Capital Markets Day Part I

Oslo, March 11 2014

Agenda

PART I

• 08:30 - 11:30 - Presentation of business model, strategy, business areas and markets
Per A. Sørlie, President and CEO
Per Bjarne Lyngstad, SVP and CFO
Morten Harlem, EVP Borregaard LignoTech/Performance Chemicals
Tom Erik Foss Jacobsen, EVP Borregaard ChemCell/Specialty Cellulose
•11:30 - 13:15 - Lunch followed by transfer to Sarpsborg site

PART II

• 13:15 - 16:00 - Presentation of site and operations, R&D projects, BALI Demo Plant visit
Ole Gunnar Jakobsen, Plant Director Sarpsborg Site
Kristin Misund, R&D Director
Harald Rønneberg, Business Director Exilva
Gisle Løhre Johansen, SVP Business Development and R&D
Visit to BALI Biorefinery Demo Plant
•16:00 - 17:15 Transfer to Oslo

Business model and strategy specialisation in global niches

Per A. Sørlie President & CEO

Borregaard in a nutshell A global niche player with a specialisation strategy

•A biorefinery business model with high value creation
• Diversified market strategy and global market positions secure maximum flexibility
• Sustainable margins supported by leading market positions in global niches with high barriers to entry
•Strong R&D capabilities and innovation efforts
•Continuous productivity improvement
• A company culture and competence base supporting the specialisation strategy

Performance ChemicalsStrong #1 position with high barriers to entry

•Largest supplier with a global footprint

Large, diverse and stable customer base
A sustainable and versatile product portfolio
Unique technical and application expertise

•High barriers to entry

Raw material
Technology
Competence
• Strong competitive position
Economies of scale vs. competition across several factors
• Dependence on sulphite pulp mills for lignin raw materials supply

Specialty Cellulose Strong market positions in Europe and Asia

•Positioned in high end of market with high barriers to entry
• Leading positions in selected applications like ethers, acetate and nitrocellulose
•Capital intensive business
• Recent capacity additions by existing players in high specialities and new entrants in textile cellulose
• A high cost player in specialty cellulose due to high wood cost and the biorefinery business model

Ingredients, Fine Chemicals and Bioethanol Important raw material and technology providers

• Ingredients
The world's vanillin expert and only supplier of wood based vanillin
Strong integration with Vanisperse product line in lignin
• Fine Chemicals
Leading supplier of C3 aminodiols for X-ray contrast media
Stable cash generator
Important technology provider
• Bioethanol
2nd generation bioethanol
Upgraded lignin raw material at the Sarpsborg Biorefinery

Contribution to high value creation at the Sarpsborg Biorefinery

Sarpsborg Biorefinery A unique set of assets

•75% of Borregaard revenues
•Unique technology and product portfolio
•Calcium sulphite mill with softwood raw material
•Wood-based vanillin/Vanisperse product line in lignin
•Potential for further development and specialisation

Specialisation and productivity improvement

Niche markets targeted Strategy

Selected specialised market segments with diversified applications

World leader in innovationand productivity

Robust financial performance

Value creation through specialisation and innovation

Continuous specialisation andimproved products

Innovation Management Teams
~15%1 of Borregaard's revenues come from new products2
90 employees in R&D, of which 34 at PhD level
Annual R&D and innovation spending of approx. 4 % of turnover³
IP strategies for each BU and major innovation projects

"Exilva"

Several initiatives in place to drive long term growth and specialisation

•Increased sales of high-value lignin products
•Development of new cellulose specialities
•Further development of vanillin blends
•BALI – Strategic lignin raw material option
•Exilva - New Microfibrillar Cellulose product and Advanced Texture Systems

Norway is a high cost location Continuous improvement, competence development and use of technology

Increased competence

- Use of technology and increased automation
- Organisational development
= Lower costs and improved production

Maintenance & environmentalcapex (mNOK) - Sarpsborg

Dual strategic focus secures high value creation

Sales per employee in Norway (mNOK)

•Specialisation and innovation

Increased value added for existing production volume
New products with higher value

•Productivity improvements

Reduced work force
Stable fixed costs over time in operations
Increased production volumes

Sustainability – Integrated in Borregaard's business model

Main objective:

Sustainable solutions based on renewable resources and unique competence

• Sustainability – a core value
Sustainability of biorefinery concept supported by life-cycle analysis
Focus on EHS across the organisation
Profitability is key to sustainability
• Long-term perspective on innovation, market development and investments
Consistent strategy over time
• Maintaining and developing competence
Comprehensive competence programmes and co-operation across skills and competences

Strong and unique competence base

innovations

• Strong combination of wood chemistry and fine chemistry competence within production and R&D
•Unique market and product application competence
•Successful co-operation between competence areas

Our company culture supports our strategy

• Market-oriented
Good understanding of the business model and customer needs throughout the organisation
Knowledge of the value-in-use of our products
A high share of our employees work in sales and marketing and technical costumer service

•Innovative

Innovation is market-driven and involves collaboration between different parts of the organisation
We use a significant share of our revenues on innovation
We regularly measure our innovation rate

•Flexible organisation

Continuous improvement through technology, skills development and a flexible organisation
Ability to implement changes through good collaboration and strong involvement from employees
We value commitment and initiative from all our employees
We regard the organisation's diversity as a strength

Borregaard portfolio - Strategic priorities

•Growth and specialisation within Performance Chemicals

Increased sales of high-value lignin products
Establish new lignin raw material sources
Develop BALI as a strategic lignin raw material option

•Develop the unique biorefinery assets in Sarpsborg

Leverage high value raw material base in Performance Chemicals
Continue specialisation of Specialty Cellulose, Bioethanol, Ingredients & Fine Chemicals
Strong focus on innovation and productivity efforts

•Establish Exilva as a new business area

Based on core competence within wood chemistry and fine chemistry
Increased specialisation through high value added

Financials

Per Bjarne Lyngstad CFO

Key figures1) 2009 – 2013

Major trends:

•

• Top-line growth
improved mix, prices and volumes
• EBITA and EBITA margin shift in 2011
Specialty Cellulose pricing
ROCE coming down from 2011 peak
still well above long-term target

Targets:

• Sustainable profitability that supports the strategy and dividend policy
•ROCE at 14-15% pre-tax over a business cycle

Key figures1) 2009 - 2013

Specialty

Key Trends 2009-2013

•Top-line CAGR 5.4% (2013: 4.0%)
•Further specialisation and improved product mix
•Increased prices
Reduced raw material supply in 2012 and 2013
•Top-line CAGR 5.6% (2013: -1.2%)
•Prices significantly up in 2011, adjustments in 2012 and 2013
•Product mix varies between years - peaked in 2011
•Wood cost reduced from 2011
•Record production output in 2013

Key cost items 2009-2013

1 0 0 %	1 2, 7 %	1 2, 4 %	1 4, 0 %	1 3, 1 %	1 2, 3 %
8 0 %	1 2, % 5	1 4, 1 %	1 3 5, %	1 5, 9 %	1 5, 1 %
6 0 %	2 3 7, %	2 4, 8 %	2 2, 1 %	2 3, 4 %	2 3, 4 %
4 0 %	9, 7 %	1 0, 4 %	9, % 7	1 0, 1 %	1 0, 0 %
	1 0 % 5,	1 5, 7 %	1 6, 5 %	1 5, 6 %	1 6, 5 %
2 0 %	2 2, 8 %	2 2, 7 %	2 2, 4 %	2 1, 8 %	2 2, 7 %
0 %	2 0 0 9	2 0 1 0	2 0 1 1	2 0 1 2	2 0 1 3
Pa l l e O he D is i bu ion t tr t ts y ro xp en se s r e xp en se s co s O he Co M En W d t g r er y oo

% of total costs

	T l t o a	t c o s s	i 2 0 1 3 n	l t c o s e	3. 3 o	b i l l i o n	N O K

2.9% CAGR from 2009 to 2013
Main cost components share of total costs relatively stable over time

d o o W	6 0- 8 0 % d fro No he in ly fro Sw de t t m so ur ce m rw ay re s a m e n  , An l p ice d lu i d- d j tra ts tm ts nu a r a n vo m e co n c m y ea r a us en o cc ur  , In lu de in bo d lo is ics ~3 0 % f w d t t g c s un o oo co s  ,
y g r e n E	En io T he l e 2 / 3, lec ic i 1 / 3 t tr ty g g er y co ns um p n: rm a ne r y e  T he l e Ba loa d in ly d by b le g g rm a ne r y : se m a co ve re re ne wa en er y so ur ce s,  k- loa d in ly d by L N G d lec ic i t e tr ty p ea m a co ve re an sp o E lec ic i 1 2- in 2 0 1 3 tr ty tra t s ta t g ea r c on c r  : y
M o C r e h t O	1) C he ica ls d he ia ls l i ke l i in ia l t te te g m an o r r aw m a r n ra m a r  w f c In l p du io ic da te t t rn ro  a c n o au s so Co fa in f p he ica l- ba d i l l in tra t m tu tro g n c an u c r o e c m se va n  C ha in inv ies to g n e en r 
n o ti s u t s b o ri c t s i D	M du l d de l ive d t p ts to os ro c s o re cu s m er  Lo is ica l o im isa io im ia l ly fo Pe fo C he ica ls t t t ta t, g p n p or n es p ec r r rm an ce m 
s e r s e n h e t p O x e	Re ir d in l s ice l / lea in d he te te ta t g p a an m a na nc e, ex rn a er v s, re n s an o r  in t g op er a ex p en se s
s e ll s o n r y e a p P x e	Co in du iv i im inc lu d in de in d t t ty t, t g g n uo us p ro c p ro ve m en -m an n an co s  du io iv i ies t t t re c n ac No f m du d by 1 0 0 las f ive ( 1, 0 4 9 d 2 0 1 3 ) t t y o an -y ea rs re ce y ea rs a ea r-e n  du io in io (- 1 3 0 ) d Br i l c los do (- 5 0 ) t t re c ns op er a ns an az e- wn - inc in R & D, N B D d S & M ( 5 0 ) d ( 1 0 ) te + + re as e an an co rp or a -

FX impact and policy

FX cash flow hedging policy

• Hedging policy aims to delay effects of currency movements
• Hedges typically carried out based on projected future operational net cash flow in major foreign currencies
Base Hedge 75%/50% of future net cash flows on a rolling basis for 6/9 months
Extended Hedge if USD or EUR rates above pre-agreed levels, up to 75%/50% of the next 24/36 months expected cash flows

FX exposure and future hedges

• Borregaard's revenues are primarily in USD or EUR, while costs are primarily in NOK
• Net FX exposure in 2013
USD: 68% (approximately 265 mUSD)
EUR: 32% (approximately 95 mEUR)
Other: 0% (GBP, BRL, JPY, SEK, ZAR)
• Future hedges at year-end 2013:
2014: 118 mUSD @ 6.03 & 65 mEUR @ 8.19
2015 & 2016: 113 mEUR @ 8.52

Hedging gains/losses in EBITA

1) Currency basket based on Borregaard's net exposure in 2013 (=100)

Cash Flow, Capex and NIBD

• Strong cash flow from operations
Close to EBITDA over time (0.99 in 2013)
• Cash Flow targets
Average Net Working Capital at 20% of Operating Revenues
Replacement capex at depreciation level

Free Cash Flow and Dividend Policy

•Free Cash Flow1)

Should be close to net earnings if targets for NWC and Replacement CapEx are achieved
Cash available for expansion after fulfilling dividend policy

•Borregaard's dividend policy

To pay regular and progressive dividends reflecting the expected long-term earnings and cash flows of the Group
Annual dividend is targeted between 30% and 50 % of net profit for the preceding fiscal year

Capital structure and target

• Key target is to maintain an Investment Grade rating
NIBD maximum 2.5-3.0 * EBITDA
• Solid capital structure (covenants)
Leverage ratio 0.97 (< 3.25 / 3.00)
Equity ratio 53.9% (> 25%)
Interest coverage 21.5 (> 3.0)

•Debt

5-year revolving credit facilities, 1,200 mNOK, maturity 2017
3-year revolving credit facilities, 600 mNOK, maturity 2015
5-year bond issue, 400 mNOK, maturity 2019
10-year loan, 40 mEUR, maturity 2024
Refinancing process on-going
• Capacity for expansion
Free cash flow
Undrawn facilities within Investment Grade target

Performance Chemicals

Morten HarlemEVP Borregaard LignoTech

Performance ChemicalsKey features

Performance ChemicalsLignin – a sustainable and flexible raw material

Product performance depends on the pulping process and the raw material

• Sulphite pulping process
Versatile lignin used in a variety of products/applications
Quality depends on the chemicals base
Water soluble
Limited number of sulphite mills

•Softwood (pine/spruce) vs hardwood and straw

Softwood lignin has superior modification potential
• Sulphate (kraft) pulping process
Lignin is normally incinerated to recover energy and chemicals
Raw material with limited potential for lignin products
Not water soluble

Performance ChemicalsOverall lignin market supply & sales 2013

Performance Chemicals600 products to around 2,900 customers (2013)

P i t r o p e r e s	A l i i t p p c a o n s
B i d i t g g n n a e n	F d b i d  e e n e r G l i i d t  r a nu a o n a C i i l t  e r a m c e s Du b i d t  s n e r
D i i g s p e r s n / t g a e n R h l g e o o y l t c o n r o	C i t t  o n s ru c o n A h i l  g r o c e m c a s f f Dy t  e s u s M l d i l t  e a s a n m n e r a s C b b l k d i t  g a r o n a c a n p m e n s M i i t t  c r o nu r e n s
C l h t t g ry s a r o w l t c o n r o	L d i d b d t t  e a a c a e ry e x p a n e r R d i f hy d i t t t t  e a r a o n o c e m e n r a o n O i l-w l l i t  g e c e m e n n
Fu i l t n c o n a d d i iv t a e	P h l l t  e n o r e p a c e m e n U V- i t t  p r o e c o n A i i d t t  n o a n x S f A i d t  o c S i l- d i i t  o c o n o n e r C l i t  g g o m p e n a e n x

Lignosulfonate properties Borregaard end markets (sales revenues)

Customer base and concentration (sales revenues)

Total ~2,900 customers

Performance ChemicalsBusiness portfolio development

Volume (1000 mtds)

Gross prices, USD/mtds – 7% CAGR

Performance ChemicalsGlobal sales and marketing team provides solutions to customers worldwide

The LignoTech global sales force a key competitive advantage

• High-end and technically demanding products require a high level of sales and technical support
• Global team of 86 people support products and services in over 80 countries
• The sales force also has strong focus on product innovation and market development
• Key attributes of sales force:
Technical excellence
Customer embedded
Global footprint
Business intelligence system

Sales teams located where we see growth, geographical distribution of sales force:

A network of 86 people sells and provides technical support for LignoTech products

ConstructionAuto/metals Feed Agro Other

Performance ChemicalsApplications, functionality and substitutes

			V lu i i t a e p r o p o s o n:
A l i i t p p c a o n	F i l i t t u n c o n a y	C i h l i t t g g o m p e n e c n o o e s	G r e e n l iv t t a e r n a e	C / f t r r o s p e o m a n c e h i t t v s. s y n e c s
B i t t a e r e s	C l h l t t t g ry s a r o w c o n r o	F e w		
C i t t r o p p r o e c o n	D i t s p e r s a n	S h i f t t t t y n e c s u r a c a n s		
M l d i l t e a s a n m n e r a s	D i d b i d t s p e r s a n s a n n e r	S h i d i f t t t t g n e c a n o r a n c s r a c a n s y u		
C i i t t r o p nu r o n	S i l d i i / t o c o n o n e r l i t g g c o m p e x n a e n	Hu i i d, hy l d i i i i d t t t t m c a c e e n e a m n e e r a a c e c a c ( E D T A )		
C d ix t t o n c r e e a m u r e s	P l i i t a s c s e r	S l i iz h h l d t t p e r p a s c e r s n a p a e n e, a n u : f l i l d ly b l i t m e a m n e s u o n a e s a n p o c a r o xy c i d a c s	 ( )	
A i l f d l l t n m a e e p e e s	B i d n e r	S h i d b i d h i l t t t a r c r e s u e s, e n o n e a n m e c a n c a i t g c o m p a c n	

Performance ChemicalsAgriculture

Crop nutrition ( Agro ) Crop protection ( Agchem )

M i i t t c r o -n u r e n s ( Z F C M ) n e u n , , ,	S i l d i i t o c o n o n e r s ( f C & C ) + s o u r c e o a	M i t t a c r o -n u r e n s ( N P, K S ) , ,	P i i d / t e s c e s ( d d i u s e a s s p	f i i d g u n c e s i ) t g g e r s n a e n
F l i / t o r m u a o n l i t g g c o m p e x n a e n	E h / n a n c e r s b i i l t t o -s m u a n s	B i a s c i t t n u r e n s	W b d t a e r a s e	S l b d t o v e n a s e
		×		×
	G r a p f i l i t e r s e r	l i i d / b i d t n u a o n a n e r s f i i d i i d t g e s c e s u n c e s , , f & l i d t s m e s o n e e e , ,	f o r g y p s u m

Performance ChemicalsBatteries

S b t t t t a r a e r y	S / b t t t t t a r s o p a e r y	H b i d r y	E l i h i l t e c r c e c e v

L d i d e a a c	G A b b l M t t s o r a n a s s a ( A G M )	G A M b t t t t a s s a r a e r y	O h h l i t t g e r e c n o o e s
f F l i t u e o r m o o n	f F l i t u e o r m o o n	F l / N i M H / L i h i i t u e u m o n f i t o r m o o n	f L i h i i i t t u m o n o r m o o n

Performance ChemicalsGrowth forecast and innovation focus

	C i t t o n s r c o n u	A g r o	F d e e	A i t t o m o e u v	I d i l t n s r a u
E M E A	0 5 % -	0 5 % -	0 5 % -	0 5 % -	0 5 % -
A i m e r c a s	5 1 0 % -	5 1 0 % -	0 5 % -	5 1 0 % -	0 5 % -
A i / P s a a c	0 5 % -	1 0 5 % -	1 0 % >	1 0 5 % -	0 5 % -

•Conversion from synthetic to green
•Existing products to new applications
•New products to existing applications

Performance ChemicalsManufacturing sites

•Norway; a highly specialised softwood plant
•South Africa; medium value hardwood plant
•USA; a highly specialised plant with a softwood/hardwood blend
•Germany; well equipped plant with external softwood supply
•Czech Republic; upgraded to a medium value softwood plant
•Spain; medium value hardwood plant, currently idle

Performance ChemicalsBALI – an opportunity to grow the lignin market

•Moderate technology risk – partly based on proven process technology
•Works with wood and biomass from annual plants
•Lignin performance equal to existing products
•Competitive costs
•3 year ramp up is expected

Performance ChemicalsGlobal presence and potential areas for the first full scale plant

Partner discussions under secrecy agreements are ongoing inn all 3 regions GO/NO GO decision and region selection late 2014 Production startup approx. 24 months after final investment decision

Performance ChemicalsGrowth and specialisation strategy

• Volume
Maximise supply from long term contract sources
Increase supply from new contract sources
Pursue BALI opportunity
• Value
Improve organic innovation rates
–Existing products to new applications
New products to existing applications
Ramp up of new specialty line targeted for oil well drilling, agriculture and batteries

Specialty Cellulose

Tom Erik Foss-JacobsenEVP Borregaard ChemCell

Specialty Cellulose High quality specialty cellulose with strong niche positions

Market position Strong positions in Europe and Asia within high-end niches

ProductionSarpsborg, Norway Capacity: 160,000 mt

Operating revenues 2013 1,597 mNOK

Focused applications

•Ethers
•Acetate
•Nitrocellulose
•Other cellulose specialties

Long-term market growth:

Ethers: 5-7%Acetate: 1-2% Nitrocellulose: 1-2%

Specialty Cellulose Total global cellulose market

Source: Company estimates, RISI World Market Capacity Report – Excerpt 2013 All figures in cellulose tonnes – wood pulp and cotton linter pulp (CLP). Excludes fluff, paper grade cellulose and refined cotton used in ethers.

Specialty Cellulose From wood to highly advanced end user products

Specialty Cellulose The specialty cellulose suppliers

•13 players supplying 1.5 million mt specialty cellulose
•4 players with 85% market share (Rayonier, Tembec, GP Buckeye and Borregaard)
•Rayonier - the clear market leader in acetate
•Tembec and Borregaard - leading wood pulp suppliers in ethers
•US and Chinese cotton linter pulp (CLP) suppliers, primarily in high viscosity ethers

Specialty Cellulose Substantial growth in supply

Significant capacity has been added in both the viscose - and specialty cellulose market
Significant overcapacity in viscose pulp has contributed to a sharp decline in prices after the peak in 2011
Rayonier and GP Buckeye's recent expansion of 190,000 and 42,000 mt/year respectively accounts for about 4-5 years of estimated average demand growth in the specialty cellulose market
Rayonier has published a revised plan for ramp-up through 2017/2018

Specialty Cellulose Sales distribution 2013

Borregaard is positioned in high-end segments in growth regions and with strong and long lasting customer relationships

Source: Company information Note: All based on 2013 figures 1. Acetate and ethers2. Excluding ethanol

Specialty Cellulose Strategy

• Further specialise the specialty cellulose business as a strong foundation for Borregaard's biorefinery in Sarpsborg
• Secure and further develop our solid positions in specialty segments
Leading supplier to cellulose ethers
Key supplier to cellulose acetate
Strong and growing positions in other specialty segments
•Continuous improvement of productivity and product quality
•Specialisation and innovation - "Niches within the niche"

Specialty Cellulose "Niches within the niche"

Specialty Cellulose "Niches within the niche" - Continuous specialisation

• Flexible technology and competence driving specialisation
Substantial investments in recent years combined with significant technology and process upgrades enables further specialisation
• Exploring new technology for producing high purity specialty cellulose products
Potential opportunity to improve existing products and to offer new world class quality grades with significant potential in "niches within the niche"
Project has potential to supply high-end niches demanding ultra high purity as well as offering "new to the world" products
If successful, Borregaard will be the first European supplier of high purity specialty cellulose
Test period next 1-2 years
•Per A. Sørlie
•Per Bjarne Lyngstad
•Morten Harlem
•Tom Erik Foss-Jacobsen
• Moderators:
Alf Inge Gjerde AFA, Senior Portfolio Manager, Storebrand Asset Management AS
Atle Vereide AFA, Head of Securities Research Oslo, SEB

THANK YOU FOR PARTICIPATING

•11:30 Light lunch in the reception area
•12:00 Bus transfer to Sarpsborg site