WDT - Wellington Drive Technologies

[tobo]

Here you go, Sudds.
Exciting possibilities, but I am not seeing evidence in OBV.
5 year chart

[tobo]

3 month chart.

Held some time ago.
Not currently.

[Nevl]

Big gains in the last few days. No news however and not too much volume. Will be interesting to see if any news is forthcoming soon.

[sudds]

Yup something must be brewing:) Directors also bought shares recently must be a good sign!

[sudds]

Big gains in the last few days. No news however and not too much volume. Will be interesting to see if any news is forthcoming soon.



And they were mentioned in the b:Dusiness section of the NZ Hearald last Sunday (CEO Green I think made some comments about NZ companies doing business overseas to reduce costs and fulfil volumes)

[emearg]

Yup something must be brewing:) Directors also bought shares recently must be a good sign!

Yes, but they have been doing that for years. Does the fact they bought them at 40 cents a few years ago make you feel good? Maybe as it isn't a bad sign but the thing to worry about is having this conversation in two years time when the directors are buying the shares at 2 cents.

I say this with some sadness as I have sold plenty and lost plenty. Still holding a few but wondering why. There probably is a lower risk equally speculative share out there!

Good luck but don't get as carried away as I did.

[emearg]

And they were mentioned in the b:Dusiness section of the NZ Hearald last Sunday (CEO Green I think made some comments about NZ companies doing business overseas to reduce costs and fulfil volumes)

Ross Green talks a good talk. Read back over this thread and the older one from the old site to see that.

WDT talk a good talk. Lovely presentations. Lots of nice words and pictures and predictions.

Sigh...

[Dr_Who]

ACC is a shareholder, there is a good reason not to own it.

[sudds]

Ross Green talks a good talk. Read back over this thread and the older one from the old site to see that.

WDT talk a good talk. Lovely presentations. Lots of nice words and pictures and predictions.

Sigh...

He didn't really talked his company up! There other two CEO said the same. Made sense to me though. The only thing he mentioned was someting about a Coca Cola contract recently for Haiti.

[sudds]

ACC is a shareholder, there is a good reason not to own it.

I don't get this - is anyone from ACC heading this company?

[Anna Naum]

ACC is a shareholder, there is a good reason not to own it.

Sorry I do not follow your reasoning, could you expand?

[Dr_Who]

Relax, I was only joking about ACC.

One would assume if WDT's product is any good, one of the big boys (FPA, Whirlpool etc) would have taken them out or bought a chunk of their shares by now.

[h2so4]

Relax, I was only joking about ACC.

One would assume if WDT's product is any good, one of the big boys (FPA, Whirlpool etc) would have taken them out or bought a chunk of their shares by now.

Maybe WDT sp is overvalued.:(

[emearg]

Time for a bit of good (well I think it may be) news.

I note that the WDT e-store is now selling ECR ONE and ECR95 motors.

The ECR ONE has very little metal on the outside. As I recall they tryed selling a product like this five (?) years ago but the market wasn't ready for a motor that didn't look like a traditional motor. I wonder if the market is ready now? Perhaps with a few years of good market performance behind them people will trust WDT enough to buy them?

The bigger ECR95 is being sold for approximately twice what the smaller motors go for. Hopefully this one has a decent profit margin? Their business model of selling more and more motors at a loss isn't a great one...

[kiwi_on_OE]

Looks like a bit of a bounce off the lows of late Feb and late Mar. Perhaps of the 'dead cat' variety?

http://chart.findata.co.nz/?e=NZX&s=WDT&w=476&h=360&n=180

[Novitiate]

WDT finally on the move today on news:

"Top US motor manufacturer signs distribution deal with Wellington Drive . . . "

[xpress]

Excellent - Bring it on Baby!!

[brucea]

Yes, finally some positive news!! I have held WDT from the start and have been a long time fan of this company (as I have been with BLT), but this past year or so the WDT sp has tested my patience, but I have grimly held on to them (as I did with BLT). I have always thought the energy saving aspect to WDT motors was a significant plus in a world that has become more aware of "green" issues. Maybe my faith in both these companies will be rewarded in the future....

[emearg]

Yes, finally some positive news!! I have held WDT from the start and have been a long time fan of this company (as I have been with BLT), but this past year or so the WDT sp has tested my patience, but I have grimly held on to them (as I did with BLT). I have always thought the energy saving aspect to WDT motors was a significant plus in a world that has become more aware of "green" issues. Maybe my faith in both these companies will be rewarded in the future....

I sold most of my WDT and put the money in BLT so WDT will have to get to about 90 cents for me to break even.

I still worry about WDT becoming insolvent. Perhaps another capital raising later this year? Or will they deliver on their promised breakeven before they run out of cash? I doubt it as they have told that story far too many times before and it hasn't been true.

Good luck WDT. You will need it but I hope you succeed for my sake as well as yours...

At least with BLT they don't look like they will run out of money. Quite the opposite actually :-)

[brucea]

I sold most of my WDT and put the money in BLT so WDT will have to get to about 90 cents for me to break even.

I still worry about WDT becoming insolvent. Perhaps another capital raising later this year? Or will they deliver on their promised breakeven before they run out of cash? I doubt it as they have told that story far too many times before and it hasn't been true.

Good luck WDT. You will need it but I hope you succeed for my sake as well as yours...

At least with BLT they don't look like they will run out of money. Quite the opposite actually :-)

Thanks Emearg, your comments make sense. I have drip fed into both BLT and WDT over the years and my break even price for WDT is 20c (did I really pay $1 all those years ago??? ...... I must be in denial!!); I think BLT has a far better chance of success given the large number of products coming on to the market that contain K12 and M18 probiotics. Still it would be great for both these NZ companies to succeed on the world market

[Nevl]

The AO Smith announcement could be a game changer for WDT. Its a huge company and even 1% of AOS sales could make a material difference to WDT. Maybe it was a good thing that WDT never hooked up with these guys 4 years ago though Ross Green stated that it would have led to immediate profitability. Still WDT is a stronger and leaner beast now with its own plans and less likely to mildly submit to what ever AOS wants. They have proved that they can survive on their own(with shareholder support) and this was not the case 4 years ago.

Am thinking that the long term future is much more assured now and feeling a bit more confident. Lets see how the sales work out.

[GR8DAY]

...also sounds like a pretty positive (if not major?) announcement out today for WDT...........could be slowly coming together now so Im gonna keep accumulating at these low prices. The announcement states WDT has received US approval and certification for their energy efficient motors after several months of intensive trialling. Hopefully sales will flow a whole lot easier and quicker now.......with reduced costs they might/could/should be in the money? SP slowly heading north.

[Lizard]

yes, such a relief to know that their motors meet safety standards... overwhelmed... :p

[Nevl]

yes, such a relief to know that their motors meet safety standards... overwhelmed... :p

No it justs shows the hoops you have to jump through!! Once you have jumped though things tend to pick up speed.

[winner69]

so BP got through the hoops as well?

[GR8DAY]

.........regardless of any "hoop jumping" or not I think we might just be witnessing the beginnings of good things for WDT..........and not before time. Energy efficiency is the global business growth story.....and WDT are right in there.

[Voltaire]

.........regardless of any "hoop jumping" or not I think we might just be witnessing the beginnings of good things for WDT..........and not before time. Energy efficiency is the global business growth story.....and WDT are right in there.

Grounds for cautious optimism at a technical level - RSI on the weekly chart moved above 50 in early May, the first time in over 2 years. SP now trading in a range between the 20 and 50 EMA's (again on the weekly) and now sitting immediately below the 50 EMA.

Disc. I hold

[percy]

I note in the chairman's address to shareholders "we are well positioned to become a profitable company." I seem to remember the same words were said by the then chairman 20 years ago!!

[GR8DAY]

.....maybe so percy but they wern't producing and selling 20000 motors a week back then! .......if they can now continue to trim costs (as they claim), the road to sustainable profitability should come with ease?

[percy]

.....maybe so percy but they wern't producing and selling 20000 motors a week back then! .......if they can now continue to trim costs (as they claim), the road to sustainable profitability should come with ease?

Didn't have half a billion shares on issue either.Nothing has ever come with ease to this company,except management options.Although I knock this company I would love them to get it right.They have certainly stuck at it.Thompson and Beck have been there a very long time,and neither man is a fool.

[Nevl]

Didn't have half a billion shares on issue either.Nothing has ever come with ease to this company,except management options.Although I knock this company I would love them to get it right.They have certainly stuck at it.Thompson and Beck have been there a very long time,and neither man is a fool.

Yeah agree Percy. Bad decisions in the late 90's really cost WDT for a long time. Still its great that they are now selling 20000 motors a week thats 50% up on last year so looking at sales of $33mill or so hopefully. Thats pretty good even if 5 years late. Still the fact that other competitors have to jump through these same hoops means that WDT has a good head start.

The AO Smith decision is the interesting part. AO walked away from a deal with WDT 5 years or so ago. Now they have come back!! Apparently it was due to new management. Well that management has obviously changed its mind about a few things. The Coke tie up could be awesome. Imagine a wdt motor in every vending machine?? Not to mention the Ventilation story restarting in Europe. Now with the Germans it can go places.

A lot more positive about WDT now than i was 6 months ago at the last capital raising. Will continue to hold as these events have a way of snowballing.

[percy]

Will continue to hold as these events have a way of snowballing.[/QUOTE]

Nevl. A very true statement.I think the next couple of years will be interesting.Looks as though they may be the right company at the right place at the right time.

[Lizard]

The presentation was pretty upfront on a couple of key issues. Namely, EBITDA still a loss (though reducing). And, while they'd hope to get through to profit without more cap raising, they don't have much room for error (I think this had been guessed and priced in - but perhaps recently the market had started to think they might make it, since they managed to squeeze a bit more cash out of inventory).

Nevl says sales look like being about $33m, but I stick with my post from 9 months ago and reckon they need to be about $56m to be profitable.
http://www.sharetrader.co.nz/showthread.php?3095-Wellington-Drive-Technologies&p=273843&viewfull=1#post273843
Though I reckon they squeezed enough out of working capital to make the funds last through till year end - the hurdle will be to get EBITDA positive for first half 2011...

[Anna Naum]

Though I reckon they squeezed enough out of working capital to make the funds last through till year end - the hurdle will be to get EBITDA positive for first half 2011...

Either way, if they need a capital raising for working capital due to increased sales, I would have thought the market would take that news well.

[GR8DAY]

......I'm at last feeling "good" about WDT and have been putting my money where my mouth is.......the right time to start accumulating me thinks.........Ive never paid a buck for them (as I believe some have) and yes they have been as low as 8c in the not too distant past.....but I somehow doubt those lows will be seen again. All looking positive now........esp with the chairman dismissing anymore capital raising. Agree Percy, right co for the right time (now).

[Anna Naum]

......I'm at last feeling "good" about WDT and have been putting my money where my mouth is.......the right time to start accumulating me thinks.........Ive never paid a buck for them (as I believe some have) and yes they have been as low as 8c in the not too distant past.....but I somehow doubt those lows will be seen again. All looking positive now........esp with the chairman dismissing anymore capital raising. Agree Percy, right co for the right time (now).

Chairman said they were keeping a close eye on cash levels and thought they should be able to make it through....but he did leave himself a lot of wiggle room so I would not spend all your spare cash just yet. But any cash call would be to fund stock so not a big deal (or probably a big call, maybe 1:10 would be my guess)

If they need cash to fund sales, I am in.

[winner69]

Obviously don't believe everything in the paper

Some paper the other day "Wellington Drive brushes off recession,
motoring to profit in second half of year" .....

........ forces Green to come out and say ....A forecast or projection of profit in the second half of 2010 has therefore not been made by the Company and was not made at the AGM.


So losses for a bit longer but maybe one day ... at least the cash burn is reducing

[Zito]

It really makes you wonder how the paper manufactured that headline out of the Chairman's AGM speech.....can't blame WDT for coming out & correcting something so false & misleading

[winner69]

It really makes you wonder how the paper manufactured that headline out of the Chairman's AGM speech.....can't blame WDT for coming out & correcting something so false & misleading

Zito .. a headline is a headline but you need to be symapthetic to the guy/gal who wrote it .... they just got caught up in the hype ... body language probably was very positive ... words sounded great .... all on track etc etc etc ... and the headline probably reflected the mood at the time ... and WDT concentrates on EBITDA and/or cash flow as their profit measure

What headline would you have written?

[GR8DAY]

.......did they actually come out and say which year (second half of) they were referring to??......not that it matters much in the long run, all still positive stuff and gives me confidence to carry on accumulating stock around current prices.......maybe the directors are hoping to do the same??

[percy]

Chairman said they were keeping a close eye on cash levels and thought they should be able to make it through....but he did leave himself a lot of wiggle room so I would not spend all your spare cash just yet. But any cash call would be to fund stock so not a big deal (or probably a big call, maybe 1:10 would be my guess)

If they need cash to fund sales, I am in.
I do not at present own any but I think your timing would be correct.Expanding companies need extra cash to finnance higher sales Just the right time to buyin.

[Zito]

Zito .. What headline would you have written?

Honestly? If I really wanted to sell a paper this week

Unstoppable All White Juggernaut 1 Italian Olympic Dive Squad 1

Everything else this week is a detail!

[winner69]

just had a thought .... maybe these super efficient super quiet motors are the ones being installed in the cheating professional bike riders bike

[GR8DAY]

......need a hell of an extension cord winner!

[Lizard]

Another month, another presentation...


“The Directors will continue to seek to take Wellington to profitability
without further equity capital raising. The Company is currently
forecasting that this will be achieved but there is a low level of buffer for
unexpected events.”
AGM Commentary

Always a worry when they present their outlook as a quote from their earlier (AGM) commentary... does that mean "we're no longer confident about saying this in real time, but we're not on the ropes yet"?

Business case remains promising, but, as usual, the obstacles to profitability just keep coming (component shortages and forex rates)

[GR8DAY]

...but the most imortant point of the presentation shud not be lost........ THEY NOW (for the first time since 1998) HAVE MORE ORDERS ON THEIR BOOKS THAN THEY CAN FILL.......WOW.....now that's a business I want (have) a part of......they are also hinting (quiet confidence?) at coming into profit soon.......cud now happen sooner than later?

[sharer]

...but the most imortant point of the presentation shud not be lost........ THEY NOW (for the first time since 1998) HAVE MORE ORDERS ON THEIR BOOKS THAN THEY CAN FILL.......WOW.....now that's a business I want (have) a part of......they are also hinting (quiet confidence?) at coming into profit soon.......cud now happen sooner than later?

So ... in accord with NZ business tradition, any bets on how many months before the insiders sell out the whole kaboodle to a bunch of foreigners?

[GR8DAY]

........maybe another Chinese takover/takeout?? .....gotta be a steal for some cashed up electronics co. out there wanting a bargain with all the years of hard work now completed and maiden profits around the corner.

[Lizard]

......they are also hinting (quiet confidence?) at coming into profit soon.......cud now happen sooner than later?

I re-read the presentation several times and... nope, couldn't find that bit... actually thought there was less of the "break even" talk than we've seen in previous years. A few numbers based on what they had to say in the "financials" slide and still can't see them getting through the year without a loss of about $8m... maybe $5m loss in first half? Will be interesting to see. For now, I'd guess 2012 for first profit.

(Note: Percy will be rolling his eyes to find they are "well-positioned" at the last slide!)

[kiwi_on_OE]

More orders than they can fill - consistent with their problems sourcing components (I don't recall Apple having same problems with iPhone or iPad) - could be interpreted as bad mgmt.

A takeover if/when they reach break-even has been in the back of my mind for a while. Their patents must start running out within a few years. Can just see the existing directors doing the sales job to shareholders for their two pieces of silver. 20cps towards the end of the year?

I continue to be disappointed, but not surprised, that they don't provide more regular (quarterly?) sales figures during the year, and leave their half yearly announcements until almost as late as possible.

[Lizard]

... still can't see them getting through the year without a loss of about $8m... maybe $5m loss in first half? Will be interesting to see. For now, I'd guess 2012 for first profit.


Just found an analyst report dated 26 Jul that agrees with me - has FY EBITDA forecast of $7.8m loss and forecasts EBIT profitability/cashflow breakeven for 1H12.

The report also reinforces my earlier cynicism (http://www.sharetrader.co.nz/showthread.php?3095-Wellington-Drive-Technologies&p=312578&viewfull=1#post312578) regarding the need for more cap raising, suggesting that WDT may need to raise further capital in about 3-4 months time.

Just something to remain cautious about. Probably need to throw another 25% more shares into the calcs before deciding if it is a bargain.

[Lizard]

A few numbers based on what they had to say in the "financials" slide and still can't see them getting through the year without a loss of about $8m... maybe $5m loss in first half?

Half year loss of $6.6m ($5.9m after currency and hedges). So wasn't too far off.

And they're raising more capital while the going is good as per my comments above.

[Silverlight]

Lizard do you have a price for the share purchase plan, I can't see a price, but I see the Record Date is today!

[Jaa]

Lizard do you have a price for the share purchase plan, I can't see a price, but I see the Record Date is today!

Where did you get this from Silverlight? The date mentioned in the 2 PDFs on the NZX site state the 30th as the record date?

[Silverlight]

Apologies, I stand corrected, I was reading the announcement date on the Appendix 7 :p

Though my question still stands, what is the purchase price?

[Jaa]

Apologies, I stand corrected, I was reading the announcement date on the Appendix 7 :p

Though my question still stands, what is the purchase price?

That's easy..... whatever they can get!

[Footsie]

Liz. how much do you think they need?

[Lizard]

Liz. how much do you think they need?

Difficult call. I would take a stab at $9-$10m, but they might be happy with $5-$7m this raising. Depends how much more working capital they need to tie up to get the growth.

Maybe looking to get away about 90m shares? Existing shareholders might be willing to swallow another 20-25m if the market as a whole doesn't squish again in the meantime.

[kiwi_on_OE]

How much cash do they need? Here's my thoughts, in a long-winded way.

Current ECR production mentioned at AGM is 20k/wk, consistent with 89k prod in June in interim release. Also in interim and AGM releases is talk of orders in excess of sales (I'll assume 'sales' means 'units shipped' or 'production'). This could mean 500k ECR units in the 2H10. Or about 600k units total, I'll call it a 50% increase.

Gross profit on 1.1m in 1H10, if I add back the 200k extra transport in 1H10, I get 1.3m, if I then add 50% growth for 2H10 I get sales of 19m and gross profit of 2m, with constant xchg rates. Assuming other costs flat as they indicate, then overall loss for 2H10 reduced slightly to 5m.

Totals for the year: -
Sales 31m
Gross profit 3.3m
net loss 11m

Cash left of about 1m, net assets of 14m.

If receiveables + inventory and payables all scale by 50% to 21m and 15m then they'll need to put their cash towards the diff and get another 1m from shareholders or a bank, and that's just for their end of year position - if I've done my accountancy right - can we get a Feltex director to check them?

At that point they're still making a loss, so how much longer before they make a profit?

Making a profit could be immediate if they pull off the possible orders for 100ks of units mentioned, but been there done that with their forecasts.

From memory their production & USD sales seem to increase at about 50%/yr, if they kept that growth and somehow managed to keep exp constant then maybe it could look something like this: -

----- 09 10 11 alternative
units 670k 1m 1.5m 3m
sales 22.4m 31m 46m 90m
margin 5% 11% 11% 20%
gross 1.2m 3.3m 5m 18m
net (17m) (11m) (9m) 5m

The numbers for 11 could easily be extrapolated with further 50% annual growth consistent margins etc., it would take years before they broke even. But if there was a jump in volume or a jump in margin (the alternative option), it could be turned around quickly.

Where is the reality? If the directors thought the 'alternative' was likely they could almost get away without any extra cash. In the interim release they talk mainly about potentially large increased sales, with not much mention of increased margins.

So back to the original question, how much cash? I think they'll need every cent they can get! If they get another 10m it should see them through another year. As always they'll either be rolling in it by then, or it will be 'next year' again.

[Lizard]

Hi Kiwi,

Agree with your analysis. My estimates tally pretty closely with yours (I was working around $32m in sales and $3.5m in gross profit). However, from my reading, the demand on working capital may not be as high this half (refer comments on inventory). I'm allowing for $5m loss 2011 and break-even 2012.

The last cap raising has so far worked out okay under the spp - purchases are up 8.3% in 9 months vs market down 5%, but that could easily change...

I think this has a 75% chance of being the LAST cap raising before break-even (and therefore the one to buy). Presuming the shares are issued at under 9cps (similar to last issue at 8.77cps), then there is probably good odds of getting a positive return on investment over 5 years and okay odds of getting 20% pa.

On my current estimates, this cap raising is likely to be satisfactory but not compelling.

[Footsie]

As many have said on here.... the time to buy WDT is the last cap raising before b/even

They seem to be getting better at managing cash.

so the question is Liz and Kiwi..... Q ) Is this the cap raising to buy into?

For footsie, I think the answer is yes as the odds are now sufficiently in favour of it being the last one. (say 75%)

IF the odds were 99% then obviously the price would be much higher

[Lizard]

The issue price will be a 15% discount to the average closing NZX share price for Wellington shares for the 5 trading days ending on 15 September.

Looks like the issue price could be quite easy to push around - though there is probably only enough incentive to do so if the same price is used to allocated shares to the larger investor who is supposedly interested...

from the half year report


Following completion of the SPP, Wellington will look to place some or all of the shares not taken up by shareholders with institutional and professional investors, (which may include the investor that originally approached Wellington) although no arrangements or commitments have been entered into at this time.

[sharer]

To assist any folks stressed about SPP dates etc, WDT announcement today:

"WDT: Further details on Wellington Share Purchase Plan The key terms and dates of Wellington's proposed Share Purchase Plan - as announced in the Company's interim results of 20 August - are set out below: 30 August 2010 Record Date 31 August 2010 Opening Date/documents sent to shareholders 15 September 2010 Issue Price determined. 16 September 2010 Closing Date 16 September 2010 Price Announcement Date By 23 September 2010 Shares allotted. The issue price will be a 15% discount to the average closing NZX share price for Wellington shares for the 5 trading days ending on 15 September. Each shareholder with a New Zealand address on the Company's register at 5.00 pm on 30 August will be entitled to apply for a maximum of $10,000 worth of shares. The full Terms and Conditions of the Share Purchase Plan will be sent to eligible shareholders on or around 31 August 2010."

[kiwi_on_OE]

2500 shareholders in Feb 2010, assume similar now. At $10k each that implies they could raise $25m. That's half the current mkt value! There wasn't that much interest from shareholders last time around, so can't imagine there will be a full take up this time either. The wording above from WDT is 'place some or all of the shares not taken up'. It will be interesting to see the shareholder uptake and the placement numbers. Maybe they'll be happy with another $10m in total?

[Voltaire]

Not an impressive track record on the road to profitability for this company and I'm no fan of the board. I imagine that given the woeful takeup by shareholders at the last capital raising the board's strategy this time will be to let the share price fall as low as possible - thereby increasing the pressure on existing holders to buy in in order to avoid dilution. I hope I'm wrong.

Disc. Hold WDT

[Jaa]

So decision time on the SPP....

Date Closing Price
9-Sep 0.085
10-Sep 0.084
13-Sep 0.081
14-Sep
15-Sep

Avg. Closing Price: 0.083333333
Discount: -15%
Issue Price: 0.070833333

Application Amount: $10,000
No. of Shares: 141,176.47

Who is in?

[Raven]

I'm in. Just posted in the cheque today. It will be interesting to see the level of subscription and share dilution. I don't quite understand the math at the moment, the share offer potentially dilutes the share price by about half if all the shares are taken up or placed and yet the discount is 15%. I'm going to be a little annoyed if share price is diluted by more than 15% and it would have been wiser to buy shares after the issue. Seems like a level of uncertainty that shouldn't really exist for shareholders when raising capital. There are enough unknowns already. Having said that I think they have a good product and they seem to be heading in the right direction. When they get there is another story.

[Anna Naum]

So decision time on the SPP....

Date Closing Price
9-Sep 0.085
10-Sep 0.084
13-Sep 0.081
14-Sep
15-Sep

Avg. Closing Price: 0.083333333
Discount: -15%
Issue Price: 0.070833333

Application Amount: $10,000
No. of Shares: 141,176.47

Who is in?

I am in but think your calc is slightly wrong. I thought it was VWAP over 5 trading days rather than the average of the closing prices.

[Jaa]

I am in but think your calc is slightly wrong. I thought it was VWAP over 5 trading days rather than the average of the closing prices.

No it is the Average Closing Price for the 5 days, VWAP is what it should have been as for most other SPPs.

From the SPP Terms and Conditions:

"Issue Price

The price at which the Shares will be issued pursuant to the SPP, being the lesser of:

• a 15% discount to the Average Closing Price; and
• the lowest price paid by investors in a private placement (if the offer under this SPP is made at the same time as, or within 30 days after, a private placement)."

So far I haven't seen evidence of it being manipulated but would be very easy to do. Even I and my 5500 shares could do it! Makes you wonder about their advisers a bit doesn't it?

[Anna Naum]

No that is what is SHOULD have been as for most other SPPs.

From the SPP Terms and Conditions:

"Issue Price

The price at which the Shares will be issued pursuant to the SPP, being the lesser of:

•a 15% discount to the Average Closing Price; and
•
the lowest price paid by investors in a private placement (if the offer under this SPP is made at the same time as, or within 30 days after, a private placement)."

I could have

Thanks Jaa

[sharer]

I'm in. Just posted in the cheque today. It will be interesting to see the level of subscription and share dilution. I don't quite understand the math at the moment, the share offer potentially dilutes the share price by about half if all the shares are taken up or placed and yet the discount is 15%. I'm going to be a little annoyed if share price is diluted by more than 15% and it would have been wiser to buy shares after the issue. Seems like a level of uncertainty that shouldn't really exist for shareholders when raising capital. There are enough unknowns already. ...

Well, i'm basically agreeing with you Raven, except that after seriously pondering this Spp i've decided this time, i'm not in. (Or possibly, halfway in :)
After loyally subscribing to every one of numerous issues, i eventually realised that i could have bought the same number of shares a lot cheaper in the market, with a little patience.
This worked well in the recently past SPP, & i suspect will do so again this time.

Having said that I think they have a good product and they seem to be heading in the right direction. When they get there is another story.
Agreed. But things evolve for each of us & eventually i've got to the point where i feel further gambling on success is increasingly questionable. They might go gangbusters & achieve world domination, but i keep wondering about competitors - with such a drawn out development period, surely other tech inventors must be trying to get into this niche market. There has to be a chance our firm will be killed off before it ever gets profitable enough to reward our prolonged investment patience. And then there is the risk of the NZ disease where a dominant few insiders might sell us all out at the first opportunity to some bunch of rich foreigners - after all, practically all of the useful WDT manufacturing activity is already set up overseas. So in my view now, it has come down to assessing just how much further capital my trust funds should commit, trying to guess how long it might take to get that negative operating result above the line, & how long after that before they start paying dividends. For now, i'm reluctant to expand the investment further, unless possibly shares become temptingly cheap in the aftermarket.

[Jaa]

Looks like the SPP price will be around 7 cents depending on whether enough shareholders take them up on it. If not, they will need to do the placement as well at perhaps an even lower price.

Date Closing Price
9-Sep 0.085
10-Sep 0.084
13-Sep 0.081
14-Sep 0.082
15-Sep 0.082

Avg. Closing Price: 0.0828
Discount: -15%
Issue Price: 0.07038

Application Amount: $10,000
No. of Shares: 142,085.82

[Jaa]

Well, i'm basically agreeing with you Raven, except that after seriously pondering this Spp i've decided this time, i'm not in. (Or possibly, halfway in :)
After loyally subscribing to every one of numerous issues, i eventually realised that i could have bought the same number of shares a lot cheaper in the market, with a little patience.
This worked well in the recently past SPP, & i suspect will do so again this time.

Agreed. But things evolve for each of us & eventually i've got to the point where i feel further gambling on success is increasingly questionable. They might go gangbusters & achieve world domination, but i keep wondering about competitors - with such a drawn out development period, surely other tech inventors must be trying to get into this niche market. There has to be a chance our firm will be killed off before it ever gets profitable enough to reward our prolonged investment patience. And then there is the risk of the NZ disease where a dominant few insiders might sell us all out at the first opportunity to some bunch of rich foreigners - after all, practically all of the useful WDT manufacturing activity is already set up overseas. So in my view now, it has come down to assessing just how much further capital my trust funds should commit, trying to guess how long it might take to get that negative operating result above the line, & how long after that before they start paying dividends. For now, i'm reluctant to expand the investment further, unless possibly shares become temptingly cheap in the aftermarket.

I decided to avoid the SPP last year as the discount of I think 5%, was no where near worth the bother and risk involved.

They seemed to have learned their lesson, 15% is a far more reasonable amount though still not generous.

Anyway I'm in for the full $10k. Lets see what games get played with this one before the shares are distributed.

[Anna Naum]

Wellington Raises $7.67m
Wellington Drive Technologies Limited (Wellington) is pleased to announce the results of its recent capital raising.
Wellington’s Share Purchase Plan (SPP) will result in 28,772,100 shares being issued on Wednesday this week at 7.038 cents each, raising $2m before costs.
A follow on placement to professional investors of a further 80,245,863 shares at the same price has also been agreed. These shares will also be issued on Wednesday. This placement will raise $5.6m. The total amount raised, before costs, is $7.67m.
Directors wish to record their thanks to shareholders for their continuing support.

[sharer]

Looks like the SPP price will be around 7 cents depending on whether enough shareholders take them up on it. If not, they will need to do the placement as well at perhaps an even lower price.

Date Closing Price
9-Sep 0.085
10-Sep 0.084
13-Sep 0.081
14-Sep 0.082
15-Sep 0.082

Avg. Closing Price: 0.0828
Discount: -15%
Issue Price: 0.07038
...

Brilliantly prophesied Jaa !

[Balance]

Wow, yet another capital raising. These guys sure know how to milk the market!

Wellington Drive Technologies Ltd. – Rights Issue

As indicated in the Market Update released today, the Directors of Wellington Drive Technologies Ltd. are proposing that the Company undertakes a 1:1 pro rata renounceable rights offer at an issue price of NZ1.25 cents per share, in order to raise up to NZ$8.4 million.

The proceeds of the rights issue will be used to fund working capital needed as sales expand, operating losses that are expected between now and the Company achieving profitability and to fund the Company’s capital expenditure requirements.

The offer will be made to eligible shareholders (expected to be holders on the record date in New Zealand and Australia). A facility is expected to be established to provide for the sale of rights of shareholders outside New Zealand and Australia.

The securities issued under the rights offer will be ordinary shares, having the same rights as the existing ordinary shares of the Company.

The Directors expect the offer to open in early January 2011.

Dr Ross M Green
Managing Director
+64 9 414 6590

[Lizard]

That has to be the most extreme discount I have seen in a while! I take it the rights issue is not underwritten and therefore they have decided the only way to go is the "gun to the head" approach - i.e. pay up or accept massive loss of value in your current shareholding.

The announcement is also a little short on numbers - i.e. the "guess-the-waffle" approach to shareholder information which is usually designed to soften the blow Presumably they will need to include some actual sales figures in the rights prospectus.

Given the seeming desperation of this issue, it would appear that it will have to be the LAST capital raising - if this doesn't work, perhaps the only move left will be a virtual giveaway of a controlling stake to the competition, as seen with FPA.

[whatsup]

Wow, yet another capital raising. These guys sure know how to milk the market!

Wellington Drive Technologies Ltd. – Rights Issue

As indicated in the Market Update released today, the Directors of Wellington Drive Technologies Ltd. are proposing that the Company undertakes a 1:1 pro rata renounceable rights offer at an issue price of NZ1.25 cents per share, in order to raise up to NZ$8.4 million.

The proceeds of the rights issue will be used to fund working capital needed as sales expand, operating losses that are expected between now and the Company achieving profitability and to fund the Company’s capital expenditure requirements.

The offer will be made to eligible shareholders (expected to be holders on the record date in New Zealand and Australia). A facility is expected to be established to provide for the sale of rights of shareholders outside New Zealand and Australia.

The securities issued under the rights offer will be ordinary shares, having the same rights as the existing ordinary shares of the Company.

The Directors expect the offer to open in early January 2011.

Dr Ross M Green
Managing Director
+64 9 414 6590

When is the ex date ?

[Phaedrus]

There is a lot to be learnt from a chart like this. More than anything else, I hope that the nameless WDT enthusiast quoted here has learnt :-
(1) The folly of buying (or holding) downtrending stocks.
(2) Why Stops are needed to limit your losses when you get it wrong.
(3) What the Market thinks of a stock is more important than what you think.
(4) Ignoring obvious technical Sell signals is risky behaviour.
(5) Adding to a losing position is unwise.
(6) Averaging-down can be a recipe for disaster.
We can but hope that the poor sod didn't keep to his plan. If he did, his funds will have been decimated.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/WDT1130.gif

Directional Movement Indicator. This is a conservative trend indicator - even more so in this example because of the 100 day period used (the default is 14). This triggered a clear SELL signal on the very day that the unfortunate poster quoted here was pledging his undying support for WDT. Prior to this, sell signals had been triggered by a trendline break and a falling OBV with another trendline break. WDT was already in a confirmed downtrend when our man made his longterm commitment to this stock.

On Balance Volume. Note the obvious "step" down as a large investor quit WDT. Conventional wisdom has it that "Big Money" is also "Smart Money" and their moves often lead the market. I guess this big dude doesn't qualify as smart - his bailout should have been over 2 years earlier. Better late than never, though eh? (WDT is down to 3 cents this morning).

Note the trendline-break "buy" signal that was triggered after a couple of years. See how there was not a hint of any volume support for this signal (flat/falling OBV). To act on any single signal is unwise. The end of a downtrend does not necessarily mean the beginning of a worthwhile Uptrend.

[Catalyst]

Some quick numbers on the recently announced 1:1 rights issue at 1.25c...

Current number of shares = 673.6m
Market cap as of last night = 673.6m x 7.5c = $50.5m

Number of extra shares under rights issue = $8.4m / 1.25c = 672m

Total number of shares after rights issue = 673.6m + 672m = 1,345.6m

Market cap after rights issue completed (here is a range of likely values):
1,345.6m x 1.5c = $20.2m
1,345.6m x 2.0c = $26.9m
1,345.6m x 2.5c = $33.6m
1,345.6m x 3.0c = $40.4m
1,345.6m x 3.5c = $47.1m
1,345.6m x 'z'

Assuming record date for the rights issue is in early January, what price should I buy WDT now to have an average buying price of less than 'z'?

= ($20.2m - 672m x 1.25c) / 672m = 1.8c
= ($26.9m - 672m x 1.25c) / 672m = 2.8c
= ($33.6m - 672m x 1.25c) / 672m = 3.8c
= ($40.4m - 672m x 1.25c) / 672m = 4.8c
= ($47.1m - 672m x 1.25c) / 672m = 5.8c

ie. if you think the market cap of WDT after the rights issue will/should be $26.9m (ie a share price of 2.0c after the rights issue in Jan 2011) then if you buy WDT now for 2.8c and participate in the rights issue then your average entry price will be 2.0c or break even.

Buying at the current market price of 3.0c will get you an average entry price of 2.1c (market cap post rights issue of $28.6m).

[Stranger_Danger]

Good analysis, but wouldn't going to Sky City be more fun?

[Awamoa]

To the Diectors of WDT forget it.No more of my money for you.
You have cried wolf too often.I have supported your previous issues for the reasons outlined in your letters.Any money that you have been provided with you have managed to make virtually worthless.
Maybe its time for you people to wear the pain.No more large salaries or Directors Fees until you have proven yourselves and have this company running successfully.

[mr.needs]

When is the ex date ?

Some time after the offer opens in early January 2011

[winner69]

To the Diectors of WDT forget it.No more of my money for you.
You have cried wolf too often.I have supported your previous issues for the reasons outlined in your letters.Any money that you have been provided with you have managed to make virtually worthless.
Maybe its time for you people to wear the pain.No more large salaries or Directors Fees until you have proven yourselves and have this company running successfully.


Must be a relief to finally realise you have been screwed

All part of the big plan for a few to own most of the company and reap plenty when it makes zillions ..... don't forget that Hunter Hall are fantastic value investors ... so they say.... and they have pumped millions in already

[elZorro]

I would guess that WDT have had quite a bit of money from TechNZ as well, i.e. the taxpayer. As it's a private enterprise company, it has to do better than squander it, like a CRI would. Don't let the side down.

[emearg]

I find it interesting that Shawn Beck bought 10 grands worth a few months ago. I recall him buying up Restaurant Brands big time a few years ago when they were way under a dollar. People thought he was mad for putting more money into that dog. He proved them wrong. He was a director on that board as well. Best not read too much into it but it does make me wonder. WDT are great at burning cash and over promising but they do appear to have succeeded in proving their products to the market and are now selling their products in ever growing numbers.

How much has been sunk so far? 60 million???

Is that a lot by international standards for a company trying to achieve what it is aiming for, and has achieved so far?

Will over-subscriptions be allowed?

It will be interesting to read the documents next year.

[Lizard]

Will over-subscriptions be allowed?


To be honest, if they do over-subs, I will arbitrage off my small holding once they are ex-rights and hope for the best.

I do not see the point of selling at current prices - even if it would buy me a few cases of Taylors 2008 Cab Sauv.

The reasons behind this cap raising ring true, but I'd like to see the sales figures behind it and make up my own mind as to whether they are being overly-optimistic once again. I do not see this business going into administration, but seems a high risk of being bottom-poached. Time that Ross Green became "Business Development Management" and someone less used to relying on external capital took the helm...

[Balance]

Will continue to hold as these events have a way of snowballing.

Nevl. A very true statement.I think the next couple of years will be interesting.Looks as though they may be the right company at the right place at the right time.[/QUOTE]

Wrong company at the right place all the time - shareholders who keep throwing money and believing the bs spewed out by this company!

[percy]

I note in the chairman's address to shareholders "we are well positioned to become a profitable company." I seem to remember the same words were said by the then chairman 20 years ago!!

Somethings never change.I may be wrong.They may be poised to become a profitable company.I have not held for over 10years.I went through the Aorangi,cadac,etc days.I dtill follow them and would buy in again if they could turn in a profit.The energy savings from their motors must work in their favour sometime soon?

[h2so4]

To be honest, if they do over-subs, I will arbitrage off my small holding once they are ex-rights and hope for the best.

I do not see the point of selling at current prices - even if it would buy me a few cases of Taylors 2008 Cab Sauv.

The reasons behind this cap raising ring true, but I'd like to see the sales figures behind it and make up my own mind as to whether they are being overly-optimistic once again.

Fat chance of that. Their inventory TO is worse than FPA :eek2:

[duncan macgregor]

PGL, Good to see rational debate for a change on the forum. Nobody is ever right all the time, so we must expect to get it wrong sometimes. When i get it wrong it costs me up to the time it hits my stop loss then I get out regardless of how right I might feel. All good investors never buy in a downtrend, WDT is in a downtrend. All smart investors have a stop loss, WDT hit every stop loss in the book. To trigger the enthusiasm of the gullable come up with a new product, then exploit them for all they are worth. That is the reason that I selected WDT and CER in the bad share competition and was third. The chinese dont recognise patents like we do. The kid next door has a chinese buggy with a motor that is an exact replica of a honda with no names or numbers. Honda parts can be fitted. Remember the old austin engine in the sixties, Datson made a car with the the exact same motor which was just another nail in Austins coffin. WDT have created huge losses for their shareholders, promised the earth and delivered very little. I really would be very surprised if they ever show a profit I think as an investor who cares better prospects else where. macdunk Its five long years since I wrote that some things never change. Macdunk

[Bobcat.]

Seller(s) have dumped this stock this morning to take its price below 3c, and I've just bought into this pup for a short term play. Even if rises to just 3.9c before the rights go ex, I've made a quick 30%.

[Bobcat.]

...rises to just 3.9c before the rights go ex, I've made a quick 30%.

..or of course if it drops below 2.9 cents and slides further then I'm out of money again with this dog !

[Balance]

Read the article by Tim Hunter in the Sunday Star Times on WDT and shudder!

This company has raised and spent $70m since 1988, promising that profitability are just around the corner at every turn.

Meanwhile, CEO Ross Green took home $682,000 in remuneration in 2008 and 2009.

[RazorX]

Just having a look at this one.... might be a bit risky but has anyone thought about buying the rights when they go on sale with the NZX? If it's anything like PGC rights issue a while back they could be a very cheap pickup - it would take to much for the price to rise to make a bit of a profit?

[Voltaire]

There is money to be made here but only on the short term bounce; this is not a stock to hold long-term (if you don't believe the charts, believe me - I have the scars to prove it).

Great products and abysmal management - not a happy marriage. Endless photo shoots of Ross Green posing by conveyor belts and a vicious spin cycle on very short rotation: {promises/promises/optimistic-projections/failure-to-deliver} & repeat.

Increasing jaundice amongst share-holders has meant that successive capital-raisings have found fewer and fewer takers - hence the latest version where the board have decided to reward existing shareholders by throwing them to the wolves. The massively-discounted rights offer and resulting decimation of the share price makes it very unlikely that long-term holders will ever recover their losses - any advantage has been given directly to new entrants to the register.

My advice: if you have recently bought or are game to buy, take your profits early and get out while you still can.

[Awamoa]

I wonder if the Directors have got the message yet.
The market does not like your latest attempt at grabbing money.Dont try this again.

[Awamoa]

Those of us that have participated in previous issues have a pretty good idea of what staggering losses are.

[RazorX]

..or of course if it drops below 2.9 cents and slides further then I'm out of money again with this dog !


* Coughs * Ouch its at 1.9 as at 5pm yesterday. Hmm Might be worth going for a buy at 1.5 and take part in the rights issue then bug out when the SP hits 3 cents?

Bit of a risk, but what is life without risk.

[h2so4]

Bit of a risk, but what is life without risk.

............ahhh easy????????????:)

[Lizard]

Looks to me like the market has decided that the rights issue will not be sufficiently supported. This seems a pretty grim outcome.

I agree that management have failed to deliver on promises of cashflow and profits (in an admittedly difficult environment). But there is still a growing business here that seems like an easy target for a good, focussed strengthening. Someone will eventually do it and reap the benefits. It may be too late for current shareholders though, if the rights issue does not find support. And I cannot see it being achieved while Ross Green remains at the helm.

[Balance]

With technology company, they either make it in the first 3 years or they never do.

WDT keeps promising and investors keep hoping.

Sad but true.

[kiwi_on_OE]

1) At curr price 1.8c => ex issue price of 0.9c, why would anyone pay 1.25c for new shares if they want more. They might need to review the pricing.
2) Is it worth keeping the company running just to see what their next excuse is?
3) Nearly 700k for Green does seem like a lot given size of company and performance. Boss at Scott Tech, roughly similar size, gets 352k, and they are bigger and make profits. Windflow boss got 209k.
4) Having a proper prospectus for this issue should make interesting reading because of the extra disclosure.
5) Perhaps it's my interpretation, but the press releases seem to be more PR/BS than factual. I would like to see monthly details of sales/orders. They may cite confidentiality, and say it is what the directors are paid to do, but given mgmt and directors inability to deliver, shareholders may need to take action.
6) Perhaps it's time for it to be taken out, I have wondered why Fisher & Paykel haven't shown an interest (even just to use the motors).

[Raven]

The main problem for me is the logistics of this company. Having no experience in international company logistics my concern may be completely misplaced but everything seems like a bit of a mess at the moment. One minute they have not enough parts to make the motors so can't meet demand (Ok, they have more inventory of unfinished product). Then they have too much inventory but plan to reduce it all in the near future based on 'indications' and yet they still need to air freight motors due to short notice orders. It all sounds a bit desperate to me. Why not put the pressure back on the companies ordering the motors.

We have motors, you want them, ok we'll ship some out to you right away. Oh, you want them now. We encourage ordering 3 months in advance so we can manage our stock efficiently and provide the best price for our customers but we are happy to air freight for an additional fee.

How can they possibly get there inventory right when companies know it's ok to defer orders AND ask them to be air freighted last minute?

[percy]

Raven,
All manufacturers beleive in just in time supply chain.If WDT want to be part of it they have to carry stock where and when their customers want it.
No one wants to carry stock.The larger and more widespread the orders the larger is going to be WDT's holding.Guy in Turkey will order today for tomorrow.If he wants it next week he will order next week.
What I think shareholders have to know is whether management can deliver.No use building up stock to be told in 6 months it is now out of date.
Yet directors do not seem to be street smart,
I also think it is telling FPA do not work with WDT.

[Anna Naum]

1) At curr price 1.8c => ex issue price of 0.9c, why would anyone pay 1.25c for new shares if they want more. They might need to review the pricing.
.

1.8c + 1.25c means ex price of 1.52c by my calc??

[kiwi_on_OE]

1.8c + 1.25c means ex price of 1.52c by my calc??

Ah, yes silly me. Px down to 1.6 today, will it get down to 1.25c? I didn't think it would get this low before the rights issue.

[h2so4]

Appointment of new chairman.

"Mr Nowell's extensive international operating experience will help drive the
company in its mission to raise operational performance and fully capitalise
on Wellington's international growth opportunities. He replaces Dr Rick
Boven, who will continue as a Director of the Company. The Board thanks Dr
Boven for his valued input and efforts as Chairman during a period of rapid
growth, and looks forward to his continuing guidance as a director."

I can't believe I just read that. Fair dinkum.

[kiwi_on_OE]

New Chairman - seems to have an interesting history, hopefully beneficial
CEO/executive - time for some serious scrutiny of their performance
Issue - 1:1 @ 1.25c
NTA - my guess is 0.1c - probably no cash left and that was most of the NTA. Def not 2.8c any more

[Voltaire]

Do we know the terms of the rights issue?


Yes, 1 for 1 (at 1.25c) ... as quoted by kiwi_on_OE above ...

but the critical question of course is: will over-subscriptions be allowed?

The willingness of sellers to part with shares at such low prices (a low of 1.3c today) may suggest they believe the answer to that question will be "yes" (in which case retaining a small holding, in order to accrue rights, and selling the remainder of their shares at any price over 1.25c might be a rational strategy).

Alternatively, it may just be that there is a large pool of sellers who now see no prospect of recovering their losses and wish to quit their holdings at whatever price they can realise?

Disc. I hold WDT

[Jaa]

Don't call it a come back but WDT found significant support below 1.5c.

Now trading at 2c up 33% for the day. Good return for the brave.

[Balance]

Buyer at 1.3c.

So how many punters are going to take up the rights at 1.5c?

Watch for just 10% of the 673m to flood the market and after rights trading, shares will be 1.1c. Cannot get any lower!

[Raven]

Buyer at 1.3c.

So how many punters are going to take up the rights at 1.5c?

Watch for just 10% of the 673m to flood the market and after rights trading, shares will be 1.1c. Cannot get any lower!

Rights issue 1.25c not 1.5c so 1.3c buyer has an extremely thin margin above rights.

[Balance]

Rights issue 1.25c not 1.5c so 1.3c buyer has an extremely thin margin above rights.

Thanks, stand corrected.

[winner69]

Makes you wonder if those few trades this morning were intended to go through ... maybe some ingnorance on somebody'd part

[Balance]

Makes you wonder if those few trades this morning were intended to go through ... maybe some ingnorance on somebody'd part

What's a bit of window dressing between friends?

There's some serious salaries at stake in WDT.

[winner69]

What's a bit of window dressing between friends?

There's some serious salaries at stake in WDT.

No window dressing today?

[Anna Naum]

Or yesterday

[Balance]

Think about this for a minute.

Why would anyone want to buy on market now when there are going to be 673m shares to be issued at 1.25c?

The issue is not underwritten (speaks volume) and there's provision for oversubscription.

[h2so4]

Who cares? Maybe the buyers went mad.

[Xerof]

Or perhaps they are taking the advice of their broker or financial advisor........:ohmy:

[Jaa]

Has anybody recieved the rights prospectus and application form in the mail? Or is it still to come out?

[Jaa]

Has anybody recieved the rights prospectus and application form in the mail? Or is it still to come out?

Just checked the prospectus:

"Offer Document and Entitlement & Acceptance Form mailed to shareholders 17 January 2011"

[Xerof]

Haven't really had a close look at the price action Balance, but you're probably right - this follows the usual pattern of the Pump before the Dump.

Who's the Arranging pumper...eeee... Broker?

[Jaa]

Xerof there is no arranging broker. Costs for this rights issue are estimated at only $100,000, no money for anything more than photocopying, postage and some lawyers to check the documents.

The only thing that gives me hope is that First NZ was buying up the heads before they went ex-rights. They don't often get these special situations wrong.

[Lizard]

Harbour Asset Management (i.e. FNZC) seemed willing to support the price when it looked perilously close to failing the rights issue earlier. Wonder if they' will/can keep it supported through till rights expiry? Sort of tricky, since presumably only need a few rights to apply for over-subs and therefore if rights price falls, share price goes with it - semi-death spiral stuff.

On the other hand, could still stack up for rights - will depend if they can get enough cash via subscriptions to survive. I would assume FNZC would step up to the plate with more funds (and perhaps over-subs if they think needed to remove risk of failure). Expect some other large holders will be relatively small price to exercise rights vs their initial investment, so maybe go with it rather than write-off. Buys some time for holders to exit - and market cap is sufficiently down on pre-rights announcement to probably give reasonable odds of exit above rights price.

[Xerof]

Don't want to get into banter here, but my cursory research of the SSH notices shows a bit of a pump/dump in December by those honourable gents you mention - they seem to have bought abt 10m (16 Dec), then promptly sold them again (22 Dec)
in what appears on the surface to be a price smoothing exercise.

I'll take another look in a month or two to see if my cynicism is proven correct.

Disc: hold none, never have.

[RazorX]

I bought some WDT today. Time will tell if this is one of my better moves.

[mikew]

I bought some too, they make good products, hope their management is as good as the products.

[Balance]

Prediction - sp will go below 1.25c per share when the new shares are issued.

[Lizard]

Prediction - sp will go below 1.25c per share when the new shares are issued.

Must be getting too old and doddery for ST - the posts are seeming more and more cryptic to me :(

Can I ask "how soon and why"?

Presumably existing holders could sell now at above that price (and use the funds to subscribe or oversubscribe the rights if they wanted). So most likely a dip to below 1.25cps would have to be driven by rights subscribers selling to recognise a gain on those (and perhaps triggering selling to below the 1.25cps.)

There is still the possibiliity of them pulling the rabbit from the hat - i.e. announcing conclusion of the negotiations on the large contract they've said is in train. (They're unlikely to announce failed discussions!). Okay, they will have to get the FY report out of the way late Feb - though that can be a positive if funds look sufficient for survival and they can hint at having passed the low...

Given the huge discount of the rights issue to the pre-announcement market cap, it seems to me that it would be surprising if it stayed below the rights price for long - provided they can convince the market they have sufficient funding for another 9 months or so. The risk is that the rights issue fails to raise sufficient funds - but in that case, would expect the shares to be trading at pretty close to rights price (or below) as existing shareholders decided to exit rather than throw good money after bad.

[J R Ewing]

What WDT has done is make the rights issue so dilutory that they have no choice but to participate.



Does the board need to get authority from the shareholders for rights issues such as this?

[Lizard]

Does the board need to get authority from the shareholders for rights issues such as this?

No. As I read it, listing rule 7.3.4 allows the directors to make a pro-rata, renounceable issue without the prior approval of equity holders.

I'm not sure if this is less rigorous than it used to be though? The rights of companies to issue new shares without shareholder approval has become considerably easier following post-GFC changes to the listing rules.

[winner69]

All quiet on the WDT thread lately as what Balance said would happen seems to be unfolding

Good engines .... maybe .... but are they that good that people will fall over backwards to buy them ... at a price that coves WDT costs .... even that would be a start on the road to recovery

Reminded me of the story of the Indian shopkeeper who had a sack of potatoes and he sold the potatoes at cost and when a bright spark asked why the cheap price he grocer said he can now sell the sack and make a bob ............. stupid story but one WDT could learn from .... nobody ever makes money when they sell stuff for less than it costs

[Lizard]

Currently 2cps as rights issue heads into the close tomorrow - possibly just a quick move to make sure any last minute hesitation over exercising rights is removed.

For those with plenty of shares to spare, it might be a good time to arbitrage the purchase of rights by selling the heads - though I'm not sure if this would affect the likely number of over-subs they might be prepared to offer... these over-sub allotment formulae are rather opaque.

[Jaa]

I had the same thought Lizard about today's relative explosion in activity. WDT's entire volume this year has only been $218K worth.

Having said that I will still be taking up my rights and applying for some overs. WDT seems to have some support around 1.5cents.

My reading of the formula is that it is simply a pro-rata allocation as at the day the rights were issued.

[Nevl]

I had the same thought Lizard about today's relative explosion in activity. WDT's entire volume this year has only been $218K worth.

Having said that I will still be taking up my rights and applying for some overs. WDT seems to have some support around 1.5cents.

My reading of the formula is that it is simply a pro-rata allocation as at the day the rights were issued.

seems silly if they don't get as much money as possible. The whole point is to avoid underwriting fee's and collecting as much cash as possible. I have actually sold down quite a bit of my holding and am hoping with over subscriptions to get my holding back up again. Luckily I sold out at 10cps so I am hoping to get lots at 1.25cents.

Anyway I expect to see a consolidation happening fairly soon after this 1billion shares is just silly and would clean up the share register.

Still expect WDT to do well in 2011 especially if Coal prices keep rising though I still think they lack ambition.

[Raven]

Well they've got there money. Lets see what they can do with it.

Wellington Drive Technologies Limited raises $8.4m

Wellington Drive Technologies Limited raises $8.4m in successful rights offering

Wellington Drive Technologies Limited (Wellington) is pleased to announce that its one for one renounceable rights offering closed yesterday fully subscribed, including by way of shareholders applying for additional shares under the offer.

As a result, the Company has raised approximately NZ$8.42 million being the maximum amount sought under the offer.

Directors wish to record their thanks to shareholders for their continuing support of the Company.

The Company will be allocating and allotting the shares as of the close of business on 4 February 2011 and securities transaction statements will be sent to investors by 9 February 2011.

Further details of the issue of shares will be announced in accordance with NZSX Listing Rule 7.12.1, once the shares have been issued.

[winner69]

What a pay day ... wonder where lunch is today?

Sorry - shareholders not invited

[whatsup]

Would you buy WDT at these levels ?

[mikew]

Market will tell you.

[Balance]

Have to say that the WDT shareholders are a hardy lot - worthy of being called long term investors rather than the normal fly-by-emotions.

Hope WDT shareholders' faith in the company is amply rewarded.

[whatsup]

Have to say that the WDT shareholders are a hardy lot - worthy of being called long term investors rather than the normal fly-by-emotions.

Hope WDT shareholders' faith in the company is amply rewarded.

Buying building , now that WDT have the $ers could be a interesting time to be a S/Her !!

[brucea]

I am in denial I think but did I really pay $1 or 50c or something like that a share all those years ago???

[Nevl]

I am in denial I think but did I really pay $1 or 50c or something like that a share all those years ago???

Yeah I am lucky in that I have being pretty active in the buying and selling. I think my average price is now negative so I feel I can hold on for a while now and just what happens. Will be interesting to see how the over subs went. But A good sign that the insiders all took up their right and looks like they applied for extras as well.

When it goes. It will fly I think. Easy to see WDT get back to 5cps in the next 12 months.

[emearg]

So the oversubscriptions were quite oversubscribed from the looks. I wanted an extra approx 56,000 but only got an extra approx 32,000

When it was all announced I wondered to myself, given the very low price, if the directors were giving themselves a chance to buy up a big chunk of the company on the cheap? I will be very interested to see how many shares the directors bought...

[kiwi_on_OE]

I think the over-subscription was a little over a quarter of the existing holding ie. implies emearg held about 120,000 shares before and now has about 270,000. If my maths is right then only 80% of the rights were taken up by rights holders. Agree it will be interesting to see directors purchases. Great opp for them to inside trade, as they will now the real story whereas prospectus had the usual BS from the directors and some quarterly sales in USD upto Dec 10.

[GR8DAY]

....as a sharholder should I have rights I can now sell......is that how it works??

[Nevl]

....as a sharholder should I have rights I can now sell......is that how it works??

Not any more. The rights have lapsed and being taken up by other shareholders if you did not take them up yourself. But if you did take them up then you have actual shares to sell not just the rights.

[duncan macgregor]

PGL, Good to see rational debate for a change on the forum. Nobody is ever right all the time, so we must expect to get it wrong sometimes. When i get it wrong it costs me up to the time it hits my stop loss then I get out regardless of how right I might feel. All good investors never buy in a downtrend, WDT is in a downtrend. All smart investors have a stop loss, WDT hit every stop loss in the book. To trigger the enthusiasm of the gullable come up with a new product, then exploit them for all they are worth. That is the reason that I selected WDT and CER in the bad share competition and was third. The chinese dont recognise patents like we do. The kid next door has a chinese buggy with a motor that is an exact replica of a honda with no names or numbers. Honda parts can be fitted. Remember the old austin engine in the sixties, Datson made a car with the the exact same motor which was just another nail in Austins coffin. WDT have created huge losses for their shareholders, promised the earth and delivered very little. I really would be very surprised if they ever show a profit I think as an investor who cares better prospects else where. macdunk Over five years ago I wrote that, and find its funny that some people still think its worth investing in. The gullable still donate to the extortunate salaries with their hard earned savings to the greedy directors and their wild promises. Macdunk

[J R Ewing]

It does seem likely that this latest capital raising is the end of the line (one way or the other), at least until they get some substantial share price recovery. It would be hard to see them getting much traction for a rights issue at $0.001 per share in a few months...

[whatsup]

Well Drive last year ann their full years results on the 3rd March, I wonder how they will be this year, if one can believe the rational for this latest cap raising a good result should be produced.

[emearg]

Shawn Beck just sunk another $34,957 into WDT. What does he know?

I followed him into RBD a few years ago. He was buying up big time under a dollar. So did I :)

Perhaps it will be this time too. Or perhaps I have thrown away a few grand like Dunc says. He could be right, he could be wrong but I am willing to gamble on this one. It is much more interesting than the horses and the returns will be far greater should the BS actually come to something.

With this one I decided it is best to think the money is lost already, and then the only way is up. It makes me sleep better at night anyway.

Comments about me being a fool aren't necessary as it is my money to be foolish with thanks.

[duncan macgregor]

Shawn Beck just sunk another $34,957 into WDT. What does he know?

I followed him into RBD a few years ago. He was buying up big time under a dollar. So did I :)

Perhaps it will be this time too. Or perhaps I have thrown away a few grand like Dunc says. He could be right, he could be wrong but I am willing to gamble on this one. It is much more interesting than the horses and the returns will be far greater should the BS actually come to something.

With this one I decided it is best to think the money is lost already, and then the only way is up. It makes me sleep better at night anyway.

Comments about me being a fool aren't necessary as it is my money to be foolish with thanks. why spend it like this when you could have squandered it on wine women and song like I did in the long distant past. One way or another all will be revealed in the short term future as I doubt that even they cant keep convincing people to through money at the company indefinately. Macdunk

[emearg]

Steven Hodgson the CFO paid $129,482 for more WDT shares. If the man with all the numbers thinks sinking that amount of cash into the company is a good call it should give us a little more confidence. Hopefully his confidence is justified because if he is wrong, he will be far more sorry than me!

[whatsup]

So how much did the directors in total buy in WDT.

[Anna Naum]

So how much did the directors in total buy in WDT.

About $750,000

[manxman]

why spend it like this when you could have squandered it on wine women and song like I did in the long distant past. Macdunk


I spent a lot of money on booze, birds and fast cars. The rest I just squandered.

Wine, women, song - money spent to some purpose. WDT - real squandering.

[whatsup]

Slow build in price. up .01 still its better than falling.

[Nevl]

Slow build in price. up .01 still its better than falling.

Yeah but they have a way to go!! Anyway am looking good for WDT now. Got a few oversubs so am looking at a nice profit there. All my shares are basically free now so might sell a few and be in profit and then hold the rest for boom or bust!!

Still think that if the results are halfway decent then they will do a consolidation of about 10 to 1 and clean up the register. Hopefully when the price is about 3 or 4 cps. That would give them about 100mill shares at 30-40cps.

[RazorX]

Whoo - up another .002, now if we keep this up it'll be at 10c in oooh about 38 weeks allowing for .002 gain per week.

[Nevl]

Whoo - up another .002, now if we keep this up it'll be at 10c in oooh about 38 weeks allowing for .002 gain per week.

Sweet!!! That would be a nice xmas pressy!!

[kiwi_on_OE]

Must be one of the top performing stocks on NZX for the year to date. Has it outperformed everything in the NZ50? Surely it can't continue. At this rate long term shareholders will be breaking even in about . . .

[emearg]

http://www.youtube.com/watch?v=Rp777lE24CI

[Voltaire]

http://www.youtube.com/watch?v=Rp777lE24CI

Hardly an inspiring performance - it may just be that Dr Green's a mediocre media-frontsperson but he seems devoid of any real spark or enthusiasm - this has all the hallmarks of a board initiative to mollify disgruntled shareholders, rather than a genuine management-led bid for custom.

The EMA20 (weekly chart) prior to the recent successful capital raising was around the 7c mark. At 1:1 with a rights exercise price of 1.25c this suggests that if there was any real condfidence in the co. the sp might have been expected to quickly move back to around 4c - it's now at half of that.

My suggestion: suspend Dr Green's overly-generous salary and pay him in options instead. Good for 12 months (after which they expire) with a strike price somewhere north of 4c per share.

Discl: I hold

[GR8DAY]

I second that V........I didnt buy into this sad story and will wait as the share price retracts further before any thoughts of averaging down.......im looking for sub 1c. HOLDER

[Nevl]

Have read the report. Good to see they have some new faces that seem to come from good backgrounds. Looks like ventilation is not doing well and I suggest they set up their own brand as currently they are running around trying to keep customers happy who are just screwing them into the ground. Better to compete with them using your own superior end product.

Apart from that not much seems to have changed. It seems to be a large learning exercise at the moment as kiwi business people get reamed by smarter offshore business people. Time for WDT to grow some balls and step up and stop bending over at every silly demand. They have a superior product. So either they purchase it or WDT will compete directly using better technology!!

[winner69]

Nev .. so the glass is (more than) half full eh

Sup[pose so - loss a bit less than last year they so but jeez thats some loss - and worse than they thought

Net loss of $14.8 million, which despite being a $1.9 million improvement over the previous year (2009:$16.7 million), was significantly greater than expected and due in particular to a weaker than expected gross margin performance.


And didn't they say they were going to get rid of a lot that stock they were carrying - Anticipated reductions in inventory levels were not achieved,

Is this the company that asked shareholders for some more capital a few weeks ago .... might need some more eh

There goes my chance of winning Lizards competition with my dogs of the NZX entry

[winner69]

There was this Indian trader who had a sack of rice .... and sold the rice at cost .... when asked why he said he still had the sack and when he sold that he made a profit

I see WDT had $27m worth of motors or whatever they sell and they sold them for $28m .... hey thats better than the Indian trader (unless he got heaps for his sack)

Not a new trend because the year before thet had $21 of stuff they sold for $22m

So over the last 2 years sold $48m of stuff for $$50m .... good one eh when you think that it cost them another $34m to make the sales

No wonder they keep on going back to shareholders

[Lizard]

Yep, a -2.3% gross margin in the second half. Pretty amazing that they can still be having this problem after all the talk of cost reductions with scale etc. Overall, a shocker of a result. Operationally out-of-control.

On the good side, the new Chairman gives a good impression. And at least prepared to be honest re forecasting another loss rather than vague promises of profits that can't be achieved... more than can be said for Ross Green, whose version of a decline in operating loss is the more misleading "improved net profit".

[mikew]

Sold my 1m shares spread from 2.1c to 2.3c, my average buy price was 1.375c, made good profit, very nervous to hold this one, can't see any upside from this company, they could come back to shareholder asking more money this year.

[J R Ewing]

They could. Would need a share consildation first tho ... ;)

Why? Can't the NZX system handle companies with a trillion shares!

[Awamoa]

the problem would be in making sure you had the correct number of commas when buying and selling :)

More like the system is not set up for their value ie .0000001 cents

[Awamoa]

Down to 1.5 cents today.
Man this stock is a winner.

[Raven]

A bit of a shake up at WDT with a new CEO on the way. Great to retain Dr Green to ease the transition. Things seem to be ticking along ok as far as sales go and a share consolidation is probably a good idea considering the share price at the mo. Any one with a bit more trading skill have any thoughts on this.

'Strong lift in refrigeration motor sales for Wellington Drive Technologies
Wellington Drive Technologies has made a strong start to its 2011 financial year with NZ dollar revenue growth for the first four months to April 30 of 53 per cent versus prior year, driven by US dollar revenue growth of 64 per cent and sales volumes growing by 59 per cent to reach a total of 420,000 units for the period.
Based on unaudited management accounts for the first four month’s trading, Wellington achieved revenue of NZ$11.9 million and an EBITDA loss of NZ$2.3 million.
Wellington’s electricity saving refrigeration motors increased sales by 78 per cent during the period, including Wellington’s first ever sales month of more than 100,000 ECR motors.
Since the end of April, trading has continued at a strong level with Wellington selling its 500,000th motor for the year during the month of May.
Wellington is continuing a strategic review of its smaller ventilation motor business, with the process expected to be completed during the coming two months.
Wellington also announced today that the board had agreed to a request from Chief Executive Officer Dr Ross Green that he move out of his role as CEO upon the appointment of a replacement, and into a more focused support and advisory role, assisting the new Chief Executive Officer to consolidate current markets and relationships, and to develop new markets, customers and partners, particularly in Latin America and China.
Chairman Tony Nowell said “We thank Dr Green for his efforts in leading the company to its present stage of development and are fortunate in being able to retain Dr Green in the business, given his unique knowledge of our customers, international markets, products and technology. Bringing a new Chief Executive into the business will allow Dr Green to refocus his efforts on supporting Wellington’s international market development.”
The Company is conducting an executive search for a new Chief Executive Officer, with Dr Green remaining in his current role until an appointment is made, and thereafter as Advisor to the board.
Following the completion of a rights issue in February 2011, Wellington now has a very large number of shares on issue. The Wellington board also advises that it has resolved to undertake a consolidation(“Consolidation”) of the existing ordinary shares (“Shares”) on issue in Wellington. Under the consolidation, every 20 existing Shares held in Wellington on June 30th 2011 (“Record Date”) will be consolidated into one Share. As a result of the Consolidation, the number of Shares on issue in Wellington will be reduced from 1,347,327,970 Shares to approximately 67,366,399 Shares.
Wellington’s Annual Shareholders Meeting will take place on June 28th.'
__________________________________________________ __________________________
Tony Nowell
Chairman
+64 9 414 6590

[J R Ewing]

Given that they are still making losses, I wonder if the consolidation is to prepare the ground for another rights issue.

[Master98]

Given that they are still making losses, I wonder if the consolidation is to prepare the ground for another rights issue.


I have same feeling.

[winner69]

Are you sure about that? The sales increases, even with slim margins, may have turned things around.

Hey Belg ... better not tell Liz about the consolidation .... we will do well in the NZX competition if she doesn't know


Off course they are still losing money - what would make you think otherwise

To put more respectability into the share price it should have been a 200 for 1 and not the 20 for 1

[Lizard]

Hey Belg ... better not tell Liz about the consolidation .... we will do well in the NZX competition if she doesn't know

Okay, I am busy, but I am not yet comatose... :p

I'm still trying to figure the numbers - probably needs checking 10 times in my current blur, but that $2.3m EBITDA loss looks to me like they may be managing about twice the gross margin of 1H10 for a 4 month gross profit around $2.3m also. If so, that would be a big improvement over the $1.1m earned on $12.5m revenue in first half 2010.

Also, I think that the news on Ross Green "requesting" a sideways move to allow for a new CEO is exactly what has been needed. Though I admit to reading it twice to check that it wasn't the Board "requesting"... :) I really would hope that he feels able to stay involved and feels adequately appreciated for having overseen the growth to date. Whilst profitability has evaded him, I think he can be proud of the sales growth and the ability to engage investors in his dream. The right CEO and Ross Green's continuing support might just be the combo that can get this business through the never-ending hurdles to being a real-deal manufacturer established in modern NZ.

[Novitiate]

WHAT HAPPENED!!! Am dreaming??!!! 0.30!!!! Is this reality, or just a glitch in the system??!!

[winner69]

WHAT HAPPENED!!! Am dreaming??!!! 0.30!!!! Is this reality, or just a glitch in the system??!!

Must be announcing they are in profit at last ..... ha ha

(Read earlier posts my man)

[Master98]

WHAT HAPPENED!!! Am dreaming??!!! 0.30!!!! Is this reality, or just a glitch in the system??!!


Shares consolidation 20:1

[Novitiate]

Yep, that was it. :( When I realised that I had forgotten to adjust my portfolio to incorporate the consolidation, I sure came back to earth. (Note to self: if it seem to good to be true - it usually is)

[Lizard]

I'm still trying to figure the numbers - probably needs checking 10 times in my current blur, but that $2.3m EBITDA loss looks to me like they may be managing about twice the gross margin of 1H10 for a 4 month gross profit around $2.3m also. If so, that would be a big improvement over the $1.1m earned on $12.5m revenue in first half 2010.

From agm today, the gross margin to end of May 2011 (5 months) sits at $2.016m, so a little lower than that calc came up with. Still a long way to go to see break-even, with net loss of $3.37m for the 5 months.

[Awamoa]

From agm today, the gross margin to end of May 2011 (5 months) sits at $2.016m, so a little lower than that calc came up with. Still a long way to go to see break-even, with net loss of $3.37m for the 5 months.

Do I sense the need for another rights issue sometime soon?

[Master98]

Do I sense the need for another rights issue sometime soon?

Inevitable, that's share consolidation for.

[brucey09]

Snrs.
Can some person from meeting tell me please what went on there.

[Master98]

Euro zone crisis could seriously hit sales in this region.

[Voltaire]

New all-time low set today: 22c (equiv to 1.1c pre-consolidation) and below the recent rights exercise price ...

Hard to believe the company will have much success with another capital raising - given their extraordinarily impressive record in failing to achieve targets - but I'm sure that won't stop them trying.

[whatsup]

New all-time low set today: 22c (equiv to 1.1c pre-consolidation) and below the recent rights exercise price ...

Hard to believe the company will have much success with another capital raising - given their extraordinarily impressive record in failing to achieve targets - but I'm sure that won't stop them trying. What a joke WDT is , imho.

[upside_umop]

It's quite sad, as they do have a good product. Sales levels are getting high, but seem to have sh1t contracts...i.e. not indexed in FX terms.

If they survive, and push margins, this would be a great stock...but unfortunately it looks like it won't.

Good luck.

[Voltaire]

It's quite sad, as they do have a good product. Sales levels are getting high, but seem to have sh1t contracts...i.e. not indexed in FX terms.

If they survive, and push margins, this would be a great stock...but unfortunately it looks like it won't.

I agree re the quality of the products but the management and governance of this company has been dire over a long period of time. Broken promise has been stacked upon broken promise and accordingly this teetering house of cards now looks set for collapse.

Actually, I think the company deserves to fail (it will cost me - I hold). As I have said in earlier posts, in their desperation to keep the company afloat the directors have sacrificed the interests of existing holders in favour of massive dilution in the sp and gains for short-term speculators. My hope is that the directors of WDT are permanently tainted by their behaviour in "support" of this company (keep an eye out for rats jumping ship in the meantime) ...

I'd say the best we can hope for is a lowball takeover offer from someone who recognises the value of the ip but has no compunction about ditching under-performing executives (the board will be lucky to be sent home clutching a saveloy and a paper hat).

[Lizard]

I just had a play with a few scenarios...

To me, it looks as though underlying cash-burn is probably sitting at about $4-$5m per 6 months at present. However, it is possible they could get this down to $1.5-$2m in the first half, as they may have been able to extract something back from working capital given how heavy the inventory was at end of December. If so, that may buy them some time.

However, they may need quite a bit of time, as I estimate that some scenarios that might get them to nil cash burn would include

tripling sales (off YTD run rate) at current gross margins
a dramatic increase in gross margin to 30% on a small increase in sales to about $40m pa
a 50% increase in sales to about $50m pa and an increase in margins to 20% with a 30% reduction in overheads.


Getting the $8.4m raised to see them through until they can achieve something like one of these ends looks to be stretching it thin. Though if they could get the 20% margins, there might be some takeover interest.

[Voltaire]

Thanks Liz, appreciate your calcs and input.

On past performance I'd have to say that achieving any of the three scenarios you paint (in sufficient time frame) strikes me as highly unlikely - especially given the strong $NZ and the bed-in time for a new CEO (which incidentally is an issue that should have been confronted by the board much earlier).

[h2so4]

Thanks Liz, appreciate your calcs and input.

On past performance I'd have to say that achieving any of the three scenarios you paint (in sufficient time frame) strikes me as highly unlikely - especially given the strong $NZ and the bed-in time for a new CEO (which incidentally is an issue that should have been confronted by the board much earlier).

I am sure there are ways they could load up their distribution channels to recognize premature sales. :)

[kiwi_on_OE]

I more or less agree with Lizard's thoughts. My numbers are a bit different though.

Extrapolating figures for the first 5mths, EBITDA -3.2m for the half, NPAT of -4.2m on sales of 18+m. Cash burn more like 3-3.5m rather than the $4-5m. That 3.5m might come from selling their inventory. So they might still have 11m in the bank at present.

Sales of 18+m in the first half will hopefully increase in the second half, but maybe not to the same extent? Are the delayed sales from 2010 recurring sales, or was it just a one-off delay? 21+m gives a nice round number of 40m for the year. Assuming they don't drastically improve/change/degrade their margins in the second half, maybe their overall figures will be EBITDA -6m, NPAT -8m, and maybe upto 8 mill still in the bank. Is that the rose-tinted view? Probably.

Would they go to shareholders for some more cash? What do they think will happen next year?

I can't see them tripling sales within a year, nor cutting overheads significantly. Although impact of new CEO might be interesting. Can they manage another year of 40-50% increase in sales? Can they increase margins to 20%? If they did then they might have sales 60m & EBITDA 0m next year.

Here's an idea for their new CEO - outsource the entire staff and mgmt to F&P, leverage off their global manufacturing, distribution, sales & industry knowledge. How much do you think they would charge 5m-10m pa?

[Raven]

Six month results out.

Close to some of the predictions made. Not sure if they'll have enough cash. Perhaps the potential deal with Ziehl might inject a little cash?

Six Month Highlights
• Sales volume for the period was 636,000 motors, up 52% over the same period in 2010,
with the volume of EC Refrigeration motors up 57% to 489,000 units.
• Revenue generated during the period was NZ$18.1m, up 44% on the prior year, increasing
in US$ terms by 62%.
• During the period Wellington progressed the previously announced review of its Ventilation
business, following which it will restructure to reduce complexity, working capital and
operating expenditure, leading to an improvement in operating margins.
• Post restructuring Wellington will focus tightly on its rapidly expanding Commercial
Refrigeration business in the primary growth markets of Latin America and Europe,
significantly reducing its exposure to the manufacturing and sale of the more complex and
working capital intensive ventilation products.
• Including restructuring costs of $1,921,000, Wellington recorded a loss of NZ$6,986,000
for the six month period to 30 June. This result also included foreign exchange losses of
$372,000.
• The normalised product gross margin, after adding back restructuring costs was 10.8%,
an improvement from 8.6% in the 2010 first half.
• The global search process for a new Chief Executive is nearing completion.

The plan
The key aspects of the restructuring plan are:
• A reduction in Wellington’s Singapore-based in-house manufacturing activities. In
future, Singapore operations will focus on the management and development of contract
manufacturing partners in the Asian region and elsewhere. The intended changes will
result in lower operational expenditures and substantial reductions in related levels of
working capital;
• Discussions are well advanced with our partner Ziehl-Abegg AG (“Ziehl”) regarding a
substantially changed agreement between our companies. The revised agreement is not
yet fully complete, but major provisions include the transfer of manufacturing capability to
Ziehl for certain motors that are currently made by Wellington for Ziehl.
• A review of operational expenditures has been undertaken across the Group, and planned
reductions are being implemented.
• A key objective of the restructuring plan is to increase funds available for investment in our
Latin American businesses (particularly Mexico and Brazil) and to strengthen Wellington’s
European business, headquartered in Turkey. These markets are driving Wellington’s
current growth, and offer the best prospects for profitable growth.
• Financial projections assume a staged introduction of the restructuring changes.
Inventory is projected to reduce from the NZ$14.2m as at 31 December 2010 to NZ$9m or
below by the second half of 2012. Six month operating expenditure (prior to depreciation
and amortisation) for the second half of 2012 is projected to be approximately NZ$5m,
down from NZ$6.3m in this current results period and $13.4m for the full 2010
financial year.

[Nevl]

Not a bad result and better than expected. The loss is not too bad given restructuring costs and now the heat is on for the 2nd half. Like the focus on South America and glad they are not manufacturing in Singapore as it is a high cost country with higher wages than NZ. Hopefully they will diversify their manufacturing base. A new CEO could really take this company forward. They have made a lot of strategic mistakes in the past. I still think they need to set up in competition to the "old School" motor users and market end products using their technology. Maybe once they are making some actual profit they can do this. Can't see any need for cash in the near future either but we will wait and see.

[Lizard]

I thought the result was unimpressive - or at least did not do any of the things it needed to do to have a halfway hope of getting to profitability without more funds. However, there are some things that are a step in the right direction and "The Plan', sounds good - although I did feel like I might have heard some of it before.

Assuming they can implement the inventory and cost reductions planned for second half, the market should get a chance to see performance in second half, before there is a likelihood of needing more funds, so I guess it is back on the wait and see list. Still a small chance they can make it, but nowhere near enough to get optimistic about.

[emearg]

http://www.seek.co.nz/Job/international-product-manager-wellington-drive-technologies-ltd/in/auckland-rodney-north-shore/20536510

[Master98]

http://www.seek.co.nz/Job/international-product-manager-wellington-drive-technologies-ltd/in/auckland-rodney-north-shore/20536510

The candidate could come from Mars, but I'm feeling lucky, just sent out my application:D

[Lizard]

The candidate could come from Mars, but I'm feeling lucky, just sent out my application:D

Having worked for Mars, I can't see anyone leaving them for WDT... :)

[xpress]

Ha. Looks like a tough job to me too. I haven't bought any WDT shares since the rights issue, but I can't stop thinking that a company who increases sales 50% each year MUST make a profit at some point! It appears that they are actually making making money on the motors now (10% gross). I wonder if the deal they are trying to do with the major customer is closer to the original concept where the company charged a royalty for other manufacturers to make the WDT motors?

[Lizard]

Finally got around to a closer look at the HY result, following initial disregard on the basis of cash-burn and low gross margin.

There are still some good things going on here. First half sales were a little higher than I'd expected, although more than off-set by lower margins (even allowing for restructuring costs). Forecasts for the second half include a necessary reduction in operating costs and significant reduction in inventory. Assuming the inventory reduction is achieved through sales rather than write-downs, and looking for margin improvement to 12-14%, along with further sales increases, this could see cash-burn in the second half reduced to under $1m.

Continuing patterns into 1H12, but with only minor further reductions in operating costs and reliant on further margin increases, cash-burn is still likely to be in the $2-$3m range (no inventory reductions and probable overall increase in working capital requirements again). So, based on this, would be stretched to get through with no further cash requirement - although the amounts required might be relatively smaller than in the past. Increasing gross margin to at least the 20% level remains the toughest challenge to crack, especially while maintaining the rate of sales growth.

However, in the meantime, the outcomes of the Ziehl-Abegg discussions are likely to be crucial to cash position. Possible outcomes include improved margins, but lower sales, reduced inventory freeing up cash and perhaps a technology transfer payment? Certainly, from the Ziehl-Abegg web-site (http://www.ziehl-abegg.com/ww/press.html), they look to be pushing their high-efficiency fan technology hard and achieving significant sales success. Any announcements regarding the outcome of discussions would be worth reading closely.

Overall, I would say WDT is still on watch and wait. If they can implement the items they've committed to this half, then they may start to look interesting for 2012, but, even so, profitability seems unlikely before 2013. Another capital raising in 9 months time can not be ruled out, although the scale of it may be reduced from past requirements. And the "risk" for long-term holders remains that a takeover will be mounted around the time shareholders get bored with waiting...

[winner69]

Finally got around to a closer look at the HY result, following initial disregard on the basis of cash-burn and low gross margin.

There are still some good things going on here. First half sales were a little higher than I'd expected, although more than off-set by lower margins (even allowing for restructuring costs). Forecasts for the second half include a necessary reduction in operating costs and significant reduction in inventory. Assuming the inventory reduction is achieved through sales rather than write-downs, and looking for margin improvement to 12-14%, along with further sales increases, this could see cash-burn in the second half reduced to under $1m.

Continuing patterns into 1H12, but with only minor further reductions in operating costs and reliant on further margin increases, cash-burn is still likely to be in the $2-$3m range (no inventory reductions and probable overall increase in working capital requirements again). So, based on this, would be stretched to get through with no further cash requirement - although the amounts required might be relatively smaller than in the past. Increasing gross margin to at least the 20% level remains the toughest challenge to crack, especially while maintaining the rate of sales growth.

However, in the meantime, the outcomes of the Ziehl-Abegg discussions are likely to be crucial to cash position. Possible outcomes include improved margins, but lower sales, reduced inventory freeing up cash and perhaps a technology transfer payment? Certainly, from the Ziehl-Abegg web-site (http://www.ziehl-abegg.com/ww/press.html), they look to be pushing their high-efficiency fan technology hard and achieving significant sales success. Any announcements regarding the outcome of discussions would be worth reading closely.

Overall, I would say WDT is still on watch and wait. If they can implement the items they've committed to this half, then they may start to look interesting for 2012, but, even so, profitability seems unlikely before 2013. Another capital raising in 9 months time can not be ruled out, although the scale of it may be reduced from past requirements. And the "risk" for long-term holders remains that a takeover will be mounted around the time shareholders get bored with waiting...

Good one Liz ... a screaming buy .... people should be prepared to pay 10/20 cents eh ... by end of year and I might wint he stock picking comp ... this is what dogs are all about ... the exponential gains one can make from the depths of despair

[emearg]

WDTL.com has an updated distributor. The following are new:
Distributor in Aussi (their website would suggest this happened late last year/early this year), one in NZ, one in the UK and one in the US.

Based on my memory they have dumped one of their US distributors and appointed a replacement. That makes for three in the US (which doesn't seem like very many)

[Lizard]

WDT price jump to 28cps after having seen a slow build-up around 20cps in recent days.

Not much volume here, mind-you, but then there is only one visible parcel on the sell right now...

... restart your motor?

[emearg]

Is it Raymond Thomson (a director) pushing up the price 50% in one week? A wonder what he knows that we don't? Plenty I would suggest...good or bad. Pretty easy to guess which way the news is if it is him. Interesting times ahead perhaps?

[Lizard]

I don't know that we can blame a director yet. He only disclosed buying as far as 22cps on the 3rd - the day it ran to 28, and quite a small parcel at that.

I was looking at depth that day, and it looked like someone came in with a couple of 50k stepped orders over top of him. Then maybe another small buyer or two jumped the gap. I am thinking it looks like a small conviction buy by a fund that may have triggered a couple of small retail buys across the spread. Maybe Winner or Belg ;). Very little on offer at present.

Doesn't seem likely to be on rumours, as directors would hardly be buying if there was potential "insider" knowledge.

Not enough volume seemingly being sought to suggest anyone building a possible takeover stake, I would have thought.

Depth looks pretty thin on the buy side and a few sellers willing to come out at 30cps+, so will see what happens next week and whether the buying holds up and comes from off-screen. Could be first turn-around we've seen in a while, though might need to wait until it forms a new base to accumulate from - (I'm never fast enough to grab any volume from stocks on the move, without finding I've caught the 6-month peak...).

[prendi]

I have followed blindly WDT for a long time.30cps makes me think its not heading out the back door but it is really is 1.5cps from before the split.love to here any thoughts on wdt i,m still clinging on the old ceo,s words.it would be nice to get some good news

[h2so4]

I have followed blindly WDT for a long time.30cps makes me think its not heading out the back door but it is really is 1.5cps from before the split.love to here any thoughts on wdt i,m still clinging on the old ceo,s words.it would be nice to get some good news

Hey prendi

WELCOME

Compared to 2010 1HY WDT didn't burn as much cash, that's good.

Turnover is up, that's good.

[Lizard]

Wow, all of a sudden, offer sits at 17cps on my screen, with last sale at 28cps.... so presumably Winner and Belg have given up accumulating and we can all go back to sleep? :p

[Anna Naum]

Wow, all of a sudden, offer sits at 17cps on my screen, with last sale at 28cps.... so presumably Winner and Belg have given up accumulating and we can all go back to sleep? :p

Lizard, dont you mean the BID is 17c and OFFER is 28c.

[Lizard]

Oops. Yes, one of those days... never been good with left and right either... near divorce material when attempting to navigate in the UK. :)

[Anna Naum]

Oops. Yes, one of those days... never been good with left and right either... near divorce material when attempting to navigate in the UK. :)

Haha, try Los Angeles with all those freeways, even with a GPS unit we nearly ended up going to Vegas to get a quicky (divorce)

[kiwi_on_OE]

It's that time of year again, eating too much, holidays, WDT cash issue etc.

They burnt $6m in the first half and had $5m left in the bank at the start of the second half. I wonder how they have done since.

Ziehl-Abegg AG deal in Oct suggests to me that they had about $8m of inventories to rundown by selling to ZA by end of Mar, so maybe they've got $3m of that in cash by now. Additional costs to WDT of about $1m to be included in this deal. So maybe another $4m (net) to come in.

I hope that sales, margins and costs in the second half have all gone the right way, but I can't imagine they are greatly changed. A loss excluding the ZA deal of at least $4m for the half year seems pretty likely to me. I could guess at a similar figure for their cash burn.

Overall it would be loss of about $10m for the year, not much reduced from previous years, but at least the cash burn wouldn't be so bad. To me the sales, margins and cash burn are the main points to look at.

So if they had $5m, burnt $4m and got $3m for running down their inventory maybe they've got $4m left at the moment. Could they keep their cash at about those levels as they get a further $4m from the ZA deal and burn a similar amount in the next half. If half year losses are then below $4m maybe they can hold out until the end of next year before they need more cash. I wasn't expecting that when I started thinking about their possible numbers.

With gross profit maybe around $5m and expenses around $14m it still looks like they have to do something pretty amazing with sales or margins to break even ie. more than double them, even if they can cut expenses as they intend. But just maybe they can hold off on a cash issue for a while.

I always seem to have rose-tinted glasses on when guessing WDT numbers, even so the light at the end of the tunnel seems to be a fair way off.

[Lizard]

I'm working on net loss (before tax) of $3m in second half and cash burn of $0.6m. Excluding restructuring costs, that makes for $7.6m loss for FY11 and total $6m cash burn, despite $4.3m reduction in working capital. I have $39m in sales for FY11.

Then my figures have them to burn $2.5m in 1H12 and another $1.1m in 2H12... dropping off to $0.5m cash burn in 1H13 before turning positive.... if they can achieve this, they may get through, as that's a total of $4.7m cash burn against $5.1m of cash.... Lots of IF's until we get there. It relies on about $53m in sales for FY12 at an increase in gross margin to 18.1% (based on being able to get somewhere close to where they need to be and on excluding low margin ventilation business). Moving up to 19.5% in 1H13...

...is that enough predictions? :p

Main point is, that it gives me something to quickly measure against when their results come out... can see if they are going to be on track or not.

[Lizard]

I'm working on net loss (before tax) of $3m in second half and cash burn of $0.6m. Excluding restructuring costs, that makes for $7.6m loss for FY11 and total $6m cash burn, despite $4.3m reduction in working capital. I have $39m in sales for FY11.

Okay, predictions in my last post are a little optimistic and will be cutting it finer than would like to see.

They burned $1.0m more in second half op cashflow, plus about another $0.7m in investing cashflow. Sales were only $35m, so I was more than 10% off for full year, having seen little growth in second half over prior (possibly to do with ventilation business wind-down).

Margins are getting there at 11%.


Then my figures have them to burn $2.5m in 1H12 and another $1.1m in 2H12... dropping off to $0.5m cash burn in 1H13 before turning positive.... if they can achieve this, they may get through, as that's a total of $4.7m cash burn against $5.1m of cash.... Lots of IF's until we get there. It relies on about $53m in sales for FY12 at an increase in gross margin to 18.1% (based on being able to get somewhere close to where they need to be and on excluding low margin ventilation business). Moving up to 19.5% in 1H13...


They are only forecasting 17% margin for FY12, but exchange rate will be putting the pressure on. I also think I am way off with my revenue predictions there - without revenues from ventilation, it could be lower than 2012. However, on the key points we agree (though it will be tighter than I'd like) - they will likely make it through without further capital raising if they can adhere to plan. They also pretty much agree with my timeframe on cash burn in predicting operating profitability from beginning of 2013. So you can all go back to sleep for another six months or so.

...then we can see if they're still on track and what the signs are for future revenue. That really needs to keep growing if 20cps is to look "super-cheap" enough to wake investors from their Rip-Van-Winkle slumber in the waiting room. :sleep:

[winner69]

Maybe after getting out of ventilation they will get out of electric motors .... and then survive on hope

[percy]

That really needs to keep growing if 20cps is to look "super-cheap" enough to wake investors from their Rip-Van-Winkle slumber in the waiting room. :sleep:

I wake up straight away when the word "profit" is mentioned and go on "full alert" mode at the word "dividend".In the meantime it is more profitable to enjoy my Rip-Van-Winkle slumber in the waiting room.

[craic]

I have had three dogs since this one and am on my fourth - Two were Fox terriers and one was a Lab-cross. I now have a full Black Labrador. All were much more fun and less costly than WDT

[h2so4]

We have Red Dog in Aus (no not the movie) she is very costly.

[Lizard]

Yesterdays AGM presentation was a good read. They are making good progress - nothing unexpectedly good, but at least appear consistent with earlier statements.

Margins at 13% in first quarter and still aiming for 17% by year end (although I think that is on a "run rate" basis and not averaged for the year). However, longer term revenue effect of exiting ventilation makes me think it will be difficult to achieve positive NPAT until second half of 2013. It's probably still safe to keep sleeping - don't think anyone will slip through a premature takeover, although some interest might be possible once margins hit 15%.

[winner69]

Seeing Rakon (and FPA) have managed to turn themselves around maybe WDT is finally going to make some money and make shareholders rich..

WDT seem to have a lot in common with Rakon ..... technology based ..... selling zillions of things that the world wants and everything is good for the future and all that

Myabe 2012 is WDTs year

[percy]

Seeing Rakon (and FPA) have managed to turn themselves around maybe WDT is finally going to make some money and make shareholders rich..

WDT seem to have a lot in common with Rakon ..... technology based ..... selling zillions of things that the world wants and everything is good for the future and all that

Myabe 2012 is WDTs year


May be not.????? Too much history to change direction.???? Possibly 2021.?

[winner69]

May be not.????? Too much history to change direction.???? Possibly 2021.?

RAK building up the same sort of history as WDT eh Percy

I'll go with your great judgment ... 2021 it is for WDT

[percy]

RAK building up the same sort of history as WDT eh Percy

I'll go with your great judgment ... 2021 it is for WDT

Definately 2nd half 2021, [unless I change my mind].
RAK.? Who are they?/them?

[winner69]

Definately 2nd half 2021, [unless I change my mind].
RAK.? Who are they?/them?

Aren't they EBOs maoin competitor???

[ekman]

Definately 2nd half 2021, [unless I change my mind].
RAK.? Who are they?/them?

Be happy if they last to 2021

[percy]

Be happy if they last to 2021

Great post ekman.Right !!!!!

[percy]

Aren't they EBOs maoin competitor???

Medical or pet side.?

[kiwi_on_OE]

HY results must be out real soon now. The first sign that WDT think they may be doing ok is when they release their results earlier than two months after the end of the HY, so it's not happening for the Jun 2012 HY. 2021? Hopefully before then.

Being a bit more serious, I'm guessing rev 21.5m +19% from a year ago, margin 14%, EBITDA -2m -53%. Second half numbers probably similar, but lower rev and higher margin, and at that rate I reckon they'll be out of cash, if they aren't already. Looks like they need to get to rev of 60m pa. if they want to break even.

I wonder how much interest companies like Skope NZ have in their motors?

[sharer]

With all the tedious political palaver about our getting going with an innovative knowledge economy etc etc, it has always puzzled me why e.g. WDT seems to have no NZ customers at all when there are several sizeable outfits that could reasonably use their motors to advantage. Another e.g. is Biovittoria in the news this morning with what sounded like a quite successful international business report & first profit, yet their attempt to list in NZ had to be pulled due to "lack of interest" (i was one of their frustrated intending investors). No doubt several other such e.g.s might be mentioned.
After riding with WDT all the way to date, i'm nearer to dumping them every time i read their reports about how they still have no profit after thrashing around in i've forgotten how many foreign economies, and selling a million ++ motors at uneconomic prices. Only the insiders & officeholders seem to receive any financial rewards from all that activity.

[winner69]

Still selling zillions of things .... 23% more
- Selling at slightly above actual cost
- Sold piles of the stuff they made last years and had on the shelves
- TURN AROUND 2012 PLAN still on track to deliver
- Still losing money but not as much as last year
- Still have a few million in the bank

Great stuff ........... share price up up and away ..... law of averages say this has to be a good year

[Lizard]

I thought it was disappointing all round... revenues in second half going to be down more than I'd guessed due to exit from ventilation, gross margin lower than expected, corporate costs higher, cash burn higher (receivables increase), talk of yet another search for yet another "strategic partner who will invest in the business" and sounding less confident of achieving profitability in 2013, R&D scrapped...

...not sure how many companies you would find around with $107m in contributed equity and only $9m in net equity left... with market cap at $9.4m, they'd have to be more than a 10-bagger just to pay investors back for what they've put in (without interest).

[percy]

... law of averages say this has to be a good year[/QUOTE]

Yeah Right.!!!

[h2so4]

Ha! I thought there was a definite improvement here, possible turnaround "As Wellington’s operating performance stabilises."

Higher revenue, more turnover (inventory), lower cashburn.

Oh well.:mellow:

[sharer]

Looking for the nearest health shop to find some anti-grumpy pills ..

[POSSUM THE CAT]

Sharer the only anti grumpy pill that will work with this company is Cyanide

[sharer]

Sharer the only anti grumpy pill that will work with this company is Cyanide

But who should get it?
I think there may be some managerial reforms going on, but they're dithering. Too much time wasting.

[Balance]

https://www.nzx.com/files/attachments/163915.pdf

Must be another rights issue and placement coming up as cash must be just about all gone?

Still remember listening to Ross Green (ex CEO) at an investment seminar in 2004 and his assertion that WDT's move into profits was just around the corner! Have to hand it to him because he kept raising the cash and kept spending the cash too!

Can the new management do the same? That is. keep raising the cash?

[winner69]

So the chief money says "this represents a successful effort to monetize nonrefrigeration technology"

Good stuff .....but balance right ....good news precedes the plea for more dosh

[winner69]

Balance me old mate ....seems everybody wants some of the action ....up 16% today

[Balance]

Balance me old mate ....seems everybody wants some of the action ....up 16% today


Yawn - been there, seen that time and gain from WDT.

"Somebody" paid 18.5c for 5,000 shares (up 32%) and now, will not buy when there's selling at 16c?

Smelling like a capital raising on the way!

No mention of hoe much it will cost WDT to service the agreement.

[Balance]

Yawn - been there, seen that time and gain from WDT.

"Somebody" paid 18.5c for 5,000 shares (up 32%) and now, will not buy when there's selling at 16c?

Smelling like a capital raising on the way!

No mention of hoe much it will cost WDT to service the agreement.

And sure enuf, a capital raising.

NZX - where are you? Surely the ramping up of the sp yesterday constitute market manipulation?

[winner69]

Superlife eh

So quite a few Sharetrader members now own a bit of WDT .... the several who thinks Suoerlife is the bees knees of Kiwisaver and retirement funds

[brucey09]

Superlife eh

So quite a few Sharetrader members now own a bit of WDT .... the several who thinks Suoerlife is the bees knees of Kiwisaver and retirement funds

Snr. Winner
What do you mean of the bees knees here.

[p2r]

Bees knees is Comvita.
Forsyth Barr decide on those superlife investments. I wonder what they see in WDT? 2% of their NZ share portfolio between rakon & Cue and a bit in Gemino growth. Superlife have been with PEB a long time and they are starting to look ok.
Anyway from Superlife point of view 15.5 c is OK. From WDT must be a plus. And from a NZ point of view it is good that Kiwisaver funds are is supporting NZ companies long term.
Be interesting how WDT go, but to be fair it is tough for all exporters at the moment especially into Europe...

[Balance]

Bees knees is Comvita.
Forsyth Barr decide on those superlife investments. I wonder what they see in WDT? 2% of their NZ share portfolio between rakon & Cue and a bit in Gemino growth. Superlife have been with PEB a long time and they are starting to look ok.
Anyway from Superlife point of view 15.5 c is OK. From WDT must be a plus. And from a NZ point of view it is good that Kiwisaver funds are is supporting NZ companies long term.
Be interesting how WDT go, but to be fair it is tough for all exporters at the moment especially into Europe...


WDT is certainly long long term!

[percy]

WDT is certainly long long term!

The BIGGEST understatement ever posted on Sharetrader.?????????????????????????/