ANNUAL REPORT - Borregaard

1 2020 ANNUAL REPORT2 THE Borregaard GROUPThe Borregaard Group ..4 Message from the CEO ..6 The Board of Directors ..8 REPORT of the Board of Directors ..10 Corporate governance ..18 Sustainability and corporate responsibility ..29 The Group Executive Management ..76 Borregaard Group consolidated financial statements ..79 Borregaard ASA financial statements ..127 Statement from the Board of Directors ..134 Auditor s REPORT ..135 Historical key figures ..139 Independent accountant s assurance REPORT on Sustainability reporting ..140 Alternative performance measures ..142 Group directory ..143 CONTENTSTHE Borregaard GROUP54 THE Borregaard GROUPTHE Borregaard GROUPB orregaard operates one of the world s most advanced biorefineries. The Group provides sustainable products and solutions based on renewable raw materials and unique competence.

2 / 1 Not including LignoTech South Africa and LignoTech Ib rica/ 2 See Note 6 to the Borregaard Group consolidated financial statements regarding treatment of the LignoTech South Africa joint 3 Alternative performance measures, see page 142 for definition. KEY FIGURESH1/LTI = number of lost time injuries per million hours workedH2/TRI = Total recordable injuries per million hours worked 2,0001,6001,4001,8001,0001,2008006004002 00 0 GWhNOx emissionsSO2 emissionsElectricityHeatOPERATING REVENUESNOx AND SO2 EMISSIONS Borregaard GROUPENERGY CONSUMPTION Borregaard GROUPEBITDA3 ROCE31,6001,4001,0001,200800600400200 0mt/yearSO2 EMISSIONS SARPSBORG SITE 20132014201520162017*Biopolymers and biovanillin ** Metric tonnes dry solidsGROSS AVERAGE PRICEBIOSOLUTIONS*BIOMATERIALS*400300200 100 0mt/year201320142015 20162017160,000140,000100,000120,00080,0 0060,00040,00020.

3 0000mt/year20132014201520162017CO2 EMISSIONS Borregaard GROUPEARNINGS PER SHARE SALES REVENUES BY GEOGRAPHICAL AREA 202018161210148642 0 SICK LEAVE SARPSBORG SITE 2013201420152016 2017 INJURY RATE Borregaard GROUP6%5%4%3%1%2%0%20132014201520162017 SICK LEAVE Borregaard GROUP201220132014201520166%5%4%3%1%2%0%5 ,0004,0003,0002,0001,000 0 NOK millCAGR 4,6184,7855,0635,3284,492 2016 2017 1%Americas 27%Asia 20%Europe 52%SALES VOLUME4500400200250300350450100150050 000 mtds20152016201720184444504682020470416 GROSS AVERAGE PRICESALES VOLUME180160120801004014060200 000 TO WATER SARPSBORG SITECOD (mt/day organic material)Copper (kg/day)ROCE2 % 2012 2013 2014201510080604020 012,5107,552,50mt/daykg/day20132014 2015 2016 2017 % 2016 2017 20182019202025 NOK per mtds**8,0007,0003,0005,0004,0006,0002016 20172018201920205,6185,6546,1666,9515,68 41,00002,000 NOK per mt**12,00010,0008,0004,0006,0002,0000201 620172018201920209,99210,58910,33710,665 10,678GJ/TAD rstalli orUTG R 2018 ROCE3 Minimum target over a business cycleNOK mill 2016 201720182019 EBITDA3 EBITDA margin3 (%)

4 1,2001,0008004006001,0211,0552000%24%20% 16%8%4%0% = number of lost time injuries per million hours workedTRI = Total recordable injuries per million hours worked Cash flow from operating activitiesCASH FLOW FROM OPERATING ACTIVITIES 1,2001,000600800400200 0 NOK mill201620172018201920207805586978861,08 1 EBITDA1 Earnings per shareDividend*Speciality cellulose and cellulose fibrils ** Metric tonnes9031,00720201, = number of lost time injuries per million hours workedH2/TRI = Total recordable injuries per million hours worked 2,0001,6001,4001,8001,0001,2008006004002 00 0 GWhNOx emissionsSO2 emissionsElectricityHeatOPERATING REVENUESNOx AND SO2 EMISSIONS Borregaard GROUPENERGY CONSUMPTION Borregaard GROUPEBITDA3 ROCE31,6001,4001,0001,200800600400200 0mt/yearSO2 EMISSIONS SARPSBORG SITE 20132014201520162017*Biopolymers and biovanillin ** Metric tonnes dry solidsGROSS AVERAGE PRICEBIOSOLUTIONS*BIOMATERIALS*400300200 100 0mt/year201320142015 20162017160,000140,000100,000120,00080,0 0060,00040,00020,0000mt/year201320142015 20162017CO2 EMISSIONS Borregaard GROUPEARNINGS PER SHARE SALES REVENUES BY GEOGRAPHICAL AREA 202018161210148642 0 SICK LEAVE SARPSBORG SITE 2013201420152016 2017 INJURY RATE Borregaard GROUP6%5%4%3%1%2%0%20132014201520162017 SICK LEAVE Borregaard GROUP201220132014201520166%5%4%3%1%2%0%5 ,0004,0003,0002,0001,000 0 NOK millCAGR 4,6184,7855,0635,3284.

5 492 2016 2017 1%Americas 27%Asia 20%Europe 52%SALES VOLUME4500400200250300350450100150050 000 mtds20152016201720184444504682020470416 GROSS AVERAGE PRICESALES VOLUME180160120801004014060200 000 TO WATER SARPSBORG SITECOD (mt/day organic material)Copper (kg/day)ROCE2 % 2012 2013 2014201510080604020 012,5107,552,50mt/daykg/day20132014 2015 2016 2017 % 2016 2017 20182019202025 NOK per mtds**8,0007,0003,0005,0004,0006,0002016 20172018201920205,6185,6546,1666,9515,68 41,00002,000 NOK per mt**12,00010,0008,0004,0006,0002,0000201 620172018201920209,99210,58910,33710,665 10,678GJ/TAD rstalli orUTG R 2018 ROCE3 Minimum target over a business cycleNOK mill 2016 201720182019 EBITDA3 EBITDA margin3 (%)1,2001,0008004006001,0211,0552000%24% 20%16%8%4%0% = number of lost time injuries per million hours workedTRI = Total recordable injuries per million hours worked Cash flow from operating activitiesCASH FLOW FROM OPERATING ACTIVITIES 1,2001,000600800400200 0 NOK mill201620172018201920207805586978861,08 1 EBITDA1 Earnings per shareDividend*Speciality cellulose and cellulose fibrils ** Metric tonnes9031,00720201, = number of lost time injuries per million hours workedH2/TRI = Total recordable injuries per million hours worked 2,0001,6001,4001,8001,0001,2008006004002 00 0 GWhNOx emissionsSO2 emissionsElectricityHeatOPERATING REVENUESNOx AND SO2 EMISSIONS Borregaard GROUPENERGY CONSUMPTION Borregaard GROUPEBITDA3 ROCE31,6001,4001,0001.

6 200800600400200 0mt/yearSO2 EMISSIONS SARPSBORG SITE 20132014201520162017*Biopolymers and biovanillin ** Metric tonnes dry solidsGROSS AVERAGE PRICEBIOSOLUTIONS*BIOMATERIALS*400300200 100 0mt/year201320142015 20162017160,000140,000100,000120,00080,0 0060,00040,00020,0000mt/year201320142015 20162017CO2 EMISSIONS Borregaard GROUPEARNINGS PER SHARE SALES REVENUES BY GEOGRAPHICAL AREA 202018161210148642 0 SICK LEAVE SARPSBORG SITE 2013201420152016 2017 INJURY RATE Borregaard GROUP6%5%4%3%1%2%0%20132014201520162017 SICK LEAVE Borregaard GROUP201220132014201520166%5%4%3%1%2%0%5 ,0004,0003,0002,0001,000 0 NOK millCAGR 4,6184,7855,0635,3284,492 2016 2017 1%Americas 27%Asia 20%Europe 52%SALES VOLUME4500400200250300350450100150050 000 mtds20152016201720184444504682020470416 GROSS AVERAGE PRICESALES VOLUME180160120801004014060200 000 TO WATER SARPSBORG SITECOD (mt/day organic material)Copper (kg/day)ROCE2 % 2012 2013 2014201510080604020 012,5107,552,50mt/daykg/day20132014 2015 2016 2017 % 2016 2017 20182019202025 NOK per mtds**8,0007,0003,0005,0004,0006,0002016 20172018201920205,6185,6546,1666,9515,68 41,00002,000 NOK per mt**12,00010,0008,0004,0006,0002,0000201 620172018201920209,99210,58910,33710,665 10,678GJ/TAD rstalli orUTG R 2018 ROCE3 Minimum target over a business cycleNOK mill 2016 201720182019 EBITDA3 EBITDA margin3 (%)

7 1,2001,0008004006001,0211,0552000%24%20% 16%8%4%0% = number of lost time injuries per million hours workedTRI = Total recordable injuries per million hours worked Cash flow from operating activitiesCASH FLOW FROM OPERATING ACTIVITIES 1,2001,000600800400200 0 NOK mill201620172018201920207805586978861,08 1 EBITDA1 Earnings per shareDividend*Speciality cellulose and cellulose fibrils ** Metric tonnes9031,00720201, IN A NUTSHELL A biorefinery with high value-added Specialisation in global niches Strong innovation ability and continuous improvement Competence as the main competitive advantage A BIOREFINERY WITH HIGH VALUE-ADDEDThe Group s business model is closely linked to the integrated nature of its biorefinery in Norway, which utilises the three key components of wood cellulose fibres, lignin and sugars to produce a diversified portfolio of products.

8 The biorefinery utilises 82 percent of the feedstock to make biochemicals and biomaterials that can replace oil-based products. Most of the remaining biomass is converted to energy used in production processes. In addition to its biorefinery in Sarpsborg, Borregaard has five1 production sites outside Norway dedicated to producing lignin-based products. The company also has sales offices in 13 countries in Europe, Asia and the Americas serving its global customer base. At the end of 2020, the Group had 1,0912 full-time equivalent (FTE) employees. SUSTAINABILITY INTEGRATED IN STRATEGYB orregaard provides sustainable products and solutions with a documented favourable environmental impact which improve the customers climate footprint. Borregaard has also committed to science-based targets (SBTi) to further reduce greenhouse gas emissions and strengthen its sustainability s business model and products are well positioned to support delivery of the UN s Sustainability Development Goals (SDGs).

9 The company has prioritised six SDGs based on its ability to contribute to solving these global challenges (see pages 33-34).SPECIALISATION IN GLOBAL NICHESB orregaard is a supplier of specialised biochemicals and biomaterials to a global customer base. The Group s main products are biopolymers and biovanillin from lignin, speciality cellulose, cellulose fibrils, fine chemical intermediates and second-generation bioethanol . The products are used in a variety of applications in sectors such as construction and building materials, feed and agriculture, food and pharma, personal care, batteries, biofuel, textiles and various other Group s strong market positions have been developed through in-depth understanding of its markets, production of advanced and specialised products and local presence in the form of a global sales and marketing AS THE MAIN COMPETITIVE ADVANTAGE Borregaard is a competence-driven company with production, research and development (R&D) and sales and marketing as its core competencies.

10 To maintain its leading position, Borregaard has a strong focus on training programmes and cooperation between the various disciplines. Borregaard has a leading research centre combining various chemicals disciplines, biotechnology and micro biology, developing new or improved products, applications and production technologies. The Group had 89 employees in R&D as of 31 December S THREE BUSINESS SEGMENTSBioSolutions develops, produces and sells biopolymers and biovanillin from lignin. Biopolymers are used in a wide range of end-market applications, such as agrochemicals, batteries, industrial binders and construction. Biovanillin is supplied to flavour and fragrance companies, as well as to the food and beverage industry. BioMaterials develops, produces and sells speciality cellulose mainly for use as a raw material in the production of cellulose ethers, cellulose acetate and other speciality products.