months 18,782 4,845 139 23,766
7 to 12 months - - 143 143
More than 12 months - - 1,465 1,465
$18,782 $4,845 $1,747 $25,374


31 December 2019
Trade and
other payables
$000s
Borrowings

$000s
Lease
liabilities
$000s
Total

$000s
Less than 6 months 15,729 1,420 143 17,292
7 to 12 months - - 134 134
More than 12 months - - 1,364 1,364
$15,729 $1,420 $1,641 $18,790

Trade and other payables above exclude any liabilities for tax (including payroll taxes), statutory liabilities and
deferred income.

Interim Report 2020 Wellington Drive Technologies Ltd
33
5.7 Reconciliation of profit for the period to net cash inflow from operating activities



Six months ended
Unaudited
Year ended
Audited

30 Jun 2020 30 Jun 2019 31 Dec 2019

$000s $000s $000s
(Loss) / profit after taxation for the period

(787) 722 448
Adjustments for:
Depreciation, amortisation and impairment 1,685 1,179 2,708
Share based payments - 4 6
Inventory provision movements (71) 190 391
Doubtful debt provision movements 108 - 20
Provision for warranty movements (36) 139 53
Change in fair value of contingent consideration (638) - (467)
Net foreign exchange differences (680) (44) (113)
Increase in trade and other receivables 4,751 (1,262) 3,167
Increase in contract liabilities 414 1,271 1,446
Decrease (increase) in inventories 39 296 (298)
(Decrease) increase in trade and other payables (4,063) (1,387) (4,374)
Net cash inflow from operating activities $722 $1,108 $2,987


5.8 Events after reporting date

In July 2020, the Company completed a 1:3 pro-rata rights issue raising $5.4m through the issue of 107,978,028
ordinary shares. The amount, net of issue costs is estimated to be $5.2m.

Interim Report 2020 Wellington Drive Technologies Ltd
34
Directory
Directors
John McMahon, Chairman
Mr Gottfried Pausch
Mr John Scott
Mr Keith Oliver

Executive Team
Greg Allen, Chief Executive Officer
Steven Hodgson, Senior Vice President Commercial
David Howell, Chief Technical Officer
Howard Milliner, Chief Financial Officer & Company Secretary
Marc Tinsel, Vice President, Supply Chain and Operations
Peter Barnes, Global Quality Leader
David Burden, VP Group Marketing & IoT Products

Phone
Ph: 64 09 477 4500

Internet
Website: www.wdtl.com
Email: info@wdtl.com

Address and Registered Office
21 Arrenway Drive
Rosedale, Auckland 0632, New Zealand
PO Box 302-533, North Harbour,
Auckland 0751, New Zealand

Auditor
Deloitte Limited
80 Queen Street, Auckland 1010, New Zealand

Banker
Bank of New Zealand

Share Registry
Computershare Investor Services Ltd,
Private Bag 92119, Auckland 1142,
New Zealand

Interim Report 2020 Wellington Drive Technologies Ltd
35