Welcome to Solar Foods' financial year 2024 review. My name is Laura Sinisalo, and I'm the CXO of the company. I'm here today with Pasi Vainikka , our CEO, and Ilkka Saura , our CFO. Our agenda today is such that Pasi will be starting the event by going through a strategy recap, and then he will be going through the most significant events from last year, after which we dive deep into the financials with Ilkka. In the latter part of the presentation, we will be actually introducing our next CEO, Rami Jokela , who is here today, and he will be also saying a few words to you. Finally, we will end the session with Q&A, and for that, you are able to ask questions throughout the webcast, and we will be answering those questions with Ilkka and Pasi later or at the end of the event.
Let's start the event, and I give the stage to Pasi. Please, go ahead.
Thank you so much, Laura. Just a reminder, what's the role of Solar Foods? Reminding of our strategy, we have a very unique role and a mission to accomplish as a company. We have already brought to the market a new harvest for humankind. We think that we are, as a food company and food system, we are not outside the other technological development that is happening around the world. We are hearing a lot of things around AI, space technologies, and so on and so on. We believe food technology is not, since first time since a century, perhaps, is not outside of this development. We are a food company of the fourth industrial wave or revolution.
We think cellular agriculture, specifically the hydrogen fermentation platform that we are practicing and scaling, it's a quantum computer of food technology bringing food security, food production efficiency completely to a new level, completely a new level compared to that what plants and animals can accomplish. What's our take then on leveraging the new technologies and the hydrogen fermentation platform is we are commercializing new protein-rich ingredients that are using the technology platform that can empower in the future several new products, but starting with our product, Solein protein-rich ingredient today, turning the technology and platform and the ingredient and cell strains into delicious products that are nutritious and their texture meet the needs of a consumer. Now, specifically on the strategy that we announced in December last year, I want to remind that we are industrializing new technology and a new technology platform.
It has to do with physical production and producing a physical product, meaning that there are certain time coefficients through which we can scale the technology and scale also the business of the company. This picture is basically reminding us that the company, since seven years now, quite precisely, we have been accomplishing all the milestones that we have set to ourselves. We also intend to do in the future. However, turning, for example, the company to produce through large-scale facilities that we call, for example, Factory 02 , it takes some time to accomplish that factory construction. Through all this, we are also building blocks for competition because we're commercializing a technology platform, new ingredient, including regulatory approval.
We understand all the technology scaling, what has to do with, which means that we can also license technology, not only sell ingredient in the future. Also, if we think of the market that we are focusing now, we have chosen now having the ability to sell in the U.S., we have decided to focus in specific U.S. health and performance sectors in the U.S. market. From that, actually, we can derive estimates for the market, what we are there to reach. Now, going forward from this, we have also decided that what are the specific product categories within this segment. We also said that our main reference today, whether you like this competitor or not, but at least we are compared to many times to whey protein.
Therefore, it might be that due to the value proposal we have, the reference price points we are taking are from the whey protein ingredient market for three different types of product segments, Ready-to-Mix , in other words, powders, protein bars, and Ready-to-Drinks . Protein bars might be a bit narrow interpretation of the low sugar, high protein snacks that are available in the market today, especially in the U.S. Yes, there are bars, mostly, for example, in Finland, maybe in the Nordics, you see the snack bars, but in the U.S., it is a lot more wider category where you have anything from pound cakes to chocolate chip cookies and M&M candies and what do you have. High protein, low sugar snack is the category a bit broader.
Drinks, yes, there are at one end the sports and performance drinks, but there are a lot of drinks that are used on a daily basis in mix with other drinks. Why we chose these categories and this market, of course, the geography is decided by the regulatory approval because we are speaking about a new ingredient here that requires regulatory approval. Why these segments? The reason is basically because Solein has excellent properties that it can offer for these segments. It has to do, to the left in this picture, with the structure-forming capability, creamy mouthfeel, for example, in drinkable products, but also nutritional value props, starting from dietary fibers to different types of vitamins, including also iron that we have recently published new information on our website. What we also did is we changed our approach to customer.
We have invested a lot in the capability in the past couple of quarters to develop and bring in front of customers product prototypes in these segments. So far, what we have seen, it creates incredible traction. It was the right decision, and it's actually opening many doors really, really fast. Previously, we did focus on thinking that we focus on what we master, in other words, producing an excellent powder form ingredient and relying on customers completely on product development, which they can also do, but showing prototypes, getting to taste as fast as possible as a strategic choice seemed to work really, really well. Now, significant events in 2024, going through those.
First, of course, one needs to remember that the technology platform, what we have producing food without agriculture based on gas fermentation that is fed mainly by hydrogen and carbon dioxide, and then again, hydrogen is made from renewable electricity. This enables us to de-risk food production, price fluctuation, availability of food ingredient production. In the past seven years, we have been basically asked three things. First, is this ingredient safe? How is it supposed to be eaten? Does your technology scale? Quite precisely, one year ago, when our Factory 01 in Vantaa, Vehkala in Finland, started to operate, the third point was proven. The technology scale and the factory is operating.
We have proven that technology scales, and we, based on this, also recently announced that we are going forward in what has to do with the pre-engineering of Factory 02 based on the technology learnings where we have learned in Factory 01 . Kind of a box ticked in our papers. The second, of course, commercial activities in the U.S. Regulatory approval/safety of the ingredient, obtaining the status to be able to sell ingredient in the most, if not the largest, depends how you calculate it, but the most significant market in the world, in the U.S., of course, is a breakthrough for a completely new strain and food that has never been seen before. It is a breakthrough for the company, but I would say also for humankind.
Now we have the capability to also provide sufficient amounts of ingredient to those players that are looking into launch products in the US. Having all these proof points, there was decision-making ongoing last year that how we want to scale. Our decision was that we were going to list the company, which we did, basically enabling to, in future, enable the company to grow and also access capital and otherwise. Listing was, of course, a significant event. Last but not least is, and also we are having Rami Jokela coming CEO here also on stage in a moment. We also did significant maybe changes, improvements, definitely in the management team of the company. You could say that now also including 1st of April, the CEO, five out of eight members of the management team of the company are new.
I have a bit more few words about this after or before Rami's introduction. Without further ado, to the actual final review by Ilkka.
Thank you, Pasi. My name is Ilkka Saura , CFO of the company, and happy to be here with you today to discuss some of the financial highlights of the FY24. On the review period from July to December, the operating loss was at level of EUR 4.6 million, a bit higher than in the comparison period due to a couple of items, mainly because of higher OpEx, operating expenses due to running of Factory 01 and strategic transition project related to listing and strategy review materialized during the second half. Company's balance sheet remained on relatively healthy levels. Net debt pointed to the positive direction. Net gearing was at level of 27%. Equity ratio remaining approximately 50% compared to the last year end .
Operating cash flows EUR 4.9 million during the period, lower compared to the previous period, mainly due to postponed grant payments to 2025, which we are expecting to receive in the next month. Investment activities mostly on the same level as last year, and financing EUR 1.3 million due to the debt service. The debt from Danske Bank has now started to repay and the service is ongoing. We ended up the year with a cash balance of EUR 13.4 million. Some of the key figures from this slide are the full year financials. Other operating income higher compared to last year, mainly due to the higher operations and activities during the financial year. Profit or the loss for the period EUR 11 million, so quite close to the last year.
About the guidance, in the strategy review in the CMD, we announced that the company has new financial targets on the longer term. The company expects to start generating positive EBITDA in 2030 and also gave a note that we might be giving a short-term guidance as part of the financial statements release. In this report, we did not give it and will be assessing giving guidance later this year. As a very significant subsequent event to the reporting period, the company announced yesterday that it has been granted an additional EUR 10 million of funding from Business Finland related to the ongoing IPCEI project, which would actually now last until the end of 2026. These proceeds will be used for the research and development of Solein and to the go-to-market activities, particularly in the US.
With these words, I would like to end the financial review section and give it back to you, Pasi.
Thank you so much. Now, the theme of the company so far and going forward from here is stick to the plan. Once again, in the seven past years since founding of the company, being also one of the founders of the company, we have achieved three things. We've proven a completely new strain and food is safe. We have regulatory approval in the most significant market in the world. We have described how it is eaten. We have chosen categories. We have shown the value props. We have also learned what comes to nutrition. Yes, we are selling a protein-rich ingredient, but we are also selling many other things. Nutrition that is very good in Solein, learning on our customer and the market. The third one is to prove technology scale, having had a significant investment, EUR 40 million investment in the scaling facility in Vehkala.
You could say that the burden of proof has been enormous on our side so far, which is fair. We have proven these points. The company has been by its DNA and nature, you could say a development-only company so far because we need to prove our case. I referred to the kind of renewing the management team of the company. The company also recently announced that there are also changes possibly in the board of the company coming. All this has to do with that we are renewing the narrative of the company, renewing our skin and going forward, sticking to the plan, turning this technology to commercial and for profit. The CEO is not outside of this evaluation. It's one member of the management team.
Also taking the hat of a shareholder and from a shareholder's point of view, one part of going forward and sticking to the plan is now focus on customer and revenue and profit. For that one, we have an excellent person coming in, Mr. Rami Jokela, as a coming CEO since 1st of April. Rami has track record in doing those things, growing those numeric things, what the company Solar Foods need to accomplish next. From a shareholder's point of view, it is excellent news to have you, Rami, here. Basically over to you then.
Thank you, Pasi. Very good introduction, but let me tell a little bit about myself first, who I am. Rami Jokela is the name. I have technical background, and if I need to say a few words who I am, I'm a global technology growth leader. You will see very soon why I'm claiming this way. I have technical background. You can see some of the logos in this slide. I have been working in ABB multiple years, two times, and also Rolls-Royce in between and Gerresheimer. What I have been doing, and that might be interesting for you, what fascinates me is the growing using the technology to business and make a profit.
What I did in ABB in 2002, for example, I established five years' time Marine business for ABB, using actually value proposition technology, electric propulsion and propulsors bringing from Finland and Europe to China. Later in 2007, I moved to Rolls-Royce. I did the same. I moved actually this half billion business from the product business to solution business. So one third to two thirds, and that was a transformation over three years. I think I found myself where I'm good at. I'm good at actually growing not only actually from zero to big business, but also transforming and actually creating something new, the whole industry. In 2010, I rejoined ABB in Switzerland to headquarter. I started a journey today called Digital or GenAI, but in 2010, nobody had that language or vocabulary even.
For marine and ports, I started Smart Ships and Ports, the first big company in the world. There's a few other companies, of course, came along, but that was actually the first big company who announced it. I'm very proud of that and actually what was done together with the team as well. I did that five years, growing the business around EUR 100 million. After that, I was asked, can I do the same for the whole ABB group? ABB group, you know, perhaps it's a multi-billion electrical automation group and more than 15 key market verticals. It was a very interesting job, really to lead thousands of the people and establishing actually as a Head of Digitalization, all the programs, how to accelerate for the growth and tap this opportunity what the digital is bringing to many of the industries.
After that doing, I knew that I want to do something else. I joined a company called Gerresheimer, which is a leader in the pharma segment and also supply chain segment and a few other technology segments, a German-based, Hamburg-based global company. My plan actually there was establishing the brand, moving from more than 50 brands to one brand, make a go-to-market plan, double the business, and also to take the business outside of the DACH, so Germany, Austria, Switzerland, where was the main focus. Especially moved to Asia and because of the corona impacted a lot the U.S. U.S. actually became one of the biggest growth.
At that time when I started in 2019, and actually five years was doing the company top line growth from EUR 1.8 billion to EUR 3.2 billion, which I'm very proud of with my whole team and all the customers and partners who were helping along. I hope this a little bit tells why I'm excited about Solein and Solar Foods. I have done five times growth journey, two times in my life now to make a number one globally the product or solution. Whatever role I take in the past and also this one, I have a very simple mechanism. Think what I do. I always take a look first, what is a mega trend? Multi-year growth expected, big momentum. Number two, how big is the market? Are we talking millions, billions, or multi-billions? What are the growth rates, CAGRs of these markets or segments, subsegments with the focus?
What is a key ingredient is the technology. What is the value proposition? What is the unique selling point? What is the new value added by the technology? How this value added helps the customer pay for better and more of yield and might be the other parameters. Typical ecosystem partners are coming along because they want to be this nice growth and they're doing something new, which is transforming the industry. The last one is who are the enabling sparring partners, stakeholders. Like here, Pasi, you have been doing great. Absolutely, like you commented all these three steps. Now my task and my value proposition, and we are very good at what I'm very eager to do. Let's grow, let's make Solein and Solar Foods global. Let's commercialize that, let's industrialize that one. That's actually what I'm very good at.
I don't know if this is enough to say I introduce this time, but I have to say that I'm very excited. I have been looking at something what is actually Helsinki, Finland-based. I've been 23 years abroad, different places, different companies, and now coming back. I want to bring actually my knowledge and make a next transformation. I'm strongly thinking and believing that it's all what actually Pasi was explaining, the next industrial revolutions happening all in the food area. All right, one more time, we will meet very soon. I will tell more about what are the plans, how will we execute. Now I'd like to hand over back to Laura.
Thank you, Rami, and welcome to the team.
Thank you.
All right. Next we are moving to the Q&A session, and I want to thank everybody already for sending plenty of questions. We are going to be standing here for a while. Let's start immediately. I suppose this first one is for you, Pasi. How do you expect the sales ramp up to differ in the US. compared to Singapore?
Singapore is very unique in every respect, and we expect it to differ a lot in the detail because the U.S. is in each single segment, in many segments, the largest market in the world. Immediately you have access nationwide to very large volumes. In Singapore, it is very different in dynamics and kind of launching strategy and so on. In the U.S., you might be, in Singapore for example, going shop by shop or restaurant by restaurant. Getting a large brand to launch in Singapore only for large volumes is something that we have kind of tested the market with our customers. Growth in the longer term to the volumes that we require for Factory 02 can happen maybe in the same way, but in the U.S. you just purely have the volumes towards Factory 02 . That's a significant difference.
Thank you. Perhaps to continue with you, what is currently the main bottleneck preventing or slowing Solar Foods from closing cooperation agreements with larger food producers?
Actually, we are seeing, and especially with the new strategy, there's a lot of traction. We hope to tell about those very soon. One needs to remind also that once again, I understand the time coefficient and the kind of market expectation, which is fair. We need to remember that about one year ago, we didn't have a large facility running. Technologies, we knew the technology scales, but we of course needed to prove it. That binary kind of a risk or proof was done.
Still having a regulatory approval only in Singapore, suddenly the U.S. opens and getting large brands on board to develop, test market, and put their brands in the game takes some time. Also with the new strategy, we know that actually a lot is happening. T he only thing what we can do now is to kind of need to come back to this in due time for other announcements.
Thank you, Pasi. Let's take the next one with you, Ilkka. Please comment the development of the share price of Solar Foods since the launch in October. Thank you.
Thank you. Of course, we've been investigating what's happening in the stock markets. Sometimes we see relatively strong selling pressure on the market. It might be, this is our own thinking, it seems that it might be coming from the foreign investors. We see quite much of activity, particularly under nominee registers in that time period.
Thank you, Ilkka. Pasi, will Pasi Vainikka leave Solar Foods or will he take a new role in the company?
Sticking to the plan also there and to the announcement of what we said. At this time, I will be continuing at least to the end of this year. I do have specific duties and thereby remaining executive. Also recently, the company announced that there is also an opportunity to join the board of the company. There is kind of the shareholder part of the story. Therefore, like it or not, I will be there. I will be here in various roles. I hope also that we can tell news very soon that kind of how things are advancing, maybe commercial side, factory side. There is a lot to do.
Thanks, Pasi. There is a question, where will Factory 02 be located?
Say again, where?
Where will Factory 02 be located?
Stay tuned in.
All right. Will Solein be cost competitive with other protein sources?
Yes. I would like to remind about our messages in CMD and part of the strategy. We communicated a very attractive economical profile related to the industrialization of the product. Price points matching with whey already achieve unit economics what comes to cell productivity and energy efficiency, provide a very sound platform for future growth and returns for shareholders as well.
Thank you, Ilkka. Let's go to the last one. Pasi, when do you expect to receive the novel food approval in the European Union?
2026 is the estimate what we've given and we keep to that.
Okay. Short and sweet. Thank you very much. We will be ending this presentation and event here. Thank you for listening and see you next time. Have a great afternoon.