Good morning, everyone. This is the first investor call in 2023 from LION AG. Thank you very much for joining this morning. After a very successful start into the year, we are now focusing on last year's numbers. The call is about the preliminary results of 2022. Today on the panel are Alessio Basteri as the chairman of LION E-Mobility AG, Ian Mukherjee as the board member of the AG and main investor, and Winfried Buss as the managing director, both for LION Smart GmbH LION LION Smart Production GmbH. Before I will hand over to Winfried, just from my side, a news I wanna share. You might have recognized it, that LION has finished the collaboration and the partnership with Weber Shandwick.
The positive news about this is potentially that I am now more focusing on supporting LION AG on all matters about PR and IR. As we have also received some questions prior to the call what we are currently planning for this year, this is definitely that we want to invest more into PR and IR. For instance, we have already started talking to a couple of journalists from the financial publications and business publications covering the e-mobility market.
We have spoken to some. What we also are planning to do is inviting those journalists individually to Hildburghausen, so that they will get a site tour there, and that they get more insights about the production and also having then an interview with Winfried about the plans of LION in the upcoming years. We expect to have the first journalist present in Hildburghausen pretty soon. We also have spoken to a couple of institutional investors. This is what we are doing ongoing, so together with Ian and also with Jörg from LION, who is the head of finance, as you might have recognized. This is also ongoing. We also planning a more, let's say...
I don't know whether it's a site opening, but it is, let's say a somehow an event in Hildburghausen where we invite journalists and also maybe local celebrities, if I may say this. That is in the planning, but this will come later this year. This is just a very quick overview and our initiatives regarding the public relations and investor relations for LION. Now I would like hand over to Winfried, who gives you a detailed overview of the numbers of last year. Winfried, you just tell me when I should click the next slide, please. Winfried, the stage is yours.
Yeah, thank you. Yeah, thank you very much, Frank, for the introduction. Good morning, ladies and gentlemen, from my side. Like Frank already indicated, we're going to present today the numbers for the last year, for 2022. We should go to the next page, please. Just a little bit of introduction because you have, you may have noticed that the press release yesterday was a little bit different structure to the ones we had before, because we have now the two legal entities, which is the LION Smart GmbH here in Garching, and LION LION Smart Production GmbH in Hildburghausen live and working.
We have now reported to the shareholders each individual result of the legal entities and on top a consolidated view that makes it comparable to compare it with the numbers from 2021. Just a little bit saying the revenue in 2022 was still recognized by LION Smart GmbH while the LION Smart Production has expensed the startup cost. You probably see this in the numbers that the one legal entity made a good profit while the other was still negative due to the startup cost.
We have done a true-up of both German companies by end of this year to make sure we have the costs separated correctly and allocated to the right legal entity by the end of this year. Like I said, the comparison is done between the 2021 LION Smart numbers and the 2022 consolidated figures, means the consolidation between the two legal entities, which are stated under point 1. If you go to the next page, then we go into medias res. Here is the numbers we have for the two legal entities. You see the LS GmbH, which is the abbreviation here for the LION Smart GmbH in Garching. You see it in the box below the table.
The LSP GmbH, this is the LION Smart Production with a location in Hildburghausen. Our external sales is close to EUR 45 million, which brings it to the upper edge of our guidance given with where we said it's EUR 50 million-EUR 55 million for the full year 2022. We have a positive EBITDA on the consolidated basis, LION Smart generated slightly north of EUR 2 million, while LSP LION Smart Production generated EUR 1.6 million negative. That ends up with half a million EUR EBITDA and roughly EUR 400 million on a consolidated basis for both companies. This is in line with our expectation.
You may remember that during the last call, we said management is expecting to close the year on a positive result. If we look on the revenue, the growth comes from EUR 29 million to close to EUR 45 million. That's an uplift of EUR 24 million. If we convert that into percentage, it's close to 75%. The growth momentum is still alive, and we can participate in the industry and grow the market. If you go to the next page, please. Let's go into the P&L. Again, you see here the numbers for the LION Smart GmbH, which is the LS GmbH, and the LSP, which is the LION Smart Production, the consolidated numbers, and the comparison to 2021.
Like we said, on the previous slide, revenue is up significantly, and we met the guidance from last announcement. We had intercompany sales of EUR 6.4 million for transfer of the inventory from LION Smart to LION Smart Production and EUR 1.1 million for intercompany service. These intercompany service are consolidated and shown here in the table on the left. LSP was the receiver of the goods, which is reported that as inventory and intercompany service at operating cost. You will see this in the numbers on the next slide. The material rate is 86% for 2022. It's quite nearly unchanged to 2021.
That means even in the quite difficult environment for fluctuating raw material prices, we have been able to defend our margin this year. We're going to expect to continue also the next year with that growth margin rate. Overall, the company generated a consolidated gross profit of EUR 7.6 million in 2022, which is up EUR 3.5 million compared to last year. You go to the next page, please. When we see the numbers from the gross profit and go down the P&L, we see the next big block, it's the personal expenses.
Personal expenses are up from EUR 3 million last year to EUR 3.8 million, which is basically due to the fact that we have a new team in Hildburghausen for running the production. We have increased the headcount in R&D in LION Smart here in Munich. Depreciation is slightly lower compared to previous years, and operating expenses is higher compared to last year, mainly due to consulting work in line with the relocation and the additional site at Hildburghausen, which adds structural cost to our P&L. Again, the consolidated EBIT is positive by roughly EUR 300,000, which means we're having a black number this year. If you go to the next page, please.
The financial result is slightly higher compared to higher interest rates we have received. Finally, we are reporting EBT, earnings before tax, of EUR 400,000. However, when you see in the LION Smart, there is a EBT of roughly EUR 2.1 million. However, due to the loss carryforward, we only have to consider minor tax payments for that amount. You see the LSP has a negative EBT of EUR 1.7 million. This reflects the transfer costs we talked on the previous slide. Overall earnings is roughly again EUR 0.4 million compared to a loss of EUR 1 million, the fiscal year before. If you go to the next page, please.
If we look on the balance sheet here, we have again the LION Smart and the LION Smart Production as well as the consolidated numbers. When we look on the first portion, which is the fixed assets, they're up from EUR 7.4 million-EUR 9.8 million, mainly due to capitalization of R&D work as well as the assets under construction in LION Smart Production. This is the line we're going to transfer from BMW. The current assets are up from EUR 6 million-EUR 13.9 million. This is the, as you may remember, that we said we're going to deliver right now our customers from inventory.
This is mainly for the cost of inventory and also increase in cash and cash equivalents. If you go to the next page, please. Equity is up from EUR 6 million compared to EUR 5.6 million. Basically subscribed capital is slightly higher compared to last year because we have LION LION Smart Production GmbH, which has a certain subscribed capital. The accumulated loss brought forward up by approximately EUR 1 million from last year. Liabilities increased from EUR 7.5- EUR 17.5, EUR 17.1 million, sorry, mainly due to the increase of payables and to affiliate companies, which is in line with the transfer of the products from LION Smart to LION Smart Production.
If you go to the next page. The overall cash flow from operations is negative by close to EUR 6 million compared to EUR 0.4 million in 2021. That's mainly due to financing of inventory for production, where we have to hedge for the blackout period where we cannot produce any product from the lines during the transfer window. Cash flow from investments, higher compared to 2021, mainly due to capitalization of R&D work, investment in LION Smart Production. Last but not least, the cash flow from financing is significantly higher due to financing of inventory as well as the invests in LION Smart Production. If you go to the next page, please. The key messages here for the last year.
Basically, number one is the company continues on the growth path. The revenue for 2022 is significantly up compared to 2021. The growth momentum is still existing in 2022. We met the guidance, and we delivered a consolidated positive full year EBIT for the both companies, despite the startup costs we faced in Hildburghausen. The Q4 sales was coming mainly from stock at LION Smart. Deliveries in the first half of 2023 will be a mixture of inventory and own production, depending on the part numbers, the variants we're having. We're going to start the production sooner or in some cases maybe a little bit later.
Typically during the transfer period, not only LION Smart has built up a stock, also our customers have built up a stock. The sales we're going to see in the first half of 2023 is expected to be lower compared to the second half as customers for sure will just utilize their own stock before they buy further packs from us. If we go to the next page. We want to give a small update on where we stand. We have sent out by the first of March a statement where we are. Basically just to recap that, the relocation of the product line and installation is completed. The product requalification is still ongoing.
Like we said in the press release, we're going to expect to deliver to customers then in the second half of April, with where we have them, then where we plan to have fully certified packs. We plan also an opening ceremony where we will invite customers and governmental officials sometime probably by the end of the second quarter. We prepared a small video for you. We hope we can broadcast it in a reasonable quality right now that you can see how this production line is working in our facility. Frank, you may start the video now. Here we see the.
In the first section of the video, typically there should be some sound on it. In the first section we have seen the module production. In the second phase of the video here, we see the pack production, where then the single modules are built into the battery housing together with the electronics, and then the full pack is tested, screwed here in this view, and then gets in the next step gets tested in the end-of-line production, and then its production process is completed. All right. If you go to the next page, please. We also want to give an update on the LIGHT Battery. Remember, last year we have given an outlook on the phase two of the OEM project.
Here we want to give an update. The phase two was rescheduled due to the fact that we had lessons learned and optimization of the LIGHT Battery from phase one. Right now we're implementing these lessons learned into the batteries. And we'll then go with the assembly of phase two in May, and we'll then deliver end of May, beginning of June, hopefully, the pack to the customer who will then test it in Q3 in this year. Go to the next page, please. Also we want to introduce our new global head of sales. And Michael Reis is has joined us in February. He's an experienced sales manager.
He served in different positions, head of sales and head of program management at OSRAM. He's coming here to help us structuring the sales team and the sales regions and the sales segments in a more professional way and help us to hopefully then make our gross numbers this year and the next years. With this. Next page, please. With this, I'm done with my part of the presentation, I'd like to hand back to Frank.
Yeah. Thank you very much, Winfried, for the explanation of the numbers and figures for 2022. I would like now to have Ian to give his perspective and his point of view about the business of last year and the actual business from the point of view of an big investor and angel investor of LION. Ian, please.
Thanks, Frank. I know we've got a Q&A in a minute, I'll be brief. I really wanted to focus on one point, which is funding, because we know that some investors have reached out and said, you know, "How is the funding going?" I think with this presentation, you saw a healthy gross margin in 2022. We have become cash generative, which covers some of our startup costs and ongoing costs. You may also remember a capital raise we did last May in preparation for all the investment that we were gonna make. We set ourself up with existing cash flow to be as well-funded as possible, knowing that in this space, you know, in general around the world, there has been funding issues, volatility in funding markets.
Touch wood, so far, that has not affected us. What we have done is we've set up a more robust capital market team, if you like. We've got Jörg- Peter Hahn, who's our head of finance at the group. We've got Dr. Michael Robb, who's a consultant. We have Frank, who's come to work with us more closely, myself and of course our Chairman, who are working together since Jörg started in November. Of course, Jörg is a key driver here to reach out to banks so that as we grow and the issue of funding working capital comes up, we have access to bank loans. We have been talking to a range of banks, including in the regions that we operate. We feel confident that we'll be able to set up some bank funding.
Of course, there are also access to shareholder loans. We don't envisage doing any equity capital raise in the foreseeable future. We are confident that we'll continue to generate good internal capital, which is the benefit of being post-revenue rather than pre-revenue. I think Winfried mentioned that the revenue guidance was EUR 70 million to EUR 80 million for this year, and I think if you listen closely, he gave guidance that the gross margin would be fairly similar to that that we've seen in the last two years, which gives me confidence that we'll be generating a decent amount of internal capital, which we're gonna need for the growth of the business.
We think it's prudent to be developing bank relationships, which we are doing, so we can set up additional methods of financing as we move forward with the hope that our sales will grow higher, but in the knowledge that higher sales means a higher amount of working capital. Frank, with that, I think we should move into Q&A.
Yes. Thank you very much indeed, Ian, for providing your point of view. Yeah, exactly. We have an Q&A session this time interactive. You either can ask your questions in the chat, or you can also say you want to ask this question live, and I will then unmute you. That's also no problem. You should then raise your hand, or put your, you know, just mentioning that you want to ask a question in the chat. We have one question, and this is from one investor who ask, "Have you considered having analyst coverage already?" Maybe, Ian, you want to answer that one.
Yes. I think that, I think without going into a lot of detail, I think that our expectation is that over the course of this year, we will see research coverage come out on our company, and I think that is important. I think as Frank mentioned, one of the goals of the capital market team is, at the moment, our big focus is on the banks and credit. We are also focused on developing particularly institutional investor relationships, so that going down the road in 2024 and 2025, if we see good growth opportunities, we've got a healthy equity capital market as well as a credit capital market.
I think to do that, as we begin more and more institutional outreach, and as Frank said, that has started already and will continue, I think, I'm pretty confident that we'll see research coverage come out. Of course, we have no control over that. This is independent and done away from us.
Thank you very much, Ian. There is a question from Tom. I will unmute you, Tom, in a second. Here you go. You can ask your questions, Tom.
Okay. Good morning, and thank you for taking my question. First, question block is about the GmbHs. Is there any news about LION North America as well? What do you expect for the revenue distribution for 2023 between the two European GmbHs? You know, last year, the one had no revenue at all, how is it going to be distributed in the future? Second question is about IR expansion. You told us about PR expansion and gave us some details. How is it going to be in IR? Are you going to visit capital market days? Are you having more quarterly numbers? How about AGM? Will it be physical? How can I visit it as a foreign investor? What are the topics there for you? Thank you.
Thank you, Tom.
Maybe I take on the first part of the question, Frank, is that okay?
Sure.
Okay. Tom, thanks for your question. Let me comment a little bit on the LION in North America. You know, we have a subsidiary in North America, which is called the LION Smart North America. In North America, we have two salespeople working our way through the North American customer base. If you ask me on the revenue split, for sure, we cannot tell you right now because we have not collected all the orders, but we're aiming for a significant portion in the North American sector. In the range of 20-30% of this year's revenue may come from the US. Does that answer your question, Tom?
Sorry, Tom. I have unmuted you, but I'll mute you.
Well, partly. I'm also interested in the revenue distribution between LION Smart GmbH LION LION Smart Production GmbH in 23.
Well, the split will be basically everything which is related to the Integration Business. This takeover of the BMW that revenue will go into the LION Smart Production because they will produce and sell the packs. Whatever is the project revenues, where we say we're going to have LIGHT Battery and so on, that will remain in the LION Smart. The majority of the revenue will move into the LION Smart Production.
Mm-hmm.
Okay. In terms of the investor relations question you have asked, Tom, the very short answer is yes. Yes, we are investing into our IR activities. There are, of course, planned road shows and also participation of, let's say, investor conferences where it does make sense. Maybe, Ian, you want to add something regarding this point?
Yeah, I'm listening carefully to Tom's question just to clean up on the discussion between the GmbH in North America. Tom, LION Smart North America is a sales office currently. No revenues are booked there. We have set it up with a view on the future, at the moment, its primary role is to employ our salespeople who sell on behalf of the GmbH. They're employed by us. LION Smart North America, as you know, is a wholly owned subsidiary of the AG. LION Smart North America job is to sell on behalf of the GmbH.
It itself has no sales, but as Winfried indicated, for LION, for LION Smart as a whole, a good chunk of our sales come from North America, and we are very keen on growing that, which is why we redefined the entity LION Smart North America, as I'm sure a lot of investors have seen, because it is our intention to grow that business as aggressively as we can. That's topic one. I hope that answers it. Yes, on IR expansion, Tom, we do quarterly calls, and this is the format for the quarterly call with Q&A. We're a small company, as you know, but we do all the mandated releases, and we are doing a quarterly conference call now with live Q&A, so that ticks.
For the AGM, we definitely want to do a live AGM this year, with video and ability to ask questions. In person, not sure, and the reason why is we actually have quite a diverse investor base now. We have shareholders that we see in the United Kingdom, in Germany, in Austria, obviously in Switzerland, in Italy, but also in Finland, where we have a following there, with quite dedicated investors there, and we appreciate a lot of the feedback that they give us, and in other places like the United States. Our shareholder base is growing, we think we really want to do something where all shareholders, wherever their geographic location is, have the ability to dial in and live ask questions.
That is, I think the right way to do this. Hope that answers your question, Tom.
Yeah, I think so. If not, Tom, you can ask your questions or to follow up on your questions. I would now move to a couple of other questions, if I may. Tom, if you can also put your hand down so that I know that the questions have been answered, and if you have another question, please raise your hand again. Thank you so much. The other questions are related to the LIGHT Battery. There are a couple of questions about this project. Maybe Winfried, you want to answer this. Are there any other interested potential clients for the LIGHT Battery beyond the OEM project we are currently working on? When will the LIGHT Battery potentially completed in its development?
What is about the modular platform of the LIGHT Battery? Is there any update on this? These are questions about, the LIGHT Battery, and then there's one about, BMS I will then ask later.
Yeah. Okay. Basically, starting with the first part of the question, are there any other parties being interested in the LIGHT Battery? The answer is yes, there are. We are doing a discussion with other interested parties. However, as we're a public listed company, if we get a, let's say, the next order or the next commitment, we will inform investors accordingly. Unless with that, we cannot speak on names or something like that. The second part of the question is a little bit more difficult, when the LIGHT Battery will be finished.
It depends a little bit on the, let's say, what will come from the OEM project or any other customer beyond where we are now. We'll need some kind of a lead customer at the end of the day to bring this into a maturity state to go to production. Other than that, the investment will not be justified in that product line. The third portion, the modular platform, I think, I'm not sure if I understand that question correctly, but it may refer back to one of the investor presentations where we have shown the modularity of the LIGHT Battery, where it will be in different applications.
We're having that in mind, so, we're just to say we're having the project with the OEM, which is both 400 and 800 volts. The modularity is still ongoing, and we're planning with that to keep this to be able to serve different applications for the LIGHT Battery in future.
Okay. Thank you very much, Winfried. I think that answers the question. If not, there might be a follow-up question on that. There was one question about the BMS, and the question is whether there are any current projects regarding BMS.
Right now, BMS is used to support our LIGHT Battery project. This is, let's say, a symbiotic product line to the LIGHT Battery. However, we have right now engaged a consultant who is about to generate a business plan for the BMS to understand what we can do with this product line in future.
Okay. Thank you, Winfried. There's another question, and this is, can you provide any update on the Integration Business customers? How does the market look at the moment?
Well, that's a little bit of a generic question. like we said in our announcement, we're going to increase the number of customers in our Integration Business. We cannot disclose all customers because we need to get permission from them before announcing any names. I can tell you we're significantly broaden the customer base compared to last year. We're also, and this is a little bit going into the future, like we said in the previous calls, we're looking forward to make evolution of the battery pack with updated cell chemistries, and with that on the LFP Module.
We're in the planning phase to understand how we can bring this into the market with a business case on the LFP version.
Thank you, Winfried. I think that answers the question very properly. I just have a look. We haven't received any further questions, and there is no one who want to ask questions live currently. I think we are finished with our investor call. I mean, if you have any questions still, you can always reach out to me via email. You know my email address, and we try to answer your questions. As you know, sometimes we cannot give answers, specific answers to specific questions because we cannot disclose or answer questions of a single investor that is relevant for all shareholders. If we can answer, then of course we try to do this.
Finally, as you are used to it, there will be also a recording of that call, which will be uploaded on the website very soon. We will also upload the video you have seen, which was not maybe the best quality given the bandwidth we have for uploading things. You can see the full video then in fantastic quality on our website. That was it for the first investor call for this year. We will continue providing news once we have these, as you are used to it, by us. I thank you for your participation and for your questions. Thank you very much. Have a fantastic day and a nice weekend. See you the next time. Bye-bye.