Borregaard

Quarterly Report • May 3, 2023

1 ST QUARTER 2023 INTERIM REPORT

CONTENTS

• 1st quarter in brief
• The Group
• The business areas
• BioSolutions
• BioMaterials
• Fine Chemicals
• Foreign exchange and hedging
• Cash flow and financial situation
• Share information
• Other matters and subsequent events
• Outlook
• The Group's interim condensed income statement
• Interim earnings per share
• The Group's interim condensed comprehensive income statement
• The Group's interim condensed statement of financial position
• Interim condensed changes in equity
• The Group's interim condensed cash flow statement
• Notes
• Alternative performance measures

Q1 2023

1 S T QUARTER IN BRIEF

• EBITDA1 NOK 435 million (NOK 400 million)2
• Positive development for agriculture and batteries in BioSolutions
• Increased sales prices in BioMaterials
• Increased sales prices and high production output in Fine Chemicals
• Reduced margin and volume for traded vanillin products
• Cost inflation affected all business areas
• Positive net currency effects
• 1 Alternative performance measure, see page 23 for definition.
• 2 Figures in parentheses are for the corresponding period in the previous year.

THE GROUP

Amounts in NOK million	Note	2023	2022	2022
Operating revenues	2	1,850	1,615	6,881
EBITDA1		435	400	1,643
Operating profit		320	291	1,186
Profit/loss before taxes	2	292	277	1,118
Earnings per share (NOK)		2.32	2.18	8.95
Net interest-bearing debt1	11	1,928	1,535	1,836
Equity ratio1 (%)		51.4	61.7	54.8
Leverage ratio1		1.15	1.04	1.12
Return on capital employed1 (%)		18.0	17.4	18.1

EBITDA MARGIN1

EBITDA1

OPERATING REVENUES

400 435

EBITDA1 NOK mill

364

Q1 Q2 Q3 Q4

434

2022 2023

EBITDA MARGIN1

OPERATING REVENUES

OPERATING REVENUES

1,615

NOK mill

2,000 1,800 1,600

1,615

Q1 Q2 Q3 Q4

Q1 Q2 Q3 Q4

2022 2023

1,770

1,770

2022 2023

NOK mill

0 200 400

800 600

1,000 1,200 1,400

0 200 400

800 600

1,000 1,200 1,400

2,000 1,800 1,600

EBITDA1 EARNINGS PER SHARE CUMULATIVE

FIRST QUARTER

Operating revenues increased to NOK 1,850 million (NOK 1,615 million)² . EBITDA1 reached NOK 435 million (NOK 400 million). Fine Chemicals and BioMaterials had result improvements while BioSolutions had a decrease. The net currency impact on EBITDA¹ was positive compared with the 1st quarter of 2022.

The result improvement in Fine Chemicals was due to increased sales prices, a high production output and improved product mix. The EBITDA¹ improvement in BioMaterials was mainly a result of increased sales prices and positive net currency effects. Reduced margin and volume for traded vanillin products were the main reasons for the EBITDA¹ decrease in BioSolutions. Cost inflation related to wood and other raw materials, maintenance and labour affected all business areas.

Operating profit reached NOK 320 million (NOK 291 million). Net financial items were NOK -28 million (NOK -14 million). Profit before tax was NOK 292 million (NOK 277 million). Tax expense of NOK -71 million (NOK -68 million) gave a tax rate of 24% (25%) in the quarter.

Earnings per share were NOK 2.32 (NOK 2.18).

Cash flow from operating activities was NOK 111 million (NOK -72 million). The net working capital increased mainly as a result of high deliveries and increased accounts receivable towards the end of the quarter. Tax payments were higher compared with the 1st quarter of 2022.

Borregaard will invest NOK 100 million in a new green technology platform and build a commercial scale demonstration plant with an annual capacity of 1,000 tonnes at the Sarpsborg biorefinery. The platform will enable deliveries of next generation lignin-based biopolymers and granulation of existing and new products. Targeted application areas are home care, industrial cleaners, water treatment and agriculture.

NOK mill CASH FLOW FROM OPERATING ACTIVITIES

CASH FLOW FROM OPERATING ACTIVITIES

Q4'22 Q1'23

EBITDA1

Cash flow from operating activites

Q2'22 Q3'22

Q1'22

1 Alternative performance measure, see page 23 for definition.

² Figures in parentheses are for the corresponding period in the previous year.

BUSINESS AREAS BIOSOLUTIONS

	1.1 - 31.3		1.1 - 31.12
Amounts in NOK million	2023	2022	2022
Operating revenues	995	948	4,050
EBITDA1	224	261	986
EBITDA margin1 (%)	22.5	27.5	24.3

FIRST QUARTER

Operating revenues in BioSolutions increased to NOK 995 million (NOK 948 million). EBITDA¹ was NOK 224 million (NOK 261 million).

For lignin-based biopolymers, higher sales prices and positive net currency effects more than compensated for increased costs and lower sales volume. Deliveries of wood-based vanillin were in line with the same quarter in 2022. Reduced margin and volume for traded vanillin products were the main reasons for the EBITDA1 decrease in BioSolutions.

The average price in sales currency was 13% higher than in the same quarter in 2022. There was a positive development for applications within agriculture and batteries.

The total sales volume was 9% lower than in the corresponding quarter in 2022 mainly due to a lower demand within construction.

AVERAGE GROSS SALES PRICE3

AVERAGE GROSS SALES PRICE3

SALES VOLUME SALES VOLUME

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

¹ Alternative performance measure, see page 23 for definition.

² Figures in parentheses are for the corresponding period in the previous year.

³ Average sales price is calculated using actual FX rates, excluding hedging impact.

⁴ Metric tonne dry solid.

BIOMATERIALS

	1.1 - 31.3		1.1 - 31.12
Amounts in NOK million	2023	2022	2022
Operating revenues	684	532	2,250
EBITDA1	127	97	427
EBITDA margin1 (%)	18.6	18.2	19.0

FIRST QUARTER

BioMaterials' operating revenues reached NOK 684 million (NOK 532 million). EBITDA¹ increased to NOK 127 million (NOK 97 million).

Increased sales prices and positive net currency effects were the main reasons for the EBITDA¹ improvement. The positive effects were partly offset by higher wood costs and other operating expenses. Cellulose fibrils had a slight improvement in volume and sales prices.

The average price in sales currency increased 18%. In total, demand for speciality cellulose was strong in the quarter. Sales of other highly specialised grades largely compensated for a slowdown in the construction market for cellulose ethers.

AVERAGE GROSS SALES PRICE5

AVERAGE GROSS SALES PRICE5

SALES VOLUME SALES VOLUME

Sales price and sales volume include speciality cellulose and cellulose fibrils.

⁶ Metric tonne.

9,000 10,000 11,000 12,000

16,000

15,000 14,000 13,000

18,000 17,000

¹ Alternative performance measure, see page 23 for definition.

⁵ Average sales price is calculated using actual FX rates, excluding hedging impact.

FINE CHEMICALS

	1.1 - 31.3		1.1 - 31.12
Amounts in NOK million	2023	2022	2022
Operating revenues	180	143	632
EBITDA1	84	42	230
EBITDA margin1 (%)	46.7	29.4	36.4

FIRST QUARTER

INGREDIENTS – SALES REVENUES

139 139

146

Q3

160

Q1 Q4

Q2

80

100 120 130

160 140

NOK million

40 60

20 0 Operating revenues in Fine Chemicals increased to NOK 180 million (NOK 143 million). EBITDA¹ reached NOK 84 million (NOK 42 million).

The significant EBITDA¹ improvement was due to increased sales prices and a high production output in the business area. In addition, there was a strong product mix for fine chemical

intermediates. The positive effects were partly offset by lower deliveries and higher costs. The net currency impact was positive.

FINE CHEMICALS – SALES REVENUES

Sales revenues include fine chemical intermediates and bioethanol.

FOREIGN EXCHANGE AND HEDGING

Borregaard has a significant currency exposure which is hedged according to the company's hedging strategy. The impact of currency rate fluctuations will be delayed as a result of the currency hedging strategy. Compared with the 1st quarter of 2022, the net impact of foreign exchange on EBITDA¹ , including hedging effects, was NOK 75 million. Hedging effects were NOK -48 million (NOK 10 million) in the quarter.

Assuming currency rates as of 2 May 2023 (USD 10.73 and EUR 11.76) and based on currency exposure forecasts, Borregaard expects a net impact of foreign exchange on EBITDA¹ of approximately NOK 70 million in the 2nd quarter of 2023 and NOK 210 million for the full year of 2023, compared with the corresponding periods last year.

CASH FLOW AND FINANCIAL SITUATION

FIRST QUARTER

Cash flow from operating activities in the 1st quarter was NOK 111 million (NOK -72 million). The net working capital increased mainly as a result of high deliveries and increased accounts receivable towards the end of the quarter. Tax payments were higher compared with the 1st quarter of 2022.

Total investments amounted to NOK 107 million (NOK 87 million). Expansion investments¹ were NOK 20 million (NOK 16 million).

The Group has sold and repurchased treasury shares with net proceeds of NOK 0 million (NOK 23 million). Realised effect of hedging of net investments in subsidiaries was NOK -58 million (NOK 31 million).

On 31 March 2023, the Group had net interest-bearing debt¹ totalling NOK 1,928 million (NOK 1,535 million), an increase of NOK 92 million from year-end 2022.

At the end of March, the Group was well capitalised with an equity ratio¹ of 51.4% (61.7%) and a leverage ratio1 of 1.15 (1.04).

SHARE INFORMATION

In February 2023, 250,000 share options at a strike price of NOK 194.00 were granted under the long-term incentive programme. The options will expire after five years, the vesting period is three years and the options may be exercised during the last two years. For more

details, see notification to the Oslo Stock Exchange on 1 March 2023.

As part of the employee share programme, Borregaard has sold a total of 169,213 shares to employees in

February 2023. The share price was NOK 132.46 per share after deduction of a 25% discount. For more details, see notifications to the Oslo Stock Exchange on 6 and 13 February and 2 March 2023.

In the 1st quarter, 20,500 share options were exercised at a strike price of NOK 65.95 per share, 199,000 share options were exercised at a strike price of NOK 70.30 per share and 30,000 share options were exercised at a strike price of NOK 94.60 per share.

In the 1st quarter, Borregaard repurchased a total of 229,640 treasury shares at an average price of NOK 178.58.

Total number of shares outstanding on 31 March 2023 was 100 million, including 245,480 treasury shares. Total number of shareholders was 8,328. Borregaard ASA's share price was NOK 174.80 at the end of the quarter (NOK 152.00 at the end of 2022).

OTHER MATTERS AND SUBSEQUENT EVENTS

ANNUAL GENERAL MEETING

Borregaard ASA held its Annual General Meeting on 18 April 2023. The financial statements of Borregaard ASA and the Group, including the proposal to pay an ordinary dividend of NOK 3.25 per share, were approved. The dividend was paid out on 27 April 2023 with a total amount of NOK 324 million.

The Annual General Meeting re-elected Helge Aasen as the chair of the Board of Directors. Terje Andersen, Tove Andersen, Margrethe Hauge and John Arne Ulvan were re-elected as members of the Board. See notice to Oslo Stock Exchange on 18 April 2023.

BORREGAARD INCREASED ITS OWNERSHIP IN ALGINOR TO 35%

Borregaard has exercised its right to increase ownership in Alginor. The value of the equity transactions was approximately NOK 124 million. After these transactions and considering the company's employee options program, Borregaard holds 35% of the shares in Alginor on a fully diluted basis.

The direct equity issue will facilitate investments that shorten the time to market for commercial volumes of Alginor's key product, alginate. This includes expanding parts of Alginor's demonstration plant to semi-commercial scale and increasing the company's harvesting capacity at an earlier stage.

To date, Borregaard's investments in Alginor total approximately NOK 268 million. See notices to Oslo Stock Exchange on 23 July 2021 and 13 April 2023.

BORREGAARD ASSIGNED FIRST-TIME ISSUER RATING OF A-/STABLE

Scope Ratings GmbH assigned first-time issuer rating of A-/Stable to Borregaard ASA. The same rating is assigned to the company's senior unsecured debt.

The rating reflects Borregaard's efficient and unique production capabilities, strong positions in key speciality chemicals markets, strong profitability and low financial leverage. See notice to Oslo Stock Exchange on 23 March 2023.

OUTLOOK

In BioSolutions, the portfolio optimisation within biopolymer applications will continue. The total sales volume for 2023 is forecast to be largely in line with 2022, depending on global economic development and the construction market in particular. Sales volume in the 2nd quarter of 2023 is expected to be in the range of 80,000 to 85,000 tonnes. The trading margins for synthetic vanillin and ethyl vanillin are expected to normalise in the 2nd half of 2023.

For BioMaterials, the total sales volume for 2023 is forecast to be higher than production output. Sales volume of highly specialised grades is expected to be higher than in 2022. In the 2nd quarter of 2023, the average price in sales currency is expected to be in line with the 1st quarter of 2023. Development in the construction market for cellulose ethers is the main uncertainty for 2023. However, other applications are expected to largely compensate for a potential slowdown in the construction market. Sales growth will continue for cellulose fibrils.

Sales volume and product mix for fine chemical intermediates are expected to improve in 2023 compared with 2022. In bioethanol, sales prices are expected to increase whereas sales volume is forecast to be in line with the 2022 level. The market conditions for advanced biofuels are favourable in several European countries. Bioethanol sales are expected to be mainly into these markets in 2023.

Wood costs will increase 10-15% in the 1st half of 2023 compared with the 2nd half of 2022. In the 2nd quarter of 2023, energy and other raw material costs are expected to be lower than in the 1st quarter of 2023.

Cost inflation and consequences of the Russian invasion of Ukraine may impact the global economy and Borregaard's markets. Financial market disturbances due to weaknesses at certain banks adds to the uncertainty in the global economy. Borregaard will continue to closely monitor cost inflation and market development and implement relevant measures if required.

Sarpsborg, 2 May 2023 The Board of Directors of Borregaard ASA

THE GROUP'S INTERIM CONDENSED INCOME STATEMENT

			1.1 - 31.3	1.1 - 31.12
Amounts in NOK million	Note	2023	2022	2022
Operating revenues	2	1,850	1,615	6,881
Operating expenses		-1,415	-1,215	-5,238
Depreciation property, plant and equipment		-114	-108	-444
Amortisation intangible assets		-1	-1	-5
Other income and expenses1	3	-	-	-8
Operating profit		320	291	1,186
Financial items, net	4	-28	-14	-68
Profit before taxes		292	277	1,118
Income tax expense	5	-71	-68	-267
Profit for the period		221	209	851
Profit attributable to non-controlling interests		-10	-8	-41
Profit attributable to owners of the parent		231	217	892
EBITDA1		435	400	1,643

INTERIM EARNINGS PER SHARE

		1.1 - 31.3		1.1 - 31.12
Amounts in NOK		2023	2022	2022
Earnings per share (100 mill. shares)	6	2.32	2.18	8.95
Diluted earnings per share	6	2.31	2.17	8.92

THE GROUP'S INTERIM CONDENSED COMPREHENSIVE INCOME STATEMENT

			1.1 - 31.3	1.1 - 31.12
Amounts in NOK million	Note	2023	2022	2022
Profit for the period		221	209	851
Items not to be reclassified to P&L
Actuarial gains and losses (after tax)		-	-	1
Total		-	-	1
Items to be reclassified to P&L
Change in hedging-reserve after tax (cash flow)	8	-406	124	-253
Change in hedging-reserve after tax (net investment in subsidiaries)	8	-47	9	-70
Translation effects		82	-4	118
Total		-371	129	-205
The Group's comprehensive income		-150	338	647
Comprehensive income non-controlling interests		-7	-9	-33
Comprehensive income owners of the parent		-143	347	680

THE GROUP´S INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION

Amounts in NOK million	Note	31.3.2023	31.12.2022
Intangible assets	13	82	82
Property, plant and equipment	13	4,436	4,371
Right-of-use assets		350	345
Other assets	9	217	254
Investments in joint venture/associate company	4	136	142
Non-current assets		5,221	5,194
Inventories		1,373	1,299
Receivables	9	1,560	1,387
Cash and cash deposits	11	217	234
Current assets		3,150	2,920
Total assets		8,371	8,114
Group equity	10	4,260	4,394
Non-controlling interests		44	51
Equity		4,304	4,445
Provisions and other liabilities		435	295
Interest-bearing liabilities	9, 11	1,490	1,370
Non-current liabilities		1,925	1,665
Interest-bearing liabilities	9, 11	657	702
Other current liabilities	9	1,485	1,302
Current liabilities		2,142	2,004
Equity and liabilites		8,371	8,114
Equity ratio1		51.4 %	54.8 %

INTERIM CONDENSED CHANGES IN EQUITY

	1.1 - 31.3.2023					1.1 - 31.12.2022
Amounts in NOK million	Note	Controlling interests	Non controlling interests	Total equity	Controlling interests	Non controlling interests	Total equity
Equity 1 January		4,394	51	4,445	4,222	84	4,306
Profit/loss for the period		231	-10	221	892	-41	851
Items in Comprehensive Income	8	-374	3	-371	-212	8	-204
The Group's Comprehensive income	8	-143	-7	-150	680	-33	647
Paid dividend		-	-	-	-499	-	-499
Buy-back of treasury shares		-41	-	-41	-68	-	-68
Exercise of share options		18	-	18	16	-	16
Reduced tax payable of exercised share options		-	-	-	-	-	-
Shares to employees		30	-	30	33	-	33
Option costs (share based payment)		2	-	2	10	-	10
Transactions with non-controlling interests		-	-	-	-	-	-
Equity at the end of the period		4,260	44	4,304	4,394	51	4,445

THE GROUP'S INTERIM CONDENSED CASH FLOW STATEMENT

			1.1 - 31.3	1.1 - 31.12
Amounts in NOK million	Note	2023	2022	2022
Profit before taxes		292	277	1,118
Amortisation, depreciation and impairment charges		115	109	449
Changes in net working capital, etc.		-193	-381	-658
Dividend/share of profit from JV & associate company	4	6	-	34
Taxes paid		-109	-77	-208
Cash flow from operating activities		111	-72	735
Investments property, plant and equipment and intangible assets *		-107	-87	-464
Investment in associate company	4	-	-	-
Other capital transactions		2	2	9
Cash flow from investing activities		-105	-85	-455
Dividends		-	-	-499
Proceeds from exercise of options/shares to employees	10	41	27	41
Buy-back of treasury shares	7	-41	-4	-68
Gain/(loss) on hedges for net investments in subsidiaries		-58	31	-79
Net paid to/from shareholders		-58	54	-605
Proceeds from interest-bearing liabilities	11	-	100	837
Repayment from interest-bearing liabilities	11	-14	-14	-512
Change in interest-bearing receivables/other liabilities	11	41	-2	78
Change in net interest-bearing liabilities		27	84	403
Cash flow from financing activities		-31	138	-202
Change in cash and cash equivalents		-25	-19	78
Cash and cash equivalents at beginning of period		111	5	5
Change in cash and cash equivalents		-25	-19	78
Currency effects cash and cash equivalents		19	-2	28
Cash and cash equivalents at the close of the period	11	105	-16	111
*Investment by category
Replacement investments		87	71	359
Expansion investments1 including investment in associate company		20	16	105
Total investments including investment in associate company		107	87	464

NOTES

NOTE 01 Organisation and basis for preparation

GENERAL INFORMATION

Borregaard ASA is incorporated and domiciled in Norway. The address of its registered office is Hjalmar Wessels vei 6, Sarpsborg.

Basis for preparation

These unaudited Interim Condensed Consolidated Financial Statements are prepared in accordance with IAS 34 Interim Financial Reporting. Borregaard ASA is the parent company of the Borregaard Group presented in these Interim Condensed Consolidated Financial Statements.

The same accounting principles and methods of calculation have been applied as in the Consolidated Financial Statements for 2022 for the Borregaard Group.

Use of estimates

The same use of estimates has been applied as in the Consolidated Financial Statements for 2022.

NOTE 02 Segments

OPERATING REVENUES

		1.1 - 31.3	1.1 - 31.12
Amounts in NOK million	2023	2022	2022
Borregaard	1,850	1,615	6,881
BioSolutions	995	948	4,050
BioMaterials	684	532	2,250
Fine Chemicals	180	143	632
Eliminations	-9	-8	-51

There is limited intercompany sales between the different segments and eliminations consist essentially of allocations from the corporate headquarter.

cont. next page

cont. NOTE 02 Segments

EBITDA1

		1.1 - 31.3	1.1 - 31.12
Amounts in NOK million	2023	2022	2022
Borregaard	435	400	1 643
BioSolutions	224	261	986
BioMaterials	127	97	427
Fine Chemicals	84	42	230

Reconciliation against operating profit & profit before tax

EBITDA1	435	400	1,643
Depreciations and write downs	-114	-108	-444
Amortisation intangible assets	-1	-1	-5
Other income and expenses1	-	-	-8
Operating profit	320	291	1,186
Financial items, net	-28	-14	-68
Profit before taxes	292	277	1,118

SALES REVENUES

		1.1 - 31.3	1.1 - 31.12
Amounts in NOK million	2023	2022	2022
Borregaard	1,825	1,591	6,776
BioSolutions	973	929	3,946
BioMaterials	674	521	2,205
Fine Chemicals	178	141	625
Eliminations	-	-	-

Operating revenues consist of sales revenues and other revenues such as commissions, revenues from waste received for incineration etc.

NOTE 03 Other income and expenses1

There were no Other income and expenses¹ in the 1st quarter of 2023.

NOTE 04 Financial items

NET FINANCIAL ITEMS

		1.1 - 31.3	1.1 - 31.12
Amounts in NOK million	2023	2022	2022
Net interest expenses	-29	-13	-76
Currency gain/loss	6	1	6
Share of profit/-loss from an associate	-2	-1	-3
Other financial items, net	-3	-1	5
Net financial items	-28	-14	-68

Share of profit/-loss from an associate is related to Alginor ASA. Borregaard holds 25% of the shares in Alginor ASA as of 31 March 2023. See Note 14 for increase of ownership in April 2023.

Other financial items, net includes changes in committed return on the Group's unfunded pension plan.

NOTE 05 Income tax expense

The tax rate of 24.3% (24.5%) for the first three months of 2023 is a compilation of the tax rates in the various countries in which Borregaard operates and has taxable income. The corporate income tax rate in Norway is 22%.

In addition to the compilation of the tax rates in the various countries in which Borregaard operates and has taxable income, the income tax rate for the Group is also impacted by the following: LignoTech Florida is a limited liability company (LLC) which is taxed on the owners' hand. Profit before tax is 100% consolidated

in the Borregaard Group, whereas the tax expense is calculated based on Borregaard's 55% ownership. Consequently, profit attributable to non-controlling interests for LignoTech Florida (45%) is calculated on profit before tax. Share of profit after tax from the joint venture, LignoTech South Africa, and from the associated company, Alginor ASA, is accounted for as part of profit before tax (due to IFRS 11). There are carry forward losses in the Group which will not be recognised as deferred tax assets, and hence increase the Group's tax rate.

NOTE 06 Earnings per share (EPS)

The share capital consists of 100 million shares. The company holds 245,480 treasury shares. As of 31 March 2023, there are 100,000,801 diluted shares

(99,752,815 as of 31 December 2022). Earnings per diluted share were NOK 2.31 in the 1st quarter (NOK 2.17 in the 1st quarter of 2022).

NOTE 07 Stock options

During the 1st quarter of 2023, 20,500 share options were exercised at a strike price of NOK 65.95 per share, 199,000 share options were exercised at a strike price of NOK 70.30 per share and 30,000 share options were exercised at a strike price of NOK 94.60 per share.

The Group Executive Management and other key employees hold a total of 1,197,000 stock options in five different share option programmes in Borregaard.

Stock options	Issued 2019	Issued 2020	Issued 2021	Issued 2022	Issued 2023
Number of stock options	128,000	370,000	249,000	200,000	250,000
Strike price (NOK)*	70.30	94.60	175.70	223.75	194.00
Vesting period	3 years	3 years	3 years	3 years	3 years
Expiry date	6 February 2024	13 February 2025	16 February 2026	17 February 2027	1 March 2028

* Strike prices as at 31 March 2023 have been adjusted for dividend paid since issuance of stock options.

NOTE 08 Statement of comprehensive income

The statement of comprehensive income shows changes in the value of hedging instruments, both cash flow hedges and hedges of net investments

in subsidiaries (hedging reserve). These figures are presented after tax.

	31.3.2023			31.3.2022		31.12.2022
Amounts in NOK million	Cash flow hedges	Hedges of net investments in subsidiares	Cash flow hedges	Hedges of net investments in subsidiares	Cash flow hedges	Hedges of net investments in subsidiares
Tax effect year-to-date	-147	-79	74	-42	-33	-65
Hedging reserve after tax	-522	-243	261	-117	-116	-196

NOTE 09 Fair value hierarchy

For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation at the end of each reporting period.

The following measurement levels are used for determining the fair value of financial instruments:

• Level 1 Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities
• Level 2 Valuation techniques (for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable)

• Level 3 — Valuation techniques (for which the lowest level input that is significant to the fair value measurement is unobservable)

There were no transfers from one level to another in the measurement hierarchy from 2022 to the 1st quarter of 2023. Borregaard has no items defined as level 1. The bond is determined as measurement level 3. The fair value of the bond is deemed to equal its book value.

Set out below is a comparison of the carrying amount and the fair value of financial instruments as of March 2023:

cont. NOTE 09 Fair value hierarchy

FINANCIAL ASSETS

		31.3.2023		31.12.2022
Amounts in NOK million	Level	Carrying amount	Fair value	Carrying amount	Fair value
Non-current financial receivables	2	200	200	194	194
Non-current derivatives	2	1	1	46	46
Current derivatives	2	10	10	49	49
Total financial assets		211	211	289	289
FINANCIAL LIABILITIES
Non-current financial liabilities	2, 3	1,492	1,492	1,372	1,372
Non-current derivatives	2	394	394	144	144
Current financial liabilities	2	657	657	702	702
Current derivatives	2	297	297	102	102
Total financial liabilities		2,840	2,840	2,320	2,320
FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
Amounts in NOK million			Level 1	Level 2	Level 3
Financial instruments 31.3.2023		-2,629	-	-2,229	-400
Financial instruments 31.12.2022		-2,031	-	-1,631	-400

The financial instruments are measured based on observable spot exchange rates, the yield curves of the respective currencies as well as the currency basis spreads between the respective currencies.

NOTE 10 Compilation of Equity

Amounts in NOK million	31.3.2023	31.12.2022
Share capital	100	100
Treasury shares	-	-
Share premium	1,346	1,346
Other paid-in capital	931	881
Translation effects	287	208
Hedging reserve (after tax)	-765	-312
Actuarial gains/Losses	42	42
Retained earnings	2,319	2,129
Group equity (controlling interests)	4,260	4,394

As of 31 March 2023, the company held 245,480 treasury shares at an average cost of NOK 177.36

NOTE 11 Net interest-bearing debt1

The various elements of net interest-bearing debt¹ are shown in the following table:

Amounts in NOK million	31.3.2023	31.12.2022
Non-current interest-bearing liabilities	1,490	1,370
Current interest-bearing liabilities including overdraft of cashpool	657	702
Non-current interest-bearing receivables (included in "Other Assets")	-2	-2
Cash and cash deposits	-217	-234
Net interest-bearing debt1	1,928	1,836
- of which impact of IFRS 16 Leases	379	371

NOTE 12 Related parties

The members of the Group Executive Management of Borregaard held a total of 584,000 stock options in the Company as of 31 March 2023.

NOTE 13 Assessments relating to impairment

No impairment indicators have been identified in the Borregaard Group's property, plant and equipment or intangible assets in the 1st quarter of 2023.

NOTE 14 Other matters and subsequent events

BORREGAARD INCREASED ITS OWNERSHIP IN ALGINOR TO 35%

Borregaard has exercised its right to increase ownership in Alginor. The value of the equity transactions was approximately NOK 124 million. After these transactions and considering the employee share options program, Borregaard holds 35% of the shares in Alginor on a fully diluted basis. The direct equity issue will facilitate investments that shorten the time to market for commercial volumes of Alginor's key product, alginate. This includes expanding parts of Alginor's demonstration plant to semi-commercial

scale and increasing the company's harvesting capacity at an earlier stage. To date, Borregaard's investments in Alginor total approximately NOK 268 million. See notices to Oslo Stock Exchange on 23 July 2021 and 13 April 2023.

There have been no other events after the balance sheet date that would have had a material impact on the financial statements, or the assessments carried out.

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.

MEASURE	DESCRIPTION	REASON FOR INCLUDING
EBITDA	EBITDA is defined by Borregaard as operat ing profit before depreciation, amortisation and other income and expenses.	Shows performance regardless of capital structure, tax situation and adjusted for income and expenses related transactions and events not considered by management to be part of operating activities. Management believes the measure enables an evaluation of operating performance.
EBITDA MARGIN	EBITDA margin is defined by Borregaard as EBITDA divided by operating revenues.	Shows the operations' performance regardless of capital structure and tax situation as a ratio to operating revenue.

		1.1 - 31.3	1.1 - 31.12
EBITDA	2023	2022	2022
Operating profit	320	291	1,186
Other income and expenses	-	-	8
Amortisation intangible assets	1	1	5
Depreciation and impairment property, plant and equipment	114	108	444
EBITDA	435	400	1,643

		1.1 - 31.3	1.1 - 31.12
EBITDA MARGIN	2023	2022	2022
EBITDA	435	400	1,643
Operating revenues	1,850	1,615	6,881
EBITDA margin (%) (EBITDA/operating revenues)	23.5	24.8	23.9

MEASURE	DESCRIPTION	REASON FOR INCLUDING
EQUITY RATIO	Equity ratio is defined by Borregaard as equity (including non-controlling interests) divided by equity and liabilities.	Equity ratio is an important measure in describing the capital structure.
EQUITY RATIO		31.3.2023	31.3.2022	31.12.2022
Total equity		4,304	4,677	4,445
Equity & liabilities		8,371	7,581	8,114

Equity ratio (%) (total equity/equity & liabilities) 51.4 61.7 54.8

MEASURE	DESCRIPTION	REASON FOR INCLUDING
EXPANSION INVESTMENTS	Borregaard's investments are either cate gorised as replacement or expansion. Expan sion investments is defined by Borregaard as investments made in order to expand production capacity, produce new products or to improve the performance of existing products. Such investments include busi ness acquisitions, pilot plants, capitalised research and development costs and new distribution set-ups.	Borregaard's strategic priorities are special isation and diversification, increase value added from the biorefinery, develop business areas and to continue emphasis on ESG along the entire value chain. To be able to deliver on those priorities, expansion investments are needed. As such, expansion investments are important information for investors. One of Borregaard's financial objectives is to have an internal rate of return >15% pre-tax for expan sion investments.

		1.1 - 31.3	1.1 - 31.12
EXPANSION INVESTMENTS	2023	2022	2022
Total investments including investment in associate company	107	87	464
Replacement investments	-87	-71	-359
Expansion investments including investment in associate company	20	16	105

MEASURE	DESCRIPTION	REASON FOR INCLUDING
OTHER INCOME AND EXPENSES	Other income and expenses is defined by Borregaard as 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 earn ings based on the business areas' normal operations. These items will be included in the Group's operating profit.	To be able to compare the EBITDA of different reporting periods, significant non-recurring items not directly related to operating activities, are included in Other income and expenses.

	1.1 - 31.3		1.1 - 31.12
OTHER INCOME AND EXPENSES	2023	2022	2022
Other income and expenses	-	-	-8

MEASURE	DESCRIPTION	REASON FOR INCLUDING
NET INTEREST-BEARING DEBT	Net interest-bearing debt is defined by Bor regaard as interest-bearing liabilities minus interest-bearing assets.	Net interest-bearing debt provides an indicator of the net indebtedness and an indicator of the overall strength of the statement of financial position. Net interest-bearing debt is part of Borregaard's financial covenants (leverage ratio) and is important in understanding the capital structure.

NET INTEREST-BEARING DEBT	31.3.2023	31.3.2022	31.12.2022
Non-current interest-bearing liabilities	1,490	1,418	1,370
Current interest-bearing liabilities including overdraft of cashpool	657	223	702
Non-current interest-bearing receivables (included in "Other assets")	-2	-3	-2
Cash and cash deposits	-217	-103	-234
Net interest-bearing debt	1,928	1,535	1,836

MEASURE	DESCRIPTION	REASON FOR INCLUDING
LEVERAGE RATIO	Leverage ratio is defined by Borregaard as net interest bearing debt divided by last twelve months' (LTM) EBITDA.	Leverage ratio is an indicator of the overall strength of the statement of financial position. Borregaard has a targeted leverage ratio between 1.0 and 2.25 over time. Leverage ratio is Borregaard's financial covenant on long term credit facilities.

LEVERAGE RATIO	31.3.2023	31.3.2022	31.12.2022
Net interest-bearing debt	1,928	1,535	1,836
EBITDA	1,678	1,470	1,643
Leverage ratio (net interest-bearing debt/EBITDA)	1.15	1.04	1.12

MEASURE	DESCRIPTION	REASON FOR INCLUDING
CAPITAL EMPLOYED	Capital employed is defined by Borregaard as the total of net working capital, intangible assets, property, plant and equipment, right of-use assets minus net pension liabilities.	Borregaard uses capital employed as basis for calculating ROCE.

CAPITAL EMPLOYED (END OF YEAR)	31.3.2023	31.3.2022	31.12.2022
Capital employed (end of year)	7,142	6,421	6,802

MEASURE	DESCRIPTION	REASON FOR INCLUDING
RETURN ON CAPITAL EMPLOYED (ROCE)	Return on capital employed (ROCE) is defined by Borregaard as 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.	ROCE is an important financial ratio to assess Borregaard's profitability and capital efficien cy. One of Borregaard's financial objectives is to have ROCE >15% pre-tax over a business cycle.

RETURN ON CAPITAL EMPLOYED (ROCE)	31.3.2023	31.3.2022	31.12.2022
Capital employed end of:
Q1, 2021		5,884
Q2, 2021		5,854
Q3, 2021		5,991
Q4, 2021		6,043	6,043
Q1, 2022	6,421	6,421	6,421
Q2, 2022	6,779		6,779
Q3, 2022	7,015		7,015
Q4, 2022	6,802		6,802
Q1, 2023	7,142
Average capital employed	6,832	6,039	6,612

CAPITAL CONTRIBUTION	31.3.2023	31.3.2022	31.12.2022
Operating profit	1,215	1,048	1,186
Other income and expenses	8	-	8
Amortisation intangible assets	5	4	5
Capital contribution	1,228	1,052	1,199
RETURN ON CAPITAL EMPLOYED (ROCE)	31.3.2023	31.3.2022	31.12.2022
Capital contribution	1,228	1,052	1,199
Average capital employed	6,832	6,039	6,612
Return on capital employed (ROCE) (%) (capital contribution/average capital employed)	18.0	17.4	18.1

Q1 2023

Borregaard ASA P.O. Box 162, NO-1701 Sarpsborg, Norway Telephone: (+47) 69 11 80 00 Fax: (+47) 69 11 87 70 E-mail: borregaard@borregaard.com www.borregaard.com