Once you have established where the warpflame lands, you can work out the damage. All models that lie under the template are hit. You will have to use your judgement and common sense to decide exactly which models lie under the template. As a rule of thumb, a model can be considered hit if at least half of its base area lies under the template, while models whose bases are only touched or grazed can be ignored.
Any model hit suffers a strength 5 hit from the warpflame. If the target is wounded by the warpflame then it takes not just 1 wound as normal, but D3 wounds (roll a D6: a score of 1-2=1, 3-4=2 and 5-6=3). Units that suffer casualties from a warpfire attack must take a panic test immediately. If the panic test is failed the unit will flee.