“Savosolar’s revenue grew in January–June by 22 per cent year-on-year to EUR 2.0 million. The Covid-19 pandemic delayed installations, deliveries and contract negotiations on new projects during the second quarter. The commissioning of France’s largest solar thermal system in Issoudun, France, was postponed because of delays from July to October. The completion of the solar thermal system commissioned in Ettenheim, Germany in July was delayed by approximately two months. The handover of the Creutzwald project currently being delivered is also expected to be postponed by about two months. The postponement of the tender and contract negotiations and thus of new deliveries hampered not only the increase of revenue but also the accumulation of the order backlog. Despite this, the company’s order backlog at the end of the reporting period stood at EUR 2.9 million, being only EUR 0.1 million the end of the comparison period. However, due to the delays caused by the pandemic, we had to initiate the statutory co-operation procedure, as a result of which we laid temporarily off some of our staff in April–June.

The corona situation and potential new restrictions imposed in different countries may further postpone the clients’ investment decisions and deliveries later than what has been planned. We seek to prepare for the potential additional effects of the corona situation in our business operations.

During the reporting period, we won the competitive tendering for solar district heating systems to be delivered to NewHeat SAS in the cities of Narbonne and Pons in France. After the reporting period, we signed a contract on the Narbonne delivery in August, and negotiations on the Pons contract are currently under way. Additionally, we entered into an agreement on a pilot project for the City of Cadaujac in France, in connection of which we also agreed with the client on an exclusive right to negotiate the delivery of a major greenhouse project after the pilot project.

Our operating result was EUR -1.7 million, compared to EUR -2.3 million a year ago. Despite the negative effects of Covid-19, our profitability developed favourably. The actions to improve our internal efficiency have yielded results, and we will continue to pursue them with determined efforts. The rights issue arranged to finance our growth succeeded well, and we raised approximately EUR 3.5 million after the transaction costs to support our growth. The issue was over-subscribed, and it is great to see that the shareholders trust in us and our expertise and want to be involved in the development of emission-free renewable energy.

A significant change in the competitor field took place during the early part of the year when the owner of our Danish competitor Arcon-Sunmark disposed of its solar thermal system business and sold the main parts of the company to other operators. In my opinion, Arcon-Sunmark’s exit from the market will direct solar thermal investments to an even more lifecycle-oriented direction. I believe that for Savosolar in particular, this will provide even better opportunities to strengthen its market position, as our efficient and high-quality solar thermal collectors were from the beginning designed to optimise the competitiveness of our clients’ long-term energy production. 

Savosolar is strongly involved in the fight against climate change. Solar heat produces emission-free renewable energy, the popularity of which increases both in industrial process heating and in district heat generation. Incentives to this end include both environmental effects and the fact that the competitiveness of solar heat further improves when the volume increases.

Savosolar Plc is a Finnish public limited liability company listed in Nasdaq First North Growth Market Sweden and Nasdaq First North Growth Market Finland that designs and supplies large solar thermal systems for district heat producers and industry. The systems are based on Savosolar’s highly efficient solar heat collectors, at the heart of which are Savosolar’s proprietary nano-coated direct flow absorbers. With this leading technology, Savosolar helps globally its customers to produce competitive clean energy. According to the information available to the company’s management, Savosolar’s collectors are the most efficient large solar heat collectors in the word.

Savosolar’s vision is to be the first-choice supplier of high performance large solar installations on a global scale.

Savosolar’s registered office and production plant is located in Mikkeli, Finland, in addition to which the company also has an office in Vantaa, Finland as well as fully owned subsidiaries in Denmark and Germany. In its sales activities, Savosolar also utilises partners who are familiar with the local markets. The company has such partners, for example, in China, the Latin America and Australia. 

This half-year report is unaudited. The release has been prepared in accordance with the Finnish Accounting Standards (FAS) using the same principles as in the 2019 financial statements. Savosolar applies the percentage of completion (PoC) principle in the revenue recognition of projects. According to the percentage of completion principle, the recognition of revenue and operating income in long-term contracts is carried out on the basis of the percentage of completion of the project during the reporting period.

The comparison figures refer to the corresponding period in 2019, unless otherwise indicated.

Savosolar’s revenue for January–June increased by 22 per cent and amounted to EUR 2.0 million (January–June 2019: EUR 1.7 million).

The revenue growth fell short of expectations because the restrictions related to the Covid-19 pandemic delayed project deliveries in France and Germany. The estimated effect of these delays on the revenue of January–June was about EUR 1.3–1.5 million. The signing of new project contracts was also delayed in the second quarter as some clients postponed their investment decisions. At the end of the reporting period, the movement restrictions were largely lifted, and our operations returned to nearly the normal level. 

Despite the Covid-19 pandemic, reasonable progress has been made in the delivery of a solar thermal system to Kyotherm Solar in Issoudun, France, and its commissioning is scheduled to take place in October. Exceptionally strong wind brought down some of the solar heat collectors that were waiting for installation in the Issoudun project field at the beginning of June, however, the incident is not expected to have effect on the company schedule-wise or result-wise. When completed, the Issoudun solar thermal system will be the largest system of its kind in France, and also Savosolar’s largest delivery to date in value. The system is more than 14,000 square metres in size, and the value of the delivery to Savosolar is about EUR 3.9 million

In Germany, the Fernwärme Ettenheim’s 1,700 square-metre solar thermal system and 200 square-metre heat storage were commissioned in July. The value of the system is approximately EUR 0.8 million, and it was Savosolar’s first delivery to Germany.

In February, Savosolar announced that it had signed a contract worth over EUR 1.3 million with a subsidiary of the French company La Francaise de l’Energie (LFDE) on the delivery of a solar heating system in Creutzwald, France. The system delivery and construction on site have been delayed because of the Covid-19 pandemic. The handover is planned to take place during 2020. The LFDE subsidiary will own and operate the solar heating system to be delivered and sell heat to ENES Creutzwald, the energy service company of the municipality of Creutzwald. The size of the solar heating system is over 6,000 square metres, and it will generate over 2,600 MWh of clean energy annually. Savosolar will deliver the largest part of the whole solar thermal plant. 

In April, Savosolar Plc announced that it had agreed on the delivery of a solar thermal system of over 900 square metres for AbSOLAR SAS pilot project in the City of Cadaujac in France. The value of the delivery for Savosolar’s is about EUR 300 thousand. The project awaits the final investment subsidy decision from France. At the same time, Savosolar Plc signed an exclusivity agreement for designing and delivering AbSOLAR’s second solar thermal plant for a greenhouse. The final decision on the implementation of the project worth about EUR 2.5 million is expected to be made towards the end of this year. AbSOLAR SAS develops and delivers heating applications for industrial and residential use, using solar energy and seasonal storage.

In June, Savosolar Plc was selected as a preferred bidder to deliver two solar heating systems to NewHeat SAS in France. The size of the solar heating plant of the City of Narbonne is about 3,000 square metres, and its value for Savosolar is EUR 850 thousand. The field of the City of Pons is about 1,700 square metres in size, and its value for Savosolar is about EUR 700 thousand. The deliveries are scheduled to commence already during 2020, and they are due for completion during the first half of 2021. Savosolar has already delivered a solar heating system to NewHeat in Condat, France in 2019 for the process heat generation of a paper mill.

In Asia, Savosolar continued its cooperation with the Chinese company named Jiangsu Holly Environmental Technology Industrial Co. Ltd on the use of Savosolar’s products in the solar thermal systems delivered by Jiangsu Holly. Also, the cooperation with the Chinese company Guangzhou Power Supply Co., Ltd. advanced as planned after the Covid-19 delay during the early part of the year. The goal is to build a demonstration project of micro-energy network complementary with renewable energy in Nansha, Guangzhou. The project is part of the Finland-China Energy Programme. The objective is that the cooperation with our Chinese partners will result in the first order in China in 2020.

Savosolar’s order backlog increased and stood at about EUR 2.9 (0.1) million at the end of the reporting period. The value of the projects in the company’s sales pipeline at the end of the reporting period was about EUR 260 (121) million. Of this, the total value of projects in the tendering and planning stage amounted to approximately EUR 94 (54) million. Among other things, the growth is due to the increased activity in the French and German markets to produce clean thermal energy. The sales pipeline includes all the active projects entered in the company’s sales management system.

Personnel costs amounted to EUR 1.1 (1.0) million. Personnel costs increased because of the new recruitments in line with the strategy implementation during the latter half of 2019 and in 2020. Following the Covid-19 pandemic, Savosolar Plc laid off 22 people, part-time or full-time, in April–June for production and economic reasons based on the outcome of the co-operation negotiations. Through personnel arrangements and other ongoing and new savings measures launched, the company achieved net savings of around EUR 0.3 million during the first half of the year. Other operating expenses decreased and totalled EUR 1.0 (1.2) million.

The operating result (EBIT) for January–June 2020 amounted to EUR -1.7 (-2.3) million. The improvement of the profitability of projects was hampered by the delays caused by the Covid-19 pandemic in the implementation of ongoing projects together with the additional arrangements made for the advancement of the projects.

Net financial income and expenses amounted to EUR -0.8 (-1.0) million. The majority of the financing costs resulted from the right issue arrangement costs, which amounted to EUR 0.8 (0.9) million.

(EUR 1,000) Jan-Jun 2020 Jan-Jun 2019 Jan-Dec 2019
Revenue 2,043 1,679 3,415
Operating profit/loss (EBIT) -1,717 -2,332  -4,999
Profit/loss for the period -2,564 -3,314  -6,760
Earnings per share, EUR*      
   undiluted -0.128 -0.007 (-0.725) -0.006 (-0.584)
   diluted -0.028 -0.002 (-0,188) -0.003 (-0.350)

*The number of shares decreased during the reporting period in the ratio of 100:1 as a result of the combination of shares. Earnings per share and the number of shares has been calculated provided that the combination of shares registered on 29 April 2020 was carried out on 31 December 2020. The comparable figures are presented on the table.

Total assets of the company as of 30 June 2020 totalled EUR 8.9 (6.0) million. Inventories stood at EUR 1.5 (0.7) million. Cash and cash equivalents totalled EUR 4.3 (2.1) million. Current receivables totalled EUR 0.8 (0.6) million. The value of inventories at the end of the reporting period was exceptionally high. It was increased by the completed collectors held in the storage, the delivery of which was postponed because of Covid-19.

Equity stood at EUR 5.4 (3.2) million. Equity including subordinated loans amounted to EUR 6.0 (4.5) million at the end of the reporting period. The company’s equity ratio at the end of the reporting period was 60.8 (54.3) per cent. With the subordinated loans taken into account, the equity ratio at the end of the reporting period was 67.6 (76.8) per cent.

Subordinated loans were repaid during the reporting period in the total amount of EUR 0.3 million in accordance with the repayment programme.

During the reporting period, Business Finland granted Savosolar “funding for business development in disruptive circumstances” in the amount of EUR 100,000. The financing will be used for developing component manufacture and coating methods so as to make production and assembly more resistant to disruptions such as the Covid-19 pandemic. Of the development funding, EUR 70,000 was paid during the reporting period, and the remaining EUR 30,000 will be paid during the last quarter of 2020.

Cash flow from operations was EUR -1.9 (-2.9) million and cash flow from investments EUR 0.0 (-0.1) million. Cash flow from operations before right issue arrangement costs was EUR -1.0 (-1.9) million. Cash flow from financing was EUR 4.1 (4.3) million, of which the share issues accounted for EUR 4.4 (5.2) million. Savosolar’s cash and cash equivalents as of 30 June 2020 totalled EUR 4.3 (2.1) million.

The company will continue to investigate the different options available for arranging project financing and project guarantees in a cost-effective way to reduce its financing costs and increase its capacity to deliver large-scale solar thermal systems in line with its strategy.

Aspects related to the Savosolar’s financing and liquidity are also described in the section entitled “General risks and uncertainty factors concerning operations”.

Investments totalled EUR 0.0 (0.1) million. The company has no need for significant investments in its plant during the next few years because the plant’s production capacity has been increased to a level that allows a revenue of EUR 20–30 million.

Savosolar’s project for the development of a new type of solar thermal collector received a loan commitment from Business Finland to the maximum amount of EUR 0.5 million, the interest rate of which is 1{3e0544090c75b66d16c3eca4d142e2092ea98ee5f79f18046a1f13abafab9023}. To date, the company has drawn down EUR 0.3 million of the loan. The project is focusing on the development of energy-efficient collectors that are suitable for large solar thermal fields and can be manufactured as mass production. The objective is to lower the costs for logistics and installation as well as to improve the flexibility of installation. The project is estimated to last until the end of 2020, and its total budget amounts to EUR 0.7 million.

At the end of the reporting period, Savosolar had 36 (35) employees. The average number of personnel was 38 (38).

Martti Jalava, who previously served as fixed term director responsible for supply chain development, was appointed Chief Operating Officer (COO) on 5 February 2020. In his new position, Jalava is responsible for production, the supply chain and quality. Antti Lilleberg, Eng, MBA (born in 1978), was appointed Vice President of Sales and Marketing as of 1 June 2020. In his position, he is also responsible for project execution. Morten Hofmeister, Head of Projects and System Design and a member of the Management Team left the company in June.

Savosolar’s management team as at 30 June 2020 consisted of the following individuals: Jari Varjotie, CEO; Torben Frederiksen, CTO; Raul Ikonen, Country Manager, China; Martti Jalava, Director, Supply Chain Development, Production and Quality; Aku Järvisalo, Production Manager; Pekka Karjalainen, Quality Manager; Antti Lilleberg, Vice President, Sales and Marketing, Project Execution; Kaj Pischow, Senior Advisor; and Heikki Timonen, CFO.

Savosolar has continued building its international cooperation partner network in line with its strategy. To improve the efficiency of operations, determined efforts have been made to develop operating practices to improve cost-effectiveness in the management of large projects in particular. As part of enhancing the efficiency of its internal functions, the company has reinforced its quality assurance and the culture of ‘doing it right the first time’ and continuous improvement. By developing procurement operations, material costs have been successfully reduced throughout the supply chain. The continuous improvement of the system planning of client projects and partnership operating models are also of central significance.  

The company also strives to develop its production and the installation of deliveries in such a way that they are less vulnerable in disruptive circumstances such as the Covid-19 pandemic.

Savosolar Plc’s Annual General Meeting of 27 April 2020 adopted the financial statements for 2019 and resolved that the loss for the financial year of EUR -6,635,369.98 be carried over to the retained earnings/losses account and that no dividend be paid. The Board of Directors granted discharge from liability for the members of the Board of Directors and the Managing Director for the period of 1 January 2019 to 31 December 2019.

The Annual General Meeting resolved that the members of the Board of Directors be paid the following remuneration for the term that begins at the close of the Annual General Meeting and ends at the close of the next Annual General Meeting following election: EUR 21,600 for the Chairman of the Board and EUR 10,800 for each of the other members of the Board. Approximately 40{3e0544090c75b66d16c3eca4d142e2092ea98ee5f79f18046a1f13abafab9023} of the remuneration will be paid to the members of the Board of Directors by giving to the Board members new shares in the company based on the authorisation granted to the Board of Directors, and approximately 60{3e0544090c75b66d16c3eca4d142e2092ea98ee5f79f18046a1f13abafab9023} in cash. The cash portion of the remuneration will be paid on a monthly basis. The number of remuneration shares will be determined on the basis of the value of the company’s share in First North Growth Market Finland as follows: the volume-weighted average price of the Savosolar Plc’s share within two weeks following the publication of the half-year report for the period of 1 January  –  30 June 2020 will be used as the value of share. Alternatively, if so resolved by the Board of Directors, the remuneration shares can be purchased in the name of and on behalf of the Board members.

The Annual General Meeting re-elected Feodor Aminoff, Eero Auranne, Mikael Lemström and Ari Virtanen as members of the Board of Directors.

Auditing firm Tilintarkastus Inkeröinen & Himanen Oy was elected as the company’s auditor. Tilintarkastus Inkeröinen & Himanen Oy has informed that the auditor-in-charge will be Juho Himanen, Authorised Public Accountant.

The General Meeting resolved on the reduction of the quantity of the company’s shares without reducing share capital by way of issuing new shares and by redemption of the company’s own shares in such a way that each current 100 shares of the company shall correspond to one new share.

The General Meeting resolved to authorise the Board of Directors to decide, in one or more transactions, on the issuance of shares and the issuance of option rights and other special rights entitling to shares referred to in chapter 10, section 1 of the Limited Liability Companies Act as follows: The number of shares to be issued based on the authorisation may in total amount to a maximum of 100,000,000 shares. The Board of Directors decides on all the terms and conditions of the issuances of shares and of options and other special rights entitling to shares. The issuance of shares and of options and other special rights entitling to shares may be carried out in deviation from the shareholders’ pre-emptive rights (directed issue) if there is a weighty financial reason for the company to do so. Shares may be conveyed either against payment or free of charge. A directed share issue may be a share issue without payment only if there is an especially weighty reason for the same both for the company and with regard to the interests of all shareholders in the company.

The authorisation is valid until 27 April 2025 and repeals the authorisation granted by the Extraordinary General Meeting on 22 January 2019.

The Board of Directors appointed at the Annual General Meeting held its constitutive meeting after the Annual General Meeting and elected Eero Auranne from among its members as the Chairman.

The company has a service contract with its subsidiary Savosolar ApS concerning, among other things, sales, marketing, purchases and product development services. Under the contract, the company paid Savosolar ApS approximately EUR 230 (275) thousand during the reporting period. A similar service contract has been signed with Savosolar GmbH, under which the company paid Savosolar GmbH approximately EUR 88 (84) thousand during the reporting period.

On 9 March 2020, Savosolar Plc’s Board of Directors resolved on a directed share issue to be used as a part of the Board members’ remuneration in accordance with the resolution by the Annual General Meeting of 28 March 2019. The Annual General Meeting of 28 March 2019 resolved that portion of the Boards of Director’s remuneration involving shares was to be paid to the Board members in two instalments in such a way that the first instalment will be when the half-year report for the period of 1 January to 30 June 2019 has been published, and the second instalment between 1 and 30 November 2019. The resolution passed on 9 March 2020 concerns the second instalment of the share-based remuneration that, owing to insider rules, had not yet been paid to the members of the Board of Directors. The company issued a total of 1,065,875 new shares that were offered for subscription to the members of the Board of Directors without consideration. The Chairman of the Board of Directors subscribed for 426,350 new shares and the rest of the board members 213,175 new shares each. When the number of shares was calculated, the volume-weighted average price of the company’s share on Nasdaq First North Growth Market Sweden during the period of 1 November 2019 to 30 November 2019, i.e. SEK 0.1078, was used as the value per share.

In April, Savosolar Plc’s Board of Directors resolved to carry out a rights issue of approximately EUR 4.3 million and a related offering of warrants that enables the company to raise up to a maximum of approximately EUR 13.0 million. The rights issue was subscribed for to 264 per cent, providing the company with new capital of about EUR 3.5 million after the transaction costs.

In the rights issue, a total of 28,999,557 new Savosolar shares were offered to the shareholders for subscription subject to the shareholders’ pre-emptive subscription right. The subscription price was EUR 0.15 or SEK 1.58 per share. The offering was secured to 80 per cent by subscription commitments and external underwriters.

In the offering, Savosolar gave all those shareholders who were registered in Savosolar’s shareholder register maintained by Euroclear Finland Ltd or Euroclear Sweden AB one book-entry subscription right for each one share held on the offering record date. Two subscription rights entitled the holder to subscribe for three offer shares.

Additionally, Savosolar gave, without consideration, each subscriber of the offer shares one newly issued warrant of series TO5, one newly issued warrant of series TO6, and one newly issued warrant of series TO7 for each two shares subscribed and paid for in the offering. The warrant plan is described in greater detail in section ‘Stock option programmes’.

The record date for the offering was 27 May 2020, and the subscription period was 1 to 17 June 2020 in Finland and 1 to 15 June in Sweden.

The Board of Directors of Savosolar resolved on 23 June 2020 to approve the subscriptions received in the offering, as well as the allocation of offered shares and warrants. 83.6{3e0544090c75b66d16c3eca4d142e2092ea98ee5f79f18046a1f13abafab9023} of the offering was allocated to subscribers who subscribed for the shares with subscription rights and 16.4{3e0544090c75b66d16c3eca4d142e2092ea98ee5f79f18046a1f13abafab9023} to those who subscribed for the shares without subscription rights.

The net proceeds from the offering and the warrants will be used for maintaining the company’s working capital and increasing the company’s financial capacity to deliver signed and future orders, for increasing its ability to meet the growing market demand, and for further strengthening its technology and quality leadership in solar thermal collector technology.

The shares subscribed for in the offering were registered with the Finnish Trade Register on 26 June 2020, and trading in the new shares commenced on 29 June 2020 on First North Growth Market Finland and on 6 July 2020 on First North Growth Market Sweden.

As a result of the offering, the number of shares in Savosolar increased by 28,999,557 shares. After the offering, the total number of shares in the company amounts to 48,332,595. The number of warrants allocated in connection with the offering amounts to 43,495,893.

Savosolar Plc’s Annual General Meeting of 27 April 2020 resolved to reduce the quantity of Savosolar’s shares without reducing share capital by way of issuing new shares and by redeeming the company’s own shares in such a way that each current 100 shares in the company correspond to one share in the company after the arrangements related to the reduction of the quantity of company’s shares have been brought to completion. The total number of shares prior to the reduction of the quantity of the company’s shares was 1,932,968,654.

As part of the arrangements in respect of shareholders registered in the shareholders’ register of Savosolar maintained by Euroclear Finland Ltd on the transaction day 29 April 2020, the company issued 107,246 new shares without consideration so that the number of all shares per the book-entry accounts owned by such shareholders are divisible by 100. After this share issue, the total number of the shares in the company was 1933,075,900 shares. On the transaction day, the company redeemed, without consideration, from all the shareholders such number of shares that is required by the redemption ratio of 100/1, i.e. altogether 1,913,745,141 shares in the company to be annulled.

Pursuant to the resolution of the Annual General Meeting, the company carried out the issue of 15,000 shares to the company itself without payment. In order to carry out the redemption, the company issued a total of 2,279 treasury shares to the shareholders without consideration so that the number of shares held by such shareholders is divisible with 100.

The annulment of the shares redeemed from the shareholders and the new total quantity following the share issue directed at the company itself were registered with the Trade Register on 29 April 2020. A total of 12,721 treasury shares held by the company were annulled on 13 May 2020. The number of shares after all the arrangements related to the reduction of the quantity of shares is 19,333,038, which was registered with the Trade Register on 22 May 2020.

Savosolar’s combined trading volume in January–June 2020 was 1.431.306.277 shares in First North Growth Market Sweden (20.884.952 shares provided that the combination of shares registered on 29 April 2020 had taken place on 31 December 2019) and 390.419.718 shares (7.474.167 shares provided that the combination of shares registered 29 April 2020 had taken place on 31 December 2019) in First North Growth Market Finland. On 10 July 2020, Savosolar had 14,118 shareholders (30 June 2019: 11,236).

Savosolar’s shares are listed on the First North Growth Market Sweden marketplace maintained by Nasdaq Stockholm AB as of 2 April 2015 with the ticker SAVOS. Secondary listing of the shares on the First North Growth Market Finland marketplace maintained by Nasdaq Helsinki Oy started on 24 April 2015 with the ticker SAVOH.

Shareholder Holding, number of shares Percentage of all shares and votes
GRIMALDI, SALVATORE 2,645,846 5.47
JOKINEN, JUKKA 800,000 1.66
GEUST, NIKLAS 792,235 1.64
ALEKSOV, OLIVER 600,120 1.24
VALJAKKA, JUHA 404,334 0.84
LILJA, ANSA ANITTA 314,495 0.65
OTHERS 39,110,214 80.92
TOTAL 48,332,595 100