ANNUAL REPORT - Nordic Paper

ANNUAL REPORT

AND SUSTAINABILITY REPORT

2021

CONTENT

O P E R AT I O N S

03

OPERATION Nordic Paper in Brief. . . . . . . . . . . . . . . . . . . . . . . 03 Performance in 2021. . . . . . . . . . . . . . . . . . . . . . . 04 CEO's commen.t . . . . . . . . . . . . . . . . . . . . . . . . . . 08 Vision and Values . . . . . . . . . . . . . . . . . . . . . . . . . 10 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Strategy and Goals. . . . . . . . . . . . . . . . . . . . . . . . 21 Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

29

SUSTAINABILITY REPORT Sustainability report . . . . . . . . . . . . . . . . . . . . . . . 30 Focus Areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 H?llbarhetsdata. . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Auditor's report on the sustainability report . . . . . . 48

49

DIRECTORS REPORT Directors Report. . . . . . . . . . . . . . . . . . . . . . . . . . 49 Corporate Governance . . . . . . . . . . . . . . . . . . . . . 53 Risks and Risk Management . . . . . . . . . . . . . . . . . 60 Remuneration guidelines. . . . . . . . . . . . . . . . . . . . 66 Board of Directors and Group Management. . . . . . 69

71

FINANCIAL STATEMENTS Financial Statements, group . . . . . . . . . . . . . . . . . 72

Financial Statements, parent company. . . . . . . . . . 76

Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Signing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . . . 110

115

OTHER INFORMATION The Share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Group Development, five-year overview. . . . . . . . 117 Key Figures Definitions. . . . . . . . . . . . . . . . . . . . 118

ANNUAL AND SUSTAINABILITY REPORT 2021 Nordic Paper's statutory annual report includes the Directors Report and Financial Statements, and can be found on pages 49?108. The statutory sustainability report, as required by the Swedish Annual Accounts Act, is included in the Annual Report (pages 10-12, 30-47 and 60-65).

ANNUAL GENERAL MEETING The Annual General Meeting will be held on Thursday, 19 May 2022.

All information about the meeting and how shareholders can exercise their voting rights and request information is on Nordic Paper's website, nordic-

FINANCIAL CALENDAR

Interim report Q1 2022 Interim report Q2 2022 Interim report Q3 2022 Year-End Report 2022

28 April 2022 20 July 2022 28 October 2022 27 January 2023

N O R D IOCPPEARPAETRI OINNS B R I E F

THE NATURAL LEADER IN SPECIALITY PAPER

With many years of experience as well as deep knowledge and expertise, Nordic Paper offers products that are contributing to the transition to a fossil-free society and a circular and bio-based economy.

Nordic Paper's high-quality speciality paper products help consumers to reduce their climate footprint. The products are made from renewable raw materials from sustainable and local forestry operations and are contributing to a circular and bio-based economy by replacing products made from fossil-based plastic.

Nordic Paper has produced and developed brown kraft paper and natural greaseproof paper since the 1800s and the business continues to develop every day, driven by the Company's 690 employees. Customers throughout the world use our speciality paper to produce products such as carrier bags, sacks, bags, baking paper, baking cups and other products used in food handling or for industrial applications.

800 customers

80 Sales to countries

Net sales end-use applications

55% food 38% industry 7% consumer products

690 employees

5

production plants

ANNUAL REPORT AND SUSTAINABILITY REPORT 2021 ? NORDIC PAPER 3

O P E R AT I O N ? P E R F O R M A N C E I N 2 0 2 1

2021 IN FIGURES

KEY RATIOS

SEKm Net sales EBITDA Adjusted EBITDA 1 EBITDA margin, % Adjusted EBITDA margin, % 1 Operating profit Adjusted operating profit 1, 2 Operating margin, % Adjusted operating margin, % 1, 2 Profit for the period Earnings per share, SEK Cash flow from operating activities Return on operating capital 12 m, % Net debt/EBITDA 12 m, multiple 3 Sales volume, 1,000 metric tonnes

2021 3,083

358 434 11.6 14.1 208 316 6.8 10.3 144 2.15 408 15.9 3.7 281

2020 2,903

458 458 15.8 15.8 348 348 12.0 12.0 258 3.85 352 26.9 1.6 267

, % 6

?22 ?5

?40 ?9

?44 16

5

1 Full year 2021 adjusted for the SEK 76m provision made in Q2 2021 for remediation of buildings and land in S?ffle. 2 Full year 2021 adjusted for the SEK 32m write-down of the pulp production in S?ffle made in Q4 2021. 3 Net debt adjusted for the acquisition of Glassine Canada amounts to SEK 674m and corresponds to a net debt excluding the acquisition of Glassine Canada Inc/EBITDA 12 m ratio of 1.9.

NORDIC PAPER'S MARKETS 2021 PERCENT OF NET SALES

68 % EUROPE

NORTH & SOUTH

AMERICA

12 %

MIDDLE EAST & 7 % AFRICA

4 A N N U A L R E P O R T A N D S U S TA I N A B I L I T Y R E P O R T 2 0 2 1 ? N O R D I C PA P E R

13 % ASIA & PACIFIC REGION

O P E R AT I O N ? P E R F O R M A N C E I N 2 0 2 1

PERFORMANCE ON TARGETS 2021

GROWTH

PROFITABILITY

TARGET: Annual net sales growth of 2-4 percent over the long term. TARGET: EBITDA margin of approximately 20 percent in the medium

Nordic Paper also intends to grow opportunistically through selective term. acquisitions.

OUTCOME 2021:6 %

OUTCOME 2021:14.1%1

NET SALES AND GROWTH

SEKm

%

3,500

15

3,000

2,500

10

2,000

1,500

1,000

5

500

?5

?10 2017 2018 2019 2020 2021

Net sales Organic growth

ADJUSTED EBITDA & ADJUSTED EBITDA MARGIN

SEKm

%

800

20

600

15

400

10

200

5

2017 2018 2019 2020 20211

Adjusted EBITDA

Adjusted EBITDA margin

NET DEBT/EBITDA

TARGET: Net debt in relation to EBITDA below 2.5x. Net debt in relation to EBITDA may, however, exceed 2.5x temporarily, for example in connection with acquisitions.

DIVIDEND

TARGET: Dividend of around 50?70 percent of net profit for the year. The proposed dividend is to take into account Nordic Paper's financial position, liquidity, future investment needs and the general macroeconomic and operational conditions.

OUTCOME 2021:3.7X

OUTCOME 2021:58% 2

1 Full year 2021 adjusted for the SEK 76m provision made in Q2 2021 for remediation of buildings and land in S?ffle 2 Calculated as percentage of profit adjusted for the effects of the provision of SEK 76m for the remediation of buildings and land in S?ffle and the write-down of SEK 32m on the discontinued pulp line in S?ffle.

ANNUAL REPORT AND SUSTAINABILITY REPORT 2021 ? NORDIC PAPER 5

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