Spinnova Plc’s Half-Year Report January-June 2024 (unaudited)

SPINNOVA PLC, COMPANY RELEASE, 22 August 2024, 08:15 a.m. EEST

Spinnova Plc’s Half-Year Report January-June 2024 (unaudited): Strategy and organization updated to focus on technology sales – execution progressing with Letter of Intent signed with Suzano

This release is a summary of Spinnova’s half-year report January to June 2024. The complete report is attached to this release and available on the company’s website at https://spinnovagroup.com/reports/.

January to June 2024 highlights (IFRS)
(comparison figures in parentheses are for January-June 2023 if nothing else is communicated)

• Revenue was EUR 362 thousand (EUR 8 820 thousand).
• Operating result for the period was EUR -9 906 thousand (EUR -10 994 thousand).
• Total investments were EUR 3 353 thousand (EUR  6 047 thousand).
• Net cash was EUR 46 601 thousand (end of 2023: EUR 54 426 thousand).
• Spinnova and Suzano signed a Letter of Intent (LOI) regarding a potential new production facility for wood-based SPINNOVA® fibre.
• Spinnova updated its strategy and targets. Focus on technology sales.
• Spinnova made changes in its Management Team to align roles according to the updated strategy.
• Spinnova started change negotiations to change the organisational structure to support the effective execution of the updated strategy and to reduce fixed costs to achieve profitability targets.
• The Board of Directors resolved on a new share-based commitment programme for the Management Team and on a new share-based incentive programme for key individuals.
• Spinnova’s R&D yarn spinning line was inaugurated in Tearfil’s mill in Portugal.
• Spinnova continued brand collaborations and released commercial products with Bestseller and Luhta.

Significant events after the period

• On 30 July 2024 Spinnova Plc and ECCO Investment Corporation signed a Letter of Intent (LOI) regarding the future plans for their 50/50 owned joint venture company Respin Oy.
• On 12 August 2024 Spinnova Plc and Valmet signed a Partnership Agreement regarding the delivery of process equipment for Spinnova’s customers.

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 Appendix on page 24.

This Half Year Financial Report has been prepared in accordance with the requirements of the IAS 34 (Interim Financial Reporting) standard.

Information concerning the full financial year 2023 is based on the audited IFRS financial statements for 2023.

OUTLOOK

Financial Guidance for 2024 (unchanged)

In 2024, revenues are estimated to be lower than in 2023. The timing of revenues is linked to the timing of technology sales and delivery of the next production facility. The operating result is expected to improve from 2023 but to continue to be negative. The total of Spinnova’s personnel expenses and other operating expenses is expected to be lower in 2024 than in 2023.

CEO TUOMAS OIJALA’S COMMENTS 

The first half of 2024 was an eventful time for Spinnova. At the beginning of the year, we worked intensely on finalizing our strategy review. We launched the updated strategy at our Capital Markets Day on 14 March. Spinnova now focuses on technology sales and delivering the technology with partners to customers investing in SPINNOVA® fibre production facilities.

The execution of our updated strategy is already in progress. In March we signed a Letter of Intent (LOI) with our long-term partner Suzano. According to the LOI, Suzano plans to invest in Spinnova’s technology by building a wood-based SPINNOVA® fibre factory with an initial capacity of 20 thousand tonnes of fibre per year. We have continued our good collaboration with Suzano and expect to commence the pre-engineering phase of the planned factory in H2/2024.

Another significant milestone was signing a LOI with our other joint venture partner, Ecco in July 2024. In the LOI both Spinnova and Ecco commit to continue the development and scaling of the leather-based fibre production at Respin. The parties aim to make a final decision about how to proceed with production scaling and commercialisation by the end of Q1/2025. In August 2024, we announced an exclusive partnership agreement with the global technology supplier Valmet, which will deliver the main equipment for future factories. Our collaboration with Valmet not only brings an established industry player to the delivery of future factories but also accelerates our development work and technology sales to new potential customers.

As part of the strategy review, we set new strategy targets for the short, medium and long term and streamlined our organizational structure to support effective strategy execution. We aim to be EBIT positive in the medium term (2028-2030) and we expect not to need to raise additional external funding to reach our strategy targets. This target underlines the strong belief we have in the new technology sales strategy, which is capital-light compared to investing in fibre production ourselves.

Organizational restructuring is always challenging for a company and its employees. We had to say goodbye to many talented people, but as an organisation we have emerged stronger with clearer roles and responsibilities. Our ongoing cost savings programme covering personnel and external spending is also progressing according to plan. The annual run-rate savings from the change negotiations and Management Team changes are approximately EUR 1.6 million and the majority of the run-rate savings will be effective by the beginning of 2025. Other operating costs in turn have already started to decrease.

In addition to these big changes in the Company, I would like to highlight the progress we have made together with our partners Suzano, Woodspin, Ecco and Respin in further improving fibre quality and optimizing the technology process. We have seen good results with fibre produced at Woodspin from Suzano micro-fibrillated cellulose (MFC) and work continues on validation by supply chain partners in H2/2024.

We are extremely proud to see that our brand partners have launched multiple high-volume products this year with SPINNOVA® fibre made from Scandinavian wood-based MFC at Woodspin’s factory. Bestseller launched t-shirts under their Jack & Jones brand in April, which was the first commercial product made with SPINNOVA® fibre produced at Woodspin. We were extremely honoured to see SPINNOVA® fibre included in two countries' summer Olympics 2024 athletes’ collections made by Jack & Jones and Vero Moda for Danish athletes and by Rukka for Finnish athletes. We also expect Ecco to launch a commercial product from leather waste-based fibre from Respin by the end of Q1/2025. We continue working systematically with apparel brands to develop longer-term plans for increasing the industrial adoption of SPINNOVA® fibre.

Our revenues during the first half of 2024 were EUR 0.4 million, mainly from technology services delivered to Woodspin and Respin. The operating result was EUR -9.9 million. Investments totalled EUR 3.2 million and continued to be primarily into the Woodspin joint venture. Our net cash position remained strong totalling EUR 46.6 million at the end of June 2024.  All in all, our financial performance during the first half of the year was as expected.

I would like to express my sincere gratitude to all our stakeholders for their support and trust in us. As we move forward, we remain committed to our strategic objectives and look forward to achieving new milestones together.

Tuomas Oijala
CEO

Spinnova Plc
 

H1 2024 webcast

Spinnova is arranging a webcast event in conjunction with the half-year 2024 results on Thursday 22 August at 10.00 a.m. EEST. Spinnova’s CEO Tuomas Oijala and CFO 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.

The webcast can be watched through the link: https://spinnova.videosync.fi/h1-2024/
 

Upcoming financial disclosures

• Financial statements bulletin for 1 January – 31 December 2024 on Thursday 13 February 2025.
• Half-year financial report for 1 January – 30 June 2025 on Thursday 28 August 2025.
• Spinnova’s Annual General Meeting will be held on Wednesday 9 April 2025. The Board of Directors will convene the meeting separately.

Spinnova Plc

For further information, please contact:
Tuomas Oijala, CEO
Ben Selby, CFO
Virva Vesanen, Director, Marketing, Communication and 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 – The textile material innovation 

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

Spinnova technology creates no side streams in the fibre production process, and SPINNOVA® fibre has minimal CO2 emissions and water use, as well as being biodegradable and recyclable. Spinnova technology uses a mechanical process, giving the fibre the look and feel of a natural cellulosic fibre such as cotton.

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