KEY POINTS:
Wellington Drive Technologies is asking investors to back the company with more cash as the electronic motor maker looks towards profitability.
The NZX-listed company yesterday made a presentation to investors explaining its products, strategy and an outlook to be running profitably in 2010. Wellington Drive is looking to raise $11.4 million in a rights issue which opens on Monday, offering existing shareholders one new share at 10c for every three shares held.
Shares, which have traded as high as 43c during the past year, closed down 0.1c yesterday at 13.9c.
The money would be invested in working capital needed as sales expanded, to fund capital expenditure needs and operating losses until profitability.
Sales were forecast to grow to about $40 million this year, up from a prospective $14.8 million in 2008, the company said.
Chief executive Ross Green said the company's electronic motors and software could enable power to be mapped and controlled, weight reduced by up to three-quarters and in some instances cut electricity usage to about a third.
"The sense of it that I get is that, well, people have never seen from us projections to the level of detail that we're able to put out this time and they seem to be viewing it with cautious optimism," Green said. "Although the climate isn't by any means perfect to be raising money I think we've got a pretty strong story there and what we hope we're seeing is that people are recognising that."
In the prospectus and investment statement, chairman Rick Boven said the company was budgeting to sell more than one million motors this year, with the largest contribution to sales growth expected from a range of motors sold into the commercial refrigeration market.
Its largest customer this year would be Vendo de Mexico which had re-confirmed an intention to buy 400,000 motors, despite the impact of the economic slowdown, Boven said.
The company forecast a loss of $11 million for the year ended December 31, with a $6.8 million loss in the first half of the current year and $2.9 million in the second half.
The outlook for 2010 said assuming some further growth in sales, control of operating costs, achieving targeted gross margin by the end of 2009 and that future capital requirements were met Wellington Drive would expect to operate profitably in 2010.
"For the next few years our growth will be driven by the advantages [electronically commutated] motors have over induction motors, notably energy efficiency and flexibility," Boven said. "Longer term our competitive advantage relative to other [electronically commutated] manufacturers will be based on lower materials costs and a simpler electronics platform."
Wellington Drive employs more than 110 people, including more than 70 staff at its Auckland engineering headquarters and 27 at a Singapore manufacturing and logistics site.
The company uses contract manufacturing in China and Malaysia.
