REG - Saietta Group PLC - Operational, Trading, and Management Update

SaiettaAnnouncement

07/03/2023 07:00

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RNS Number : 0751S  Saietta Group PLC  07 March 2023

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 which forms part of UK law by virtue of the
European Union (Withdrawal) Act 2018 ("MAR").

 

7 March 2023

Saietta Group plc

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

 

Operational & Trading Update and Proposed Management Change

 

Increasing focus on near-term mass production; concentration of resources to
deliver world class eDrives into service in rapidly growing Asian market

 

Saietta Group Plc (AIM: SED), the multi-national business which designs,
engineers and manufactures complete Light-duty and Heavy-duty eDrive systems
for electric vehicles, today provides an operation and trading update across
its core business units.

 

Axial Flux & Light Duty integrated eDrives

 

Further to the announcement of 6th December 2022, that the Company had entered
into its first set of commercial agreements with one of the largest OEMs in
the Indian light-duty mobility market, the Company is pleased to update that
the supply chain for the Saietta complete eDrive system is now ready with
technical collaboration agreements in place with major 1(st) tier companies in
the region for the key components including the gear box and power
electronics.  Unit pricing and delivery timing is confirmed and therefore the
Company is confident that the start of mass production in India will commence
on plan later this year with volume targets of 80,000 eDrive systems in a five
year period.

 

Engineering Design Services ("EDS") purchase orders of c£986,000 have been
received from the OEM so far this financial year with the balance of the £3.2
million being receivable in FY 2023/24.  Site selection and capital equipment
ordering is underway for the Saietta VNA assembly facility in India, targeting
completion in August 2023.

 

Saietta VNA therefore remains confident of receiving its first formal purchase
orders later in H1 2023 which would formally contract the client to the
commencement of commercial production targeted for September 2023.

 

Building off the work conducted for the first set of commercial contracts
described above, Saietta now has a further 11 OEM live enquiries at various
stages from RFQ (Request For Quotes) through to final selection stage for its
primary Light-duty vehicle applications.  The combined market the Company is
now actively seeking to address is for circa 2 million vehicles over the next
five years as the anticipated rapid increase in demand for eDrive solutions in
this market gathers pace.  Saietta products have the key benefit of being
complete eDrive systems incorporating electric motor, integrated inverter,
transmission and if required VCU (vehicle control unit).  In addition, the
patented AFT 140i motor is now proven to deliver class leading performance as
evidenced by the commercial contracts with the Company's initial OME partner.

 

UK Facilities

 

The Saietta technical centre at Silverstone is completing its fit out and by
the end of March 2023 almost all staff will be collocated, bringing design,
procurement, sales, workshop and test facilities all together for the first
time.  The Company has retained some facilities at Upper Heyford so as to
continue to use the test tracks to cater for engineering and customer vehicle
testing.

 

Initial pilot production has now moved from Upper Heyford to Sunderland with
early sample motors starting to head to Europe, the US, the Company's India
Joint Venture and to its Propel division in the Netherlands.  Specialised
machinery to manufacture the core motor components at volume are now on site
in Sunderland with even more advanced equipment on track for delivery in late
summer.

 

 

Marine Division

 

Throughout the winter the Propel team has been demonstrating both the inboard
and outboard electric marine systems with clients and has now reached
commercial agreements with distributors in the UK, Ireland and Finland.
However, delays have occurred in the supply of key electronic components which
has impacted sales performance in the immediate term.  This delay has not
affected the long-term potential but the Group does not expect material sales
for the 2023 boating season and will seek to advance these downstream products
in Q4 2023 once the mass production of AFT motors is fully underway.

 

Heavy Duty

 

The collaboration with Duracar in Europe, has resulted in them taking over the
lease of Saietta's "Retromotion" facility in Apeldoorn and seven staff have
been permanently transferred to them to assist with the build of their
vehicles which will include AFT eDrives.

 

Product design and sales commercialisation is progressing on the Joint
Commercial Development programme with ConMet (the "ConMet JCDA") which
continues to a revised plan with the expectation that prototype parts will be
ordered during the next quarter.  A restructure at the Saietta R&D Centre
in Apeldoorn (a separate facility to the Retromotion facility) has seen a
significant reduction of headcount to optimise the team size and structure to
support the ConMet JCDA programme and remove unnecessary costs.  Some aspects
of the programme are being adapted as the technical specifications are
optimised. While the overall outlook for the US e-truck market remains
compelling we are adjusting our internal expectations as to the timing of
material revenue contribution to the Group.

 

Guidance and Outlook

 

FY 2022/23 revenues are expected to now grow by 40% year on year vs FY
2021/2022 and the outlook for FY 2023/24 indicates further growth of at least
100% year on year.  The revenues for the current financial year incorporate
an important change in the joint financing of our Joint Venture in India.
The Group has committed to completely fund some key components within the
eDrive system, notably the stator industrialisation, the inverter and VCU
hardware and software designs.  These are key Intellectual Property ("IP")
components that now are ensured not to be exclusive to any end user so as not
to limit future potential.  It is likely that these components will be
supplied to the Joint Venture directly from facilities in India, fully owned
by Saietta Group.

 

Overall, the Board of Saietta is confident that the Company is now in position
to fully finance the coming financial year (2023/24) without recourse for
further external fundraising by removing excess costs, reviewing all key
relationships and focussing on the delivery of major revenue streams flowing
from late summer. The Company's cash balance as at 28(th) February 2023 was
circa £11 million.

 

These actions are expected to deliver a positive EBITDA from early calendar
2024, in line with the announced business strategy.  As part of this
assessment, the Board has factored in the adjustment to timelines on
developing certain aspects of the marine and heavy-duty divisions described
above.  Consequently, Saietta is in detailed discussions with APC to ensure
to maximise the potential for the grant that was awarded for industrialisation
at Sunderland.  There is a risk that the Company may have to reapply for some
elements of the grant.

 

The vision of the Group at the time of its initial admission to AIM was to
launch and develop the world's leading automotive electric drivetrain business
using a combination of IP, excellent UK engineering talent and key
international relationships.  This vision was aimed at initially serving the
large-scale opportunity of the Asian market with ground-breaking lightweight
and highly efficient eDrives.  Although the journey has not been strictly
linear it is evident that the plan, technology and market opportunity were
correctly calibrated and next calendar year will see Saietta-powered vehicles
in volume on the roads.

 

Proposed Management Changes

 

Wicher (Vic) Kist has proposed to focus primarily on strategic business
development, particularly with the objective of accelerating the market
development for our Propel marine division.  Accordingly, as and when the
details of Vic's role with the Group are agreed the Board will communicate the
associated management structure changes. Vic Kist has worked closely with Tony
Gott, Executive Chairman, since before the 2021 IPO to deliver the progress to
date and will continue to do so beyond the changes envisaged.

 

 

Tony Gott, Executive Chairman, commented:

 

"As previously communicated in October 2022, the core business of Saietta in
light-duty integrated eDrives is developing at a greater scale and faster pace
that the Company originally envisaged.  Meeting current customer demands for
volume mass production in Q3 2023 in order to allow the associated vehicle
platforms to be launched in Q1 2024 has become an absolute priority for the
Group.  While the board is confident that it has the technical and financial
resources to meet this goal it is also cognisant that it remains a challenging
task and has resolved to make all necessary refinements to its strategy to
ensure its achievement without recourse for further external fundraising.

 

"Over the coming months we will be regularly updating the market on further
progress with our launch products and facilities in India where scheduled
volume production orders to support the start of vehicle production are
expected from May 2023."

 

 

 

The person responsible for arranging the release of this announcement on
behalf of the Company is Steven Harrison, Group Chief Financial Officer of the
Company.

 

-ENDS-

 

For any further enquiries, please contact:

 

 Saietta Group                                      via FTI

 Tony Gott, Executive Chairman

 Wicher (Vic) Kist, Group Chief Executive Officer

 Steven Harrison, Group Chief Financial Officer

 Canaccord Genuity (Nomad and Broker)               Tel: +44 (0) 207 523 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 Light-duty and Heavy-duty eDrive systems for electric
vehicles on land from scooters to buses (Vehicle categories L, M, N and T) as
well as marine applications.

 

Saietta has engineered breakthrough electric motor technology including
proprietary AFT (Axial Flux Technology) and RFT (Radial Flux Technology) which
can be combined with in-house power electronics, powertrain controls,
mechanical axles and transmissions. The designs are 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.

 

To demonstrate the outstanding attributes of the AFT technology and the
company also founded it's own next-generation marine propulsion division
Propel (www.propel.me (http://www.propel.me) ) which delivers solutions for
boating in the electric era that support the transition to decarbonization and
clean mobility on waterways.

 

 

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