SED.L Regulatory News (SED)

29 December 2023

Saietta Group Plc

("Saietta", the "Company" or the "Group")

Unaudited Interim Results for the six months ended 30 September 2023

Saietta Group Plc (AIM: SED), the multi-national business which designs, engineers and manufactures complete eDrive systems for electric vehicles, today announces its unaudited interim results, covering the six-month period ended 30 September 2023 (the "Period").

Financial Highlights for the Period

· Group income (including grants) of £1.4m compared to £1.3m in prior Period

· Gross profit of £0.1m (H1 2022: £0.1m) with a gross margin of 9% (H1 2022: 13%). The decline in gross margin reflects both the absence of retrofit revenues in H1 2023 and high manufacturing costs prior to the Group's recent automation of production.

· £0.2m of gain on disposal of fixed assets in the period, generated through the restructuring of arrangements with ConMet.

· Loss from continuing operations, before tax, of £7.9m (H1 2022: £9.4m) largely reflecting a lower share option charge.

· Adjusted EBITDA1 loss of £6.5m (H1 2022 £6.3m loss)

· Net cash at the end of the Period of £0.5m

Operational Highlights

· On 3rd April 2023, AYRO Inc. placed an order for 3,000 AFT eDrives to be supplied from Saietta's Sunderland facility. Orders commenced shipment in Q2 of the financial year 2023/24.

· On 1st August 2023, Saietta and ConMet agreed a restructuring of the arrangements to develop an in-wheel motor and in-wheel generator for the US truck market. The agreement resulted in a gain on disposal of fixed assets in the period of ?200k.

· In September 2023, production commenced in the Delhi factory facility of Saietta's Indian joint venture, Saietta VNA, producing AFT (Axial Flux Technology) motors for the OEM (Original Equipment Manufacturer) customer announced on 27 September 2023, with initial five year volumes expected to be for a minimum of 40,000 units.

Post-Period end

· On 13th November the Group announced that its Indian JV, Saietta VNA, had secured an order for its new RFT (Radial Flux Technology) eDrive system, from its major OEM customer in India. This validation of Saietta's proprietary RFT motor opens up the huge electric 2-wheel market in India. Target volumes indicated by the client, suggest this initial order will scale to an expected minimum of 60,000 units over a 5 year period.

· In December 2023, Saietta announced it had completed a fundraising of £7.14m before expenses. Proceeds of the fundraising will be used to satisfy the Group's working capital requirements through to the end of March 2024 and to support growth of the Company's Indian joint venture, Saietta VNA.

Outlook

· Saietta and its Indian JV, Saietta VNA, have secured high volume OEM relationships in India and the US which are set to utilise the production capacity they have developed in Delhi and Sunderland. The Group is therefore ready to enter the next stage of its evolution as a large-scale manufacturer.

David Woolley, Chief Executive of Saietta, said:

"The first half of the 23/24 financial year has been challenging but Saietta has made significant strides towards its full transition from an R&D company to a full-scale production manufacturer.

During the Period, Saietta reached operational readiness in its joint venture facility in India and successfully commenced deliveries to its US customer, AYRO Inc. The development of in-wheel motors and generators for trucks was transferred to Consolidated Metco Inc. ("ConMet"), resulting in an upfront payment to Saietta of ?3.3 million and potential additional future license payments of up to ?20m. This allowed the Group to narrow its focus on the lightweight EV opportunity in India.

Demonstrable evidence of the demand for Saietta's proprietary eDrives in India has come from an initial AFT order from a global OEM which is one of the largest producers of light commercial vehicles in that market.

Post the Period end, the benefits of the Group's focus were further realised through an additional contract for Saietta VNA, namely, an order from its lead OEM customer for Saietta's proprietary, all-new RFT motor, mated to a bespoke Saietta controller, transmission, axle and vehicle control unit.

Saietta has now raised £7.14m of additional funds (before expenses) in the market which, with tight control over costs, will meet its working capital needs until the end of March 2024 and management continue to explore alternative sources of funds to take the Company through to a cash positive position thereafter.

I am therefore delighted to be at the helm of Saietta as it enters this exciting phase."

For any further enquiries, please contact:

1Adjusted EBITDA above is a non-IFRS measure and is calculated as the Group's earnings before interest, tax, depreciation, amortisation, impairment and extraordinary items including share-based payment charges, costs related to Saietta Group Plc's fund-raising, fees in respect of establishing new staff pension scheme, write-off inventory acquired as part of Sunderland lease transaction and legal fees in respect of the incorporation of the equity accounted associate. See note 4 for more details.

About Saietta:

Listed on the London Stock Exchange's AIM, Saietta is a global business that designs, develops and manufactures complete electric drivetrain (eDrive) solutions for established manufacturers of a broad range of electric vehicles.

Saietta's breakthrough proprietary technologies include AFT (Axial Flux Technology) and RFT (Radial Flux Technology) motors, power electronics, powertrain controls, mechanical axles, transmissions and vehicle control units. Considerable flexibility is built into the core design, meaning solutions can be quickly and cost effectively tailored to a specific application.

Saietta works in a highly collaborative way with clients, driven by the belief that partnership is key to delivering world-class tailored solutions at pace. Saietta's engineering team takes time to deeply understand a client's brand, target market sector, competition and the services they require. Then Saietta develops a bespoke suite of products and services to fast-track the client to production with eDrive solutions which deliver a sustainable competitive advantage.

Chairman's Review 

Saietta recognised the need to re-focus on light duty eDrives ahead of the Period and has delivered on that strategic pivot both in terms of restructuring its operations and in securing initial purchase orders from major OEMs.

We believe the Group is at an inflection point for growth, as evidenced by the orders detailed in the post Period end section above. These achievements have required a considerable transformation in the business and there have been changes at Board and Operational levels as a consequence.

Outlook

Moving from an R&D-focused technology start-up to a manufacturer, selling complex products internationally, has been a challenging transformation in a relatively short time frame.  However, with the foundations in place for delivery to its major OEM customer, Saietta is able to look forward to a sustained period of motor production and development that will enable it to achieve its goal of making a positive, substantial difference to electrification of light duty vehicles, particularly in areas with high pollution levels such as major cities in India.

Financial Review

(NB: comparative figures are shown for the comparable period in the previous financial year unless otherwise stated)

Revenue and expenditure both reflect a period of transition where hitherto engineering design services have been complemented by motor sales from initial production.

The ramp up of production had just commenced at the end of the Period, buoyed in particular by the two significant orders obtained in the period for AYRO inc, in the US and a major OEM in India.

Revenues were broadly in line with prior year with commercial activity split between completing restructuring of the ConMet and Propel activities and driving forward operational readiness for the India production launch.

Operational and administrative expenditure was below prior year by £0.6m (6% decrease), reflecting a lower share option charge.

Excluding the impact of share option charges and fundraising costs, the adjusted EBITDA was a loss of £6.5m (4% higher than prior period).

Interim condensed consolidated statement of comprehensive income and total comprehensive income

*Comparative figures have been restated to exclude income and expenditure relating to discontinued operations. A reconciliation of the balances is included in note 5.

Interim condensed consolidated statements of financial position

Interim condensed consolidated statements of changes in equity

1. General information

Saietta Group plc is a public limited company, registered in England and Wales. The address of its registered office is Riverbank, 2 Swan Lane, London, EC4R 3TT.

The principal activity of the company is the provision of electric drive solutions including the manufacture of prototype and production electric motors for vehicles.

2. Basis of preparation and significant accounting policies

The interim condensed consolidated financial statements for the six-month period ended 30 September 2023 do not include all the information and disclosures required in the annual consolidated financial statements, and should be read in conjunction with the Group´s annual consolidated financial statements as at 31 March 2023. The Group has applied the same accounting policies and methods of computation in its interim condensed consolidated financial statements as in its annual consolidated financial statements as at 31 March 2023. The interim condensed consolidated financial statements are not the statutory accounts of the Group. 

The directors are responsible for the preparation of the financial statements and to give a true and fair view. The interim condensed consolidated financial statements are prepared on a going concern basis.

The interim condensed consolidated financial statements are presented in pound sterling and all values are rounded to the pound sterling, except when otherwise indicated.

Going concern

The condensed interim set of financial statements included in this half-yearly financial report have been prepared on a going concern basis as the directors consider that the Group has adequate resources to continue operating for the foreseeable future.

The Group and Company operate in markets that are rapidly growing and has strategic plans that respond to such growth. In delivering those plans, the Group is mindful of the ultimate benefits from maintaining control over the deployment of its intellectual property in applications with major OEMs and within its joint venture arrangements. In order to do so, it recognises that at times it will potentially need to co-invest or defer investment to its partners to enhance the future value it can achieve from application of its products. In such instances the commercial merits will be weighed in determining whether funding is sought.

On 15th December 2023 the Group announced a fund raise of £7.14m before expenses. At that time, the Group indicated that the fund raise would meet the Group's working capital needs up to the end of March 2024. Thereafter additional funding would thus be required. Whilst the Directors expect that such additional funding can be raised this is not guaranteed and when continuing with an accelerated expansion this presents a material uncertainty which may cast significant doubt over the Group's and the Company's ability to continue as a going concern and therefore its ability to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not reflect any adjustments that would be required to be made if they were prepared on a basis other than the going concern basis.

Whilst acknowledging the uncertainties described above, the Board have concluded, on the basis of all scenarios and related expected cashflows and available sources of finance, that the Group and Company will be able to continue as a Going Concern for at least twelve months from the date of signing these financial statements and therefore it remains appropriate to prepare the Group and Company's results on the basis of a going concern.

3. Loss per share

The calculation of the basic loss per share is based upon the net loss after tax attributable to ordinary shareholders and weighted average number of shares in issue for the year.

The basic loss per share set out above is based on the average number of shares in place across the year.

The Company was loss making for all periods presented, therefore the dilutive effect of share options has not been taken into account in the calculation of diluted earnings per share, since this would decrease the loss per share for each reporting period.

4. Alternative Performance Measures ("APM")

In reporting financial information, the Group presents alternative performance measures ("APMs") that are not defined or specified under the requirements of IFRS. The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business. The APMs used within these results are defined below.

The Group uses adjusted EBITDA as an APM to review and measure the underlying profitability of the Group on an ongoing basis for comparability as it recognises that increased capital expenditure year on year will lead to a corresponding increase in depreciation and amortisation expense recognised within the consolidated income statement.

Reconciliations between these alternative performance measures and statutory reported measures are shown below:

5. Discontinued operations

6. Intangible fixed assets

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