Spinnova Plc's Half-Year Report January-June 2023 (unaudited): The technology handover to Woodspin was conducted successfully - Revenues increased and operating result decreased, as expected

SPINNOVA PLC, COMPANY RELEASE, 31 AUGUST 2023, 08:45 A.M. EEST

This release is a summary of Spinnova’s half-year report January to June 2023. The complete report is attached to this release and available on the company’s website at https://spinnovagroup.com/reports/.

Spinnova Plc’s Half-Year Report January–June 2023 (unaudited)

The technology handover to Woodspin was conducted successfully - Revenues increased and operating result decreased, as expected

January to June 2023 highlights (IFRS)
(comparison figures in parentheses are for January-June 2022 if nothing else is communicated) 

• Revenue grew to EUR 8 820 thousand (EUR 7 635 thousand).
• Operating result for the period was EUR -10 994 thousand (EUR -5 766 thousand).
• Total investments were EUR 6 047 thousand (EUR 8 115 thousand).
• Net cash was EUR 58 789 thousand (end of 2022: EUR 74 454 thousand).
• The number of permanent employees at the end of the period was 78 (69).
• Successful technology handover of the first factory producing wood-based SPINNOVA® fibre to the joint venture Woodspin.
• Feasibility planning for the next Woodspin factory continued.
• Spinnova entered into a yarn development co-operation agreement with Tearfil.
• CEO Kim Poulsen stepped down as CEO, and CFO Ben Selby was appointed as interim CEO.
• Santeri Heinonen was appointed Chief Human Resources Officer and management team member. 

Significant events after the period

• In July, Spinnova received a R&D grant of a maximum EUR 1.9 million from Business Finland for developing SPINNOVA® fibre from new raw materials.
• In August, Spinnova Plc’s transition to IFRS reporting was published.
• 31 August, Tuomas Oijala appointed as Spinnova’s new CEO and Ben Selby deputy CEO.
• 31 August, Spinnova announced, that a strategic review will be conducted and that the results of the review will be communicated in the coming months.

IFRS KEY FIGURES1

1) The company’s potential dilutive instruments consist of stock options. As the company’s business has been unprofitable, stock options would have an anti-dilutive effect and therefore they are not taken into account in measuring the dilutive loss per share. Thus, there is no difference between the undiluted and diluted loss per share.

The number of shares used in the key performance indicators table are found in the PDF Appendix on page 21.

This Half Year Financial Report has been prepared in accordance with the requirements in IAS 34 (Interim Financial Reporting) standard. Information concerning the full year 2022 is based on the audited IFRS financial statements for 2022 that were published on 17 August 2023.

OUTLOOK

Commercial outlook

The long-term demand for sustainable textile fibres and materials remains strong. Spinnova expects to see increased interest when Woodspin ramps up production and more wood-based fibre volumes become available.

Financial Guidance for 2023 (unchanged)

A strategic review will be conducted and communicated in the coming months. If there are any changes to Spinnova’s medium- and long-term targets, these will be communicated at that time. Spinnova’s 2023 financial guidance is unchanged.

The timing of the final investment decisions of the joint ventures’ Woodspin and Respin next plants will be key factors in the timing of Spinnova’s technology revenues.

In 2023, revenues are estimated to be lower than in 2022, impacted by expected phasing of technology sales fees.

The loss will increase during 2023 as the company is ramping up operations.

COMMENTS BY INTERIM CEO BEN SELBY

“In May, our joint venture Woodspin officially opened the first factory producing wood-based SPINNOVA® fibre, with almost 100 guests visiting the facility in Finland. Spinnova finalised the technology installations during spring and the technology handover was completed successfully. The factory has since May been fully operated by Woodspin. The ramp-up is ongoing, gradually increasing the production run-rate of the machinery. The planned capacity of the plant is to produce one thousand tonnes per year of sustainable textile fibre.

Suzano Finland as raw material supplier to Woodspin continues to develop its production process to improve the quality of the wood-based micro fibrillated cellulose (MFC) produced and efficiency of its process. While Suzano develops its MFC process it is expected that the first Woodspin facility will mainly be used for R&D to test new MFC batches and that commercial production volumes will be limited in the short term. To meet customer commitments Woodspin used alternative wood-based MFC from Scandinavia during the first half of 2023. The first commercial deliveries of fibre based on this alternative raw material have now been sent from the factory. Spinnova’s textile development work continues, and we are planning to launch our first products using Suzano MFC once the raw material has reached the needed quality level.

Together with Suzano, we have been gathering the learnings from the first Woodspin plant to support the decision making for the next Woodspin factory investment. Spinnova is actively working with Suzano to improve the efficiency of the wood-based raw material (MFC) process and the quality of the MFC produced. At the same time Spinnova continues to further develop the technology concept to reduce capital expenditure per tonne of fibre produced compared to the first Woodspin plant. The market opportunity and ambition level with Suzano to scale Woodspin’s production capacity remains unchanged.

Following the agreement with ECCO to proceed towards commercialising leather-based fibre at Respin, we have started a feasibility study of the first commercial factory for Respin, which is planned to be located in the Netherlands.

Spinnova sees great potential in fibre produced from other raw materials such as textile waste and agricultural waste, and we continued to invest into research and development during the first half of 2023. We were pleased to receive a grant of approximately EUR 1.9 million from Business Finland in July to focus on research into these raw materials as well as research into recycling SPINNOVA® fibre and developing more energy-efficient raw material refining. We expect this to open new opportunities for Spinnova to expand its business by adding new raw material refining and fibre recycling components to its technology offering.

Another great brand cooperation effort came to fruition at the beginning of April, when the Halti Cyclus unisex parka hit the stores. The parka is made from environmentally friendly SPINNOVA® fibre and cotton and dyed using Imogo’s sustainable technology from Sweden.

In June, we entered into a yarn development co-operation agreement with Tearfil, the visionary spinning mill based in Portugal, whereby Tearfil will operate our R&D yarn-spinning line. The yarn-spinning line is intended for product development, and it will be located at Tearfil’s facilities, in Europe’s most significant textile industry hub in Portugal. This will improve our access to global textile markets. 

I’m pleased that our revenues grew during the period. Our revenues increased to EUR 8.8 million from EUR 7.6 million, driven mainly by technology sales. Our operating result was approximately EUR -11 million compared to EUR -5.8 million. The decline in operating result was expected as we were ramping up our and our joint venture operations and had increased personnel costs. During the period our investments of EUR 6 million continued to be primarily into the Woodspin joint venture.

Today Spinnova announced a strategic review. The review will focus on prioritising areas in the strategy that in the short- to medium-term deliver the fastest time to positive cashflow generation and that create the most value for the company’s stakeholders.

I would like to thank our dedicated team and partners for all their hard work in the first half, thanks to which we were able to achieve significant milestones in our development, most notably the handover of the technology installation to Woodspin.”

Ben Selby
CEO (interim) and CFO

Spinnova Plc

H1 2023 webcast

Spinnova is arranging a webcast event in conjunction with the half-year 2023 results on Thursday 31 August at 11.00 a.m. EET. Spinnova’s CEO (interim) Ben Selby will comment on the company’s January-June events and financial performance.

A recording of the event will be available on the investor website within 24 hours.

A registration is required and can be done at:
https://spinnova.videosync.fi/half-year-results-2023/register

For further information, please contact:

Ben Selby, CEO (interim), CFO
Sophie Jolly, Interim Head of Investor Relations
Tel. +358 20 703 2430
ir@spinnova.fi

Certified advisor:
Aktia Alexander Corporate Finance Oy
Tel. +358 50 520 4098

Distribution:
Nasdaq Helsinki
Major media
 

SPINNOVA – Sustainable textile materials, naturally

Spinnova transforms the way textiles are manufactured globally. Based in Finland, Spinnova has developed breakthrough patented technology for making textile fibre out of wood or waste, such as leather, textile, or agricultural waste, without harmful chemicals.

The SPINNOVA® fibre creates zero waste and side streams or microplastics, and its CO2 emissions and water use are minimal. SPINNOVA® materials are quickly biodegradable and circular. Spinnova is committed to using only sustainable raw materials such as FSC certified wood and waste. SPINNOVA® fibre is produced without harmful or complex chemical processes and has the touch and feel of natural fibres such as cotton and linen.

Spinnova has received awards from e.g., the Fast Company, ISPO, Scandinavian Outdoor, ANDAM, Monocle and Marie Claire UK.

Spinnova’s shares (SPINN) are listed on the Nasdaq First North Growth Market Finland.

SPINNOVA® home: www.spinnova.com
Corporate & IR site: www.spinnovagroup.com