Borregaard — Investor Presentation 2016

Sep 20, 2016

^{W E L C O M E T O B O R R E G A A R D} ' ^{S C A P I} TA ^{L M A R K E T S D} AY

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Agenda

10:00-11:50

• •Welcome and opening
• •Strategy update
• •Financial update
• •Performance Chemicals
• •Speciality Cellulose

11:50 Lunch

12:35-13:35

• •Sustainability
• •Exilva
• •Sarpsborg site

13:35-15:00

• Visit to Exilva plant and demonstration of Borregaard products

^{S T R} AT ^{E G Y U P D} AT ^E

^{P e r A} . ^{S ø r l i e P r e s i d e n t} & ^{C E O}

Borregaard is a global leader in biochemicals

High value added through full raw materials utilisationBorregaard's biochemicals are sustainable and environmentally friendly substitutes for petrochemicals

The specialisation strategy

•Specialisation in global niches

• •Markets with high barriers to entry
• •Leading market positions through application knowledge and proximity to markets
• •Diversified market strategy and global market positions secure maximum flexibility

• Strong innovation efforts and continuous improvement

• •Business driven innovation model that involves the entire organisation
• • Continuous productivity improvement through more efficient organisation, competence development and smart use of technology

•Competence is our main competitive advantage

• •Our competence differentiates us from our competitors
• •Combination of competences in sales & marketing, R&D and production

Borregaard's corporate culture

Market-Market-oriented 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 & marketing and technical customer 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

Change- Change-orientedoriented

• •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 strengt h

Borregaard's core values

Sustainability

• •Green chemicals that substitute petrochemicals
• •Sustainability demonstrated through life-cycle analysis
• •Focus on EHS across the organisation
• •Profitability is key to sustainability

Long-term perspective perspective

• •Consistent strategy over time
• •Long-term perspective on innovation, market development and investments
• • Competence development through training programmes, organisational development and use of technology

Integrity

• •High credibility through transparency, honesty and predictability
• •Act responsibly in relation to our stakeholders and exercise corporate responsibility
• • Demonstrate respect for individuals and different cultures while maintaining our integrity and adhering to the company's code of conduct

Strategic priorities – Capital Markets Day March 2014

• Growth and specialisation within Performance Chemica Growth ls

• •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 Speciality Cellulose, Bioethanol, Ingredients & Fine Chemicals
• •Strong focus on innovation and productivity efforts

•Establish Exilva as a new business area

• •Leverage core competence within wood chemistry and fine chemistry
• •Increased specialisation through high value added

Update on strategic priorities

Growth within Performance Chemicals

• •Acquisition of Flambeau's lignin business (40,000 mtds1) in Q4-15)
• •Capacity expansion in LignoTech South Africa (20,000 mtds from mid 2017)
• •Lignin project in Florida (100,0002) mtds from 2018)
• •Bali remains a long term strategic lignin raw material option

Develop the unique biorefinery assets in Sarpsborgunique biorefinery in

• •The Ice Bear project – speciality cellulose with ultra high purity (from mid 2016)
• •Capacity expansion for high-end bioethanol (from late 2017)
• •Energy conservation projects implemented

Establish Exilva as a new business areaExilva as a business

• •New commercial scale production facility in Sarpsborg (from Q3-16)
• •SenseFi (food ingredient) in pilot testing phase in WI, USA

1) Metric tonne dry solid

2) First step in a two-phased investment to reach 150,000 mtds

Strategic priorities – next steps

•Execution of strategic investment projects in Performance Chemicals

• •Completion of capacity expansions in USA and South Africa
• •Successful market introduction of new volumes

•Increased specialisation through market introduction of new products

• •New Ice Bear product range in Speciality Cellulose
• •Exilva and SenseFi microfibrillar cellulose products
• •Commercialisation of R&D portfolio in Performance Chemicals

• Pursue further value- Pursue further value-creation opportunities at the Sarpsborg sitecreation opportunities at the Sarpsborg site

• •Completion of high-end bioethanol expansion
• •Initiate capacity expansion in fine chemicals (C3 aminodiols for X-ray contrast media)
• •Explore other specialisation and capacity expansion opportunities

Financial objectives and dividend policy at IPO (2012)

Financial objectives:

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

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

• 1) Return on capital employed pre-tax

• 2) Dividend per share divided by earnings per share

Financial objectives and dividend policy

Financial objectives

• •ROCE > 15% pre-tax over a business cycle
• •IRR >15% pre-tax for expansion capex
• •Average net working capital at 20% of operating revenues
• •Replacement capex at depreciation level
• • Maintain an investment grade rating
• •Leverage ratio1) targeted between 1.0 and 2.0 over time

Borregaard's dividend policy

• • To pay regular and progressive dividends reflectingBorregaard's expected long term earnings, free cash flows and expansion capex
• • Annual dividend is targeted between 30% and 50% of net profit for the preceding fiscal year

1) Net interest-bearing debt divided by last twelve months' EBITDA adj.

^{F I N A N C I A L U P D} AT ^E

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Key figures 2012 – 2016 (LTM)1)

• • Key figures for the Group have been relatively stable in 2012-2015
• •A significant shift in profitability between business areas
• Product mix, prices and market conditions have changed, together with impact of FX and lower oil price
• • Improvement in all areas year-to-date 2016
• •Mainly FX driven

Profitability target:

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

1) Last twelve months as per June 2016

Key figures 2012 – 2016 (LTM)1)

• •Specialisation and improved product mix, price increases
• •Reduced raw material supply 2012-15
• • Lower demand and increased competition in the construction and oil sectors from 2015, but favourable FX impact from late 2014
• •Top-line CAGR -4%
• •Overcapacity and price pressure from 2012, also affecting product mix
• •Improved market balance from mid 2015
• •Reduction in key cost elements (wood, energy)
• •Favourable FX impact from late 2014
• •Top-line CAGR +3%
• •Ingredients: Challenging market situation from late 2011
• •Fine Chemicals: Volume growth for key products from 2015
• •Exilva project: Increasing costs, softened by EU grant from May 2016
• •Favourable FX impact from late 2014

^•Top-line CAGR +9%

¹⁾ Last twelve months as per June 2016

Sensitivity on EBITA adj.

Sensitivity of 1% change

• • Global presence, diversified product portfolio and GDPdriven demand reduce market risk
• • Oil price affects demand and competition in certainmarkets, cost/pricing of substitutes and raw materials, but main effect is on FX because of correlation between NOK and oil price
• • Significant FX exposure, softened by FX hedging1) in the medium term
• • No major single component in other cost of material s
• • Distribution cost: Most products sold "delivered customer"
• • Other expenses are repair and maintenance, external services, rental/leasing etc.

1) Hedging based on expected net cash flow (EBITDA)• Base hedge - 75%/50% on a rolling basis for 6/9 mon Base ths for major currencies •Extended hedge - 75%/50% of the next 24/36 months i f USD and EUR are above predefined levels

Cash flow, net working capital (NWC) and investments

• •Strong cash flow from operations; close to EBITDA over time
• • Average NWC level increased in 2015, mainly due to FX
• •Significant temporary fluctuations will occur
• •NWC ratio relatively stable at target
• • Expansion investments increasing from 2015

• •Exilva, SenseFi, Ice Bear, Flambeau business, R&D activities

• • Average net working capital at 20% of operating revenues

• •Replacement investments at depreciation level

1) Cash flow from operating activities (IFRS) + tax paid +/- net financial items +/- dividend (share of profit) from JV

Investment forecast 2016 to 2018

•Replacement investments

• •Targeted at depreciation level
• • Wood seasoning silos funded by property damage insurance, but will be booked as replacement investment (IFRS)

•Expansion investments

• • New plant LignoTech Florida phase 1: USD 110 mill (100%) ≈NOK 900 mill (late 2016 to mid 2018)
• New plant Exilva: NOK 225 mill (mid 2014 to 2016)
• Ice Bear project: NOK 100 mill (early 2014 to 2017)
• • Other planned projects (bioethanol plant upgrade, lignin specialities, fine chemicals capacity, R&D activities)
• • New expansion projects may lead to additional investments

1) Forecast is best estimate as of today. Uncertainty is related to final investment decisions, timing of investment payments, execution time and risk and unexpected events e.g.

Investments and cash flow

• • Significant investments planned in 2016-18
• •Currently strong cash flow from operations
• • Cash flow risk factors/uncertainties
  • •Macroeconomics, including FX
  • • Demand, competition, raw material prices and supply, operational factors
  • •Additional expansion investments
  • •Change in net working capital
• • Capital structure will depend on future cash flow, investments and dividend payments/repurchase of shares

1) Cash flow from operating activities -/+ net paid to/from shareholders +/- other capital transactions (IFRS cash flow statement) 2) Last twelve months as per June 2016

Capital structure

•Solid capital structure as per end June 2016

• •Leverage ratio1) 0.68
• •Equity ratio 54.2
• • Target to maintain investment grade rating
• •Leverage ratio targeted between 1.0 and 2.0 over time

• Borregaard has has financial financial capacity for expansionexpansion

• • Revolving credit facilities (RFC), 1,500 mNOK, maturity 2021
• • Bond issue, 400 mNOK, maturity 2019
• • Nordic Investment Bank (NIB) loan, 40 mEUR, maturity 2024

1) Net interest-bearing debt (NIBD) divided by last twelve months' EBITDA adj.

^{P E R F O R M A N C E C H E M I C A L S} – ^{P R E} PA ^{R E D F O R G R O W T H}

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Looking back

•Strategic focus since IPO in 2012

• •A market place short of supply
• •Optimise value of available volumes
• • Drive for short term sourcing opportunities
• •Establish long-term sustainable supply
• •Development of alternative technology

Lignin – the supply side

New application based reporting of business portfolio

•Specialities

•Batteries, agro, agchem, oil, dyestuff, etc.

•Construction

•Concrete admixtures, ceramics, gypsum board, etc.

•Miscellaneous

•Mainly binding applications such as dust suppression, briquetting, feed, etc.

	2 0 0 9	2 0 1 0	2 0 1 1	2 0 1 2	2 0 1 3	2 0 1 4	2 0 1 5
l S i i i t p e c a e s	1 3 %	1 4 %	1 4 %	1 4 %	1 % 7	1 8 %	1 9 %
C i t t o n s r u c o n	5 6 %	5 2 %	5 4 %	5 6 %	5 6 %	5 3 %	5 2 %
l l M i s c e a n e o s u	% 3 1	% 3 4	% 3 2	% 3 0	% 2 7	% 2 9	% 2 9
l ( '0 d ) 0 0 V t o u m e m s	2 0 4	3 4 5	3 4 7	0 5 1	6 2 4	6 4 4	0 4 1

Total world market(1) and Borregaard's positions

2) Metric tonne dry solid

Update – LignoTech Ibérica

• •Sniace pulp operation expected to re-start during Q4-16
• •Expect a gradual ramp-up through 2017
• •Lignin market launch plan in place

Volume growth - LignoTechSouth Africa

• •20,000 mtds additional capacity from mid 2017
• •Proven and well established products
• •Target markets as for current operation

Volume growth - LignoTechFlorida

• Two steps to 150,000 mtds capacity
• •Applying Borregaard technology on a new raw material source
• •Softwood grades that match our current products for targeted applications
• •Ideal location to serve markets with substantial growth potential
• •Gradual ramp-up
• •Permitting process on track, planned final decision second half 2016

Bali remains a long-term strategic option

• • Lignin technology developed and proven on a wide range of raw materials
• • Increasing the value of the sugar stream is the main priority in the further project work

End market growth forecast, indicative annual rates to 2019

	C C i i t t t t o o n n s s r r u u c c o o n n	/ h A A g g r r o o a g c e m	d F e e	A i t t u o m o v e	d d l l I i i I t t n n u s s r r a a u
A E M E	0 3 % -	0 3 % -	2 4 % -	2 4 % -	1 4 % -
A i m e r c a s	% 2 5 -	% 0 3 -	% 2 4 -	% 0 2 -	% 1 4 -
/ A i P s a a c	0 3 % -	2 5 % -	3 7 % -	3 5 % -	1 4 % -

2.5% annual GDP growth assumed

Sources: IMF, BNP Paribas, LafargeHolcim, Heidelberg Cement, Portland Cement Association, Phillips McDougall, Agropages, Dow, Syngenta, Bayer, Johnson Controls, Alltech, OECD-FAO, Borregaard analysis

Well positioned to facilitate and capture market growth

• •Short term a challenging market
• •Generally, if lignin is available it gets sold
• • To be regarded as a sustainable alternative, ligninmust demonstrate stable quality, cost efficiency, predictability and long-term supply
• • The construction sector - undersupplied for years – has a preference for lignin and represents a growthpotential
• • Significant growth opportunities in binding applications if lignin is available (partly non-use at present)
• •Green niches within agchem are growing
• • Borregaard has geographical and application flexibility to phase in increased volumes

There are no other known sulphite lignin capacity movements at present

Value growth – some initiatives

Penetrating new battery niches

Investments in Norway and USA for improved agchem and agro manufacturing capabilities

New packaging line for liquid specialities in small volumes, Norway

Performance Chemicals - strategy

•Volume

• •Bring capacity projects to market on time, quality and cost
• •Re-engage in known volume applications, convert from synthetics and identify new volume outlets
• •Strengthen geographical reach and establish presence locally in new markets
• •Expand distribution capabilities to support wider geographical reach

•Value

• •Continue to build value growth, in particular within Specialties
• •Bring current innovation projects to market
• •Refill innovation pipeline with projects that meet the market's future needs

•Bali

• •The long-term option for sustainable lignin supply
• •Increase the value of sugar stream to secure the overall competitiveness

^{S P E C I A L I T Y C E L L U L O S E}

To ^{m E r i k F o s s} - ^{J a c o b s e nE x e c u t i v e V i c e P r e s i d e n t} - ^{B o r r e g a a r d C h e m C e l l}

Speciality cellulose customer requirements

What customers typically do with our speciality cellulose:

• • The main raw material for our customers' products
• • Used in various niche applications as a building block for certain cellulose derivatives
• • Customers' products like e.g. cellulose acetate and cellulose ethers are typically made through a chemical modification of our cellulose

Speciality cellulose product characteristics and differentiators:

• • Borregaard offers a broad range of highquality, tailor-made speciality cellulose products within and across a number of application areas
• • Key product parameters are viscosity viscosity (ethers), purity (acetate), brightness, density, reactivity and product stability

Key product properties

• Viscosity thickening and water retention

• Purity colour and clarity

Speciality cellulose market

	Se ts g me n	l Ap ica ion t p s	ke ke M M ize ize t s t s ar ar '0 0 0 m t ( ) 2 0 1 5	l An nu a h t g row 2 0 2 0 2 0 1 5-
d e s li a i c e p s y l h g i H	Ac ta te e	f l C ig i t te te are rs, las ics L C D, t p y ar n ,	5 9 0	0- 1 %
	he E t rs	Co ion ing tru t t ns c co a s, , fo d, ha l o p rm a, p er so na ca re	4 3 0	3- 4 %
	l Sp ia i ty ec p ap er	f l Au ive i ion to t tra t mo , ba k n te n o s	9 5	% -2
	d T ire co r	h- fo H ig ire t p er rm an ce ds co r	5 0	2- 3 %
s e i t li a i c e p s r e h t O	l lu los i N tro ce e ( ) N C	ks, Co ing in ing in t t a s, p r l v h, i is ic t na ar n en er g e de g ra s	1 4 0	1 %
	l l M icr ine ta oc ry s ( ) l lu los M C C ce e	d, ha Fo o p rm a	1 3 5	% 4
	l lop ha Ce ne	d p ka Fo ing o ac g	8 0	1 %
	Ca ing s s	Sa ing us ag e c as s	5 0	3- 4 %
	Sp on g es	lo hs Sp t on g e c	1 5	2- 3 %

Source: Celco market reports, RISI and Borregaard estimates1) Metric tonne

Ice Bear status

•Part of our specialisation strategy to increase flexibility in the market

• •Targeting "niches within the niches" as well as improved offering to existing markets
• •Acetate plastics, LCD, tire cord, food and pharma

•Technology in place for large scale production and commercial deliveries

• •Technology is scalable
• • Ramp-up of Ice Bear production will be based on market up of Ice Bear will based demand
• •Volume potential estimated to be around 20-30,000 mt/year by end 2018

Speciality cellulose suppliers

• •13 players supplying 1.6 million mt speciality cellulose
• •Top 5 players (Rayonier Advanced Materials, Tembec, GP Buckeye, Bracell and Borregaard) have 90%1) market share
• •Capacity reduced by 190,000 mt due to Rayonier Advanced Materials' Jesup conversion in 2015
• •Top 5 players use textile and fluff markets as capacity filler
• •Limited volumes from viscose pulp producers into speciality segments due to barriers to entry

2ndgeneration bioethanol

•Bioethanol contributes to the overall value creation in the biorefinery n in

• •20 million litres capacity, delivered as 96% or 100% bioethanol
• • Life cycle analysis shows favourable environmental footprint compared with petrochemical substitutes
• • Main applications
• • Biofuel, car care products, household chemicals, solvents, food, personal care and pharma
• •Increasing demand for 2nd generation 100% bioethanol as biofuel

•Expansion project - - new dehydration plant plant

• •63 mNOK investment1), expected start-up late 2017
• •Full flexibility between 96% and 100% bioethanol
• •30% grant from Enova2)

2) State enterprise owned by the Ministry of Petroleum and Energy

¹⁾ Includes facility to capture and store biogas

Speciality Cellulose - strategy

•Secure and further develop our solid positions

• •Leading supplier to cellulose ethers
• •Key supplier to cellulose acetate
• •Strong presence in other speciality segments
• • Specialisation and innovation Specialisation and innovation
• •"Niches within the niches"
• • Continuous improvement of productivity and product quality

Agenda

10:00-11:50

• •Welcome and opening
• •Strategy update
• •Financial update
• •Performance Chemicals
• •Speciality Cellulose

11:50 Lunch

12:35-13:35

• •Sustainability
• •Exilva
• •Sarpsborg site

13:35-15:00

• Visit to Exilva plant and demonstration of Borregaard products

^{S U S} TA ^{I N A B I L I T Y} – ^{A N I N T E G R} AT ^{E D} PA ^{R T O F B O R R E G A A R D} ' ^{S B U S I N E S S M O D E L}

^{T u v a B a r n h o l t S e n i o r V i c e P r e s i d e n t} - ^{S t r a t e g i c S o u r c i n g}

Sustainability and corporate responsibility

• • Borregaard has defined five main areas in our annual Sustainability Report
• • Main focus in this presentation will be on sustainability in a climate perspective

Borregaard's business model

• •Renewable raw materials
• •High raw material utilisation
• Environmentally friendly substitutes for petrochemicals

Life cycle analysis1) confirms a sustainablebiorefinery

^R AW ^M AT ^{E R I A L S P R O C E S S E S P R O D U C T S}

Natural, renewable, sustainable

Investments in reduced emissions and greener energy sources

Biochemicals replace petrochemicals

•Life cycle assessment

• •Carried out for all products in Sarpsborg
• •Cradle to gate results are compared with petrochemical products based on typical industry data
• • Climate impact from use of products and end of life cycle effects are not included in the assessment, would have improved the relative GHG2) footprint further

2) Greenhouse gases

¹⁾ Third party analysis based on ISO 14044/48, updated 2015

The main raw material is renewable

•Wood sourcing for Sarpsborg site

• • Sourcing area mainly Norway
• •PEFC1) certified
• •Renewable
• •Sustainable
• • Annual growth 2x the harvest in Norway
• • Lignin raw material sourcing
• •Sourced from adjacent pulp mills
• • These suppliers purchase their wood from FSC2) certified sources

2) Forest Stewardship Council

¹⁾ Programme for the Endorsement of Forest Certification

Continuous reduction of GHG emissions

•Paris agreement

• •Action plan to combat global warming
• • Borregaard's climate impact
• • Mainly from energy production (direct) and purchased energy (indirect)

• Ambition - - 2.1% annual reduction of GHGof GHG

• •Science based target recommended by CDP1)
• •Reduce energy consumption
• •Increase use of natural gas/biogas
• •Remove fossil component in municipal waste

•EU ETS2) gives flexibility

• •Sarpsborg site covered by ETS
• •Annual allowances, cap and trade system
• •Norwegian CO2 compensation for electricity

Direct and indirect GHG emissions Borregaard Group Actual and scenario 2010-2050

• 2) The EU Emissions Trading System
• 3) Carbon dioxide equivalent

¹⁾ Not-for-profit global disclosure system for investors and other stakeholders

Environmentally friendly substitutes for petrochemicals

• •Lignin vs synthetic plasticisers in concrete admixtures
• •Lignin in water based agchem solutions vs solvent base
• •Cellulosic ethers vs synthetic thickeners
• •Exilva MFC vs advanced acrylates as rheology modifiers
• •2ndgeneration bioethanol vs petroleum-based diesel
• •Wood-based vanillin vs synthetic vanillin

Recognition for sustainability

Borregaard among 10 international companies listed for taking unique steps to address climate change in Sustainalytics' "10 for 2016" report

• • "The Paris Agreement could further enhance growth in the bio-based chemicals market"
• • "Borregaard offers wood-based chemicals and is well positioned to thrive in this market combining focused R&D experience with economies of scale in production."

^{E X I} LVA - ^S TAT ^{U S A N D O P P O R T U N I T I E S}

^{P å l R o m b e r g E x e c u t i v e V i c e P r e s i d e n t} - ^{E x i l v a}

• • Microfibrillar cellulose (MFC) is cellulose fibers defibrillated into millions of tiny fibrils (100,000 times thinner than hair)
• • Exilva is Borregaard's brand name for microfibrillar cellulose used in industrial applications
• • Exilva is a sustainable biobased material with multifunctional properties
• • Improves flow, stability, flexibility and strength in industrial formulations and materials
• •Enables customers to develop new and improved products

Microfibrillar cellulose attracts considerable attention1)

"A tiny fiber with huge applications" (ScienceDirect)"The world's hottest new supermaterial" (Gizmodo)"The properties of nanocellulose (e.g. mechanical properties, film-forming properties, viscosity etc.) make it an interesting material for many applications and the potential for a multibillion-dollar industry" (Wikipedia)

•More than 20 different applications listed in the article

1) MFC and nanocellulose are used interchangeably. A common terminology is not yet established. ^{5 3}

A dynamic field with a lot of activity

• • In weeks 30-32/16 alone there were 36 new patents/ patent applications announced within this field
• •18 (50%) came from commercial companies
• • Examples:
  • • Toyota, Japan - patent application on cathode material for secondary batteries comprising MFC
  • • Georgia-Pacific, US - patent application on the use of MFC in ply-bonding adhesives
  • • Hangzhou Special Paper Industry, China - patent application on a diesel filter paper containing cellulose nanofiber

Exilva - a long-term perspective on innovation

• • Innovation takes time…..
• •2005: Project established
• •2011: Technology selected
• •2012: Pilot plant operational
• •2014: Investment decision

• •2016: Commercial operation

• • Leveraging Borregaard's strengths

• • Speciality cellulose and fine chemical competence and technology
• • Know-how in sales and marketing of performance chemicals
• •Innovation resources

Exilva– a broad range of opportunities

Focus areas

Other areas testing ExilvaOther

•Packaging, oil field, composites, filters & barriers, batteries, ink

Dispersion and stability

Paint with high particle load

Ecobeadssuspended

suspended

1) Hydroxyethyl cellulose 2) Microspheres (glass bubbles) used for testing anti-settling effects in formulations

Exterior flat paint - mud crack resistance

Reference with HEC1) Cracking > 0.36 mm

With ExilvaNo cracking, up to 1.52 mm

1) Hydroxyethyl cellulose

Exilva in adhesives - video

Customer acceptance time depends onthe situation

"S l b l " i • o v n g a p r o e m	h 6 1 2 t m o n s -
f f l b f O i i i t t • e r n g n e r n a e n e s ( ) b h d l i t t, r o u s n e s s, c o s a n n g	h 1 2- 2 4 t m o n s
b l l h E t t • n a e s c u s o m e r o a u n c a "n d " ( t e w p r o u c e g g r e e n e r,
d f ) i m p r o v e p e r o r m a n c e	h 2 4 3 6 t m o n s -
d f N i i t t • e e o r n e w r e g s r a o n	h 1 2 ≥ t m o n s
d f N i t • e e o r e q u p m e n	h 1 2 ≥ t m o n s
f h b O i t t n e o r m o r e o e a o v e m e n	d i i t t o n e s u a o n s m a y

be relevant when we introduce Exilva to potential

customers

EU support for commercialisation of Exilva

• •EUR 25 million granted on 22 April 2016
• •Will cover 60% of Borregaard's costs in a three-year period starting 1 May 2016
• •Support reduced if the project is profitable in the period
• • Funding is granted under the Horizon 2020 Flagship programme for research and innovation
• •Provides opportunity to increase our efforts in market introduction phase
• •Borregaard is the coordinator in a six-party consortium

This project has received funding from the Bio Based Industries Joint Undertaking under the European Union's Horizon 2020 research and innovation programme under grant agreement No 709746

Status Exilva

• • Market
• •Some commercial sales established
• • Large number of prospects testing
  • •High positive feedback rate
  • •Long development time
  • •High degree of secrecy

• •Strengthening commercial organisation

• • Investment project

• •Completion on time and cost
• •Equipment in place and tested
• •Optimisation work during Q4-16

Status SenseFi

• •Advanced texture system for food
• • Enables formulation of food products with reduced fat content without compromising mouthfeel, texture or taste
• •Still in demonstration phase
• •Customer base growing steadily
• •Decision on commercial operations expected in 2017

Follow us on www.exilva.com

^{S A R P S B O R G S I T E}

^{O l e G u n n a r J a k o b s e n P l a n t D i r e c t o r} - ^{S a r p s b o r g S i t e}

Operational excellence

Achievement of world class operations through of through

• •Competence building
• •Organisational development
• •Advanced technology

Approaching world class operations

•From 15 decentralised control rooms to one central control room – reorganised management system

• •Competence development and new organisation
• •Upgraded human machine interface and standardisation
• •Top level control systems based on integrated sensors, automation, analyses and visualisation of big data

¹⁾ Best known operator practiceSource: www.mycontrolroom.com(User Centered Design Services)

Exploring digitalisation – next steps

SMART operations

• •Utilise sensor technology - make big data available
• •Understand and optimise processes through advanced process digitalisation and big data
• •Develop new working methods and tools for operator support
• •Personal digital platforms for receiving and giving information swiftly and precise
• -Leading to more efficient work processes and increased availability

Agenda

10:00-11:50

• •Welcome and opening
• •Strategy update
• •Financial update
• •Performance Chemicals
• •Speciality Cellulose

11:50 Lunch

12:35-13:35

• •Sustainability
• •Exilva
• •Sarpsborg site

13:35-15:00

• Visit to Exilva plant and demonstration of Borregaard products

Site visit and safety information

• • Follow instructions from tour guides wearing yellow helmet and visibility jacketvisibility jacket

• • Photos are not allowed (without permission) during Photos are not during the visvisit

• • Exilva plant Exilva plant

• •Safety equipment in this area: safety goggles
• • Emergency meeting point: outside the building, where you left the bus

Important notice

• This presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ('relevant persons'). Any person who is not a relevant person should not act or rely on this presentation or any of its contents.
• • This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Borregaard Group. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.
• • This presentation includes and is based, inter alia, on forward-looking information and contains statements regarding the future in connection with the Borregaard Group's growth initiatives, profit figures, outlook, strategies and objectives. All forward-looking information and statements in this presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for the Borregaard Group and its lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions.
• • Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although Borregaard believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation.
• Borregaard is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither Borregaard nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.
• Information contained herein will not be updated. The slides should also be read and considered in connection with the information given orally during the presentation.