WDT changes tack, looks for capital

By Phil Boeyen, ShareChat Business News Editor

Tuesday 5th March 2002

Engineering innovator Wellington Drive Technologies (NZSE: WDT) is planning a capital raising and predicting further losses as it juggles revenue goals with the need for market acceptance of its brushless electric motors.

The company revealed Tuesday that its interim deficit for the six months ended December had increased by 48% to $1.27 million and said that although sales rose 50% to $164,000 the growth was "significantly lower than projected in the listing profile dated December 2000."

The lack of licensing income means the company has had to rejig its business strategy and begin manufacturing increased numbers of fully built up RF66 motors at its Auckland premises for companies to trial. Previously the motors were only produced in sample lots rather than in the thousands.

"This offer has had an excellent response," the company says.

"It gives prospective licensees a low-risk route for assessing Wellington benefits in their markets and product lines, and also a progressive route for acquiring their own Wellington production capability."

While offering prospective licensees easier access to its proprietary designs will hopefully pay off in the long-term, WDT admits that it reduces the likelihood of large, one-off payments for licence fees in the short term.

"The board expects to see a steady growth in revenue over the next 12 months although, in the absence of one-off licence payments, the company is likely to continue to trade at a loss throughout this period.

"However, this change in approach to the market should result in good acceptance and penetration of our motor styles in the medium term without compromising the magnitude of longer-term opportunities."

WDT says a capital raising will now be necessary as a result of the absence of large one-off license payments and the change in strategy.

"The directors are currently entering discussions with several parties who may be interested in providing capital to the company. The directors will advise shareholders of any progress on this and/or other potential plans as soon as any information is available."

For the past year or so WDT has been taking its story to the world with an increased sales and marketing push, particularly at trade fairs.

However the latest news is a further indication of just how tough it is to introduce a radical product into what MD Ross Green has previously described as a conservative industry.

The sharemarket, which has been keen to see the company get some significant sales under its belt, marked down the stock to new lows following the release of the interim result.

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