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ANNUAL REPORT 2018 SUSTAINABILITY REPORT 2018

A SUSTAINABLE BRAND

In every action, in every decision, in every gesture

In every action, in every decision, in every gesture, we can think about our contribution to a more sustainable society by being more responsible, more fair and more balanced. By protecting natural resources and people alike. From the foundation of a development model that ensures our planet’s future.

For The Navigator Company, sustainability is a part of responsible business management. It is present in our daily actions and decisions.

From the forest, a natural and renewable source of raw material to paper, our final product.

From a sustainability perspective, the functional solutions for producing paper from raw materials become vitally important.

MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS

Dear Shareholders,

Continuing down a long path of growth and good results, 2018 was a truly successful year for The Navigator Company, bearing out the positive expectations we had foreseen. Your Group is stronger and better prepared to keep facing the challenges along this path with success.

In a sector of high environmental sensitivity such as ours, it is truly gratifying to know that we work in such a responsible way. This has once again been proven, this time by the Group’s recognition as an A-List Company – the highest possible ranking in sustainability – by the prestigious international “CDP” (Carbon Disclosure Project) organisation, acknowledging the Group’s contribution towards fighting climate change.

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Who we are and what we do

The Navigator Company’s integrated operations start in the forest and continue with the production of pulp, paper (UWF and tissue) and energy. Its operations are based at industrial units that use state-of the-art technology and are a benchmark for the sector. The Company’s business model is founded on a prime-quality raw material - Eucalyptus globulus - whose intrinsic characteristics have allowed it to develop a strategy centred on distinctive top-of-the-range products. These are international standard-setters in the industry.

STRATEGIC DEVELOPMENT

In 2018, Navigator recorded total investment of € 216.5 million. In accumulated terms, the Aveiro tissue project represented € 83.4 million, the capacity expansion in Figueira da Foz around € 37.3 million and recurrent investment in pulp and paper business totalled approximately € 95.8 million. This last figure includes the value of the project to convert Paper Machine 3 in Setúbal.

New Tissue Mill in Aveiro

Completion of the project for the new tissue mill in Aveiro represents an important milestone for the Group and attainment
of its strategic goal, mapped out in 2015, to position Navigator as the third largest tissue manufacturer in Iberia, with total production
capacity of 130,000 tons (reels) and 120,000 tons of finished products (converting).

The new mill has a potential to create 760 (direct, indirect and induced) jobs and will have an impact of € 51 million in GDP.
(Source: KPMG, 2018)an impact of € 51 million in GDP. (Source: KPMG, 2018)

Expansion of pulp capacity in Figueira da Foz

The year saw the completion and start-up of OP3 (Optimisation Project 3), increasing pulp production capacity in Figueira da Foz, where annual nominal capacity was expanded from 580,000 tons to 650,000 tons. This project also entailed a series of important environmental improvements with a significant overall impact on the efficiency of the pulp production process. These improvements are described in chapter 3.3.

Production of high grammage paper in Setúbal

In the fourth quarter of 2018 the Company completed a project at the Setúbal Industrial Complex for production of paper with grammages between 135 and 300 g/m 2 , involving investment of € 11.8 million. In-house production of high grammages will enable Navigator to complement the high grammage papers it currently offers to customers, opening the door to important new business opportunities. This investment will develop Navigator’s commercial presence in a market niche with excellent growth prospects, and the aim is to achieve in-house production of approximately 35,000 tons at cruising speed.