Borregaard

Investor Presentation • Feb 3, 2021

Agenda

Per A Sørlie, President & CEO

• Highlights
• Proposed dividend
• Business segments
• Outlook

Per Bjarne Lyngstad, CFO

Financial performance

Highlights – 4 th quarter 2020

• EBITDA¹ NOK 263 million (NOK 183 million)
• Improved result in all business areas
• Improved product mix for biopolymers and lower costs in BioSolutions
• Lower wood and energy costs and high deliveries in BioMaterials
• Favourable product mix in pharma intermediates and higher bioethanol sales volume
• Strong cash flow

3

Highlights – full year 2020

• All-time high EBITDA¹ 1,132 mNOK (1,007 mNOK)
• Improved result for BioMaterials and Fine Chemicals, slight decline for BioSolutions
• Reduced raw material supply and higher distribution costs, partly offset by improved product mix and cost reductions for biopolymers
• Lower wood and energy costs, higher production volume and improved product mix for BioMaterials
• Higher sales volume and prices as well as an extraordinary demand from disinfectants in Q2 for bioethanol
• Positive net currency impact
• Strong cash flow

4

Dividend proposal for 2020

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
• A dividend of NOK 2.50 per share is proposed by the Board of Directors
• 57% of net earnings
• Total dividend payment of 249 mNOK

BioSolutions markets – Q4

Sales price and sales volume include lignin-based biopolymers and biovanillin

Sales volume 14% lower vs Q4-19

• Discontinued raw material supply partly offset by increased sales volume from Florida and reduced inventory
• Concrete admixtures and low-value industrial applications particularly affected by reduced raw material supply
• Continued low demand in oil field chemicals
• Sales to agriculture and batteries increased

Average price in sales currency 4% above Q4-19 due to improved product mix

Reduced sales to concrete admixtures and low-value industrial applications

1 Includes 100% of sales volume from the J/V in South Africa. Average sales price is calculated using actual FX rates, excluding hedging impact.

BioSolutions markets – full year

Sales volume 11% lower vs 2019

• Discontinued raw material supply from Sappi Saiccor and Sniace, reduced supply from Park Falls
• Sales to concrete admixtures and low-value industrial applications have been reduced
• In Specialities, sales to oil field chemicals dropped significantly as a result of reduced demand, while sales to several other applications increased
• Florida sales volume continued to increase in accordance with the ramp-up plan, but result is still unsatisfactory

Average price in sales currency 6% above 2019 due to improved product mix

Reduced sales to concrete admixtures and low-value industrial applications

1 Includes 100% of sales volume from the J/V in South Africa. Average sales price is calculated using actual FX rates, excluding hedging impact.

BioMaterials markets – Q4

Sales price and sales volume include speciality cellulose and cellulose fibrils

High deliveries in Q4

• Lower growth rate in demand for cellulose ethers to construction applications due to the Covid-19 pandemic
• Food and pharma applications continued to show strong growth
• Targeted actions to balance inventories

Average price in sales currency 3% above Q4-19

Q4-19 sales influenced by sale of declassified products Increased sales of cellulose fibrils, but still at a low level

¹ Average sales price is calculated using actual FX rates, excluding hedging impact

BioMaterials markets – full year

Sales price and sales volume include speciality cellulose and cellulose fibrils

Reduced sales volume mainly related to Covid-19 effects

• Improved product mix, sales of highly specialised grades increased to 77% (73%)
• Reduced demand growth for cellulose ethers to construction due to the Covid-19 pandemic
• Food and pharma applications continued to show strong growth
• Impact of low prices for textile cellulose limited due to reduced exposure to this market

Average price in sales currency 1% above 2019 due to improved product mix

Growing sales of cellulose fibrils

Fine Chemicals markets – Q4 & full year

Sales revenues include pharma intermediates and bioethanol Sales revenues include pharma intermediates and bioethanol

Higher sales volume for bioethanol

Deliveries mainly to the biofuel segment

Favourable product mix and high deliveries for pharma intermediates

Extraordinary bioethanol sales to disinfectants in Q2 and increased production volume

• Contributed to higher sales volume and improved product mix
• Deliveries mainly to the biofuel segment in H2, biofuel market normalised after Covid-19 related reduction in Q2

Increased deliveries but weaker product mix for pharma intermediates

Outlook

BioSolutions

• Sales volume in 2021 forecast to decrease by approx. 10%, mainly depending on raw material supply
• Will have positive effect on product mix and average price in sales currency
• Reduced demand in certain speciality applications expected to continue in markets affected by the Covid-19 pandemic
• Market conditions for biovanillin expected to be unchanged, the ongoing capacity expansion will be completed mid-2021
• Full effect of cost savings from the upgrade of the lignin operation in Norway from 2021

BioMaterials

• Average price in sales currency is expected to be 2-3% below the 2020 level, mainly related to markets affected by the Covid-19 pandemic
• Total sales volume and volume of highly specialised grades expected to increase in 2021
• In Q1-21, total sales volume expected to be higher vs Q1-20 with similar product mix
• Lower wood costs but increased energy costs and freight rates expected in H1-21
• Sales growth will continue for cellulose fibrils, but new development and customer trials will be delayed due to the Covid-19 pandemic

Fine Chemicals

• No major changes are expected in the market conditions for Fine Chemicals
• Bioethanol sales mainly expected to be in the biofuel segment in 2021

Possible further consequences of the Covid-19 pandemic may affect Borregaard's business

Financial performance Q4-20

Borregaard key figures – Q4

Revenues 8% above Q4-19

EBITDA¹ 263 mNOK for the Group

• All business areas improved their results
• Slightly negative net FX effect on EBITDA¹

Earnings per share (EPS) NOK 1.21 (NOK 0.38)

13

Borregaard key figures – full year

Revenues increased by 5% vs 2019

All-time high EBITDA¹ 1,132 mNOK for the Group

• Improved results for BioMaterials and Fine Chemicals, decline in Bio Solutions
• Positive net FX effect on EBITDA¹

14

Earnings per share (EPS) NOK 4.36 (NOK 4.17)

Impacted by -116 mNOK in Other revenues and expenses

BioSolutions key figures – Q4

• Revenues 1% above Q4-19
• Reduced raw material supply and 14% lower sales volume
• Full year growth 3%

• Reduced sales from South African operation had marginal impact on top-line due to JV accounting (equity method)

• Lower operating costs and improved product mix for biopolymers

• Negative net FX effects

• Full year EBITDA¹ 632 mNOK (647 mNOK)

• EBITDA margin¹ slightly above Q4-19

• Full year EBITDA¹ margin 20.5 (21.7)

BioMaterials key figures – Q4

• Revenues increased by 10% vs Q4-19
• High sales volume
• Average price in sales currency increased by 3%
• Full year growth 1%
• Q4-19 affected by operational incidents at the Sarpsborg site
• Lower wood and energy costs and higher sales volume for speciality cellulose
• Higher sales, cost reductions and improved result for cellulose fibrils
• Insignificant net FX impact

• Full year EBITDA¹ 318 mNOK (234 mNOK)

• EBITDA margin¹ significantly above Q4-19

• Full year EBITDA¹ margin 18.4 (13.7)

1) Alternative performance measure, see Appendix for definition

Fine Chemicals key figures – Q4

• Revenues increased by 47% vs Q4-19
• High sales for both pharma intermediates and bioethanol

• Full year growth 34%

• Favourable product mix and high deliveries for pharma intermediates

• Higher sales and production volume and reduced variable costs for bioethanol
• Negligible net FX impact

• Full year EBITDA¹ 182 mNOK (126 mNOK)

• EBITDA margin¹ above Q4-19

• Full year EBITDA¹ margin 33.5 (31.0)

Currency impact

• Net FX EBITDA¹ impact ≈-5 mNOK vs Q4-19
• Includes change in hedging effects and based on estimated FX exposure
• Net FX EBITDA¹ impact YTD ≈30 mNOK
• Net FX EBITDA¹ impact in 2021 estimated to be ≈-10 mNOK vs 2020
• Assuming rates as of 2 February (USD 8.59 and EUR 10.35) on expected FX exposure
• Net FX EBITDA¹ impact in Q1 estimated to be ≈-10 mNOK vs Q1-20
• Significant FX exposure, but delayed impact of FX rate fluctuations due to hedging policy

18

• ² See Appendix for currency hedging strategy, future hedges and hedging effects by segment.

• ³ Currency basket based on Borregaard's net exposure on EBITDA¹ in 2019 (=100): USD 65% (approx. 203 mUSD), EUR 35% (approx. 98 mEUR), Other 0% (GBP, BRL, JPY, SEK, ZAR).

• Revised hurdle rates for extended currency hedging:

• USDNOK: 8.00 and 8.50
• EURNOK: 9.25 and 9.75
• Revised due to change in long-term average for USD and EUR

Cash flow, investments and NIBD

Strong cash flow in Q4

Cash effect from improved EBITDA¹ , reduced tax payments and significant reduction in net working capital

Investments below Q4-19 and Borregaard's forecast

NIBD¹ decreased by 320 mNOK in Q4

Leverage ratio¹ 1.58 (1.86)

Equity ratio¹ 53.9% (51.4%)

INVESTMENT FORECAST 2021-2023

Replacement investments

• Targeted at depreciation level
• Upgrade of caustic soda production facility a major investment in 2020 and 2021

Expansion² investments

• Capacity expansion for wood-based vanillin the main project (130 mNOK, completion mid-2021)
• A few smaller expansion projects are ongoing or planned

Revised forecast mainly due to carry-over from 2020

Related to the caustic soda production facility (replacement) and capacity expansion for wood-based vanillin (expansion)

New projects may lead to additional investments

¹ Uncertainty is related to final investment decisions, timing of investment payments, execution time and risk and unexpected events

² Alternative performance measure, see Appendix for definition

Questions?

For questions, please contact Borregaard's Investor Relations by phone or email

See: https://www.borregaard.com/Investor-Relations

Appendix

Borregaard – key figures

Amounts in NOK million	Q4-2020	Q4-2019	Change	YTD-2020	YTD-2019	Change
Operating revenues	1 338	1 234	8 %	5 328	5 063	5 %
EBITDA1	263	183	44 %	1 132	1 007	12 %
Depreciation property, plant and equipment	-110	-110		-443	-418
Amortisation intangible assets	- 2	- 1		- 5	- 4
Other income and expenses1	-20	-11		-116	-27
Operating profit	131	6 1	115 %	568	558	2 %
Financial items, net	-12	-31		-72	-91
Profit before taxes	119	3 0	297 %	496	467	6 %
Income tax expenses	- 8	-12		-117	-116
Profit for the period	111	1 8	517 %	379	351	8 %
Profit attributable to non-controlling interests	-10	-20		-57	-66
Profit attributable to owners of the parent	121	3 8		436	417
Cash flow from operating activities (IFRS)	416	288		886	697
Earnings per share	1,21	0,38	218 %	4,36	4,17	5 %
EBITDA margin1	19,7 %	14,8 %		21,2 %	19,9 %

Operating revenues and EBITDA¹ per segment

	Amounts in NOK million				Amounts in NOK million
Operating revenues	Q4-2020	Q4-2019	Change	EBITDA1	Q4-2020	Q4-2019	Change
Borregaard	1 338	1 234	8 %	Borregaard	263	183	44 %
BioSolutions	733	726	1 %	BioSolutions	137	131	5 %
BioMaterials	458	416	10 %	BioMaterials	8 0	3 1	158 %
Fine Chemicals	153	104	47 %	Fine Chemicals	4 6	2 1	119 %
Eliminations	- 6	-12

Amounts in NOK million Amounts in NOK million Operating revenues YTD-2020 YTD-2019 Change EBITDA¹

Operating revenues	YTD-2020	YTD-2019	Change	EBITDA1	YTD-2020	YTD-2019	Change
Borregaard	5 328	5 063	5 %	Borregaard	1132	1007	12 %
BioSolutions	3082	2982	3 %	BioSolutions	632	647	-2 %
BioMaterials	1732	1712	1 %	BioMaterials	318	234	36 %
Fine Chemicals	543	406	34 %	Fine Chemicals	182	126	44 %
Eliminations	-29	-37

Cash flow

Amounts in NOK million	Q4-2020	Q4-2019	YTD-2020	YTD-2019
Amounts in NOK million
Profit before taxes	119	3 0	496	467
Amortisation, depreciation and impairment charges	113	121	449	432
Change in net working capital, etc	200	171	-21	-85
Dividend (share of profit) from JV	-12	2	5 1	5
Taxes paid	- 4	-36	-89	-122
Cash flow from operating activities	416	288	886	697
Investments property, plant and equipment and intangible assets *	-191	-213	-503	-583
Other capital transactions	1 2	8	1 4	2 9
Cash flow from Investing activities	-179	-205	-489	-554
Dividends	-	-	-229	-224
Proceeds from exercise of options/shares to employees	1	1	3 5	3 5
Buy-back of shares	- 1	- 4	-62	-60
Gain/(loss) on hedges for net investments in subsidiaries	5 9	5	1 0	-26
Net paid to/from shareholders	5 9	2	-246	-275
Proceeds from interest-bearing liabilities	200	402	1 550	2 100
Repayment from interest-bearing liabilities	-257	-493	-1 703	-1 971
Change in interest-bearing receivables/other liabilities	-12	- 1	1 8	- 3
Change in net interest-bearing liablities	-69	-92	-135	126
Cash flow from financing activities	-10	-90	-381	-149
Change in cash and cash equivalents	227	- 7	1 6	- 6
Cash and cash equivalents at beginning of period	-127	9 2	8 1	8 6
Change in cash and cash equivalents	227	- 7	1 6	- 6
Currency effects cash and cash equivalents	- 4	- 4	- 1	1
Cash and cash equivalents at the end of the period	9 6	8 1	9 6	8 1
* Investment by category
Replacement Investments	153	182	344	370
Expansion investments1	3 8	3 1	159	213

1 Alternative performance measure, see Appendix for definition

Balance sheet

Amounts in NOK million	31.12.2020	30.09.2020	31.12.2019
Assets:
Intangible assets	8 6	9 0	9 3
Property, plant and equipment	3 973	3 962	3 852
Right-of-use assets	381	374	380
Other assets	380	249	251
Investment in joint venture	3 8	2 6	9 9
Non-current assets	4 858	4 701	4 675
Inventories	887	1 001	931
Receivables	1 051	1 055	991
Cash and cash deposits	207	5 0	147
Current assets	2 145	2 106	2 069
Total assets	7 003	6 807	6 744
Equity and liabilities:
Group equity	3 668	3 112	3 306
Non-controlling interests	110	124	158
Equity	3 778	3 236	3 464
Provisions and other liabilities	291	373	294
Interest-bearing liabilities	1 381	1 480	1 419
Non-current liabilities	1 672	1 853	1 713
Interest-bearing liabilities	623	687	608
Other current liabilities	930	1 031	959
Current liabilities	1 553	1 718	1 567
Equity and liabilities	7 003	6 807	6 744
Equity ratio1 (%):	53,9 %	47,5 %	51,4 %

1 Alternative performance measure, see Appendix for definition

Net financial items & net interest-bearing debt¹

Amounts in NOK million
Net financial items	Q4-2020	Q4-2019	YTD-2020	YTD-2019
Net interest expenses	-17	-20	-76	-69
Currency gain/loss	6	- 3	7	-12
Other financial items, net	- 1	- 8	- 3	-10
Net financial items	-12	-31	-72	-91

Amounts in NOK million

1 Net interest-bearing debt (NIBD)	31.12.2020	30.09.2020	31.12.2019
Non-current interest-bearing liabilities	1 381	1 480	1 419
Current interest-bearing liabilities including overdraft facilities	623	687	608
Non-current interest-bearing receivables (included in "Other Assets")	- 3	- 3	- 4
Cash and cash deposits	-207	-50	-147
1 Net interest-bearing debt (NIBD)	1 794	2 114	1 876
- of which impact from IFRS 16 leases	396	386	387

Currency hedging strategy

Purpose is to delay effects of currency fluctuations and secure competitiveness

Hedging based on expected EBITDA¹ impact²

• Base hedge: 75%/50% on a rolling basis for 6/9 months for major currencies
• Extended hedge: 75%/50% of the next 24/36 months if USD and EUR are above defined levels EUR; gradually increased at effective rates from 9.25 to 9.75 USD; gradually increased at effective rates from 8.00 to 8.50
• Contracts³ : 100% hedged

Balance sheet exposure hedged 100%

Net investments in subsidiaries hedged up to 90% of book value in major currencies

	USD million	USD rate	EUR million	EUR rate
Q1-2021	34	8.17	26	10.09
Q2-2021	34	8.28	25	10.13
Q3-2021	35	8.42	24	10.21
Q4-2021	33	8.59	24	10.36
2021	136	8.35	99	10.20
2022	128	8.95	101	10.65
2023	90	9.42	70	11.08
2024	7	8.78	6	10.88

Contracted FX hedges with EBITDA impact (as of 02.02.21) Hedging effects by segment

NOK million	Q4-20	Q4-19	YTD-20	YTD-19
BioSolutions	-18	-14	-103	-33
BioMaterials	-22	-16	-116	-37
Fine Chemicals	-4	-2	-22	-6
Borregaard	-44	-32	-214	-76

¹ Alternative performance measure, see Appendix for definition

² Hedging done mainly in the Norwegian company

³ Strict definition of contracts applied for 100% hedging (mutually binding agreement in which price, currency, volume and time are defined)

Credit facilities, solidity and debt

Long-term credit facilities

• 1,500 mNOK revolving credit facilities, maturity 2021 Facilities refinanced in July, maturity 2023 and 2025
• 400 mNOK 5-year bond issue, maturity 2023
• 40 mEUR 10-year loan, maturity 2024
• 60 mUSD term loan for LT Florida, tenor 8.5 years from completion

Short-term credit facilities

• 225 mNOK overdraft facilities
• 15 mUSD overdraft facility in LignoTech Florida
• 400 mNOK commercial paper

Solidity

• Equity ratio¹ 53.9% (> 25%)
• Leverage ratio¹ LTM 1.58 (< 3.25² ) (covenant)

3 536 1 381 620 207 1 742 0 250 500 750 1 000 1 250 1 500 1 750 2 000 2 250 2 500 2 750 3 000 3 250 3 500 3 750 NIBD¹ 1,794 mNOK

Other NIBD Cash & cash

deposit

Undrawn facilities

Long-term debt

Debt and undrawn facilities 31.12.2020

Total available

¹ Alternative performance measure, see Appendix for definition

² Leverage ratio covenant is pre IFRS 16 Leases, and the actual leverage ratio¹ is restated to pre IFRS 16 for compliance calculations

Alternative performance measures

In the discussion of the reported operating results, financial position and cash flows, Borregaard refers to certain measures which are not defined by generally accepted accounting principles (GAAP) such as IFRS. Borregaard management makes regular use of these Alternative performance measures and is of the opinion that this information, along with comparable GAAP measures, is useful to investors who wish to evaluate the company's operating performance, ability to repay debt and capability to pursue new business opportunities. Such Alternative performance measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure.

• EBITDA: Operating profit before depreciation, amortisation and other income and expenses.
• EBITDA margin: EBITDA divided by operating revenues
• Equity ratio: Equity (including non-controlling interests) divided by equity and liabilities.
• Expansion investments: Investments made in order to expand production capacity, produce new products or to improve the performance of existing products. Such investments include business acquisitions, pilot plants, capitalised R&D costs and new distribution set-ups.
• Other income and expenses: Non-recurring items or items related to other periods or to a discontinued business or activity. These items are not viewed as reliable indicators of future earnings based on the business areas' normal operations. These items will be included in the Group's operating profit.
• Leverage ratio: Net interest-bearing debt divided by last twelve months' (LTM) EBITDA.
• Net interest-bearing debt (NIBD): Interest-bearing liabilities minus interest-bearing assets (see slides 23 and 26).
• Return on capital employed (ROCE): Last twelve months' (LTM) capital contribution (operating profit before amortisation and other income and expenses) divided by average capital employed based on the ending balance of the last five quarters. Capital employed is defined by Borregaard as the total of net working capital, intangible assets, property, plant and equipment, right-of-use assets and investment in joint venture minus net pension liabilities.

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.

This presentation was prepared for the interim results presentation for the fourth quarter of 2020, held on 3 February 2021. 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.