Establishment of EV Motor Production Facility UK
04/04/2022 11:07
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RNS Number : 1443H Saietta Group PLC 04 April 2022
Monday 4 April 2022
Saietta Group plc
("Saietta" or "the Company")
Establishment of EV Motor Production Facility in UK
Saietta Group plc (AIM SED), the international electric drivetrain group,
announces that it has taken on a manufacturing facility in Sunderland, UK (the
"Sunderland Factory") through a number of agreements with ZF Automotive UK
Limited ("ZF").
The agreements will enable Saietta to meet its stated objective of
establishing a UK pilot production facility, with capacity to produce 100,000
units per annum, significantly ahead of its target and budget at the time of
IPO.
The Sunderland Factory is a specialised automotive electric motor
manufacturing facility of 86,000 square feet with a history of manufacturing
over 20 million electric motors for a range of automotive applications.
In addition, Saietta has purchased a total of 4 motor production lines and an
electronic circuit board production line for a consideration of £1.1 million,
a considerable amount of this equipment can be re-purposed to meet the needs
of Saietta's customers going forward, potentially representing a meaningful
cost saving.
Thirty-nine former ZF personnel with a range of critical skills including
fabrication, engineering, IT, quality control, finance and process management
will join Saietta. This team's ability to deliver efficient and timely
fabrication and certification of electric motors for automotive applications
is extremely valuable and scalable - as is the Sunderland Factory's
established supply and logistics chain.
Saietta intends to use the Sunderland Factory to manufacture its heavy
commercial vehicle drivetrains (which were previously manufactured in China)
as well as scale up the production of its AFT motors for its European marine
subsidiary "Propel" and other customers.
Strategic Rationale & Benefits
This move accelerates Saietta into the next phase of its evolution in line
with its published business strategy.
At the time of its IPO in July 2021, Saietta guided that approximately £10
million of the proceeds raised were to be used for the development of a
greenfield UK pilot production facility, with a capacity of approximately
100,000 units per year, within three years from completion of the IPO.
The agreements announced today enable the Company to achieve this IPO
objective of having a facility in place, after modifications and additions of
further equipment, more than two years in advance, and, the Directors believe,
at an overall cost significantly lower than that envisaged by the Company's
original IPO proceeds for a greenfield site.
Having an on-site manufacturing capacity will be crucial in ensuring that
Saietta maintains its product skill and knowledge from concept to production
and, the Directors believe, should help to secure material contracts both in
the near future and longer-term.
Initially, the Sunderland Factory will be used to produce Saietta's electric
marine motors, marketed under the Propel brand, and the e-Axle product line
that was acquired as part of the e-Traction acquisition in November 2021,
which gave the Company access to the heavy goods vehicle and commercial
vehicle markets.
Overview of the Material Agreements with ZF
· Saietta to take over ZF's lease of an 86,000 square feet electric
motor manufacturing facility in Sunderland with immediate effect
o Annual rent of £440k increasing to £615k from 1 January 2023
· Saietta to acquire all of the machinery and IT equipment
remaining at site from ZF for a consideration of £1.1 million
o With modification and further additions, the equipment will allow Saietta
to operate its own business shortly after completion, expected later today
i) Lease Assignment
Saietta, with the consent of the Landlord - The Council of the City of
Sunderland - will take on the lease of the 86,000 square feet Sunderland
Factory on the Rainton Bridge Industrial Estate from ZF (the "Lease"). The
Lease runs until September 2040 and a break clause is available from September
2025.
Saietta will pay an annual rent of £440,000 which will increase to £615,000
on 1 January 2023 and is subject to rent reviews in 2025, 2030 and 2035.
The Lease will be accounted for by Saietta as a Right-of-use Asset on its
balance sheet in accordance with accounting standard IFRS16. The Company
believes the initial carrying value, subject to audit, will therefore be
approximately £4m. There are no profits attributable to the Lease.
ii) Asset Acquisition Agreement
The Sunderland Factory has been producing electric motors for 23 years having
established an effective and reliable automotive production line.
ZF will be ceasing operations at the Sunderland Factory and, alongside the
assignment of the Lease to Saietta, the Company has reached agreement to
acquire the majority of the remaining assets contained in the Sunderland
Factory, such as machinery and IT equipment. With modification and additional
equipment this will enable Saietta to use the assets to operate its own
business at the Sunderland Factory.
Saietta has agreed to purchase the assets for a sum of £1.1 million, with £1
million payable within five days of completion and, subject to certain
conditions £100,000 paid within two weeks.
The equipment has been subject to an independent valuation which concluded an
in-situ market value of £1.64 million.
As the Asset Acquisition Agreement sets out the purchase solely of physical
production assets and IT equipment, with no transfer of personnel, trade, or
other business, there are no profits attributable to the assets. The Company
has entered into a separate agreement with ZF to supply ZF with certain de
minimis run-off services which are expected to be concluded within a couple of
weeks.
Direct re-employment of workforce
Separate to any arrangements with ZF, the Company has offered employment
contracts directly to 39 personnel who, until recently, were employed at the
Sunderland Factory. The new service contracts expected to be entered into will
amount to a total wage bill of approximately £1.2 million per annum to the
Company.
Further to today's announcement, the Company expects to be announcing a
financial year-end trading update during April.
Wicher (Vic) Kist, Chief Executive of Saietta, commented:
"This is a landmark achievement for Saietta providing us with a UK pilot
production facility more than two years ahead of schedule and considerably
within the originally anticipated budget. In addition to the lease on the
large factory in Sunderland, we are acquiring an automotive production line
which has demonstrated over 20 years of operations producing electric
motors. We will also be able to re-employ a proven, skilled workforce,
preserving valuable jobs for the region.
"I want to thank Sunderland Council for their support and to welcome our new
employees in the North East, I look forward to working with you all to make
this facility a key foundation in Saietta's continued success."
-ENDS-
Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information as defined in Article 7
of the Market Abuse Regulation EU No. 596/2014, as retained and applicable in
the UK pursuant to the European Union (Withdrawal) Act 2018 (as amended). With
the publication of this announcement, this information is now considered to be
in the public domain
For any further enquiries, please contact:
Saietta Group via FTI
Wicher (Vic) Kist, Group Chief Executive Officer
Steven Harrison, Group Chief Financial Officer
Canaccord Genuity (Nomad and Broker) 0207 523 8000
Henry Fitzgerald-O'Connor
Patrick Dolaghan
FTI Consulting (Financial PR advisor) Tel: +44 (0) 20 3727 1000
Ben Brewerton saietta@fticonsulting.com
Dhruv Soni
About Saietta:
Saietta is an AIM-quoted, multi-national business which designs, engineers and
manufactures complete powertrains for electric vehicles on land from scooters
to buses and on sea.
Saietta has engineered breakthrough electric motor technology including
proprietary AFT (Axial Flux Technology) and RFT (Radial Flux Technology) which
is mated to in-house controllers and transmissions. The design is unique and
modular, delivering both high and low voltage electric drive solutions.
Saietta's difference lies in its ability to conceive powertrain solutions
tailored to deliver competitive advantage and its turnkey engineering services
designed to fast-track electric vehicle manufacturers from concept to start of
production.
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