Saietta Group Plc (LON:SED), the multi-national business which designs, engineers and manufactures complete Light-duty and Heavy-duty e-drive systems for electric vehicles, today announced its unaudited interim results, covering the six-month period ended 30 September 2022.
Financial Highlights for the Period
· Group income (including grants) increased to £1.3m (H1 2021: £1.0m) with the Company focusing its main activities in the first half of the year on the establishment of the Joint Commercialisation and Development Agreement with Consolidated MetCo, Inc (“ConMet”) (the “JCDA”) and launch readiness in the Indian light duty market
· Gross profit of £0.1m (H1 2021: £0.4m) with a gross margin of 13% (H1 2021: 55%). The lower gross margin reflects the impact of retrofit revenues in H1 2022
· £0.3m of development costs under the ConMet JCDA incurred in the Period, of which 50% is recoverable from ConMet, recognised within assets under joint arrangements rather than as revenue in accordance with accounting standards and fiscal treatment
· Loss before tax of £10.4m (H1 2021: £5.2m loss) reflects the fact that the Group is still at the early commercialisation stage for its products and the loss includes significant share options expense and costs related to the additional fund raise
· Adjusted EBITDA1 a loss of £6.3m (H1 2021 £1.1m loss)
· Placing of 17,101,450 shares which raised gross proceeds of £23.6m
· Net cash at the end of the period of £22.7m
Operational Highlights
· On track to ramp up UK-based and India production leveraging existing assets that are able to provide for a capacity in excess of 100,000 units p.a., having secured the location for the pilot production plant in Sunderland and progressed the development of the durability test facility at Silverstone Park
· Specialised production automation equipment is being built and will be installed at the Sunderland production facility ahead of a planned Q1 2023 opening
· Interaction with several OEMs has accelerated with the completion of the Padmini agreement and Pradumna Walimbe’s appointment as Managing Director of Saietta VNA Electric Drive Private Limited (“Saietta VNA”), the Company’s Indian JV
· Certain equipment in Sunderland is being prepared for redeployment to Saietta VNA to enhance its production capability
· Ongoing R&D continues to enhance the growing range of eDrive motors, refining the technology for mass production, and expanding the overall intellectual property (“IP”) portfolio – in particular strengthening patent applications into Asian markets
Post-period end
· On 1 October 2022, a restructuring of the business took place in which the Performance Units were moved into separate wholly owned subsidiaries of Saietta Group PLC. These companies are:
– Saietta Light Duty eDrive Limited (S-LDE)
– Saietta Sunderland Plant Limited (S-SP)
– Saietta Europe BV (S-HDE)
– Propel B.V.
– Saietta VNA Electric Drive Private Limited
· On 5 December 2022, Saietta VNA signed its first major contract with an OEM operating in the light Duty eDrive segment (see separate RNS announcement issued this morning).
– First in a series of agreements with a global OEM and one of the largest operating in the Indian light duty market
– The agreements:
o Represent initial development revenue of approximately £3.2m, and
o envisage minimum volumes of 80,000 units across five years from first production in September 2023
· Also on 5 December 2022, the Group appointed Devyani Vaishampayan as a Non-Executive Director. Devyani brings a wealth of experience as a Board member, in particular across all aspects of company organisation and culture (see separate RNS announcement issued this morning).
Outlook
· Saietta remains dedicated to securing several long-term, high volume OEM relationships globally and continues to receive a large volume of sales enquiries from numerous OEMs with regards to potentially material contracts
· The work with ConMet is progressing at speed, on plan and budget with concept designs now complete. Parts are currently being ordered for trials with the project prototypes starting in less than 6 months. The product concepts have been shared with several US and European truck OEM’s and have received enthusiastic responses. Together with launch partners, the Company plans to start the first road trials in 2023 to demonstrate that the ConMet powered by Saietta eDrive solutions work and allow truck and trailer OEMs to order initial production series
· With momentum from the contracts secured to date and last year’s launch of Propel’s marine motors directly into distribution and retail, management is confident of delivering expected customer orders in line with its full year expectations which were revised in October. However, the accounting treatment of ConMet receipts, from revenue to assets under joint arrangement, will represent a reclassification from income statement to balance sheet of approximately £3m for the year ended 31 March 2023.
Executive Chairman’s Review
The rapid progress since we revealed our range of AFT motors late last year has been maintained with commercial, product and R&D developments continuing on all fronts.
The £23.6 million fund raise in August 2022 was a major step in the Group’s continuing development and supports the acceleration of our commercial progression to mass production of our electric drivetrain solutions for a range of global market applications.
As anticipated, the financial resources secured through that funding round have enabled Saietta to accelerate its interaction with a number of OEMs including the announcement of the JCDA with ConMet. The JCDA will see Saietta leverage its proven commercial vehicle electric powertrain engineering capabilities centred in its Heavy Duty eDrive (HDE) division in the Netherlands. Saietta has also progressed with plans to establish a high-tech engineering facility at Silverstone Park, UK.
In India, the Company has accelerated the potential of its AFT electric motors through Saietta VNA, a partnership with Padmini VNA, a leading Tier 1 automotive supplier.
We have demonstrated that Saietta can reduce axial flux electric drivetrain cost without diminishing performance, which is essential if EVs are to become more accessible for mass market consumers across a wider range of vehicle platforms from lightweight to commercial.
Saietta expects to be ready to use its new Sunderland facility before the end of FY22/23 to scale up the production of its proprietary AFT motors for multiple applications. Saietta will also locate the in-wheel generator (IWG) manufacture as part of the ConMet JCDA and a share of its proven e-Axle commercial vehicle drivetrain technology in Sunderland, creating the potential for more green-technology manufacturing jobs in the UK.
Outlook
Having successfully raised net proceeds of £22.3m in August 2022, Saietta is well positioned to drive forward commercial opportunities. Although some revenue has already been secured in H1, more substantial results are expected in H2, particularly following the ConMet agreement’s initiation in August 2022.
