Welcome to Spinnova's half year 2022 results webcast. My name is Virva Vesanen, and I'm the head of investor relations here at Spinnova. Today, in the studio, I have with me our CEO, Kim Poulsen, and our CFO, Ben Selby. As you can see, we're all wearing nice outfits by our brand partners. We will be talking more about these clothes later today. Now, first, we will have a discussion about our half year results and main events, and then we will have a Q&A session in the end. Please send your questions already now during our discussion. Okay, let's start. Kim, you started as the CEO 1st of August. Tell us a little bit, what are your first feelings about the company, and why did you find Spinnova an exciting opportunity? No, I mean, thanks, Virva. Maybe first about the feel that I was thinking three words: I feel energized, I feel positive, and I feel empowered. That's to set the scene and at the same time, I feel really humble and honored of the opportunity, and I think all Spinnova people should be because this is our company, and we want to take it to the next step. The journey ahead of us is once in a lifetime opportunity. Talking to people, I've been really impressed with the intellectual capital we have in the company. The DNA is different, and it's really, really nice to see people who are committed to sustainability, and they are really driving the company forward on the agenda we have set. Of course, then the technology goes without saying. It's patented, it's unique, it's a huge edge on the market. First feelings are great. Our mission is to produce the most sustainable textile materials in the world. Could you remind us why we are doing this and what kind of a challenge are we trying to solve here? Sure. It's not a nice reminder. Of course, we all have read about the global warming, the floodings, the storms, and so forth, but textile industry is 4% of all the emissions in the world, so it's a huge chunk of emissions we can work on. The silver lining of the whole thing is that the brands have decided to cut their emissions by 30%, and luckily we have a toolkit to help them in that journey. Bad as it is, but there's good things to come. That's right. What makes Spinnova fiber so special, and how can we help the brand partners to achieve their environmental goals in practice? That's a great question, and I mean, facts are facts, and me coming as an outsider looking at the company, the hard facts, it's given that Spinnova emissions are way less than any other option. That's the underlying fact. If we split it into kind of three areas, the CO2 emissions we generate or don't generate is very low, especially if we can release the excess energy to district heating, so it's a CO2 even negative in some cases. Thirdly, no harmful chemicals are used, so it's a clean process, nondissolving. Of course, the touch and feel of the product itself is great. We have the water, CO2, no chemicals, and the feel, which I can feel as we speak. I think we have a great thing in our hands. Of course, to tell how good we are by ourselves, it's of course nice, but the testimonials given to us from our brand partners have been really pleasing, and it's been a pleasure to be part of those launches. I'm wearing the Adidas hoodie as we speak. If we look from the investor's perspective. Mm Could you summarize Spinnova as an investment case for all our viewers there? Sure. It's a huge market. Let's remember, 200 billion. It's gigantic. It's huge. We have the technology, unique, patented, scalable. The market is, the opportunity is big. Then we have a partner, Suzano, the world's biggest pulp producer, who we are backward integrated to have them as a partner to move ahead with our plan to implement and take part of that huge market with our technology. Of course, the scaling up opportunity is there, and this 1 million tons out of that 200 billion, it's not that much, so it's more than realistic. By the way, Virva, now you are asking me. I should be asking you as well that, I guess, the same. What are your first feelings, and why did you join Spinnova? Well, fashion has always been a passion. Mm-hmm. Here in Spinnova, we can combine textiles with sustainability and technology. Mm. As you said, it's an amazing opportunity to be changing the way we dress into a more sustainable way. Sure. Of course, it's fun to be talking about clothes every day at work. Thanks, you look great, and great to have you on board. Thank you. If we then move on to the actual results, Ben, would you like to summarize the highlights of the first half of the year? Yeah, I think every period at Spinnova is exciting, but this first half of 2022 was really something, you know, exciting to be in the company and to see, first of all, these launches come to market with the three brands that we have here. I think, like we said, we're all looking good in the outfits. As well as keeping then the commercial plans on track with those launches, we've also kept on track with the technology and production scaling as well. On track to ramp up our Woodspin factory by the end of the year. In the IPO last year, we also talked about that we would use the proceeds to invest in growing the organization ready for the 1 million tons long-term target. We've added key competencies to the organization. That was a kind of very also important part of the period. As the CFO, I'm also very happy to say that our sales were the highest they've ever been for any period, and actually even higher than they were for the full year of 2021. I would say quite a good first half for the company. Thank you, Ben. If we talk about the product launches a bit more. Mm. Kim, how would you comment the launches, and what kind of feedback have we heard from our brand partners? Thanks. It's been 6-7 weeks, and maybe I had the luxury of being on the tail end of the launches because they take a while and of course great onboarding as is to get the feel of the brands and how they launch it, how big is the journey to get there. We had this Adidas, we have had the Marimekko, we had the Artek, so major launches and it's really been nice to see how the product, how well it's been utilized. It's a drop-in, you know, analyzed depending on the application, how we do it, and this co-branding, that it's the brand owner and our brand attached has been a pleasure to see and of course then, I mean, honestly, nobody would use the fiber unless it would work. The quality feedback has been good because we can see it in the products. Maybe I'm biased to say this, but I'm gonna say it anyways. Honestly, they feel really good on you. It's a touch and feel part, which is really appealing to me and I'm sure to many other consumers as well. Yeah. Maybe Kim, if I may kind of pick up on this co-branding point and actually show an example. This is the Marimekko overshirt, and you can see that we have the Spinnova logo right next to Marimekko, and this is their real signature pattern, as those of you who follow Marimekko will know. I think this really says kind of a couple of things, that we're delivering on what we said we would on the ingredient brand strategy. Mm. I think I've even used the words and we've used as a company the words that we have the ambition to be the Gore-Tex of sustainability. Mm-hmm ... when the consumer sees our label, they know they're making the most sustainable choice. This is really happening, and I think it's, you know, impressive for a company of our size to get that alongside some of these major global brands. Sure. Obviously shows their confidence in the product from Spinnova as well. That's true. Yes, that's right. Okay, let's talk about ramping up the production of SPINNOVA fiber. Ben, what's going on with our joint venture Woodspin’s construction of the first commercial plant? The picture here really tells the main story. You can see that the plant is progressing very well in central Finland in Jyväskylä. We actually had the Investor Day in June when many investors came to see it in person. You can see that it's even progressed further since then. The key point is that the construction and the whole project is on track according to schedule. The construction has now been completed, and Spinnova actually took over the technology installations and started those in August. I would say going well, and this has been the main contributor then to Spinnova's record revenues in this period, has been the technology delivery to Woodspin. Finally, of course, it's worth noting that the Woodspin board decided to increase the CapEx budget for the project from EUR 22 million- EUR 31 million, half of which is for Suzano and half of which is for Spinnova to pay for. The reasons were to enhance the sustainability and R&D capabilities of the plant, which will help us as we then go to the next scale, and of course, to account also for cost inflation due to the macro environment. Now that we are finalizing the first commercial plant, can you, Kim, comment on how the next plant, the 50,000-ton plant? Let's break it into two buckets. One is Spinnova, one is the Woodspin, the JV. In the JV, we have decided to initiate, and we have started a global feasibility study. Where should be the location of this coming second phase of the plant. Key drivers there would be energy, because we use energy, but we also release energy. It's inbound and outbound. Same applies to logistics, inbound logistics and outbound logistics to our customers. Of course the financing is critical for the big step, or the second step. What comes to Spinnova, this was Woodspin, the feasibility. We have decided at Spinnova that we have started a pre-engineering phase of the technology concept, which is kind of the core of our technology, which could be then replicated in the coming investment, so that work is ongoing. Two things, feasibility started, and the pre-engineering of the technology concept is on its way. Okay, talking about feasibility, we recently made a recruitment. Yes related to our scaling, and also some other changes to the team. How would you like to comment on the organization, and do you feel that we now have the right resources in place for future growth? I think I commented in the beginning already about the special DNA, and that's definitely something we want to cherish. It's not only taking people in, it's how we care work time beyond work time of our employees. It's all about having them on board, happy, contributing, and the retention part of it. I think, Ben, you're gonna comment a little bit later on about the total headcount, so I don't steal your thunder. About some key recruitments, me starting as the CEO 1st of August, our founder and Janne Poranen as the Chairman. Then we had a new starter, Teemu Lindberg, coming from UPM, strong background in investment projects and feasibility studies and scaling up. He started 2-3 weeks ago, so he has all hands on deck, and a flying start on this pre-engineering and the feasibility. Good recruitment there to speed up what we're doing. Allan Andersen, he joined us, out of my memory, in May, so he's the chief commercial head, talking to brands, you know, our value chain forward. Really nice background with the big brands like Under Armour and Adidas. I think these small gaps we had, it's been fulfilled, and we're ready for the fight. Good. If we then look at our financials, Ben, how did we do financially during the first half of the year? Well, as said, you know, the record revenues for the period, so EUR 7.6 million, up, from EUR 0.4 million in the first half of 2021, and already above the full year 2021 number as well. The reason, you know, predominantly behind this was the technology sales to Woodspin. If I comment a bit about the organizational growth, you know, we decided to invest in growing our world-class talent, as we said we would at the IPO, so we've increased our permanent employees from 49 to 69 over the last year. That's been adding kind of key talents in the commercial team, in R&D, production, corporate roles, and also our project teams for the ramp-up. You know, this is obviously a big percentage increase. I would say that we've now made kind of a lot of big investments. There will be more hires coming, but the pace of growth will probably be a little bit slower going forward. This is also not just about investing into new employees, but also you know, we're taking very seriously the wellbeing of our employees. It's very important to us. As Kim said, it's you know, a business that's all about intellectual capital, and kind of creating the future. We're really happy to say that our employee engagement scores, which we started this year, have been very high compared to industry average. Mm-hmm. If we look at the overall results, so the operating loss did increase to EUR 5.8 million, up from EUR 3.1 million loss in the same period last year, and that was of course with the ramp-up of the business. Part of that was the increased costs related to the new hires, so the world-class talent that we've added, and then, you know, other things which are critical for us to be able to go to the next level and commercialize the business, increased branding costs and so on. Of course things related to just having more people, being a listed company, and having now some more kind of processes and corporate processes as well. I think then the important kind of takeaway is that the net cash position remains very strong, EUR 95.1 million at the end of the period, down from EUR 98 million at the end of June 2021, and that's even after these increased expenses. Of course on top of that we also have continued to invest in our R&D, and the capitalized R&D, and also Spinnova's investments into Woodspin. Even after all of that, you know, our cash position is remaining strong. There's a lot more information of course in the financial report. We wanted to keep to the highlights here, but really happy to take any further questions later. Thank you, Ben. Spinnova has set medium and long-term business targets. Mm. Kim, could you comment on how we are progressing towards these targets? Sure. Let's slice and dice it to short, medium, and long so it's easier. I think the short, we touch on few occasions here. We have the launches behind us. There's more to come most likely already in the fall time. Pilot running flat out. Eteläportti 1,000 ton on track, and the feasibility and the pre-engineering started ongoing. Short-term numbers, I don't have to comment. You already did. Midterm, I think the discussions with the brand owners is big because we are kind of an appealing alternative, so we have multiple discussions ongoing. Keep that on track ongoing, still aiming for 150,000 tons in the midterm and get the company to EBIT positive. On the long term, we're still aiming for 1 million tons out of that EUR 200 billion market. The long-term targets are intact. We keep it as it is for the time being. It's good to see that progress is happening, though there remains lots of work to do for all of us. I agree. Let's end our discussion with the outlook for 2022. Mm-hmm. Ben, would you like to comment what the outlook is? The key message here is that the outlook is unchanged from what we said at the beginning of the year. Our expectation is that Spinnova will have considerably higher revenues this year, driven by the technology sales. As said, we've already had kind of more sales than 2021 in total, and we expect that number to obviously be even higher for the second half. During the year while we're in the ramp-up phase as well, we will continue to make an operating loss. Thank you, Ben and Kim, for the discussion. Pleasure. This was the end of our half-year results discussion, and now let's move on to the Q&A session. Please send your questions to the studio. Let's see what we have here. First question may be for Ben. Is the 50,000 plant financing plan already in place? Does the market situation affect availability of financing? Good question. Yeah, we've been working and discussing with multiple different potential financing partners, both public and private sector, and, you know, those discussions are progressing well. I think the it has to come in steps though, so the key next stage, as Kim commented, is the feasibility study, and essentially once we have then locked down the location of the plant, then it will go to the next stage with the financiers. We're on track according to our planned schedule for this. There's also another question about the 50,000 from our analyst, Carnegie. When will the final investment decision be made for the 50,000-ton plant? You want me to have a stab at it? Please. All right. I mean, I have done a few of these in my life, so I think first we want to complete the feasibility to know where we are. Also the engineering, the technology concept part, the kind of the heart of the engine. I think in months we would have at least some sort of better understanding, and decision making most likely will happen then on 2023 rather than 2022 because it takes a while to complete these studies. Okay. Do you have other brands planning to introduce Spinnova garments? I mean, I guess this. Yes. This falls to me again. Well, I mean, it's, we're not in the habit of communicating our brands' agendas, you know. Let's put it the other way. You know, we have multiple discussions ongoing, and I'm very strong believer, and I almost know that we will have more launches on this fall. I'm not allowed or don't even want to give the names of our brands because it's their launch. It's not my launch. It's our joint launch, but it has to be done together. Right. One question about Suzano's involvement. Can you confirm that the plan for Woodspin 2, the 50K, still involves Suzano as a 50/50 joint venture partner? Well, the joint venture legal entity is as it is, right? Mm. Unless the ownership is changed. Discussions are going with Suzano, and it's the Woodspin board which is the ultimate decision maker once the feasibility is ready. I think it's premature to comment on that, but the partnership has been established with the longer term strategy rather than playing the short game. The Woodspin board will decide it once the feasibility is completed. If I may just add, you know, I think it's important to reiterate nothing has changed as we know on the Suzano side. Mm. We cannot exactly talk for them, but we can reiterate what has been said that they are together with us on the 1 million ton target. Yes. I think, you know, you only need to go and look at their capital markets statement materials to see how important that they see this partnership is as well. That's right. About the feasibility planning and pre-engineering, can you comment anything how long it will last and what will it cost? Yes. If I can elaborate a little bit around it first and just that people get a feel what we are looking for. There's, I call them, sorry, that this is only color play, but greenfield site is something which is an empty site, brand new. We'll build something. There's brownfield sites which might have some infrastructure, but a shut down building, but operating infrastructure. There's, let's call them dark brown sites, which have the infrastructure and the buildings, but not operational. We need to scan all of these opportunities in order to check the energy, the location, the logistics, and all of that. The actual pre-engineering, it's not that expensive because the pre-engineering eventually turns into detailed engineering, which turns into the project. This pre-engineering, we're not talking about huge amount of money. It's more about strategy, where, what, and why. Mm. The main thing is that we scan everything to make the right choice then at the end of the day. Right. There's another question from analyst. Mm. How has the cost profile of your fiber changed if it's split into our own R&D and then the new energy landscape now that energy prices are higher? Does it affect the cost of the fiber? Do you want to have a stab at it? Yeah. Well, I think, as you know, the energy is a kind of very big component of the operating costs of producing the fiber. Just as a reminder, this will be actually Woodspin's expense 'cause it's the joint venture that is producing it rather than Spinnova. That's one thing to be aware of. I think the other point is that, in the short term, you know, we have the MFC price, the microfibrillated cellulose, price is fixed for 18 months, and that is also a big indirect kind of link to the energy price. Of course, the energy price will have some effects, but, you know, I think it's gonna be in the bigger scale that it's most relevant. This comes down to the strategic decisions that Kim has talked about around the location of the plant and how we can then optimize the energy price agreements with the providers and the net energy cost because we can also sell the excess heat from the process back to the energy provider as well. Right. Can you comment anyway, anyhow, on the production outlook or the commercial agreements with the brands regarding the 1,000-ton plant or even the 50,000? Yes and no. We can comment, of course. We have discussions ongoing, but maybe if I turn it the other way around that if there's 1,000 tons, do we want to sell upfront 1,000 tons, or do we want to sell it along the line and leave a little bit of capacity for pilots, trials, you know, new kind of development? I'm not convinced that we want to sell the 1,000 right away today, that we rather work on it because the ramp up takes a little bit of time. We are confident that we have discussions ongoing that the 1,000-ton can be sold. It's not about that. It's about strategically how we operate with the 1,000-ton and in regards to the next step. How do we utilize the first step for the next step? We can play short, mid, or long, and I'm not in a habit of playing short game only. I want to play the long game. Right. There's one question about Respin. What is the production capacity of Respin and the product of Respin? Do you know the capacity? I don't even have the number in my head. Well, at the moment, the capacity is it's the pilot line. Mm which I don't think we have a kind of specific capacity for it, but it's small. I think perhaps then as a general comment on Respin that that's been progressing as expected. You know, the wood-based part has been the first kind of step and what's going ahead first with now the ramp up at Eteläportti. With Respin, you know, we're working now with our joint venture partner Ecco to then plan the next phase. That will include then what are the products that come out of it, of course, like how it can be commercialized, and then what the future volumes will be. We're not yet at the stage when we are ready to share that, and that's still according to the schedule that this is the time when we're planning the commercialization of this. Okay. There's one question about energy prices in Brazil versus Europe. How does it look now, and could Brazil turn out to be the best available location for the big plant? It's a good question, and I think as long as the feasibility is ongoing, I think what you know, you know, and what you don't know, you don't know. We complete the feasibility. There's so many components in it, and it's not only the energy which is. Mm the decisive factor. It's the ones I mentioned earlier. I know there's a lot of green energy, there's solar and so forth in Brazil, but I'd rather not comment on it now because I want to have the hard facts in my hand. The feasibility will tell us the right location once it's completed. Okay. A question about the SPINNOVA fiber and its availability. Will the fiber production be available only for brand partners or also to fabric suppliers who will supply for smaller brands and factories? You or me? Go ahead. You do. Well, I would say that the kind of strategy has been that Woodspin will be the seller of the fiber, and then that will be sold to those brands that are large enough to make their own fabrics via their own supply chains, like the Adidas hoodie. And then what is, I guess, under development and part of the future potential is then the fabrics business on Spinnova's side, where we would actually make the fabrics ourselves in an outsourced supply chain and then sell the fabric from Spinnova to those smaller brands that were mentioned. The plan is not to actually sell fiber directly to fabric manufacturers that would then sell it to- Mm Smaller brands, but rather that Spinnova would be part of that. Yeah that step itself. Mm. I guess it's in our strategy. Yes also mentioned. Okay, it looks like these were all the questions for today. Thank you, Ben and Kim, for your answers. Thanks, very well. Thank you everyone who was watching. The recording will be available on our website and tomorrow also with the Finnish subtitles. Have a nice day everyone, and see you later. Bye. Bye-bye. Bye.