Year-end report Q4 2020

Figures in parentheses refer to the year-earlier period.

October — December

Financial information

• Net sales for the period amounted to SEK 232 thousand (508).
• The loss after financial items amounted to SEK 21,071 thousand (loss: 12,182).
• Cash flow from operating activities following changes in working capital amounted to an outflow of SEK 13,246 million (outflow: 11,292).
• Earnings per share, before and after dilution, amounted to negative SEK 0.9 (negative: 0.6).

Significant events

• As a step toward establishing Renewcell’s future plant, the environmental permit application has been submitted to the County Administrative Board in Västernorrland. The process is ongoing and is expected to be completed in the second quarter of 2021.
• On October 2, Renewcell signed a lease with SCA for the establishment of the next textile recycling plant at Ortviken’s industrial area in Sundsvall.
• During October, options from the 2016/2020 options program were exercised. The exercised options raised SEK 7.7 million for the company and 682,500 new shares were issued.
• Renewcell was listed on Nasdaq First North Premier Growth Market with the first day of trading on November 26, 2020. The offering to the market was oversubscribed multiple times, resulting in the company raising SEK 753 million in equity.
• On October 22, a five-year agreement with Tangshan Sanyou was signed for Renewcell to supply 40,000 metric tons of Circulose® pulp annually, beginning in the first half of 2022.
• Renewcell formally concluded the partly EU funded RENEWTEXTILE project on December 4, 2020 following EU approval. The project was concluded ahead of time since the goals of the project had already been met.
• On October 8, a bridging loan was agreed with the largest owners, H&M and Girincubator AB, who were repaid in conjunction with the listing on Nasdaq First North Premier GM.
• On November 12, 2020, Renewcell signed a loan agreement for SEK 450 million with Nordea and AB Svensk Exportkredit guaranteed by Finnvera. The loan will be used to finance the company’s new plant. Renewcell’s right to payment is conditional on additional debt financing of SEK 250 million and that Renewcell obtains an environmental permit.
• Construction of the new plant began in December through placing orders for some important process equipment.
• On October 7, 2020, the Danish fashion company BESTSELLER announced that its next collection was to be made using Renewcell’s Circulose® product. The clothing will be released in store in spring 2021.
• Renewcell’s Circulose® product was included in TIME Magazine’s list of ”The 100 best inventions of 2020”.

January — December

Financial Information

• Net sales amounted to SEK 1,453 thousand (750).
• The loss after financial items amounted to SEK 68,722 thousand (loss: 37,657).
• Cash flow from operating activities following changes in working capital amounted to an outflow of SEK 51,990 thousand (outflow: 31,109).
• Total assets at the end of the period were SEK 827,287 thousand (103,963).
• Cash and cash equivalents at the end of the period totaled SEK 719,288 thousand (39,215).
• Earnings per share, before and after dilution, amounted to negative SEK 3.4 (negative: 2.0).

Significant events after the end of the interim period

• Renewcell has signed a contract with Valmet for the supply and installation of production equipment at the company’s plant in Sundsvall. The value of the contract amounts to SEK 232 million.
• Intense work is ongoing with the contracting of suppliers to the new plant with a goal to complete the process by April at the latest. At the same time, financing work is proceeding with the goal to have a fully-financed plant before construction begins. The Board of Directors proposes that no dividend be issued for 2020.

CEO’s comments

2020 was a milestone year for Renewcell’s history. We began the year as a small company with promising technology for the future and ended it as a listed company with a commercially proven product, an order book of almost SEK 2 billion and a lease in place for establishing the world’s largest chemical textile recycling plant. Our Circulose® product was also listed as one of the 100 best inventions of 2020 by the illustrious TIME Magazine and Fast Company listed Circulose® as one of the year’s ”World Changing Ideas”.

All of this, as well as the two major launches completed with H&M and Levi’s, took place during a pandemic that shook the entire world. Investors, companies and people have been forced to see the world around them from a new perspective. For me, it is clear that the situation has boosted commitment to the necessary transition toward sustainability in the fashion industry. One customer after another that we communicate with is resolute that they will emerge from the coronavirus crisis with a strong force for sustainable change. With new capacity underway, Renewcell will help the textile industry to achieve this.

Establishing a full-scale process industry with the ambitionof being world leading is no small task, which we face humbly if undaunted, for we note that world-leading sustainable companies are being created in industries such as the automotive and electrification industries. At the same time,
I am thankful that we have the wind at our back as, for example, the EU is continuing work to implement the circular economy package that maintains that all local authorities in the EU must collect and separate textile waste by 2025 and that incineration and landfill will be prohibited. In Sweden, an investigation was presented for national producer responsibility for textiles in light of the EU’s future regulations. Investments with a sustaintech scope are increasingly attractive in the capital markets, particularly in Sweden, where 2020 become a record year for investments in sustainability- focused companies. Renewcell’s listing and subsequent share-price increase made the share the most successful listing in the Swedish stock market in several years. Despite the pandemic, I am pleased that 2020 was the launchpad for the decade of change in which sustaintech companies such as Renewcell will play a decisive role in enabling a sustainable society while creating a profitable company that generates shareholder value.

We are now underway with preparations to establish operations at Ortviken’s industrial area in Sundsvall. We are moving to a site with a historic cellulose legacy and will be the tenant of an illustrious major company that has borne the Swedish forest industry’s banner high in the global arena. We will recycle millions of garments in PM5, a machine previously used for printing paper with a capacity of 255,000 metric tons per annum that was operational between 1985 and 2021. The structural transformation of the paper printing market has created the opportunity to use the knowledge, infrastructure and machines that made Sweden a world-leading forest products exporter in a new context. By thinking circularly, not just with our products but also with our investments, we are saving money and natural resources and leveraging a process expertise that cannot be found elsewhere. Sweden is unique in that regard. We view this as part of an Industrial Evolution toward sustainability.

With our listing on Nasdaq First North Premier Growth Market, Renewcell has gained thousands of new owners, established institutions as well as individual savers, who all want to support us in our journey of growth. However, funding has enabled us to quickly change tact and carry out all necessary processes and activities to deliver in line with the plan that we took to market. Thank you to all of our owners, new and old, for your confidence.

The foundations are in place, now it is time to make the textile industry circular!

Stockholm, February 2021
Patrik Lundström — CEO

The complete Year-end report is available as an attachment to this press release.