Spinnova Plc's Financial Statements Bulletin January-December 2023

SPINNOVA PLC, COMPANY RELEASE, 14 March 2024, 08:10 a.m. EET

Spinnova Plc's Financial Statements Bulletin January-December 2023

Spinnova Plc's Financial Statements Bulletin January-December 2023: Finalizing the successful technology delivery to Woodspin and ramping up operations resulted in decreased revenues and operating result, as expected.

This release is a summary of Spinnova's Financial Statements Bulletin for January to December 2023. The complete report is attached to this release and available on the company's website at https://spinnovagroup.com/reports/

January-December 2023 HIGHLIGHTS
(Comparison figures in parentheses are for the same period in 2022 if nothing else is communicated)

• Revenue was EUR 10 640 thousand (EUR 24 279 thousand).
• Operating result for the period was EUR -20 926 thousand (EUR -13 149 thousand).
• Total investments were EUR 8 963 thousand (EUR 16 973 thousand).
• Net cash at the end of 2023 was EUR 54 426 thousand (EUR 74 454 thousand).
• The number of permanent employees at the end of the period was 76 (75).
• Successful technology handover of the first factory producing wood-based SPINNOVA® fibre to the joint venture Woodspin.
• Halti parka jacket made of SPINNOVA® fibre and cotton was launched.
• Spinnova received a grant of maximum EUR 1.9 million, for its research and development (R&D) work for textile and agricultural waste streams, from Business Finland.
• Spinnova entered into a yarn development co-operation agreement with Tearfil.
• Spinnova announced a strategy review.
• Spinnova and Swedish textile recycling innovator Renewcell announced their cooperation to develop textile waste-based fibre.
• CEO Kim Poulsen stepped down as CEO 21 April, and CFO Ben Selby was appointed as interim CEO.
• Tuomas Oijala was appointed CEO and Ben Selby deputy CEO on 31 August. They started in their roles on 11 December 2023.
• Santeri Heinonen was appointed Chief Human Resources Officer and management team member on 1 March 2023

July- December 2023

• Revenue was EUR 1 820 thousand (EUR 16 644 thousand).
• Operating result for the period was EUR -9 931 thousand (EUR -7 383 thousand).
• Total investments were EUR 2 916 thousand (EUR 8 859 thousand).

Significant events after the period

• Spinnova and Suzano signed a non-binding Letter of Intent regarding plans for a new wood-based fibre production factory on 7 March 2024. Suzano plans to own and operate the factory at their own site. The targeted annual capacity of the factory is 20 thousand tonnes of fibre. 
• Strategy review was finalized and the updated strategy was announced on 14 March 2024. The strategy will be presented in more detail in the Capital Markets Day on 14 March 2024.
• Spinnova made changes in the management team on 14 March 2024. The management team members and roles will be: Tuomas Oijala, CEO, Ben Selby, CFO and Deputy CEO, Santeri Heinonen, Chief Operating Officer, Lasse Holopainen, Chief Revenue Officer, Shahriare Mahmood, Chief Product and Sustainability Officer and Juha Salmela, Chief Technology Officer. Chief Sales Officer Allan Andersen and Executive Vice President, Production Scaling Teemu Lindberg will leave the Management Team. In addition, Chief Operations Officer Petri Poranen decided to step down from the Spinnova Management Team due to health reasons.
• To support the effective execution of the updated strategy and to achieve the profitability targets, Spinnova started change negotiations affecting the entire organisation except the management team on 14 March 2024.

 

IFRS KEY FIGURES1

EUR (thousand)	7-12/2023	7-12/2022	1-12/2023	1-12/2022
Revenue (net sales)	1 820	16 644	10 640	24 279
Operating result (EBIT)	-9 931	-7 383	-20 926	-13 149
Profit for the period	-9 033	-7 572	-19 596	-15 123
Earnings per share (EUR, diluted and undiluted) 1)	-0.17	-0.15	-0.38	-0.29
Net cash	54 426	74 454	54 426	74 454
Equity ratio, %	89 %	86 %	89 %	86%
Number of permanent employees, end of period	76	75	76	75
Number of permanent employees, average	76	70	77	67

 

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 23.
 

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

 

OUTLOOK

 

Financial Guidance for 2024

 

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.

 

COMMENTS ABOUT YEAR 2023 BY CEO TUOMAS OIJALA

I joined Spinnova as CEO on 11 December 2023. For me, this is a unique and challenging opportunity to commercialise Spinnova's sustainable technology innovation. The current tough economic climate is not the easiest for scaling a growth company. During my first months, I have got to know our operations and people with the aim to bring clarity, focus and prioritisation. We are making progress step by step on our journey to increase the production volumes of Spinnova fibre and to bring the fibre to the market in product applications through our committed supply chain and brand partners. It is clear to me that macroeconomic trends, constraints in the global fibre supply chain, and the need for the textile industry to meet its sustainability targets present us with a significant and inspiring opportunity to capture.

Our top priority in 2023 was finalizing the technology delivery and the construction of Woodspin's first factory. We worked throughout the year closely together with our joint venture partner Suzano and Woodspin on ramping up the factory. The ramp-up has progressed somewhat slower than originally anticipated, and therefore, fibre volumes have been limited so far. Suzano's work related to the efficiency and specifications of the eucalyptus-based micro fibrillated cellulose (MFC) raw material process has progressed with good results.

At the same time, Spinnova continues to further develop its technology concept to reduce the operational expenses and capital expenditure per tonne of fibre produced. The next step in our scaling is working towards the start of the pre-engineering phase of the next wood-based factory, planned to be owned and operated by Suzano. This includes the technology process design package work, which can also be applied to the planning of other future plants.

On 31 August, we announced that we would start a strategy review, in which we focused during the second half of the year. The aim was to prioritise those parts of the strategy that, in the short- to medium-term, are expected to deliver the fastest time to positive cashflow generation and that create the most value for the company's stakeholders. The outcome of the strategy review has been announced today and will be presented in detail in the Capital Markets Day today.

Spinnova will focus on technology sales and delivering the technology together with its partners. Technology sales will be targeted at where it creates the most value, with upstream raw material partners or downstream textile manufacturers. As we continue to make significant steps in the fibre, expanding its addressable market, as well as in the cost profile of technology investments, we will be able to offer an attractive solution for technology customers.

Other achievements during 2023 included the testing of textile waste as raw material in the Spinnova process with promising preliminary results. Moreover, we entered into a R&D yarn spinning line partnership with our supply chain partner Tearfil. A highlight of commercial and material development work was the launch of a denim blend at the Kingpins trade fair in October 2023. Denim development continues and the aim is to launch commercial denim products in the future. Joint Venture Respin's development advanced last year and the first product from leather waste, a pair of shoes, has been made successfully.

If the global textile industry wants to shift its material base from conventional materials, such as cotton and polyester, to more sustainable alternatives, we need all the players in the textile value chain on board. Bringing a new material innovation like Spinnova to the market in larger volumes requires investments, incentives and long-term commitments from investors, textile industry players and policymakers. 

Our revenues during 2023 totalled EUR 10.6 million, driven by the technology delivery to Woodspin's first factory and the operating result was approximately EUR -20.9 million. The operating result was expected as we continued to ramp up our own and our joint venture operations. During 2023 our investments totaled EUR 9.0 million and continued to be primarily into the Woodspin joint venture.

I want to thank our dedicated team and partners for all their hard work during 2023. I look forward to working together to take the next steps on our exciting journey and to execute the new strategy for Spinnova.

 

Tuomas Oijala
CEO

 

 

STRATEGY REVIEW

On 31 August 2023, Spinnova announced a review of its strategy and medium- and long-term business targets. The global demand drivers and resulting opportunity for Spinnova continue to be very strong. Spinnova's ambition level to transform the global textile material industry remains unchanged. Spinnova has decided to prioritise actions which -  in the short- to medium-term - deliver the fastest time to positive cashflows, and create the most value for the company's stakeholders.

The outcome of the strategy review has been announced today and will be presented in our Capital Markets Day on 14 March 2024.

Spinnova has set the following strategy targets:

	Short term (2025-2026)	Medium term (2028-2030)	Long term (2034-2036)
Cumulative technology sales*	30k tonnes	130k tonnes	450k tonnes
Financial	No additional external financing required	EBIT positive	More than EUR 100 million EBIT per year   More than 30% of revenues recurring**

 

*Total cumulative annual fibre production capacity committed to be built by Spinnova technology customers or by Spinnova through own investments
** Royalty and service fees
 

As Spinnova is implementing its technology sales strategy and does not plan to make its own investment into fibre production in the short to medium term, Spinnova does not expect to need additional external financing in order to reach its strategy targets.

 

Upside potential to Spinnova's strategy targets is expected to be driven by acceleration of the timing of investment decisions for new plants by our technology customers, increased adoption of sustainable materials by consumers and brands, further regulation of raw materials in the textile industry and faster than anticipated ramp up of alternative raw material pulp suppliers.

 

Downside potential to Spinnova's strategy targets may include potential delays to investment decisions by our technology customers, potential delays to delivery of our technology projects to customers, slower than anticipated development of reductions in capex or opex per tonne of Spinnova's technology, and slower than expected development of SPINNOVA® fibre properties which would reduce the size of the addressable fibre market for our technology customers.

 

THE BOARD OF DIRECTORS' PROPOSAL FOR THE DISTRIBUTION OF PROFITS

In the medium term, Spinnova focuses on growth and the company does not expect to distribute a dividend in the short to medium term. The distributable unrestricted equity of Spinnova Plc on 31 December 2023 was EUR 79 129 thousand, of which the result of the period was EUR -14 627 thousand. The Board of Directors proposes to the Annual General Meeting that no dividend be distributed for the financial year January-December 2023, and that the loss of the financial year is recorded in the retained earnings.

In Jyväskylä, 14 March 2024

Spinnova Plc
Board of Directors
 

Financial Statements Bulletin Webcast

Spinnova is arranging a Capital Markets Day today on 14 March 2024 at 14.00-17.00 (EET). The financial results of January-December 2023 will be presented in the end of the CMD webcast by CEO Tuomas Oijala and CFO Ben Selby.

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

The CMD webcast can be followed through the link:
https://spinnova.videosync.fi/2024-cmd

Upcoming financial disclosures

• Spinnova's Annual Review and Sustainability Report 2023 is estimated to be published approximately during week 16 / 2024
• Spinnova's Annual General Meeting will be held on Tuesday 7 May 2024. The Board of Directors will convene the meeting separately.
• Half-year financial report for 1 January - 30 June 2024 on Thursday 22 August 2024

Spinnova Plc

For further information, please contact:
Tuomas Oijala, CEO
Ben Selby, CFO
Virva Vesanen, Head of Investor Relations
Tel. [phone]
[e-mail]

Certified advisor:
Aktia Alexander Corporate Finance Oy
Tel. [phone]

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 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

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