• Cashflow from operations improved by NOK 217.5 million in 2023, from negative NOK 50.6 million in 2022

to positive NOK 166.9 million in 2023. Significantly improved capital efficiency in Höganäs Borgestad during

2023, net working capital reduction of NOK 28.3 million.

• New equity of NOK 296.7 million, deducted for transaction costs.

• Net interest-bearing debt reduced from NOK 689 million at 31.12.22 to NOK 307 million at 31.12.23.

• Frode Martinussen was employed as a new CEO in Höganäs Borgestad and the strategy for Höganäs

Borgestad was updated.

• On 27th October, the company announced a conditional sale and leaseback agreement with Bjuv

municipality in Sweden, with a net estimated cash effect of SEK 141.3 million. The transaction is estimated

to be completed in 2024 and will further decrease the net interest-bearing debt to NOK 166 million.

Alternative performance measures (APMs) are described in the appendices Alternative performance

measures

2023 was a transformatory period for Borgestad, with a continued positive operational development for our

two businesses, in addition to the significant financial restructuring and the positive outcome of the arbitration

process in Vienna. These developments position Borgestad as a financially strong investment company, and

the ongoing strategy process will outline the priorities for growth and value creation to leverage on new

opportunities.

We have completed a total refinancing through a private placement and a subsequent repair issue, which

means that Borgestad is now fully financed, and has a sustainable balance sheet. The company repaid EUR

10 million on the mortgage in Agora Bytom in December 2023, and received payment of the entire amount

The Norwegian Corporate Governance Board (NUES) issues the recommendation on corporate governance

for companies listed in Norway, with the latest update on the code of practice 14 October 2021. The

recommendation is based on share, accounting and securities legislations, as well as the Issuer Rules for

Oslo Børs. Compliance with the recommendation is based on a "comply or explain" principle.

board meetings with corporate governance on the agenda.

recommendation with the exception of item 6, independent meeting management of the General Meeting,

and item 7, the General Meeting must establish guidelines for the Election Committee's work. This statement

in 2022. The total revenue and other income increase of 22.5 percentage is mainly growth within the

refractory business, which contributed with a growth of 23.1 percentages in 2023.

The Group achieved an EBITDA of NOK 127.5 million in 2023 compared to an EBITDA of NOK 52.3 million in

2022. Result before tax expense for 2023 was negative NOK 37.3 million, compared to a loss of NOK 124.3

million in 2022. The group had write-downs of NOK 94.3 million and NOK 91.3 million in 2023 and 2022

respectively, which relates to the property value of the Agora Bytom shopping centre.

During the financial year, Management identified indicators of impairment for Agora Bytom. The indicators of

impairment were primarily due to the economic environment, characterized by increased inflation and interest

rates. Macroeconomic factors have led to a decrease in consumer purchasing power, which has adversely

affected the revenues of the tenants in the shopping centre. Concurrently, the increase in interest rates has

negatively impacted the valuation of the property, as the cost of capital used in property valuation models has

increased.

inputs. The main inputs are discount rate, rent per sqm, vacancy, capitalization expenses and terminal value,

for more detailed information related to these inputs and assumptions the Board refers to Note 9.

As a result of this analysis, the carrying amount of Agora Bytom was found to exceed its recoverable amount,

indicating an impairment. An impairment loss of NOK 94.3 million has therefore been recognized in the

income statement under “Impairment of non-current assets”.

In 2023, the refractory segment achieved a total revenue and other income of NOK 1,072.2 million which is

an increase of 23.1 percent compared to 2022. EBITDA for 2023 is at NOK 102.0 million, including the

settlement from the Arbitration Court in Vienna with an EBITDA impact of NOK 46.4 million. For 2022 the

refractory segment generated a total revenue and other income of NOK 870.8 million and an EBITDA of NOK

31.9 million.

EUR through Bank Pekao SA, with outstanding debt of EUR 29.9 million as of 31. December 2023. The

interest rate of the loan is 100 percent hedged until 30. June 2024, with a cost of 0.3 percent. Agora Bytom

has an obligation to hedge minimum 70 percent of the outstanding loan before 30. June 2024. Other terms

include 1-month EURIBOR plus a margin of 2.80 percent.

The company repaid its tax debt to the Swedish tax authorities of SEK 75.4 million, with the addition of

outstanding interest, through a voluntary prepayment. The tax debt was originally payable in instalments in

2024, 2025 and 2026, and the prepayment is prompted due to improved liquidity in the Group following

receipt of payment in accordance with the result of the arbitration case in Vienna and improved working

capital in Höganäs Borgestad.

At the balance sheet date, the available liquidity was NOK 186.1 million and the interest-bearing debt NOK

conditional agreement with Bjuv municipality in Sweden for a sale and leaseback transaction for two

properties in Sweden where the production plant and other production facilities for refractory products are

located.

Borgestad will sell the two properties, including the production facilities, to Bjuv municipality and then lease

the production facilities needed. The company will after the completion of the transaction still be the owner of

all machinery and equipment used in the production.

The two properties are in the transaction valued at SEK 145 million and the purchase price will be

approximately SEK 141.2 million after adjustment for stamp duty. The purchase price shall be settled with

cash in three instalments; 60 percent will be payable upon completion of the transaction, 20 percent will be

payable 12 months after completion, and the remaining 20 percent will be payable 24 months after

Conditional of completion of the sale leaseback transaction is an additional reduction of the interest-bearing

debt, with NOK 52.4 million, and improved liquidity.

A number of factors can have an unfavourable impact on Borgestad's operations and future value

development. These factors include financial risk, including interest rate, currency and credit risk, risk related

to operations, market risk, environmental and legal risk, as well as risk related to the individual projects in

which the Group has investments. The Group's biggest financial risk is linked to Agora Bytom where the

Group has a net equity investment that is exposed to value fluctuations in the Polish property market. In

recent years, Agora Bytom has reduced its debt significantly and currently has the lowest debt in the center's

history, which reduces the Group's overall risk.

Liquidity risk is the risk that the Group will not be able to service its financial obligations as they fall due. The

For 2023, Borgestad has used the European Union’s Corporate Sustainability Directive (CSRD) and the

Borgestad published its first Transparency Act report in June 2023 and will publish an updated version in

the risks and opportunities associated with the coming green shift. This work continued in 2023, with the

updating the double materiality analysis and executing a GAP analysis.

diligence on suppliers. The company will further expand the risk-based due diligence to include environmental

Borgestad is an investment company that primarily operates in the real estate and the industrial sector. Key

operations include the Agora Bytom shopping centre in Poland, serving a broad consumer base, and

Höganäs Borgestad, offering refractory products and services critical for high-temperature industrial

processes.

end users’ energy consumption, while providing solid returns to shareholders.

The value chain for Borgestad is illustrated below. Höganäs Borgestad supplies refractories products and

services for industries such as steel, cement, and glass manufacturing, as well as for use in petrochemical

plants and incinerators. These products are crucial for the durability and efficiency of the clients' operations,

withstanding extreme conditions to ensure production. Höganäs Borgestad's operations rely on critical inputs

hired workers (maintenance, security and services), while the downstream value chain include tenants and

consumers.

Borgestad maintains a constant dialogue with its stakeholders as part of its normal business operations.

Regular engagement with stakeholders ensures that Borgestad is aligned with stakeholders’ expectations

and the company’s sustainability goals.

In 2023 Borgestad initiated dialogues with core stakeholders, hereunder board members, employees, and

financial partners. The insights gained from these initial discussions were instrumental in establishing four

guiding pillars (see page 1) that now direct the strategic decisions for the company, and to further understand

the company’s material topics on a high level.

Borgestad's initial high level materiality analysis identified climate change, pollution, circularity and resource

use, own workforce, workers in the value chain, and business conduct as most important topics for

Borgestad. These topics directly influence Borgestad's sustainability strategy and operational focus.

The world is facing significant climate change, which poses both risks and opportunities for businesses both

through the physical climate changing and the transition to a low-carbon economy. Borgestad works

strategically to mitigate negative impacts from climate risks and capitalise on opportunities in the green shift.

Borgestad’s reliance on external suppliers for raw materials places the company at risk of disruptions due to

climate-induced extreme weather events. These risks, prevalent in countries with significant supply chain

operations, could affect the company’s long-term costs and lead times. Further, the carbon-intensive nature of

refractory material production exposes Borgestad to potential increases in operating costs, through e.g., the

expected tightening of emission regulations.

Borgestad’s production processes are energy-intensive, and currently relies largely on non-renewable energy

sources with negative impact on the climate. Through its end-users, Borgestad mitigates environmental

impacts by providing high-quality refractory products that lower clients' energy use and emissions.

The rising cost of energy presents a financial risk for the company, particularly given the industry's high

resilience in the supply chain to mitigate physical and transition risks associated with climate change and

pursuing innovation in refractory products to further support clients' energy efficiency improvements and GHG

reduction efforts.

Borgestad’s efforts are currently focused on understanding its position in the value chain and exploring

Borgestad is prioritising investments in innovation and new technology as this is seen as central to

Given the company’s current sustainability maturity level, Borgestad is in the process of developing a more

comprehensive approach to climate change risks and opportunities. Future disclosures are expected to

Development of climate-related targets will be conducted within the next two years.

Borgestad accounts for its renewable and fossil energy consumption for Höganäs Borgestad and Agora

location in Skien due to a lack of data. Borgestad’s fossil fuel use was calculated by taking the Group’s total

sold in Norway must be biofuel, and on publicly available information from fuel retailers about the maximum

share of biofuel in the fuels they sell. As directed by the Greenhouse Gas Protocol and ESRS E1 on climate

change, carbon dioxide emissions from biofuel combustion are reported separately from Scope 1, while

methane and nitrous oxide emissions from the combustion of biofuels are included in Scope 1.

Scope 2 includes Borgestad’s indirect greenhouse gas emissions from the consumption of purchased

electricity and heating. For 2023, Borgestad purchased electricity and/or district heating in Norway, Sweden,

Finland, and Poland. Borgestad’s location-based Scope 2 emissions were calculated using an emissions

factor from the Norwegian Water Resources and Energy Directorate from 2022, which was the most recent

year available. This factor gives carbon dioxide equivalents and includes the climate effects of methane and

nitrous oxide – the two additional greenhouse gases emitted under combustion of fuels which are covered by

the Kyoto Protocol. The emissions factors for Sweden, Finland, and Poland came from the International

Energy Agency, and included only the emissions of carbon dioxide. These were the best available emissions

factors. Borgestad’s emissions from purchased heat were also calculated using the best available factors,

which were the International Energy Agency’s factors for combined electricity, heat, and steam. This means

that the emissions for purchased heat are likely overestimated in this greenhouse gas account.

its electricity use in Sweden, and the emission for this electricity were set to zero under the market-based

approach.

greenhouse gas emissions as it includes all the energy use from the stores in Borgestad’s shopping centre in

Poland.

reports. Borgestad has no internal carbon price as of today.

cost of carbon, this can result in reduced purchasing power, and negatively impact Borgestad’s income

streams. It is estimated that these risks, if they occur, can have high financial consequences for the company

in the medium to long-term time horizon.

The physical risks identified include extreme weather events such as flooding, that can cause disruptions in

the value chain. This can result in increased lead times, increased costs, and loss of reputation.

high-emissions scenario for both direct operations and the company value chain. Likelihood of occurrence

and financial impacts on the company in different time horizons will be explored in more detail than in the

conducted high-level analysis to be compliant with the ESRS requirements. The findings from the analysis will

guide where, when, and how Borgestad will implement risk mitigating and opportunity seizing activities.

potential hazardous materials are to be identified to ensure safe handling, and emissions to air is regularly

Emissions of NOx is usually measured in Bjuv, however, there were no measurement in 2023 due to an error

on the measuring instrument. A new measurement will therefore be conducted in March 2024, after the

Borgestad targets zero breaches of environmental permits relating to air pollution. In recent years there has

not been any cases of breaches.

applied as input into new materials and products. Despite its potential for environmental and economic

There are currently no targets related to resource use and circular economy other than a general aim to

reduce waste. Targets related to resource use and/or circular economy will be developed during the next two

years.

opportunities, focusing on own operations and the upstream value chain.

materials for Höganäs Borgestad. It does not include finished products for refractory operations or other type

of products.

and disposal methods, highlighting both hazardous and non-hazardous waste categories.

Borgestad is committed to improving waste management reporting by incorporating data for all company

operations in coming years. This year's focus on Bjuv is a crucial first step towards achieving more detailed

Borgestad’s Policy for Sustainable Business Practice and Ethical Code of Conduct contains requirements and

expectations relating to the company’s workforce. Borgestad supports and acknowledges human and labor

rights standards set out in the OECD Guidelines for Multinational Enterprises, The International Labor

Organization and The United Nations Guiding Principles on Business and Human Rights.

The objective of the policies is to provide a safe, fair and inclusive working environment free from any form of

discrimination and abuse and to support company employees to develop their potential. Borgestad shall

comply with the highest standards and laws related to human rights and health and safety in the countries

where the company operates.

take parental leave. The company offers good parental leave arrangements in portfolio companies with the

accepted. The fundamentals of equality and motivation for all employees to take parental leave and for the

Group to be flexible related to parental leave or in other circumstances are a highly valuable within the Group

for Board of Directors, executive management and all other employees.

Borgestad has a channel for raising concerns through Höganäs Borgestad’s independent whistle-blower

channel that is available for own workers on the intranet. When a concern is raised through the whistle-blower

channel, the whistle-blower has the opportunity to stay anonymous. The concern is sent to the CEO for

handling and is further reported to the chairman of the board.

development particularly in Finland, the figures in Sweden and Norway are somewhat higher in 2023 than in

2022. The average number for Borgestad was 6% (see table under social metrics).