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 3^rd 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 1^st 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