The Global Phytosterol Market and Cooperation with

the Steroid Hormone Business

• Phytosterols = “plant sterols”– Cholesterol = “animal sterols”

• Most abundant: Sitosterol, campesterol and stigmasterol

• Uses:– Blood cholesterol-lowering food additive and dietary

supplement– Cosmetic ingredient– Contains the chemical building block for manufacture of

pharmaceutical steroid hormones

CholesterolSitosterol

WHAT AREPHYTOSTEROLS?

Steroid Hormone Building Block e.g. Hydrocortisone

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HOW AREPHYTOSTEROLS PRODUCED?

• Sterols are present in trace quantities in plants• Manufacturing uses concentrated by-product

streams generated from other industrial processes• Most common:

– Soybean oil distillate (SOD) produced in soybean oil refining• Soybeans: ~0.05% sterols• Crude soybean oil: ~0.3% sterols• SOD: ~5-10% sterols

– Tall oil pitch (TOP) produced downstream of pine wood pulping• Pine trees: ~0.1% sterols• Crude Tall Oil (CTO): ~2.0% sterols• Tall Oil Pitch (TOP): ~10-15% sterols

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PHYTOSTEROL SOURCES’MARKET DYNAMICS

• Soy Sterols– Isolated together with vitamin E (VE) from SOD– VE = main product; phytosterols = by-product of SOD– Profit depends largely on VE market– VE and sterol concentrations in SOD have been declining

• Wood Sterols– Isolated from planted and managed pine forests– Phytosterols = main product of TOP– Many commodity and value-added tall oil products and markets

• Adhesives, inks, coatings, synthetic rubber, biofuels• Cosmetics, fragrances

– Mature, highly diversified pine chemicals industry space

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PHYTOSTEROLS-GLOBALSUPPLY/DEMAND

• Estimated demand: 13,000-15,000 MT/year– 40-50% steroid hormones (e.g. Sito, Pfizer)– 40-50% food (e.g. Unilever, Danone)– 3-5% supplements and cosmetics

• Estimated supply: 13,000-15,000 MT/year– Oilseed, East: 15-20% (e.g. Wilmar, Glanny)– Oilseed, West: 30-35% (e.g. ADM, BASF, Cargill)– Wood: 55-60% (e.g. Arboris)

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STEROID HORMONES: RAWMATERIAL ALTERNATIVES

• Diosgenin– Extracted from a species of “yam” plant– Steroid synthesis routes well established– Factories have struggled with reducing pollution– Supply and price unsteady

• Phytosterols– Extracted from soybeans, pine wood, etc.– Steroid synthesis routes well established– Becoming preferred and growing raw material for

steroid hormone manufacture

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ARBORIS BACKGROUND

• Incorporated-2001• Venture with Schering AG (now Bayer)-2002• Factory construction completed, production began-2004• Expand into supplying food market-2005• Private owners support a long-term growth focus• Factories in Savannah, Georgia and Newark, Ohio, USA• World’s largest producer of phytosterols• More than 10 years of reliable supply to all leading food

and pharmaceutical sterol users

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ARBORIS’ VALUEPROPOSITION

“Long Term, Stable, Dependable,Cost-Effective Sterol Supply”

• Strengths:ü Raw Material: TOP agreements with all US producers, and

other global producers.ü Factories: High yield, proprietary process technology.

State of the art facilities. Reliable, high quality production.ü People: Long-tenured professionals drive continuous

improvement.ü Customers: All major food and pharmaceutical sterol users.

More than10 years of reliable supply.ü Focus: Sterols are a byproduct for many producers. Arboris is

only focused on manufacturing and marketing of sterols.

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VALUE CHAIN ANDBACK INTEGRATION

• Sustainably back-integrated for long-term supply of raw material, Tall Oil Pitch (TOP)

Pulp Mills Paper Mills

Tall Oil Refineries

SpecialtyChemical Plants

Arboris SterolFactories

PaperProducts

AdhesivesInksCoatingsBiofuels

Functional FoodsPharmaceuticalsSupplements

Planted Forests

Tall Oil

Tall Oil Pitch

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SAVANNAH, GEORGIA FACTORY

• Plant construction completed 2004• Expansions: 2005, 2013-2015• Extracts and concentrates

phytosterols from TOP• ISO 9001:2008 certified

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NEWARK, OHIO FACTORY

• 99% pure phytosterols from Georgia factory’s TOP extract

• Capacity and reliability expansions: 2013-2015

• EU and US cGMPs• Quality and Reliability: >99% in spec, >98%

uptime (5 year)

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SUMMARY• Arboris possesses:

– Strong raw material and supply chain– Modern state-of-the-art plants, process efficiency,

reliability, and high quality– Stable business base load– Highly diversified industry space– Substantial inventory, expanding capacity– Established track record with multinational customers

• Arboris offers:– Commitment to be the reliable and cost-effective

supplier of the highest quality sterols to our current and future partners

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