Monday 20 December 2021

Saietta Group Plc

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

Unaudited Interim Results for the six months ended 30 September 2021

Saietta Group Plc (AIM: SED), the UK company that has developed the innovative, patent protected, AFT electric motor designed for high efficiency electric vehicle drivetrains, today announces its first unaudited interim results since its Admission to AIM, covering the six-month period ended 30 September 2021 (the "Period").

Wicher (Vic) Kist, Chief Executive of Saietta, said:

"Saietta has made considerable progress since our successful IPO in July and we remain on track to ramp up our UK-based production capacity to the target of 100,000 units per annum by 2024.  Having demonstrated that Saietta can reduce electric drivetrain cost without diminishing performance, which is essential if EVs are to become more accessible for mass market consumers, we have continued to grow our range of AFT motors.  We can now address a wider range of vehicle platforms from lightweight to commercial and have recently launched our marine propulsion motors under the Propel brand.

Since the Period end, we have acquired e-Traction which takes us into the heavy commercial vehicles market and doubled our headcount. We continue to receive a large volume of sales enquiries from numerous OEMs and are confident of entering into material contracts possibly before the end of the financial year.

We are busier now than at any time in Saietta's history and the level of interest from the industry since we launched the AFT140 late last year gives us great confidence for a strong second half and in the longer-term opportunities for the Company."

Financial Highlights

·     Sales revenue increased significantly to £795k (H1 2020: £56k) as the Company began proactively marketing its launch motor topology in Q4 2020

·     Gross profit £437k (H1 2020: £37k) with a gross margin of 55% ¹

·    Loss before tax £5,231k (H1 2020: £954k loss) reflects the fact that the Group is at the early commercialisation stage and  includes significant share options and IPO-related costs

·      Adjusted EBITDA² a loss of £1,064k (H1 2020 a loss of £394k)

·      Net cash at the end of the period £31.4 million  

Operational Highlights

·      Admission to AIM on 7 July 2021, raising gross proceeds of £37.5 million

·     On track to ramp up UK-based production capacity to target of 100,000 units per annum by 2024 having recently secured a   location for the pilot production plant and durability test facility at Silverstone Park

·     Specialised production automation equipment is being built and will be installed at the production facility ahead of a planned Summer 2022 opening

·     Interaction with several OEMs has accelerated with the completion of the Padmini joint venture agreement and a number of  operating motorbike models retro-fitted with Saietta motors, being shipped to India in the Perio

•    Entered into an exclusive in-wheel traction motor supplier agreement with Electric Assisted Vehicles Ltd ("EAV") for its proposed Lightweight Inner-City Solution ("LINCS") vehicle

·   Ongoing R&D continues to enhance the growing range of AFT 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

·    Acquisition for up to €2 million of e-Traction Europe B.V. ("e-Traction"), a designer, manufacturer, and supplier of complete electric powertrain systems for heavy commercial vehicles

·    Commercial launch of marine propulsion division, Propel, with two motors: the Propel S1 electric outboard and Propel D1 electric inboard

o  Immediate positive response from both OEM's and distributors, with initial focus on the Netherlands market followed by Benelux and Germany

o  Indicative orders from distributors of £0.9 million received since mid-November product launch

·     Appointed Seshu Bhagavathula as an Independent Non-Executive Director.  Seshu has over 30 years' experience in the automotive industry and is currently a Non-Executive Director of Swedish electric truck manufacturer, Volta Trucks AB.  Earlier in his career, Seshu spent 18 years across a number of roles at Daimler AG, including over 4 years in India where he founded DaimlerChrysler's R&D centre in Bangalore. From 2016, Seshu spent nearly five years at Ashok Leyland, the Indian bus and truck manufacturer, as Chief Technology Officer and then President - New Technologies

Outlook

·    Saietta remains dedicated to securing a number of 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

·    With momentum from contracts secured to date and the successful launch of Propel's marine motors directly into distribution and retail, management is confident of achieving its targets for the year ended 31 March 2022

·    Acquisition of E-Traction is expected to accelerate the performance of the enlarged Saietta Group beyond initial expectations  in future years

For any further enquiries, please contact:

¹Gross profit margin has decreased due to change in the company's sales mix. In the 6 months ended 30 September 2020, the Company was involved in a greater proportion of ad hoc consultancy work which generally generated greater gross profit margin but lower sales volumes than the revenue streams it operated in the period ended 30 September 2021 

²Adjusted EBITDA above is calculated as the Group's earnings before interest, tax, depreciation, amortisation, impairment and exceptional items including share-based payment charges & costs related to Saietta Group Plc's admission to the AIM

About Saietta:

Saietta Group plc is an engineering business specialising in the design, development and supply of complete powertrains for electric vehicles (EVs) from scooters to buses and marine applications.

Saietta has engineered breakthrough electric motor technology including proprietary AFT (Axial Flux Technology) and RFT (Radial Flux Technology) which is mated to controllers and transmissions. The design is unique and modular, enabling the delivery of high and low voltage e-motor solutions.

Saietta's difference lies in in two areas. Firstly, its ability to conceive powertrain solutions tailored to deliver competitive advantage; and secondly, it provides turnkey engineering services to OEMs to take them to start of production faster.

Services include market research and product definition, CAE and simulation, motor-controller electrical and mechanical integration, prototype build and rigorous testing on rigs and 20 miles of private roads. Saietta can go further still, defining the high-volume production processes for clients to manufacture in their local markets.

Chief Executive'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 Admission to AIM in July, raising gross proceeds of £37.5 million, was a major step in the Company's continuing development and supports the acceleration of our commercial progression to mass production of the proprietary AFT electric motor for a range of global market applications.

As anticipated the financial resources secured through the IPO have enabled Saietta to accelerate its interaction with a number of OEMs including the completion of a number of operating motorbike models retro-fitted with Saietta motors which now are being shipped to India. Saietta remains dedicated to securing a number of long-term, high volume OEM relationships globally.

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.

Whilst initial capital expenditure was delayed following the adjustment to post COVID lock down operations and several supply constraints, recent developments in particular with regards to securing locations for the pilot production plant and durability test facility at Silverstone Park in a unit completed prior to fit out, mean that Saietta remains well on track to ramp up its UK-based production capacity to its target of 100,000 units per annum capacity by 2024.  Approximately £2.0m of expenditure commitments had been placed and headcount increased by more than ninety per cent by 30 September 2021. 

The growing collaboration with EAV on the development of their LINCS platform will help showcase how effective Saietta in-wheel motors can be for lightweight commercial vehicles and we believe this could become a significant revenue opportunity in its own right. EAV has already commenced sales of its existing range of e-cargo bikes to a variety of customers including, but not limited to, DPD, Asda and Ocado, as well as having sold a number with the platform concept to a major global automotive OEM for evaluation, development and testing.

Saietta has made considerable progress since the IPO in its core focus lightweight mobility market; identifying and commencing the planned expansion of its UK production and testing capabilities at a site at Silverstone Park.  Specialised production automation equipment is being built and will be installed at the facility ahead of a planned Summer 2022 opening.  The facility will also house several new multi-faceted test cells.  Silverstone Park is approximately 20 miles from our headquarters at Upper Heyford and compares very favourable to constructing new production and testing facilities at Upper Heyford. The Company is also in initial discussions about securing additional production capacity at facilities in the North of England.

Since the Period end, a further £3.8m of capital expenditure has been committed on production automation equipment and, through the e-Traction acquisition, headcount has again doubled.

The acquisition of e-Traction will allow Saietta to accelerate its business plan by several years adding not just commercial and technical capability but also extending our IP portfolio and acquiring an operational power electronics production facility. Specifically, the addition of an operational inverter production line, at a fraction of the cost to develop such organically, considerably accelerates a number of Saietta's business goals.

We are delighted to welcome the e-Traction team to the Saietta group in order to both accelerate the current roll out of Saietta AFT technology into high voltage products and also to access the wider and lucrative commercial and HGV markets.

Saietta's marine division, Propel, achieved its target of commencing in-water testing of its first prototype e-outboard motors by Summer 2021 and has developed an inboard variant suitable for both retrofit and new build applications which has also successfully commenced testing.  As planned, we launched these products at the Marine Equipment Trade Show ("METS") in Amsterdam in November 2021, and were pleased to see an immediate response from both OEMs and distributors, with the latter already providing indicative orders of £0.9m for production units in the current financial year.

The Company is currently focused on three distinct areas: 

Firstly, the protection of Saietta's AFT technology intellectual property which underpins the Company's ability to provide motors with high torque at low voltage at a highly economic cost.  We continue to invest in patent protection across multiple jurisdictions and actively monitor for infringements while carefully selecting our trading partners;

Secondly, the scale up from R&D operations to large scale production which requires equipment, skills, processes and coordination.  The Company has made a number of hires with extensive knowledge and experience of such a scale up specifically to steer the expansion in the most efficient and effective manner, whilst automation is being supported by leading experts in that field; and

Thirdly, building strong supplier relationships across the supply network to mitigate the macro-economic effects that are impacting manufacturers across the Globe, alongside careful inventory planning in order to support the pace of growth.  Through choice of materials and the recent E-Traction acquisition, the Company has limited the impact of any single supplier failure and increased its purchasing leverage.

Outlook

Having completed the IPO, Saietta is well positioned to drive forward commercial opportunities.  Having already secured some revenue in H1, more substantial results are expected in H2, particularly following the November launch of Propel.  The Company continues to receive a large volume of sales enquiries from numerous OEMs and management is confident of entering into material contracts, possibly before the end of the financial year.  Management remains confident of achieving its targets for the full year.

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 business transitioning from an R&D centre of excellence into a full-service engineering design company, supporting OEMs on a journey from drivetrain design through to pilot production, test and commercial production, ultimately under licence.

Revenues exceeded prior year by 1,400% demonstrating how quickly commercial traction came after the IPO and indicating the step changes from contract wins.  With a broadened AFT motor range and the access to additional markets achieved through EAV and E-Traction, the rapid revenue growth is set to continue.

Operational and administrative expenditure exceeded prior year by £3.0m (511%) of which £1.2m was related to the IPO process.  The remaining increase in operating costs reflects the rapid scale up which followed the IPO itself, with the creation of a joint venture in India, collaboration with EAV and expansion of headcount in key areas of production, testing, engineering design and commercial delivery as contributory factors.

Excluding the impact of share option charges and IPO costs, the adjusted EBITDA was a loss of £1,064k, 170% higher than prior year.

Interim condensed consolidated statement of comprehensive income and total comprehensive income

Interim condensed consolidated statements of financial position