Saietta Group plc (LON:SED), the multi-national business which designs, engineers and manufactures complete electric drivetrain (eDrive) solutions for electric vehicles, has announced its full year results for the 12 months ended 31 March 2023 and provides an operational and financial update.
Since floating on the London Stock Exchange in July 2021, in 28 months Saietta has transformed from being just an axial flux technology (AFT) R&D company into a designer of a range of complete eDrive solutions for vehicle manufacturers, secured a major global OEM (original equipment manufacturer) as its launch customer for a range of their vehicle lines, established leading manufacturing facilities in both Sunderland and Delhi (through its JV partner Saietta VNA) and appointed high quality local supply chains.
The Company believes that it has reached its inflection point for its core business based on its proven AFT eDrives. The orders in place provide a firm launch pad and the Board is confident that it is now able to convert a significant proportion of its rapidly growing sales pipeline into firm commercial orders, thereby leveraging many months of development work and investment in its design and manufacturing capabilities.
This communication also sets out a very significant step-change business opportunity for Saietta by industrialising a proven all-new second model line based on its new in-house radial flux technology (RFT) motor family.
The Company has resolved the frustrating technical accountancy issues around accounting for the post balance sheet event of the new agreements with Consolidated Metco Inc (“ConMet”) which were signed on 1st August 2023 and has accordingly published its fully audited accounts for the year ended 31 March 2023.
Financial highlights for FY ending March 2023
| · | Revenue and Other Income from continuing operations increased 132% to £4.8m (2022: £2.1m) |
| · | Revenue and Other Income from continuing and discontinued operations increased 19% to £5.1m (2022: £4.3m) |
| · | Revenue and Other Income reduced from previously disclosed unaudited values by £1.2m, of which £0.3m relates to the reclassification of certain revenue as relating to a discontinued operation and £0.9m relates to ConMet engineering and design services payments being treated as proceeds on a disposal of an intangible asset, rather than revenue |
| · | EBITDA reduced from previously disclosed unaudited values by £4.0m by virtue of the reduction in turnover and due to capitalized development costs being reclassified as expenditure |
| · | Gross profit of £0.7m (2022: £0.8m profit) following above reclassification |
| · | Adjusted EBITDA loss of £14.0m (2022: loss of £4.4m) which excludes exceptional losses from the discontinued activities of £7.9m |
| · | Statutory Loss before Tax of £28.3 million (2022: £11.1m) accounting for all write downs and discontinued activities |
| · | Cash as at 31 March 2023 of £7.2m (2022: £18.4m) |
| · | Total Assets of £39.7m at 31 March 2023 (2022: £42.7m) |
| · | Net Assets of £29.2m at 31 March 2023 (2022: £32.8m) |
For information on the Company’s current working capital position post period end, please see the Finance Update post-period section below.
Operational highlights for FY ending March 2023
| · | Strategic adjustment to narrow near-term focus onto high volume revenue generating opportunities with established OEMs rather than a myriad of start-ups in the rapidly expanding global lightweight electric vehicle (EV) sector with a particular focus on India and the wider Asian region. The Board believes that the content of this communication clearly confirms the success of this strategy. |
| · | Expansion of the product portfolio from a stand-alone axial flux technology (AFT) motor at IPO (July 2021) to a supplier of complete proprietary eDrive solutions consisting of an AFT motor with integrated electronic controller in the same housing, modular transmission, mechanical axle and a mated vehicle control unit (VCU). The breadth of this extended product offering has been proven to generate significant market pull from OEMs. |
| · | In December 2022, Saietta announced what the Board now views as a major commercial breakthrough – the signature of a Development Agreement with a leading Indian OEM which is one of the largest manufacturers of light commercial vehicles (LCVs) in the Indian market. For clarity, this OEM is referred to as the “Lead OEM” in the rest of this document. This agreement immediately triggered an engineering design services (EDS) contract for approximately £3.2m of revenue spread over two financial years for eDrive solutions powered by Saietta’s AFT motors for two product lines with indicative minimum volumes across the first five years of 80,000 units. As outlined in this announcement, this initial agreement has to date matured into Saietta potentially providing eDrive solutions to the Lead OEM for four product lines in 2, 3 and 4 wheel vehicles in the very large Indian lightweight vehicle sector. |
| · | Established a production facility in Sunderland, UK for North American and European clients. |
| · | Discontinued its loss-making bus retrofit business branded “RetroMotion” in the Netherlands which it inherited when it bought e-Traction in November 2021. RetroMotion was sold to a Saietta customer in January 2023 which included transferring the seven employees and the associated premises and thereby reduced the burn rate to £0. |
| · | Strengthened the Board with the appointment of a new Non-Executive Director, Devyani Vaishampayan. |
Operational update post-period
| · | In April 2023 the Company was awarded a contract for 3,000 bespoke eDrive units from AYRO Inc., a US manufacturer of lightweight electric urban delivery vehicles. AYRO announced on 28 September 2023 that it had commenced deliveries of vehicles to end customers. |
| · | In April 2023 Saietta opened its Global Technical Centre in Silverstone, UK which saw all of its engineering team co-located for the first time. |
| · | In July 2023 Saietta confirmed the signature of an additional Letter of Assignment (LOA) between Saietta VNA and the Lead OEM for a third product line featuring the Company’s all-new Radial Flux Technology (RFT), mated to an all-new Saietta controller, gearbox and vehicle control unit. This application is for a lower powered L5 category small commercial vehicle than the two model lines to be powered by Saietta’s AFT motors. Once the RFT eDrive has been fully proven to fully meet the client’s requirements, a minimum of 60,000 units sales are forecast over a five year period in addition to the 80,000 units detailed above for AFT eDrive solutions across two product lines. |
| · | In July 2023 Saietta successfully completed proof of concept for complete inboard and outboard motor products in the leisure marine sector powered by Saietta’s AFT motors under the ‘Propel’ brand. The Saietta Board believes both product variants will be highly successful but recognises the strategic imperative to focus time and resources on the lightweight EV market, where the commercial opportunities are bigger, nearer and more certain. The Propel operations in the Netherlands were therefore suspended and the operation moved to Saietta’s Global Technical Centre in Silverstone, UK. This reduced annual operating expenses by approximately £1.2m to £0, but also resulting in an impairment of intangible assets of £2.1m. Saietta is now actively engaged in discussion with two potential partners for the marine business for an arrangement to take-on the industrialisation and commercialisation of the proven Propel products for which Saietta will receive ongoing revenue from product sales of the AFT motor to power the inboard and outboard systems as well as seeking technology transfer fees and ongoing royalties for the innovation delivered by Saietta. |
| · | In August 2023 in the heavy goods vehicle sector, Saietta restructured the contractual arrangements with their North American client ConMet, which resulted in an upfront payment to Saietta of €3.3 million, potential additional future license payments to Saietta of up to €20 million, and the transfer of the relevant project team in the Netherlands to ConMet which reduced Saietta’s annual operating costs by approximately €2 million to €0. It also meant that Saietta had no further costs for the development or production of the ConMet products. Saietta’s Heavy-Duty eDrive division was moved to Saietta’s Global Technical Centre in Silverstone, UK and the Company remains free to develop any eDrive products for trucks and buses apart from the ConMet in-wheel products for truck hubs. However, this also led to an inventory write down of £2.1m. |
| · | In September 2023 the AFT eDrive went into series production at Saietta’s UK manufacturing hub in Sunderland for North American and European customers with AYRO Inc. being the initial launch customer. |
| · | In September 2023 Saietta announced that its Indian joint venture, Saietta VNA, received a purchase order for supply of complete eDrives from the Lead OEM. The purchase order was for approximately £420,000 of systems for the first three months of vehicle production. Target volumes indicated by the client for the first year of production is expected to generate revenue for Saietta VNA in excess of £11.2 million. The Directors believe that the purchase order established Saietta VNA as the sole eDrive supplier for one of the Lead OEM’s light commercial vehicle (LCV) product lines and is expected to build to a minimum of 40,000 complete systems over a five-year period. An order for a second LCV product line also powered by Saietta’s AFT technology is expected over the coming months, and the two product lines combined are forecast to generate a minimum of 80,000 orders over a five-year period. |
| · | In October 2023 production of the AFT eDrive for the Lead OEM commenced in Delhi, India at Saietta VNA’s all new 33,000 sq-ft factory. |
| · | In October 2023, building on the work for the three LCV product lines for the Lead OEM, Saietta commenced work to evaluate RFT motor solutions for a fourth product line, this time for the 2 wheel market. This is very significant for Saietta given that in the 12 months ending September 2023, some 835,000 electric 2W vehicles were registered in India. This equated to approximately 5% of the total 2 wheel registrations, indicating the scale of the opportunity as this sector in India fully transitions to electric propulsion. The Lead OEM client has indicated sales aspirations of a minimum of 50,000 units over a 5 year period with start of production targeted for 2025. |
| · | As at October 2023, Saietta is progressing towards successful agreement for an aftermarket manufacturing contract to be undertaken by its Sunderland manufacturing facility. |
| · | As at October 2023, Saietta has a live engineering project with a second, separate major Indian OEM to complete a final proof of concept for another RFT motor variant for the very large 2-wheeler sector. Forecast 5-year vehicle volumes from the client are 800,000 units. |
| · | On 6 October Steven Harrison resigned for personal reasons from his role as Chief Financial Officer. Saietta is pleased to announce that David Wilkinson is appointed as Interim CFO with immediate effect. David understands the Saietta business intimately having joined the Board at IPO in July 2021 as Non-Executive Deputy Chairman and Chair of the Audit Committee. David will lead the Finance function with the support of Mr Harrison who will remain engaged in the business for a period of time to support Mr Wilkinson and assist the Company with a smooth transition of responsibilities to a new full time CFO. The Board has initiated a search for a new CFO and the Company will announce details of such appointment and Mr Harrison’s departure date in due course. |
As Saietta has now secured contracts from a leading OEM, the Board has high confidence that a significant proportion of the material items in the Company’s sales pipeline will mature into commercial contracts in the current financial year.
Finance update post-period
As announced on 25 September 2023, at the end of August 2023 the Company had cash resources of £1.2m and stated that this, combined with additional sums receivable from key customers and JV partners would meet the requirements for its focused AFT eDrive production plan.
As part of its joint venture relationship, the Company has recently formalized the advanced payment of £1.5m for certain machinery that is scheduled to be transferred from its Sunderland facility to the Saietta VNA joint venture in India. The Company is due to receive these funds from the JV in the coming days providing a significant increase to the September-end cash balance of £0.4m and, absent other financial resources becoming available, are deemed to provide the Group sufficient working capital into December 2023.
The Board believes that the increased scale of the commercial opportunities from the current sales pipeline, described in the Operational Update above, presents a unique opportunity to make a step-change and thereby secure substantial recurring long-term revenues over a range of high-volume product lifecycles.
Consequently, the Board has concluded that the Company will need to secure additional funding in Q4 2023 for further working capital and to generate the financial resources required to fully capitalize on the potential from the anticipated additional sales contracts within its pipeline.
The Company will accordingly proactively engage with stakeholders to explore financing opportunities which may include an equity raise.
Tony Gott, Executive Chairman of Saietta, said:
“We have finally resolved frustrating technical accountancy issues around accounting for the post balance sheet event of the new agreements with Consolidated Metco Inc (“ConMet”) which were signed on 1st August 2023 after our financial year end and released our fully audited accounts for the year ended 31 March 2023, which will recommence trading in our shares on AIM.
Saietta has made huge strides since the end of the last financial year and we believe we have reached the inflection point for the business. At IPO just 28 months ago we planned to build Saietta organically based on revenues from sales of our ground-breaking axial flux technology (AFT) motors before scaling up into additional product lines. However, the market is transitioning to electric propulsion much faster than even we predicted, especially in Asia.
As Saietta has now secured contracts from a leading OEM, the Board has high confidence that a significant proportion of the material items in our sales pipeline will mature into commercial contracts within the current financial year. This includes market pull from the Indian 2 wheel (2W) sector for Saietta’s all-new eDrives based on our radial flux technology (RFT) motors. This is highly significant given in the 12 months to September 2023 some 835,000 electric 2W vehicles were registered in India which equated to approximately 5% of the total 2W registrations, indicating the scale of opportunity in India as this sector transitions fully to electric propulsion.
The automotive market globally stands at an unprecedented moment of disruption, arguably the biggest since vehicles were first introduced over 120 years ago. With major disruption comes major commercial opportunity. We passionately believe that Saietta has the right product breadth and depth, at the right prices, at the right time, with the right people and the right business partners to fully capitalize on this huge opportunity.
The Saietta Board has therefore taken the decision to seek step-change additional funding in part to underpin our current working capital and, importantly, to also generate the financial resources required to fully capitalize on the potential from the anticipated additional contracts within our sales pipeline, including the huge 2W sector in India. We are open on how best to achieve this and are commencing discussions with our key investors to get their advice, but we are determined to appropriately capitalize the business and maximise the ROI for our investors.”
The financial information set out below does not constitute the Group’s statutory accounts for the year ended 31 March 2023, but is derived from those accounts. References within the document may refer to information in the statutory accounts and these will be sent to shareholders shortly and be published on the Company’s website imminently.
Chairman’s Statement
Saietta has transitioned from its beginnings as an R&D motor designer to a provider of engineering design services and supplier of light-duty vehicle e-axle products to OEM’s. Such a transformation within two years of raising funds through an IPO is an exceptional achievement.
Facilitated primarily by the proceeds from the IPO and subsequent fund raise, Saietta has made considerable progress in its core focus lightweight mobility market having secured orders for design and delivery of light-duty vehicle e-axles to customers in India and the United States. Saietta remains dedicated to further securing a number of long-term, high volume OEM relationships globally.
These achievements have required a considerable amount of transformation within the business and there have been changes at Board level and operating level as a consequence.
In particular, whilst the E-Traction acquisition made in November 2021 brought in new valuable intellectual property and skills to the Group, it also contained operational activities that were non-core such as the Retromotion, bus conversion category.
Successfully releasing this activity and deciding to seek an industrialisation partner to take forward the Netherlands-based marine operation, Propel, have together made it possible for the Group to reach the milestones set out with OEM’s in the light duty sector.
The decision regarding Propel has led to an impairment of the assets in that business unit as there is uncertainty over the timescale to complete such a transition.
Outlook
Moving from an R&D-focused technology start-up to a large-scale manufacturer with international sales is clearly a dramatic transformation and the Group continues to encounter the challenges commensurate with such. However, its market acceptance is now firmly in place, which provides a much clearer path towards its goals and aspirations.
Saietta employees Group-wide have been integral to delivering on its ambitious growth plans and the Board is confident that our short- and long-term goals remain achievable. Saietta’s ramp up of delivery of light-duty vehicle e-axle products to our customers remains firmly in place to ensure the future prosperity of the Group.
The Board has confidence that the commercial opportunities for Saietta across global markets and particularly in India remain readily apparent and the rapid scale-up of its business will allow it to access these opportunities in the near future.
Chief Executive Officer’s Review
This was a challenging transitional year for the Group with commercial success and operational delivery becoming a dominant feature of the business as opposed to the research and development start up phases of the past. Our turnover in the 12 months ended 31 March 2023 increased by 50% to £2.1 million (2022: £1.4m) from continued operations.
The Group now consists of:
| · | An international light duty division offering an entire, integrated e-drive system (comprising gear box, axle, inverter, and controller) packaged around an AFT 140 motor. The Board believes this increases the value of the AFT product offering and accelerates the timeline for its adoption into vehicle platforms; |
| · | An international heavy-duty division which which holds an agreement post year end for future licence revenues due on two products under development by Consolidated Metco Inc., a leading US supplier of hubs to OEM’s; and |
| · | A world class automotive electric motor factory in Sunderland with 4 motor production lines and an electronic circuit board production line. |
Our achievements during the year
Saietta VNA awarded contract with Tier 1 Indian OEM
In December 2022, the Group signed a Development Agreement with a Tier 1 Indian OEM for engineering design services of approximately £3.2m for a series of products with assumed minimum volumes across the next five years of 80,000 units and a start of production in the fourth quarter of 2023.
Ayro Inc. awarded contract and initial purchase order of USD6.0m
In April 2023, the Group received an order for 3,000 bespoke eDrive units from Ayro Inc., a US customer that commenced delivery of prototype units earlier in the year. The award reflected Ayro’s confidence in Saietta’s engineering design and support as well as its clear delivery capability, having secured a production facility in Sunderland in April 2022.
Strategy, recent developments and commercial opportunities
The Group’s strategy has evolved throughout the year driven by market pull, particularly in the area of light-duty solutions and by resource constraints that have led to prioritization on the original AFT technology away from the ancillary areas of Marine and Heavy Duty.
The decision to find an industrialization partner for Propel and to renegotiate the arrangements with ConMet were necessary steps in this evolution.
Looking ahead, the outlook for the business with a refocused operating model is highly positive for Saietta. We envisage the growth experienced in 2022/23 will accelerate as the scaled up production of AFT and RFT motors in India and other markets will occur in the coming year.
Future growth strategy
The Group intends to invest for growth in the following areas:
· Saietta VNA scale up to meet client orders
· Securing a number of long-term, high volume OEM relationships globally; and
· Continue to secure crucial patents across all key international markets.
To make such growth possible, the Group has had to apply rigorous rationing of its capital and its subsequent renegotiation of arrangements with ConMet are an example of the discipline and refocus applied.
Saietta is quickly positioning itself to become a prominent participant in drive train systems and technology for applications across the electric vehicle segments.
Review of the Group’s Business and Financial Performance
Overview
Having commenced the year acquiring a facility in Sunderland with 86,000 square feet of factory space designed specifically for electric motor production, the Group moved away from its research and development origins and pivoted towards a phase of industrialization of motor production in order to address the opportunities materializing in contract wins.
The Group delivered moderate results during the year, generating total revenue of £2.1m (2022: £1.4m) from continued operations whilst formalising its business structure and strategy for its principal divisions*:
a) Lightweight mobility division addressing India through Saietta VNA and the United States of America directly from its Sunderland plant.
b) Heavy-duty commercial division with licence revenue in place for future products.
* the marine division has now been discontinued whilst an industrialization partner is being sought.
Establishment of production facility
On 4 April 2022, the Group acquired fixtures and fittings, plant equipment and a lease for an 86,000 square feet production facility in Sunderland which will ultimately be able to produce in excess of 100,000 units per annum. The Sunderland plant will service non-India based customers through semi-automated lines for both AFT and RFT requirements. Saietta VNA, the Group’s Indian joint venture, will service customers through a fully automated AFT line and RFT lines due to be in place in quarter four 2023.
Furthermore, in the event that additional contractual orders for eDrives are received in the near term (ahead of cashflows from the AFT eDrive vehicle programmes referenced above) then the Company may also require additional capital to fund the set up and production implementation of those additional contracts.
Business development – Lightweight mobility division
The development order from India with production to follow and the order from the USA confirmed the Group’s strategy to concentrate on lightweight mobility as the most effective means to harness the potential of its AFT technology with a view to rapid profitable growth in the coming years.
Business development – Heavy-duty and Marine divisions
The Group has needed to concentrate its attention and capital on the areas of most substantial returns both in terms of internal rates of return and immediacy.
As a consequence the arrangements with ConMet, the discontinuance of the Retromotion activity and the redirection of marine retail operations in the Netherlands all became necessary steps towards the focused Group strategy.
Gross profit
Saietta delivered gross profit of £0.7m (2022: £0.8m) with a lower gross profit margin of 31% (2022: 58%) from continuing operations. The fall in gross margin is driven by revenue mix and the changing nature of the ConMet contract.
Other income
£1.0m gain on disposal of the intangibles created in the ConMet projects and £1.7m (2022: £0.7) of grant income from two projects (2022: 3 projects) were recognized in the year. Grant income included the projects with Innovate UK (“APC 6” and “APC 16”) which generated income of £1.0m (2022: £0.6m).
Administrative expenses
Administrative costs for the year of £21.8m (2022:£13.1m) represents an increase of £8.7m.This increase is driven by the Group expanding its operations across geographies which in turn has served to increase its fixed cost base. In particular, the Group deployed funds to grow its existing operations with the addition of the Netherlands based heavy duty division for the entire year, a Sunderland plant and expanded Propel B.V. which has caused total, average staff numbers to increase from 100 in 2022 to 189 in 2023.
The share-based payment charge decreased from £4.4m in 2022 to £2.3m in 2023, due to performance below target for the new Long-Term Incentive Plan (‘LTIP’) awards.
Discontinued operations
The strategic adjustment to narrow near-term focus on immediate revenue generating opportunities in the rapidly expanding global lightweight electric vehicle (EV) sector through the discontinuance of the Retromotion activity and the redirection of marine retail operations in the Netherlands lead to significant losses in the year £7.9m (2022: £0.05m)
Adjusted EBITDA
The underlying level of loss that is measured by Earnings Before Interest, Tax, Depreciation and Amortisation, discontinued operations and non-recurring expenditure, which excludes expenses associated with the Admission to AIM in the prior year and the raising of additional funds through a placement in the financial year ended March 2023 and share-based payments (adjusted EBITDA), shows an increase in adjusted EBITDA loss from £4.4m in 2022 to £14.0m in 2023.
For full details on how the adjusted EBITDA figure is calculated, please see note 4.
Consolidated statement of financial position and cash flows
Non-current assets
As at 31 March 2023, non-current assets amounted to £25.5m (2022: £15.5m), including intangible assets of £10.9m (2022: £8.4m) and property, plant and equipment of £8.1m (2022: £3.5m).
Of the increase in intangible assets, internally-generated development costs and the purchase of intangible assets accounted for £3.3m (2022: £3.6m) and £1.0m (2022: £0.5m) respectively whilst disposal groups held for sale accounted for £(1.7)m (2022: nil).
Current assets
As at 31 March 2023, current assets amounted to £14.2m (2022: £27.2m), including cash balances of £7.2m (2022: £18.4m).
The principal elements of the decrease in cash were:
| · | Gross proceeds through placing and subscription of £23.6m (2022: £37.5); |
| · | Operating cash outflow of £18.2m (2022: £6.8m); |
| · | Investing activities including the acquisition of intangibles, property, plant & equipment and the capitalization of development costs which totaled £10.5m (2022: £8.9m); and |
| · | Movements in working capital of 3.4m outflow (2022: £1.0m outflow). |
Directors’ Report
The Directors present their report and the consolidated financial statements for the year ended 31 March 2023. The Directors who served during the year and their beneficial interest in the Company’s issued share capital at year end were:
| Date of appointment | Date of resignation | Ordinary shares of£0.011 each2023 | Ordinary shares of£0.011 each2022 | |
| Executive Directors: | ||||
| Anthony Gott1Wicher Kist | 7 July 202123 November 2018 | N/A17th April 2023 | 21,7391,313,289 | -1,295,174 |
| Steven Harrison | 22 April 2021 | N/A | – | – |
| Non-Executive Directors: | ||||
| Emmanuel Clair | 23 November 2018 | N/A | 12,777,622 | 12,603,709 |
| David Wilkinson | 7 July 2021 | N/A | 11,956 | 8,333 |
| Seshu Bhagavathula | 17 December 2021 | N/A | – | – |
| Devyani Vaishampayan | 5 December 2022 | N/A | – | – |
1On 1 August 2022, Anthony Gott was appointed Executive Chairman and on the 18th April 2023 as Interim Chief Executive Officer. On 2 October 2023 David Wooley was appointed as Chief Executive Officer.
Principal Activities
Saietta Group plc is a company registered in England and Wales that has developed the innovative AFT electric motor, designed to deliver class-leading performance for its target markets whilst being low cost and built for mass market production. Saietta’s initial target market is the high volume, fast-growing lightweight mobility market including motorcycles in Asia.
Review of Business
A review of the business, its development and performance for the year and its position at the year end, together with the future prospects of the Group, is contained in the Chairman & Chief Executive Officer’s Report and the Strategic Report.
Going concern
The financial statements have been prepared on a going concern basis. In adopting the going concern basis, the directors have considered the financial position of the Group and the Company, their cash flows and their liquidity position. The Group and Company’s financial risk management objectives and exposures to liquidity and other financial risks and uncertainties are set out on pages 15 to 18 of the Group’s financial statements. The Group had net assets of £29,189,193 (2022: £32,814,791) as at 31 March 2023 and available liquidity of £7,247,267 (2022: £18,402,055) comprised of cash and cash equivalents.
The Group and Company have modelled scenarios for a period up to October 2024 from the March 2023 year end and stress tested its financial position in such scenarios. These stress tests modelled the variability in financial performance and free cash flows when incorporating certain hypothetical events such as a reduction in forecast revenue and a delay in the receipt of payments for equipment from Saietta VNA.
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.
These forecasts align to the business strategy which was based on the assumption that the Group and Company will significantly increase its revenue and be able to generate significant gross profit in the next 12 months.
Furthermore, the forecasts also include payments from Saietta VNA, the Group’s joint venture in India, for equipment for fully automated production of AFT motors. The Group has spent £3m on such equipment and this amount is to be reimbursed by Saietta VNA. In the absence of such reimbursement there may also be a need to raise additional funding
Whilst the Directors expect that 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.
Results and Dividends
The Group loss for the year, before taxation (including discontinued operations), amounted to £28,041,921 (2022: 10,782,252). The Directors do not recommend a final dividend this year (2022: £nil).
Research and development costs
In accordance with the policy outlined in note 2, the Group incurred research and development expenditure of £3.3m (2022: £3.8m) in the year. Commentary on the major activities is given in the Strategic Report.
Financial instruments
The use of financial instruments and financial risk management policies is covered in the Strategic Report and also in note 33 of the financial statements.
Substantial shareholdings
At 31 March 2023, the Company had been notified that (other than Directors) the following were interested in 3% or more of the issued capital of the Company:
| Number of Ordinaryshares | % of issuedshare capital | |
| Amati AIM VCT plc | 10,980,174 | 10.67% |
| Lawrence Marazzi | 5,794,799 | 5.63% |
| John Michael Winn | 6,326,934 | 6.15% |
| Premier Miton Investors | 7,122,114 | 6.92% |
| Schroder Investment Management | 7,167,665 | 6.96% |
| Canaccord Genuity Wealth | 6,003,963 | 5.83% |
At 18 October 2023, there were 102,917,675 Ordinary shares in issue.
Governance and the Board
The Board’s governance system provides balanced support for the executive management team in the development of the Group’s strategy and with the need to ensure effective monitoring of its implementation. The Board and its committees have considered the significant events of the year and their impact on the Group’s business and reputation.
During the year the Audit & Risk Committee was chaired by David Wilkinson, the Remuneration Committee was chaired by Devyani Vaishampayan (previously David Wilkinson) and the Nomination Committee was chaired by Devyani Vaishampayan (previously David Wilkinson). The Board remains confident in the work of those committees and the overall system of governance.
Events after the reporting period
The events after the year end of 31 March 2023 are detailed in note 36 to the financial statements.
Strategy and future developments
The Group’s strategy and future developments is covered in the Chief Executive Officer’s Report.
Major macroeconomic impacts
Covid-19 and its aftershocks: We are mindful that the legacy of the COVID-19 pandemic and the friction it placed into international trade continues to have a notable impact on global supply chains; however, after negotiation and supplier development we currently do not anticipate that our production and sales volumes projections will be adversely affected in FY2023/24.
Economic and geopolitical factors: Inflationary pressures have been increasing throughout the first half of 2023, with major economies across the globe experiencing high energy prices linked to the conflict in Ukraine. This has fed through into higher interest rates and inflation on supplier costs. This has directly impacted the business as some prices we pay our suppliers are directly indexed to market rates which then puts pressure onto profit margins. Cost down measures to reduce the bill of materials and labour requirement have been pursued during the year to mitigate the effect of the increased raw material costs. Looking ahead, we will continue to monitor the impact of changes in material costs on our margins and continue to review areas where cost can be taken out of the manufacturing through process engineering. Ultimately, we may also look to adjust sales prices if we cannot avoid passing cost increases on to our consumers.
Auditors
Each of the persons who is a director at the date of approval of this annual report confirms that:
· so far as the director is aware, there is no relevant audit information of which the company’s auditors are unaware; and
· the director has taken all the steps that he/she ought to have taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the company’s auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006. The auditors, BDO LLP, will be proposed for reappointment in accordance with section 489 of the Companies Act 2006.
Saietta Group plc has not included the requirements of Streamlined Energy and Carbon Reporting (SECR) due to the Group and its subsidiaries not meeting the threshold for reporting.
