avantium-2021-12-31-en

Contents

Avantium at a Glance ................................................................................................

Company Highlights 2021 .....................................................................................................................

Key Financials 2021 ................................................................................................................................

Key Events 2021 ......................................................................................................................................

Message from the CEO ...........................................................................................................................

Who We Are .............................................................................................................................................

Our Business Units ..................................................................................................................................

Our Technologies .....................................................................................................................................

Management Report .................................................................................................

How We Create Value ............................................................................................................................

Value Creation Model ..............................................................................................................................

The World Around Us .............................................................................................................................

Our Strategy ..............................................................................................................................................

Stakeholders and Materiality ................................................................................................................

Value We Created in 2021 ....................................................................................................................

Financial Performance in 2021 (including Going Concern) ............................................................

Investor Relations and Share Performance .......................................................................................

Risk and Opportunity Management .....................................................................................................

Page

Page

Governance ................................................................................................................

Management Team .................................................................................................................................

Supervisory Board ...................................................................................................................................

Report of the Supervisory Board ..........................................................................................................

Remuneration Report 2021 ...................................................................................................................

Corporate Governance ...........................................................................................................................

Financial Statements 2021 ......................................................................................

Other information .....................................................................................................

Articles of Association Governing Appropriation of Profit ..............................................................

Independent Auditor’s Report ...............................................................................................................

Supplementary Information ....................................................................................

About This Report ....................................................................................................................................

Our Contribution to the SDGs ...............................................................................................................

GRI and SASB Content Index ................................................................................................................

Glossary .....................................................................................................................................................

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3

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Key Financials 2021

(€1,000)

2021

2020

% change

Revenues

10,917

9,863

11%

Other income from government grants

6,686

8,403

-20%

Net operating expenses

(33,687)

(33,173)

2%

EBITDA

(16,084)

(14,907)

8%

Depreciation, amortisation and impairment charge

(7,837)

(7,597)

3%

Finance costs - net

(495)

(325)

52%

Loss for the financial year

(24,416)

(22,830)

7%

Cash flow from working capital movements and adjustments

11,806

9,411

25%

Cash flow from investing activities

(3,932)

(3,453)

14%

Cash flow from financing activities

24,830

(1,946)

-1376%

Net cash flow

8,288

(18,817)

-144%

Cash position

34,911

26,626

31%

Segment revenues

Catalysis

10,029

9,173

9%

Renewable Chemistries

500

405

23%

Renewable Polymers

388

285

36%

Total segment revenue

10,917

9,863

11%

Other income from government grants

Catalysis

279

235

19%

Renewable Chemistries

3,610

5,764

-37%

Renewable Polymers

2,683

2,288

17%

Support

114

116

-2%

Total segment other income

6,686

8,403

-20%

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Key Events 2021

3 February

Avantium publishes its sustainability plan, Chain Reaction 2030, committing to 10 ambitious targets

to be achieved by 2030

9 February

Avantium signs a patent licence agreement with Eastman Chemical Company for the right to operate

under Eastman’s FDCA-related patent portfolio

24 March

Avantium secures new offtake contracts for the planned YXY® Technology FDCA Flagship Plant from

Japanese specialty chemical company Toyobo, US polyester film producer Terphane, Dutch bottling

company Refresco and one other major global food and beverage brand

24 March

Avantium announces a collaboration with Carlsberg to jointly develop several PEF applications,

including its Green Fibre Bottle

24 March

Avantium announces its 2020 results

7 April

Avantium reaches a key commercial milestone for its planned FDCA Flagship Plant with offtake

commitments for >50% of its output, after securing a contract with Belgian plastic packaging supplier

Resilux

13 April

Avantium successfully produces polyesters using plantMEG™ from its Ray Technology™

demonstration plant

15 April

Avantium successfully raises €28 million through an accelerated bookbuild offering

22 April

Avantium announces partnership with Cosun Beet Company to scale up Ray Technology and

produce plant-based glycols from sugars

19 May

Avantium’s shareholders adopt all resolutions at the 2021 Annual General Meeting

19 May

Tom van Aken is re-appointed as CEO of Avantium

27 May

Avantium is awarded a total of €1.78 million in EU grants for the development of electrochemical

processes and CO2-based polymers

2 June

Avantium and Roelofs construct the world’s first test road using bio-asphalt with lignin produced in

the Netherlands

11 August

Nils Björkman is nominated as a new member of Avantium’s Supervisory Board

11 August

Avantium announces its first-half 2021 results

9 December

Avantium meets all three key conditions for the construction of its FDCA Flagship Plant and

announces a positive Final Investment Decision, which is confirmed by shareholders at an

Extraordinary General Meeting on 25 January 2022

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Dear Stakeholder,

A year is a long time in business. In last year’s Annual Report, I

found myself reflecting on the challenges we faced throughout

2020 and the significant progress we had nonetheless made at

Avantium. Now, with 2021 behind us, I am proud to be looking

back on an historic chapter for our company – with an even

brighter future ahead.

2021 was a landmark year for Avantium. The positive Final

Investment Decision (FID) on the construction of our

furandicarboxylic acid (FDCA) Flagship Plant, announced in

December 2021, was the culmination of a decade of hard work to

bring our lead technology, YXY® Technology, from pilot to

commercial scale, and a huge step towards realising our vision of

a fossil-free world. This achievement was undoubtedly the

highlight for Avantium in 2021, but there were positives across all

three of our business units, which I am pleased to share with you

in this Report.

A Defining Moment in Our Evolution

Confirming the positive FID for our Flagship Plant involved

meeting three key conditions: (i) securing sufficient financing, (ii)

obtaining sufficient offtake commitments and (iii) finalising the

engineering and establishing the supply chain. In 2021, we

worked hard to meet these conditions, and in early December we

confirmed the final piece of the puzzle: with a €90 million debt

financing from a consortium of Dutch banks and the Dutch

government-backed impact investment fund, Invest-NL. This debt

financing secured the total €192.5 million needed to construct the

FDCA Flagship Plant, subject to Financial Close.

Securing this funding is a truly remarkable feat for a disruptive

technology company like Avantium, and it paves the way for our

transition from research and development (R&D) to

commercialisation. Bringing any new polymer to the market is an

extraordinary achievement, and I believe that polyethylene

furanoate (PEF) has the potential to become a key material

worldwide, helping us all on the path to a circular economy.

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Reaching a positive FID is a key milestone not just for Avantium

Renewable Polymers but for our company as a whole. We could

not have achieved this without the drive, resilience and

perseverance of our talented colleagues, some of whom have

been involved in this project for more than 10 years. This success

was a champagne moment to end 2021.

Developments in Our Technology Pipeline

While our other technologies are not yet at the same maturity

level as YXY Technology, we recorded important developments

for each of them in 2021.

In Avantium Renewable Chemistries, a new partnership with

Cosun Beet Company will help us to accelerate the commercial

potential of plantMEG™ (mono-ethylene glycol) and plantMPG™

(mono-propylene glycol), produced by our pioneering plant-to-

glycols Ray Technology™. Elsewhere, in collaboration with the

CHAPLIN XL consortium,1 we constructed the world’s first bio-

asphalt test road with lignin produced by our Dawn

Technology™. Finally, we were awarded a €1.78 million grant by

the EU Horizon 2020 programme to develop our Volta

Technology; we also commenced pre-pilot testing of the

technology at partners’ sites in Europe.

Avantium Catalysis continued to be affected by COVID-19 travel

restrictions, which prevented installations, maintenance and

upgrades of Flowrence® systems at customers’ sites. Our own

laboratory, however, ran uninterrupted throughout the year,

furthering our technological developments in adsorption and

analytics.

A significant accident took place in our Ray Technology

demonstration plant in 2021. Two colleagues are still recovering,

with our full support, after being exposed to hazardous vapours

while carrying out cleaning duties (wearing full protective

equipment). Workplace safety has always been our top priority at

Avantium, and this event came as a terrible shock to us all. We

halted all operations at the plant while we first awaited the

results of internal and external investigations and then

implemented changes to help avoid such an accident happening

again. Fostering and maintaining safe workplaces for all our

colleagues will remain the number-one priority across all our

sites.

Sustainability, Society and Us

In 2021, even as the world continued to face the threat of

COVID-19, the pandemic did not completely dominate the global

agenda. We again heard multiple warnings about the growing

environmental crisis: among others, the United Nations Climate

Change Conference (known as COP26) and the

Intergovernmental Panel on Climate Change both called for

urgent action to limit greenhouse gas emissions and tackle

climate change.

While worldwide organisations and governments set clear

expectations for individual and collective action, words alone will

not drive the scope and speed of change that is needed. At

Avantium, our strategy is focused on clear actions. By scaling up

our technologies to produce fully plant-based and circular

materials, we can offer the radical innovations our partners need

to provide customers with smart, effective and sustainable

solutions.

As a company with strong expectations of others in our industry,

we must live up to our own high standards. In 2021, we began

working towards the goals set out in our sustainability plan,

Chain Reaction 2030. Blazing a trail for the chemical industry, it

identifies clear and ambitious targets for the future of our

business. These time-bound, measurable goals will guide our

decisions, raise accountability and generate tangible and

meaningful results.

Our People

Of course, we would be nowhere without Avantium’s people,

who continue to be key to the successful implementation of our

strategies. We strive to keep our talented employees engaged,

excited and motivated by our vision and values, and to provide a

safe, inspiring and dynamic workplace. This year, with office-

based working facing further disruption, we paid particular

attention to maintaining social cohesion and supporting mental

and physical well-being among colleagues.

As part of our sustainability plan, we have set ourselves the twin

targets of becoming a more diverse and inclusive company and

being one of the top 10 places to work in the Netherlands by

2030. As we shift our focus from R&D to commercial operations,

it is especially important to broaden our talent pool and welcome

the expertise required to make this transition a success.

In 2021, we appointed Bas Blom as Managing Director of

Avantium Renewable Polymers. In early 2022, Nils Björkman was

appointed to the Supervisory Board.

A Brighter Horizon

In 2021, we showed that Avantium truly has the potential to be

at the forefront of game-changing sustainable chemistry – and I

look forward to reaching new heights in 2022 and beyond. I am

immensely proud of my colleagues for their continued hard work

and commitment, and am very grateful both to them and to all

other stakeholders who contribute to Avantium’s success.

Together, we can look to the future with optimism, confident in

the knowledge that a fossil-free world is closer than ever.

Tom van Aken

Chief Executive Officer

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1 The CHAPLIN XL (Collaboration in aspHalt Applications with LIgniN) project is comprised of several academic and industrial organisations including: Avantium, Roelofs Groep, Utrecht University, Wageningen Food & Biobased Research, Asfalt

Kennis Centrum, H4A Infratechniek and Stichting Biobased Delta.

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Our Technologies

YXY® Technology

YXY Technology is our lead technology. It converts industrial

sugars into furandicarboxylic acid (FDCA), a key ingredient for

making the polymer known as polyethylene furanoate (PEF).

A Next Generation Polymer

PEF is 100% plant based, and outperforms traditional

packaging materials such as conventional plastic, glass and

aluminium. It has superior barrier properties (meaning longer

food and drink shelf lives), higher mechanical strength (enabling

thinner packaging), higher heat resistance and a lower

processing temperature (needing less energy).

PEF is fully mechanically and chemically recyclable and

degrades much faster than polyethylene terephthalate (PET).

A 2021 life-cycle assessment (LCA) for single-layer PEF and

multilayer PET/PEF bottles showed a significant reduction in

greenhouse gas (GHG) emissions of around 35% over the life

cycle of the bottles (for details, see our corporate website).

Realising the Potential of PEF

PEF has huge potential in the packaging, film and textile sectors,

which are growing markets already worth over US$200 billion

per year. We have recently confirmed a positive Final

Investment Decision (FID) to open the world’s first commercial

flagship plant for FDCA and PEF, and are working to ensure it is

up and running by 2024. A full explanation of our FID can be

found on our corporate website.

Our Lead Product: FDCA

Furandicarboxylic acid (FDCA) is a central ingredient for making

the polymer known as polyethylene furanoate (PEF). Historically,

there was no economically viable way to manufacture FDCA,

leading to it being labelled ‘the sleeping giant of the chemicals

industry’ – but that has all changed with the arrival of

Avantium’s YXY® Technology.

Waking the Sleeping Giant

We believe we can now fully unlock the potential of this product

to shape the value chain of PEF. In 2011, we were the first

company to build a pilot plant for FDCA: now, one decade on,

we are ready to scale up the technology at our Flagship Plant,

capable of producing 5,000 tonnes of FDCA per year from plant

sugars.

As a monomer, FDCA can realise exciting opportunities to create

a wide range of useful and sustainable polymers, and most

importantly PEF – a 100% plant-based and recyclable polyester

made with FDCA and mono-ethylene glycol (MEG). In the future,

we will explore other FDCA-based polyesters, co-polyesters,

polyamides, polyurethanes and coating resins.

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Ray Technology™

Our proprietary Ray Technology also has an important role to

play in PEF production. PEF’s other essential building block,

alongside FDCA, is mono-ethylene glycol (MEG), traditionally

made from fossil sources. With Ray Technology, however,

we can turn industrial sugars into plant-based MEG in a single

step. As a core component of PEF and PET, this plantMEG™ can

accelerate the transition to the fully green and circular

production of plastic materials and textiles.

Groundbreaking Innovation

Demand for MEG is projected to grow to 50 million tonnes by

2035. With more than 99% of this MEG currently made from

fossil sources, it is more important than ever to reshape the

market with our disruptive Ray Technology.

Our 2021 LCA shows that Ray Technology can produce

plantMEG with 56–83% fewer CO2 emissions than traditional

fossil-based methods (for full details, see our corporate

website). Avantium’s plantMEG is thus a far more sustainable

alternative than fossil-derived MEG. Crucially, we can achieve

this without any compromise on quality or performance.

Planting the Seed for plantMEG™

Following the successful commissioning of our Ray Technology

demonstration plant in 2020, we want to go even further.

We plan to scale up our operations to a commercial facility,

and to implement a technology-licensing business model.

To this end, we have joined forces with Cosun Beet Company,

planning to jointly construct and operate the first commercial

plant for producing plant-based glycols using Ray Technology.

For more information, see our corporate website.

A Better Way: plantMEG

With Ray Technology™, Avantium has found a way to produce

mono-ethylene glycol (MEG) from plant-based feedstocks,

rather than fossil sources. We call this plant-derived compound

plantMEG™, and we see it as a key stepping stone towards a

greener materials industry.

MEG is a fundamental chemical building block for textiles like

clothing and household upholstery, plastic packaging and

kitchenware and de-icing products and coolants. With such a

wide range of end applications – and a market with a

compound annual growth rate of 3.5% – it is vital that we make

the production of this commodity more sustainable.

A Green Game-Changer

Ray Technology’s single-step catalytic process means that

plantMEG is cost competitive with fossil-based alternatives.

Not only this, but plantMEG is also identical to the petroleum-

based incumbent in performance and quality. In view of such

clear benefits, and not forgetting its significantly lower carbon

emissions, we believe plantMEG is the game-changer we need

to shape a greener future.

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Dawn Technology™

Dawn Technology is Avantium’s biorefinery technology and the

second of the three Renewable Chemistries technologies.

A radically improved and modernised upgrade on a 100-year-

old method, Dawn Technology converts non-food plant-based

feedstocks – like forestry and agricultural residues – into

industrial sugars (as used in our YXY Technology and Ray

Technology) and lignin (an energy-dense co-product).

A Bio-Based Technology

As the only viable alternative to fossil-based feedstocks,

biomass is an essential solution to a fossil-free industry and a

bio-based economy. The resulting industrial sugars can replace

petroleum as a carbon source, which in turn makes them

excellent raw materials for sustainable chemical and industrial

processes.

The global demand for alternative feedstock streams and

conversion technologies is on the rise. As we continue to

develop, optimise and scale up this technology, we are blazing a

trail towards a collective greener future for our industry.

Refining Our Operations

Avantium’s pilot refinery opened in 2018. In preparation for

scaling up Dawn Technology, we are continuing to optimise and

de-risk our technology, to test new feedstocks and to develop

exciting partnerships and opportunities both up- and

downstream.

A New Dawn: Industrial Sugars and Lignin

If the chemical industry is to successfully make the switch to

plant-based feedstocks, new sources of carbon will be required

to meet global product demands. Industrial sugars, such as

those produced by Dawn Technology™, are an ideal solution, as

they can be used in place of petroleum-based feedstocks as the

starting material for any product.

More than a Co-Product

In our biorefining process, lignin is the mass remaining after the

sugars have been removed from the raw material. With an

energy content up to 40% higher than the original wood chips,

lignin is an extremely efficient material for energy generation.

We are also exploring other high-value applications for this

underused polymer, including water purification and bio-

asphalt. Asphalt is traditionally made using bitumen, derived

from crude oil, so replacing this bitumen with lignin would

deliver crucial CO2 savings for the road construction industry.

In June 2021, the world’s first test road made from bio-asphalt

with Avantium lignin was constructed in the north of the

Netherlands. Further details of this project can be found on our

corporate website.

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Volta Technology

Our fourth proprietary technology, and another member of the

Renewable Chemistries family, Volta Technology takes a

different approach in our quest for a circular economy.

Where our other technologies use plant sources as their raw

materials, Volta Technology uses electrochemistry to harness

the power of air-based CO2.

By using carbon from the air, our technology converts a waste

GHG into a raw material for a broad range of intermediate and

final chemical products, from formic acid and oxalic acid to

glyoxylic acid, glycolic acid and fuels.

A Cleaner, Greener Approach

Avantium’s cutting-edge electrocatalytic platform unlocks CO2

as a new carbon source for the chemical industry, enables

cleaner processes through its use of electrons as reagents and

allows industrial parties to reduce their CO2 emissions. By not

only using up CO2 that would otherwise contribute to global

warming but also making products that would traditionally be

made from fossil carbon, Volta Technology means we can set

our sights on a circular future sooner.

Going Mobile

As one of the world’s most advanced carbon capture and

utilisation (CCU) technologies, Volta Technology shows

enormous promise. In the short term, our efforts are focused on

perfecting our mobile solutions and demonstrating what we can

achieve with our electrochemistry technology at several

industrial sites in Europe.

Championing CO2-Based Chemicals and Polyesters

Through the electrochemical reduction of CO2, Avantium can

produce formic acid and oxalic acid, as well as derivatives

including glycolic acid. These high-value chemicals have a wide

range of applications. PLGA co-polymers containing lactic acid

and at least 50% glycolic acid, for example, show enhanced

barrier properties against both oxygen and moisture compared

to most other polymers.

In addition, Avantium is developing a new family of proprietary

oxalic acid-based polyesters (PISOX) with an unprecedented

combination of properties: engineering plastics with outstanding

mechanical and thermal properties that are also fully marine

degradable, even at low temperatures in the dark. There are

currently no materials on the market offering this combination of

properties.

When biogenic (non-fossil) CO2 is used as the feedstock, these

PISOX materials are unique in having a negative carbon

footprint. They are therefore able to offset residual emissions

and accelerate our quest for net-zero emissions.

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How We Create Value

Avantium creates value by focusing on

developing and commercialising

technologies to accelerate the transition

from fossil-based to renewable and

circular plastics. We manage risk and

strive to transform our capital resources

to create value for the environment,

society and our investors.

Our capital lies in the talent and expertise of our employees,

our intellectual property (IP) portfolio and innovative processes,

our feedstocks and sources, our laboratories and plants, our

partnerships with industry leaders and our cash position, grants

and investments. Our value creation model shows how our

vision, mission and actions create a positive impact on our direct

value chain and beyond.

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The World Around Us

In 2021, our world continued to adjust to

the effects of the pandemic. In times of

crisis, there is always a temptation to

settle back into old, comfortable habits,

but when it comes to global attitudes to

resources, consumption and circularity,

this pull is one that all of us – from

governments, industries and companies

to individuals and communities – must

resist. This year, even with society still

confronting the impact of COVID-19,

the world needed a wake-up call.

A Final Warning on Warming

An alarm was sounded in August by the Intergovernmental

Panel on Climate Change (IPCC), the United Nations (UN) body

for assessing the science related to climate change. In its Sixth

Assessment Report (AR6), the IPCC officially declared, for the

first time, that it is ‘unequivocal’ that human actions – namely

greenhouse gas (GHG) emissions – have warmed our land, seas

and atmosphere and caused ‘widespread and rapid changes’,

on an unprecedented level, to our environment (see the IPCC

The AR6 warns that warming will exceed a rise of 1.5°C (the

limit established under the 2015 Paris Agreement) in the

twenty-first century, perhaps even passing 2°C. This will, in turn,

significantly affect the planet’s climate systems, bringing about

even more frequent and devastating climate events.

Announcing a ‘code red for humanity’, the IPCC suggested that

the world needs to roughly halve its emissions over the next

decade.

According to the IPCC, reducing human-induced GHG emissions

is necessary for limiting global warming to a level to which we

could adapt. However, fossil feedstocks, the main culprit for

GHG emissions, continue to dominate the energy and material

industries. While a general shift towards renewable energy is

underway, the materials industry is lagging behind, with the

chemicals and plastic sectors especially slow to de-fossilise.

But this could all change with the right solutions. A renewable

carbon strategy for the chemicals industry would see

manufacturers replacing fossil feedstocks with sources such as

glucose or sucrose from plants (as with Avantium’s YXY®

Technology, Ray Technology™ and Dawn Technology™) and

using carbon from CO2 to make the products and materials we

rely on (as with Volta Technology). With the scientific support

for drastic action on emissions stronger than ever, the stage is

set for a transformation of the chemicals sector.

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Rethinking Packaging

In today’s world, plastic is everywhere. There are good reasons

for this: it is lightweight, strong, versatile, reliable and cheap to

produce. But the world’s current ‘make, use, dispose’ attitude to

plastic is unsustainable: we make it recklessly, use it carelessly

and dispose of it dangerously.

Our society demands – and produces – plastic in enormous

quantities: 367 million tons in 2020. Perhaps more alarmingly,

99% of all plastics are made from fossil sources, accounting for

8–10% of global oil consumption (see statistics). With forecasts

suggesting that demand for plastics will continue to rise,

addressing the lack of bio-based feedstocks and the poor

circularity of many plastics is one of the most urgent issues

facing the plastics industry. It is also one that Avantium is

ideally placed to help tackle.

Around 40% of plastic is used for packaging applications, much

of it in single-use items that are immediately thrown away.

When this waste plastic is non-recyclable, or when it is

disposed of irresponsibly, it ends up in landfill or as pollution in

our natural environments. It remains there – sometimes for

centuries – without properly breaking down, causing harm to

wildlife and habitats and infiltrating drinking water supplies.

Recyclable, degradable and high-quality plastics for packaging,

like Avantium’s plant-based PEF, are needed urgently.

Pressure on All Sides

As demand rises, consumer awareness of the plastic problem is

also growing. However, concerns usually focus on end-of-life

mismanagement of plastic: the part most visible to users. The

challenge is to extend these concerns upstream, to fossil

feedstocks and unsustainable production (see MDPI study).

In a 2021 Eurobarometer Survey, 58% of respondents said

business and industry are responsible for tackling climate

change (2020: 51%). But mounting pressure on plastics

manufacturers and the wider chemicals industry comes not only

from the general public: more governmental regulations,

legislation and policies on plastic also took effect in 2021.

Please see the Climate-Related Regulation section for details.

Collaborating for Climate Action

The messages from the IPCC and others have clarified the need

for urgent action against climate change. The transition to

sustainable chemicals and plastics cannot wait, but it requires a

coordinated, international and industry-wide commitment.

Collaboration has long been central to our strategy, and

developments in 2021 suggest that other companies – and

countries – are more willing than ever to join forces for more

effective climate action.

In February, for instance, a meeting of the UN Environment

Assembly (UNEA-5.1) saw the beginning of the Global Plastics

Treaty Dialogues. Hundreds of nations and major plastics

companies alike have expressed support for a global, legally

binding agreement on plastic pollution. We welcome this step

forward and await further progress at the next UNEA session in

early 2022.

As technological innovators, however, we know much more

work is needed, especially upstream. Plant-based solutions, like

PEF made from FDCA and plantMEG™, cannot be overlooked if

the chemicals and plastics industry is to successfully decouple

from fossil feedstocks.

If 2020 was marked by an unexpected crisis, 2021 was a year in

which a long-anticipated one – the global environmental

breakdown – became starker and more urgent than ever. Within

this challenging landscape, our disruptive technologies,

renewable feedstocks and circular products have a valuable role

to play. As the world around us takes steps to build back better,

Avantium will continue to seize every opportunity to work with

like-minded partners, advance our innovative solutions and

contribute to a more sustainable future.

20

Stakeholders and Materiality

It is essential that we maintain an

ongoing dialogue with our stakeholders

concerning the strategy, developments

and activities of Avantium. We define our

stakeholders as those individuals, groups

or organisations that can affect or be

affected by our business. We create value

for our stakeholders by working towards

our mission to transition the chemical

industry to renewable feedstocks and to

secure a sustainable future for all. We

also work with our ecosystem of strategic,

commercial and financial partners, expert

suppliers and service providers and

academia to drive better results.

Our Stakeholder Groups

We recognise six stakeholder groups: employees; partners and

customers; shareholders; suppliers and contractors; governments

and authorities; and society. The varied interests and variable

expectations of these stakeholder groups determine Avantium’s

strategy, and each group is affected by Avantium’s business

activities and performance in a different way.

Employees

Our employees and their talents and motivation are our biggest

competitive advantage. We provide a safe and vibrant workplace

where everyone can thrive and contribute to our goals. We aim to

be a magnet for the best people from a diverse array of

backgrounds. Safety is always our number-one priority: we strive

for an incident- and accident-free environment.

Partners and Customers

An integral part of Avantium’s strategy and commercialisation

roadmap is our collaboration with partners throughout the entire

value chain. We bring our technologies to the market in

collaboration with like-minded companies who complement our

skills and knowledge and increase our chances of success.

We bring forward innovative solutions that benefit our customers

and help them achieve their sustainability goals. We conduct

dialogues with our partners and customers in order to explore

common ground for building partnerships and create ecosystems

for our innovations around the world. With a global customer

base that includes industry leaders, we are well placed to provide

tailored services and deliver meaningful results.

Shareholders

Our shareholders rely on Avantium to successfully execute its

strategy and create maximum value. By monetising our

innovative technologies and bringing our game-changing

products to market, we are able to deliver this value to our

shareholders, for example through partnerships and licensing.

We also develop and capitalise on our extensive intellectual

property (IP) portfolio. Our Avantium Catalysis business unit

generates revenue and profits by providing extensive service

projects and highly advanced catalyst testing systems.

Suppliers and Contractors

Our suppliers and contractors are integral as partners in the

efficient and seamless scale-up of our technologies and in

delivering on our customer commitments. We are committed to a

responsible and sustainable supply chain.

Governments and Authorities

Governments and regulation authorities develop and implement

legislation and associated regulations that can significantly affect

Avantium. Moreover, European, national and local governments

and authorities provide subsidies and grant permits. We therefore

engage regularly with these bodies.

Society

Avantium also considers a range of other stakeholders when

conducting business. We align our business strategy and

sustainability goals with the needs of broader society, looking

beyond our direct value chain. We also engage with students at

schools and universities, sharing our expertise and exciting the

next generation about sustainable and renewable chemistry (for

full details, see the Our People section). We have an active

dialogue with local communities, industry associations, media

and non-governmental organisations (NGOs).

21

Materiality

Avantium’s 2021 materiality assessment identified and prioritised

the sustainability topics and issues that are most material to our

business and stakeholders, in line with the GRI Standards

guidelines, the Sustainability Accounting Standards Board (SASB)

and the UN Sustainable Development Goals (SDGs).

Avantium’s leadership, colleagues and key internal and external

partners (including business partners, NGOs and investors) then

rated these topics according to (i) the level of risk and opportunity

they present to Avantium's business and (ii) the extent to which

they influence our impact on society and the environment. This

informed the finalisation and prioritisation of the key topics.

Definitions of Very High Priority Material Topics

Environmental Impact of Our Technologies

Applying Avantium's expertise to improve the efficiency of

existing chemical processes and invent new technologies with an

improved environmental impact versus fossil-based incumbents.

Greenhouse Gas Emissions of Our Operations

Aligning Avantium's business with a 1.5°C future by reducing

carbon emissions in line with the Paris Agreement and working to

remove stubborn emissions through credible offsetting.

Circularity

Optimising the recovery, reuse and recycling of our technologies,

mitigating Avantium's impact on natural resources.

Sustainable Feedstocks

Using plant-based feedstocks including agricultural crops,

residuals from agriculture or forestry or waste material that

would otherwise be incinerated.

Occupational Health & Safety

Implementing strong safety management practices, as defined by

ISO 45001, in our workplaces to safeguard employees' health.

Health & Well-Being

Ensuring the health and well-being of employees both through

our culture and with programmes focusing on work-related

stress, work–life balance and mental health.

Talent Attraction & Retention

Attracting, engaging and retaining a productive and talented

workforce through programmes, benefits and development

opportunities.

Climate Advocacy

Accelerating the industry transition to fossil free by helping our

customers and partners embrace the essential technologies and

products of tomorrow.

Stakeholder Engagement

Engaging proactively and continuously with various stakeholders

in a two-way dialogue, understanding their priorities and

reflecting them in our collaboration, advocacy and ESG strategy.

Corporate Partnerships

Selecting partners who share the same values as us and who

want to decouple the industry from its reliance on fossil fuels.

IP & Data Protection

Ensuring the protection, confidentiality and ethical use of

company, client, employee and supplier data.

Definitions of High Priority Material Topics

Diversity & Inclusion

Upholding the highest standards of equality, fairness and respect

among employees by ensuring an inclusive and socially mobile

culture with zero tolerance for harassment or discrimination.

Hazardous Materials Management

Reducing or eliminating hazardous materials from our processes

wherever possible, and focusing on responsible management and

disposal when their use is unavoidable.

Next Generation of Scientists

Promoting and improving STEM education as a way to raise

levels of scientific literacy and equip our society to address

climate change.

Climate-Related Regulation

Engaging with laws, regulations and restrictions on climate-

related topics, from rapidly changing emissions regulations to

taxonomy.

Non-Hazardous Waste Management

Reducing material use through the adoption of responsible

consumption practices and ensuring the highest standards of

reuse and recycling across our offices and operations.

Product Stewardship

Managing, in a responsible way, the health, safety and

environmental aspects of a product throughout its lifecycle.

22

23

Our Strategy

Avantium’s overarching strategy is founded on the four pillars of

our mission: creating disruptive technologies, bringing them to

the world with partners, accelerating the transition to renewable

and circular products and providing a safe and vibrant place to

make an impact.

Our goal is to be a world leader in renewable and sustainable

chemistry technology solutions and to commercialise them

through partnerships and licensing. To achieve this, Avantium’s

strategy centres on our extensive portfolio of renewable

technologies with a focus on sustainable polyesters.

An integral part of Avantium’s strategy and our

commercialisation roadmap is close collaboration with strong

partners throughout the entire value chain. We work with

companies who share our values and want to build a better

world for future generations. This helps us develop innovative

solutions that deliver sustainability benefits to customers and

beyond.

24

Our Business Model

We have multiple strategic routes for monetising our innovative

proprietary technologies. These include (i) licensing them to third

parties, (ii) applying them in our production plants, partnerships

or joint ventures and (iii) divesting them to third parties.

Licensing is especially important: as well as being the most

capital-efficient way to commercialise our technologies, we

believe it is the fastest way to bring our sustainable solutions to

market.

Our management processes allow us to manage risk and

increase shareholder value. We know we must manage, plan

and allocate our resources in the way that best serves all

Avantium’s stakeholders while enabling us to fulfil our

objectives.

Avantium’s strategy centres on our extensive portfolio of

renewable technologies with a focus on sustainable polyesters.

Our development activities use a stringent stage-gate process

to manage the innovation funnel from ideation to business

launch, as outlined below. Our strategic aim is to advance our

technologies to the point of selling products and licensing our

technologies to industrial parties who are expected to build

industrial-scale production capacities.

Business Unit Strategies

Avantium Renewable Polymers

Avantium Renewable Polymers is responsible for developing

and commercialising YXY® Technology, which catalytically

converts plant-based sugars into furandicarboxylic acid (FDCA),

the main building block of polyethylene furanoate (PEF): a 100%

plant-based, fully recyclable plastic material with significant

performance benefits and a significantly lower carbon footprint

than fossil-based plastics.

The Avantium Renewable Polymers strategy can be broken

down into four parts: (i) to continue developing the market for

PEF by working with partners to generate global demand, (ii) to

prove the technology at commercial scale at our FDCA Flagship

Plant, for which we took a positive Final Investment Decision in

2021 and which we aim to make operational in 2024, (iii) to

ensure global availability of PEF via technology licences and (iv)

to maintain our technology leadership regarding our YXY

Technology through ongoing research and key partner

collaborations.

Avantium Renewable Chemistries

In Avantium Renewable Chemistries, we aim to develop and

commercialise Ray Technology™, Dawn Technology™ and

Volta Technology.

For Ray Technology, Avantium plans to form a joint venture with

Cosun Beet Company. Through this we aim to accelerate the

commercial potential of plantMEG™ and plantMPG™ and take

further steps towards the scale-up to a commercial facility,

planned to be operational in 2026. We intend the joint venture

to acquire a Ray Technology licence from Avantium. As part of

its licensing business model, Avantium will continue to develop

and license its Ray Technology globally.

Avantium runs a pilot biorefinery based on Dawn Technology in

Delfzijl, the Netherlands, with a focus on operational excellence.

We strongly believe in the potential of this technology, which

produces industrial sugars from forestry and agricultural

residues. We see industrial sugars from Dawn Technology as

imperative to a successful future bio-economy. Second-

generation, non-food biomass is a viable option for the

chemicals industry as it shifts to plant-based sourcing and seeks

an extended feedstock portfolio.

As well as creating technologies that use plant-based carbon

sources, Avantium aspires to develop materials using carbon

dioxide (CO2) as a feedstock. Our Volta Technology, a carbon

capture and utilisation technology, is an electrocatalytic

platform that converts CO2 into chemical building blocks and

high-value products. For Volta Technology, the focus is on

finding industrial partners that are interested in scaling up first

to a pilot plant and then to commercialisation.

Avantium Catalysis

Avantium Catalysis is home to our advanced catalysis research

and development and is our revenue-generating business. We

aim to maintain our technological leadership in this field as well

as to improve cash flows.

Avantium Catalysis also enables customers to develop new

catalysts. This not only contributes to sustainability but also

provides the R&D methodologies and technologies to support

our proprietary technology programmes.

25

Our Innovation Funnel

Our development activities use a stringent stage-gate process

to manage the innovation funnel from ideation to business

launch, as outlined below. Our strategic aim is to advance our

technologies to the point of selling products and licensing our

technologies to industrial parties who are expected to build

industrial-scale production capacities.

26

Value We Created in 2021

2021 was a landmark year for Avantium:

we took our long-awaited positive Final

Investment Decision (FID) on our YXY®

Technology and made huge strides

towards bringing a new polymer to the

market. But progress was not limited to

Avantium Renewable Polymers: across

all three of our business units, and

despite the ongoing challenges of the

pandemic, our people worked tirelessly to

optimise our technologies and advance

our strategy.

Our updated value creation model shows how we act to bring to

life our ultimate vision: a chemicals industry decoupled from

fossil feedstocks. It also illustrates how our sustainability ethos

is interwoven into every aspect of our work. Through our

actions, we aim to create value for all our stakeholders – from

employees and investors to partners, customers and society.

In this chapter, we begin by reporting on the highlights of 2021

for each technology area within Avantium. Using the four pillars

of our sustainability plan, Chain Reaction 2030, as our compass,

we then explore the value we created in 2021 in relation to the

topics we have identified as being most material to our

business. For more details on this process, see the Stakeholders

and Materiality chapter. We also report on the specific

sustainability targets we have set ourselves to achieve by or

before 2030.

We are also committed to making a positive contribution to the

United Nations Sustainable Development Goals (SDGs), which

governments worldwide have adopted with the aim of ending

poverty, protecting the planet and ensuring prosperity for all by

2030. Both in this chapter and under Supplementary

Information, we report on our SDG contribution in relation to

each material topic.

27

Business Highlights

Each of the technologies within our three

business units (Avantium Renewable

Polymers, Avantium Renewable

Chemistries and Avantium Catalysis)

made further strides in 2021 towards its

strategic goals.

YXY® Technology

As Avantium’s most advanced technology, YXY Technology has

always been our central strategic focus, not least because of its

potential to revolutionise the plastics industry. In December

2021, our positive FID for the construction of a Flagship Plant

rounded off a landmark year. This pivotal moment was the

result of many years’ hard work, both to optimise our technology

and to meet the necessary conditions that we had identified for

the positive FID.

At an Extraordinary General Meeting on 25 January 2022, we

asked our shareholders for their support of the FID and their

approval of several specific related resolutions. The

shareholders voted in favour of these resolutions, which enables

Avantium to execute all relevant documentation, including but

not limited to the investment documentation with the minority

shareholders Groningen Consortium and Worley, and the debt

financing documentation necessary to complete the transaction

(Financial Close). Consequently, we can begin the scale-up of

our operations and build the world’s first commercial

furandicarboxylic acid (FDCA) factory in Chemie Park Delfzijl

(the Netherlands).

As well as generating revenues in its own right, this Flagship

Plant will allow us to prove the process technology, demonstrate

the commercial applications of the next-generation plastic,

polyethylene furanoate (PEF), and to sell technology licences to

industrial collaborators. With a capacity of 5,000 tonnes per

annum, Avantium’s Flagship Plant promises to help realise the

potential – and the positive climate impact – of our pioneering

YXY Technology.

Making History, Step by Step

The positive FID was subject to fulfilling three key conditions: (i)

securing sufficient financing, (ii) obtaining sufficient offtake

commitments and (iii) finalising the engineering and establishing

the supply chain.

During 2021, Avantium secured a total of €192.5 million to start

building the Flagship Plant, subject to Financial Close. This

funding comes from a combination of sources: grants, third-

party equity, Avantium equity and bank loans. In December, we

signed a term sheet for a three-year debt financing package of

€90 million with a consortium of lenders: four Dutch banks (€15

million each) and the government-backed Dutch impact

investment fund Invest-NL (€30 million).

Securing financial support of this kind is a remarkable feat for

an innovative sustainable chemistry company like Avantium,

and we believe it is a testament to the enormous potential value

of our YXY Technology.

28

We made good progress in generating conditional offtake

commitments for the Flagship Plant. In March and April 2021,

we received three new commitments on top of the two agreed in

2020 (all subject to Financial Close and party-specific

conditions), taking the total to more than 50% of the Flagship

Plant's capacity. Avantium now has contracts (with customary

conditions) with specialty chemical company Toyobo (Japan),

specialty polyester film producer Terphane (USA), beverage

bottling company Refresco (the Netherlands), international rigid

packaging supplier Resilux (Belgium) and a major global food

and beverage brand. We also signed a collaboration agreement

with Carlsberg Group in 2021, relating to the joint development

of several PEF applications including Carlsberg’s Green Fibre

Bottle.

Attracting partners of this calibre reflects the clear potential of

FDCA and PEF to break the hold of fossil feedstocks on the

packaging sector. We aim to grow this catalogue of

international partners and to agree additional offtake

commitments, with the aim of selling out the Flagship Plant

capacity ahead of its start-up.

We also finalised the engineering and supply chain

arrangements for the Flagship Plant in 2021, thus meeting our

third key condition for a positive FID. As planned, the front-end

engineering and design (FEED) phase was completed by our

engineering partner Worley. Avantium then agreed an

engineering, procurement and construction contract with

Worley in December: with a delivery date at the end of 2023.

This contract keeps us on track to commence operations at the

Flagship Plant in 2024. We also signed a sub-leasehold

agreement with Groningen Seaports for the land on which the

plant will be built. In March 2022, the necessary environmental

permit from the Groningen environmental authorities became

irrevocable.

December 2021 also saw a new strategic partnership agreed in

relation to the YXY Technology supply chain. Following the

signing of a multi-year FDCA polymerisation contract with

specialty polyester supplier Selenis in 2020, Avantium has now

secured a long-term agreement with agricultural cooperative

Tereos, which will supply high-fructose syrup as a 100% bio-

based and local feedstock for the Flagship Plant. This will

ensure a stable supply of quality, sustainable materials for use

in our processes.

Avantium's Management Team and Supervisory Board have

met on a very frequent basis to discuss preparations,

developments and progress in relation to the FDCA Flagship

Plant. As part of the process of working towards a positive FID,

the Avantium Management Team asked the Avantium

Technology Board to comprehensively review the technology-

related aspects of the project. Following the completion of its in-

depth review, the Technology Board shared its observations and

positive recommendations with the Management Board and the

Industrialisation Committee of the Supervisory Board. Avantium

also sought and received external expert advice wherever

appropriate and necessary.

After an intense and challenging few years, we were delighted

to confirm the positive FID for our Flagship Plant in December

2021. It marks a turning point in Avantium’s journey to bring a

game-changing new polymer to the market; one that we believe

will help the transition to a fossil-free industry, revolutionise

value chains worldwide and contribute materially to setting us

firmly on the path to a circular economy.

Ray Technology™

Having successfully commissioned Avantium’s Ray Technology

demonstration plant in 2020, we focused on building on this

momentum in 2021 by optimising our processes, bringing new

partners on board and completing our life-cycle assessment

(LCA; for details, see Environmental Impact of Our

Technologies). In this regard, we made several leaps forward

towards commercialising our plant-based glycols technology.

In April, we successfully completed the application validation for

Ray Technology’s plantMEG™ and plantMPG™. Key

applications include polymerisation to PEF and polyethylene

terephthalate (PET) polyesters and functional fluids used for de-

icing and heat transfer. We have now achieved the significant

milestone of polymerising Avantium’s FDCA with plantMEG to

produce 100% plant-based PEF, which stands as further proof

of the functional performance of Avantium’s plant-based

glycols. The creation of a sustainable, fossil-free polyester, ideal

for use in valuable textile and packaging applications, marks an

important step along the way to the commercial scale-up of Ray

Technology.

However, excitement around this progress was countered by a

grave reminder of the safety risks inherent in our industry. We

reported an accident at our Delfzijl demonstration plant in 2021,

from which two colleagues are continuing to recover. We halted

Ray Technology operations at the plant while we carried out the

necessary investigations and implemented changes to safety

procedures and protocols. For full details of the accident and our

response, see the Occupational Health & Safety section.

Going Further, Together

We achieved a second key accomplishment in 2021. In April, we

announced a new collaboration with our existing Ray

Technology feedstock supplier, Cosun Beet Company, a sugar

beet processor whose sustainability ambitions fit well with our

own. Cosun Beet Company and Avantium signed a term sheet

to establish a joint venture to construct a first commercial plant

to produce plantMEG and plantMPG using Ray Technology. The

term sheet describes the intention and conditions for the joint

venture, in which Cosun Beet Company will take a substantial

share.

Together, we want to construct and operate the world's first

commercial plant for the production of plant-based glycols,

which we believe will be operational in 2026. The joint venture

plans to acquire a technology licence from Avantium for Ray

Technology and aims to establish a long-term supply agreement

for the renewable sugar beet feedstock used in our commercial

plant. This will further support the fulfilment of our Chain

Reaction 2030 target to ensure that 100% of our plant-based

feedstocks come from sustainable sources.

29

This landmark partnership with Cosun Beet Company

represents the sugar beet crops of around 9,000 farmers in

north-western Europe – but Avantium’s ambitions for licensing

Ray Technology go much further. We know that we cannot act

alone if we are to bring about the fossil-free transition we need,

so, in the years to come, we will actively seek out similar deals in

different global regions, using local feedstocks.

Dawn Technology™

With our sights firmly set on a circular chemicals industry,

Avantium continued working hard in 2021 to develop Dawn

Technology at our pilot biorefinery. Chemical processes depend

on sugars, and given the global lack of other viable, scaled-up

technologies for producing second-generation glucose, Dawn

Technology is a highly promising solution for de-fossilising the

industry.

In 2021, we de-risked our technology, explored up- and

downstream integrations and tested new feedstocks. We also

put lignin, a high-value Dawn Technology co-product, to the test

in the infrastructure industry.

The Road to Sustainable Construction

Lignin is an organic polymer with exciting sustainability

applications separate from those of industrial sugars. In June,

infrastructure company (and CHAPLIN XL consortium member)

Roelofs built a test section of public road made with bio-asphalt,

which uses Dawn Technology lignin to replace fossil-derived

bitumen. The new Dawn Drive in Groningen is 250 metres long

and contains around 1 tonne of Avantium’s lignin.

In 2022, the road will continue to undergo performance and

sustainability testing, including an LCA, but preliminary results

indicate that lignin-based asphalt has a substantially lower

carbon footprint than its fossil-based counterpart. Avantium is

proud to be part of this CHAPLIN XL collaboration, which will, if

successful, support significant CO2 reductions in the fossil-heavy

infrastructure sector. This short section of test road therefore

marks another small but significant step towards our 2030

sustainability target of delivering 1.5 million tonnes of CO2

savings across our industry.

Volta Technology

In an eventful year for our carbon capture and utilisation (CCU)

solution, we made good progress in our on-site Volta

Technology projects with partners, won several landmark new

grants and refocused our strategy for this key electrochemical

technology.

A Better Strategic Fit

In 2021, we decided to revise our plans for this technology in

line with our ultimate goal of commercialisation, shifting our

focus away from renewable glyoxylic acid towards the

upstream conversion of CO2 to formic acid as well as oxalic acid

and glycolic acid. The latter two are key building blocks for

polymers and other materials, opening up a much wider range

of possible applications. This approach therefore strengthens

our business case for Volta Technology. Accordingly, we

broadened our intellectual property portfolio by filing six new

patents during the year.

Grant Recognition

Continuing Avantium’s strong tradition of attracting government

funding, we were awarded several significant new grants in

2021 that will help us bring Volta Technology to pilot scale. We

believe our ongoing success in grant applications is due

recognition of the enormous potential of our technology to

create value for our various stakeholders in an efficient and fully

scalable way.

In May 2021, we were awarded a total of €1.78 million by the

European Union’s Horizon 2020 programme for the

development of electrochemical processes and CO2-based

polymers. This sum, which will be paid out over a period of four

years, covers our participation in three consortia.

CATCO2NVERS, CO2SMOS and VIVALDI all aim to cut the

chemical industry’s greenhouse gas (GHG) emissions through

innovative and integrated technologies, including

electrochemistry platforms such as Avantium’s Volta

Technology. This funding will allow us not only to further

30

improve the efficiency of our processes but also to accelerate

our growth and strengthen our position at the very forefront of

CCU activities in Europe.

Putting Volta Technology to Work

One of our ongoing Horizon 2020 grant projects took important

steps forward in 2021. As part of the OCEAN programme, which

aims to use CO2 emitted by power plants to produce oxalic acid

(which is the basis for various high-value chemicals), we carried

out mechanical and chemical testing on the functionality of a

mobile Volta Technology container unit. In January 2022, we

installed the unit at an RWE power plant in Germany. During a

six-month period, Avantium's will aim to convert 250 g/hour of

CO2, coming directly from a capture facility located at the power

plant, into formate.

These pre-pilot containers are an ideal way to test Avantium’s

Volta Technology in real-world applications. So far, the use of

mobile units has shown much promise, and in 2022 we intend to

explore the possibility of using such containers all the way up to

pilot scale, rather than building a pilot facility. Leasing mobile

containers to industry customers means Avantium will benefit

from financial revenue at the same time as demonstrating the

value of our CCU systems.

Even if the COVID-19 situation kept crucial on-site discussions

with partners out of reach in 2021, we nonetheless made

notable progress on several potential collaborations. Pandemic

restrictions permitting, we aim to finalise new partnerships in

2022. This will allow us to gain traction on Volta Technology’s

road from development to pilot stage and eventually to

commercialisation.

31

Avantium Catalysis

Avantium supports customers to develop better catalysts and

optimise catalytic processes by offering R&D systems and

contract R&D. Our products and services are essential to our

clients’ future. Because catalysts help to make chemical

processes more efficient, and reduce waste and unwanted by-

products, we contribute not only to our customers’ profitability,

but also to their transition to sustainability.

Harnessing Remote Systems

Just as in 2020, Avantium Catalysis was hampered in 2021 by

the ongoing travel restrictions and site closures caused by the

pandemic. Our Flowrence® systems operations were hit

particularly hard, with our technicians unable to visit customers’

sites to install and commission our proprietary catalysis testing

platforms. Nevertheless, in August, we successfully completed

our first-ever remote installation and commission of a Flowrence

unit via video link. This was a significant challenge and an

important achievement, brought about thanks to the ingenuity

and hard work of our team. This success opens up more

opportunities to support customers efficiently for as long as

travel disruption continues, and even beyond.

Avantium Catalysis also had to contend with disruption to the

supply chains of key (sub)components and microchips.

However, we managed this without a major impact on our

operations. Overall, revenue from our Systems business in 2021

amounted to €6.8 million.

Elsewhere, the difficult global context also affected our Refinery

Catalyst Testing services. Demand remained low due to oil

refineries running at reduced capacity, which meant they did not

need to test new catalyst loads. However, overall, our Contract

Research business saw the same level of demand as in 2020,

and generated €3.2 million in revenue. In 2021, we were able to

keep these operations running uninterrupted, in accordance with

the Dutch government’s COVID-19 guidelines.

New Demand for Sustainable Chemistry

We are pleased to see an increase in questions and requests

regarding R&D into sustainable chemistry, which requires

tailored solutions. The unique capabilities of Avantium in both

chemistry and engineering make us a good partner for such

projects. For example, the growth in sustainable chemistry and

bio-based products requires more purification of, and separation

of contaminants from, product streams. At Avantium Catalysis,

we are developing high-throughput solutions for liquid, gas and

respiratory adsorption. In 2021, we constructed and delivered a

tailor-made testing unit for adsorption to IrceLyon.

In the autumn of 2021, Avantium Catalysis joined the PROVE IT2

consortium consortium, which aims to make existing CO2-to-

methanol pathways more efficient and consequently to support

the reduction of greenhouse gas emissions within the chemical

industry. As part of this three-year project, our Flowrence

technology will be used to optimise a proven process for

catalytically converting off-gas CO2 into methanol – another

significant contribution towards the circular economy. Avantium

Catalysis received €291,000 for its participation in PROVE IT as

an innovator in catalytic R&D.

32

2 The PROducts of Value from various CO2 sources, Enabled by Integrating Technologies

Our Technologies

Avantium is committed to becoming a

world leader in sustainable chemistries.

In 2021, our array of proprietary

technologies continued to make valuable

contributions to the future of our planet

and its people.

Environmental Impact of Our

Technologies

SDG

Subtargets

9.4: By 2030, upgrade infrastructure and retrofit

industries to make them sustainable, with increased

resource-use efficiency and greater adoption of clean

and environmentally sound technologies and industrial

processes.

12.4: By 2020, achieve the environmentally sound

management of chemicals and all wastes throughout

their life cycle, in accordance with agreed international

frameworks, and significantly reduce their release to

air, water and soil in order to minimise their adverse

impacts on human health and the environment.

13.3: Improve education, awareness-raising and

human and institutional capacity on climate change

mitigation, adaptation, impact reduction and early

warning.

Avantium specialises in accelerated R&D, applying its scientific,

R&D and scale-up expertise to improve the efficiency of existing

processes and invent new sustainable technologies for the

chemicals industry.

Proving the Power of PEF

In 2021, we conducted a full cradle-to-grave life-cycle

assessment (LCA) for Avantium’s YXY Technology, carried out in

partnership with nova-Institut GmbH under the framework of

the PEFerence project. The entire life cycle of PEF-based bottles

was assessed, from the extraction or cultivation of raw

materials, through production and use, to disposal of the

product. All relevant environmental aspects of furandicarboxylic

acid (FDCA) and polyethylene furanoate (PEF) production were

analysed.

The LCA was performed according to the ISO 14040/14044

standard methodology and was based on the engineering data

for the first commercialisation phase of Avantium’s technology

to produce PEF. A critical peer review of the study was

conducted by experts on LCA methodology and incumbent

technologies, to verify whether the LCA met the requirements

for methodology, data, interpretation and reporting.

Polyethylene terephthalate (PET) bottles were modelled using

Ecoinvent data for bottle-grade PET production, available from

the most recent Eco-profiles of the European plastics industry.

The LCA showed that, compared to fossil-based PET bottle

solutions, the use of renewable feedstock (high-fructose syrup

from wheat) in PEF results in clear reductions in greenhouse gas

(GHG) emissions throughout the entire life cycle.

A second factor in the lower carbon footprint of PEF bottles is

the improved barrier and mechanical properties of PEF, enabling

a substantial reduction in material usage compared to PET

bottles. For monolayer PEF bottles, this results in 33% lower

GHG emissions, with a 37% reduction for multilayer PEF/PET

bottles.

In addition, as all plants absorb carbon during growth, an

inherent advantage of PEF-based products is the temporary

storage of CO2. At the end-of-life of a PEF-based product (i.e.

when PEF can no longer be recycled and is incinerated), this

biogenic carbon re-enters the natural carbon cycle, whereas

end-of-life fossil-based plastics release carbon that had been

33

locked up in the ground for millions of years, increasing the total

amount of carbon in the atmosphere.

This LCA forms the basis for assessing the sustainability

benefits of Avantium’s current PEF applications. It enables

identification and quantification of further technology

development, as well as opportunities for improvement in the

value chain. Further improvements may consist of the use of

renewable energy, different feedstock sources, process

optimisation and recycling of PEF. For instance, this LCA took

into account the current energy mix in the Netherlands, which

still contains a low percentage of renewable energy. It is

foreseen that the use of both renewable heat and renewable

electricity will become the norm in the near future.

Recent energy optimisation work for an FDCA plant at industrial

scale has already shown that energy consumption can be

significantly reduced, leading to further improvements to the

LCA results. Furthermore, this LCA study still assumes that PEF

will initially end up in an open-loop recycling stream with

relatively low recycling rates. Sufficient market growth will

enable an individual closed-loop material recycling stream with

high efficiencies. The PEF process is expected to become much

more efficient, in terms of both energy integration and achieved

yields. Substantial further GHG emission reductions and other

environmental benefits will be achieved when these

developments have been realised. Avantium will conduct

another LCA study once they have materialised.

More information about the LCA for PEF applications can be

found on Avantium's website.

Confirming the Value of Ray Technology

In February 2022, we announced the results of our second LCA:

a cradle-to-grave LCA by Sphera (formerly Thinkstep). This

study explored the long-term environmental impact of plantMEG

from Ray Technology in PET bottles (its most applicable market)

in 2025, with a regional focus on Europe. It compared

Avantium’s plantMEG production with current incumbent

alternative production routes for MEG (using natural gas,

naphtha, shale gas and coal feedstock). The LCA shows a GHG

emission reduction of up to 83% over the product life cycle when

Avantium’s plantMEG is used instead of fossil-MEG incumbents.

The plantMEG LCA was conducted according to the guidelines

of ISO 14040/14044 and was reviewed by an external critical

review panel. It took into account the use of sugar beet from

Cosun Beet Company, the production process of Avantium’s

Ray Technology and the end-of-life stage (when waste

materials are recycled, incinerated or landfilled). This study was

aligned with European Commission 2025 target-setting for PET

and plastic bottle collection and recycling (under the Single-Use

Plastics Directive) and used the Circular Footprint Formula for

end-of-life allocation.

The life-cycle impacts of plantMEG are sensitive to assumptions

about energy sources. For the plantMEG production process, the

LCA assumed the use of electricity from wind, green hydrogen

based on wind power and thermal energy from natural gas.

The use of renewable feedstocks (sugar beet from Cosun Beet

Company) for plantMEG is the main factor in its carbon footprint

(574 kg CO2eq/t), with the thermal energy used to produce

plantMEG being the second driver. Compared to fossil-MEG,

plantMEG's GHG emissions are between 56% lower (versus

MEG made from shale gas) and 83% lower (versus coal-based

MEG). PlantMEG performs even better under the so-called

substitution approach, which is based on the assumption that

recycling into secondary material at the end-of-life will replace

an equivalent amount of virgin material. Under this approach,

plantMEG scores 72%–89% better than fossil-MEG.

In the above figures, carbon sequestration (the storage of

carbon in plants) during biomass growth is not taken into

account. This is in line with the international LCA standards and

methods in Europe,3 which do not allow for carbon discounting

based on temporary storage.

More information about the plantMEG LCA can be found on the

Avantium's website.

The Right Kind of Impact

These ISO-certified LCA results show more clearly than ever

that our FDCA and plants-to-glycols technologies are a game-

changer for the environmental impact of the chemicals industry.

In all kinds of growing markets, from plastic packaging and

textiles to aeroplane de-icing and heat-transfer fluids for solar

panels, PEF and plantMEG can have a significant positive

impact on circularity and product sustainability in a world where

consumers’ environmental consciousness is also rising.

We will use our LCAs to assess the impact of our technologies

as they come to market, tracking the real-world reduction in CO2

emissions enabled by using YXY Technology and Ray

Technology in place of fossil-based processes.

Small Scale, Big Picture

Meanwhile, as the chemicals industry increasingly seeks to

reduce waste and energy consumption, the technologies within

our Avantium Catalysis business unit will become ever more

valuable. Catalysis enables more efficient, and therefore

sustainable, chemical processes: catalysed reactions not only

need less energy and fewer raw materials, but also create more

specific products and reduce unwanted side products and

waste. Avantium’s Flowrence systems and contract catalysis

activities provide a platform for small-scale testing, using

minimal quantities of energy and materials. In this way, our

solutions greatly improve the sustainability of processes in the

chemicals sector and reduce the environmental impact of our

customers’ operations.

34

3 European Commission – Joint Research Centre – Institute for Environment and Sustainability. (2010). International Reference Life Cycle Data System (ILCD) Handbook - General guide for Life Cycle Assessment - Detailed Guidance. Luxembourg:

Publications Office of the European Union.

Circularity

SDG

Subtargets

9.4: By 2030, upgrade infrastructure and retrofit

industries to make them sustainable, with increased

resource-use efficiency and greater adoption of clean

and environmentally sound technologies and

industrial processes, with all countries taking action in

accordance with their respective capabilities.

12.4: By 2020, achieve the environmentally sound

management of chemicals and all wastes throughout

their life cycle, in accordance with agreed international

frameworks, and significantly reduce their release to

air, water and soil in order to minimise their adverse

impacts on human health and the environment.

12.5: By 2030, substantially reduce waste generation

through prevention, reduction, recycling and reuse.

13.3: Improve education, awareness-raising and

human and institutional capacity on climate change

mitigation, adaptation, impact reduction and early

warning.

In our sustainability plan, we pledged to make Avantium a

circular business by 2030. In 2021, we took an important step

towards this destination by setting up a company-wide

circularity workgroup. The group’s role is to identify and

investigate the various circularity metrics that could be used to

assess Avantium’s progress on circularity. We will use the

workgroup’s findings as the basis for our reporting on this

material topic in the years to come.

In the meantime, we also continued improving our lead

technologies and products, which have been designed to fit

seamlessly into the sustainable materials cycle of the future. The

design phase is critical to the success of any circular economy: if

products are not specifically developed to be renewable,

reusable and recyclable, the circle will inevitably break down.

We have therefore ensured that Avantium’s technologies run on

plant-based feedstocks whose supply can be renewed, rather

than consuming finite resources. As for our products, such as

PEF and plantMEG, the LCAs described above provide evidence

of their circular credentials regarding recyclability and end-of-

life. Our efforts to commercialise our technologies and bring our

products to consumers are, by the very nature of these

technologies and products, fully aligned with our circularity

ambitions.

Sustainable Feedstocks

SDG

Subtargets

13.3: Improve education, awareness-raising and

human and institutional capacity on climate change

mitigation, adaptation, impact reduction and early

warning.

15.2: By 2020, promote the implementation of

sustainable management of all types of forests, halt

deforestation, restore degraded forests and

substantially increase afforestation and reforestation

globally.

Securing the sustainable supply of feedstocks is a priority at

Avantium. We are committed to ensuring that 100% of our

plant-based feedstocks for YXY Technology, Ray Technology,

Dawn Technology and Volta Technology will come from

sustainable sources by 2030. For us, this means finding

suppliers who treat not only the environment but also people –

from their employees to their wider society – with respect.

As discussed in the Business Highlights section, Avantium

therefore agreed two new partnerships in 2021 with local plant-

based feedstock suppliers who demonstrate clear sustainability

ambitions: with Tereos (high-fructose syrup) and with Cosun

Beet Company (sugar beet), providing renewable feedstocks for

our YXY Technology and Ray Technology respectively.

The improved environmental impact enabled by plant-based

feedstocks could be further enhanced by a switch to

lignocellulosic feedstocks, such as those from second-

generation, non-food biomass. Dawn Technology converts this

biomass into sugars and lignin, helping to transition the

chemical and material industries to non-fossil resources.

Supply Chain Responsibility

Ensuring a green supply chain and logistics set-up is highly

material to our work at Avantium. We are therefore diligent

about assessing the responsible business credentials of our

supply chain and other partners. Throughout 2021, Avantium

worked on developing a Supplier Code that incorporates a

range of standards to which we expect our suppliers to adhere.

The core of this code is based around compliance with national

and international regulation and respect for human rights and

labour standards, as well as responsible production of bio-

based feedstocks. We expect this code to be published in 2022.

35

Our Operations

Even as we work to support the

transition to a de-fossilised chemical

industry, we remain conscious of our own

operations and their impact on the world

around us. In 2021, we set our sights on

ambitious sustainability targets and took

steps to bolster our safety processes.

Occupational Health & Safety

SDG

Subtargets

3.9: By 2030, substantially reduce the number of

deaths and illnesses from hazardous chemicals and

air, water and soil pollution and contamination.

Safety has always been, and will always be, our number-one

priority. Providing safe and healthy working conditions for our

people is fundamental – most of all for our colleagues’ well-

being, but also for the day-to-day functioning of our business

and the fulfilment of our strategy and sustainability goals.

ISO 45001 Certification

We made a commitment in Chain Reaction 2030 to achieve ISO

45001 certification for all Avantium’s plants by 2023. We

believe this to be the gold standard for organisations that are

serious about improving employee safety, reducing workplace

risk and creating better and safer working conditions. ISO

45001 requires an occupational health and safety (OHS)

management system, supports organisations’ OHS performance

and provides guidance on healthy and safe workplaces.

In 2021, we took steps towards achieving this key sustainability

target, working on system governance as well as on document

coding, registration and templates. Furthermore, we selected a

consultant to help Avantium conduct a gap analysis and

develop a detailed implementation plan, including resource

planning. We will start implementing ISO 45001 across the

entire company in 2022.

Safety Practices and Protocols

As a safety-first company, we have measures to facilitate the

ongoing attention and awareness we need to operate in a safe

manner. We continued to provide mandatory safety training to

new joiners in 2021, and all Avantium employees are also

committed to our Golden Safety Rules, which are supported by

safety procedures and systems on our sites.

Avantium company meetings always begin with a safety

update, where we discuss incidents and the measures taken to

prevent their recurrence. Our Safety Culture Team publishes a

quarterly newsletter – ‘We take care of each other’ – to keep

everyone’s knowledge up to date. One edition in 2021 focused

on how to work from home in a safe manner, in response to the

continued requirement for many colleagues to work remotely for

parts of 2021. For more details on the measures we are taking

to support employees’ health and well-being during COVID-19,

see the Our People section of this chapter.

36

With some Avantium colleagues switching between on-site and

remote working at different times of the year, we recognised the

importance of refreshing everybody’s safety knowledge and

habits. In the summer of 2021, the Safety Culture Team

therefore organised a mandatory ‘Back to Basics’ training

course for all employees – whether working in our offices,

laboratories or plants. Plenary meetings on risk reduction,

colleague behaviours and unplanned events were followed by

interactive team dialogue sessions. In these meetings, we

refreshed employees' memories about the Golden Safety Rules

and also decided to revise one rule: 'We take the time to work in

a safe way' has now become 'We stop activities in unsafe

situations and take the time to work in a safe way'.

Accidents and Incidents

At Avantium, we strive to be an accident- and incident-free

workplace, but we also recognise that the nature of our work in

the chemicals industry brings certain risks. We therefore foster a

no-blame culture, promoting openness about unwanted events

by encouraging employees to report accidents and incidents

and allowing us to continuously improve our safety and

environmental performance.

In 2021, we recorded 29 incidents (2020: 8). The reason for this

increase is that our pilot plant in Geleen has improved the

stringency of its reporting mechanisms since 2020. Of the 29

incidents, most were related to breakages or spillages, with the

root cause being equipment or behaviour. Nineteen incidents fell

under the category Loss of Primary Containment. Three

incidents were related to behaviour (a cut to the hand from the

sharp edge of a mug, a finger pinched during manual control of

a slide valve and a stumble over a doorstep). First aid was

needed for two of the incidents.

We also recorded one accident in 2021 (2020: 1). In the first

quarter of the year, two experienced operators, wearing full

personal protective equipment, were exposed to hazardous

vapours as they carried out cleaning activities at the Ray

Technology demonstration plant in Delfzijl, and reported health

complaints afterwards. The operators remain on sick leave, and

they and Avantium continue to focus on recovery and re-

integration.

Following the accident, and in accordance with Avantium’s

protocols, we carried out a root cause analysis that led to the

implementation of improvement measures, such as intensifying

our efforts to handle hazardous substances safely. We also

redesigned certain areas of the demonstration plant, improved

our operation instructions and provided additional safety

training. During implementation of the improvement measures,

we intermittently halted operations at the Ray Technology

demonstration plant.

We also initiated a chemical investigation to identify the

hazardous vapours. We formed a team including relevant

subject-matter experts such as a toxicologist and an

occupational hygienist. All required notifications, including to the

Dutch Inspectorate for Social Affairs and Employment (Inspectie

van Sociale Zaken en Werkgelegenheid), were fulfilled.

In the summer of 2021, we initiated an unknown cause analysis

(UCA) with an external facilitator, as the cause of the accident

(identification of the hazardous substance) was still unclear. We

decided to halt operations at the demonstration plant until the

UCA and any follow-up actions were completed.

The UCA showed both that there were extraordinary

circumstances during the cleaning activities and that small

concentrations of certain hazardous compounds can be formed

during the Ray Technology process. Advanced analytical

techniques were used to identify these compounds and to

assess their toxicity. No environmental impact was identified in

connection with the accident.

We subsequently completed the implementation of further

process safety measures, including adjustments to the design of

the Ray Technology demonstration plant. Avantium also

conducted extensive safety assessments and is now in the

process of recommencing operations at the demonstration

plant.

For a close-knit, safety-first company where such accidents are

rare, this occurrence has been hard to come to terms with. The

accident has had its impact on the company and the team

working in the demonstration plant, making it necessary to

restore confidence in the process, installation and organisation

and leadership. We therefore took good care, throughout 2021,

to be transparent with our colleagues about this event and its

consequences, communicating internally about the accident on

several occasions: at the plant in Delfzijl, at town hall and

company meetings and to the Works Council. Relevant external

stakeholders were also kept up to date.

Greenhouse Gas Emissions of Our

Operations

SDG

Subtargets

7a: By 2030, enhance international cooperation to

facilitate access to clean energy research and

technology, including renewable energy, energy

efficiency and advanced and cleaner fossil-fuel

technology, and promote investment in energy

infrastructure and clean energy technology.

12.4: By 2020, achieve the environmentally sound

management of chemicals and all wastes throughout

their life cycle, in accordance with agreed international

frameworks, and significantly reduce their release to

air, water and soil in order to minimise their adverse

impacts on human health and the

environment.

At Avantium, we are conscious of our role as a member of the

wider global community and of our duty to play our part in the

much-needed transition to net-zero emissions. We are therefore

committed to aligning Avantium’s business with the 1.5°C future

set out by the Paris Agreement. To guide our actions as we

reduce our greenhouse gas (GHG) emissions (and offset in a

credible way those that remain), we have set ourselves the

37

specific target of achieving net-zero carbon emissions from our

own operations by 2030.

This ambition covers both direct GHG emissions from our energy

usage (scope 1) and indirect emissions from our activities (scope

2). To reach net zero in Avantium’s own operations, we will

focus on (i) developing and implementing strategies for GHG

reduction and climate resiliency, (ii) lowering our emissions

footprint by driving energy efficiency and investment in

renewables and (iii) offsetting unavoidable emissions.

In 2021, we worked towards ensuring that all Avantium sites

are supplied by renewable electricity. Our pilot plant in Geleen

and our site at Amsterdam Science Park were already operating

on renewable power, and our Zekeringstraat headquarters in

Amsterdam moved to renewable power in January 2022. Our

pilot plants in Delfzijl are supplied by the on-site gas-fired

combined heat (steam) and power plant.

We also reviewed the way we heat each of our sites. This is a

challenging topic for Avantium: our headquarters at

Zekeringstraat would need significant structural building work

to move away from the current gas boiler system, and our

industrial sites are supplied by facilities over which Avantium

does not have control. We will continually review the available

heating options, and transition to more sustainable approaches

if they become available.

As a chemical company, we inevitably produce chemical

emissions at each of our sites. We reduce these wherever

possible at the experimental design phase, and by using our

small-scale Flowrence research technology instead of larger

systems wherever possible.

Our Carbon Footprint in 2021

In 2021, we started working on defining how to calculate direct

GHG emissions from our Flagship Plant, pilot plants, laboratories

and office activities. We decided to draw our utilities emissions

factors from www.co2emissiefactoren.nl. This website is

managed by Rijkswaterstaat on behalf of the Dutch Ministry of

Economic Affairs and Climate.

Our scope 1 emissions footprint covers two areas: direct heating

systems (gas boilers) and chemical emissions. For chemical

emissions reporting, we will base our methodology on the Kyoto

Protocol (as used in GRI-305 methodology), which requires us to

look for GHG emissions, ozone-depleting emissions and any

other significant substances. Due to our commitment to reach

net-zero carbon emissions, we will also report on our other

carbon emissions, converted into CO2-equivalent.

Our pilot plant sites already measure a range of emissions on an

annual basis, covering both CO2 and other chemicals of interest.

Our Zekeringstraat research site (laboratories) will begin annual

emissions measurements from 2022. Our Science Park

laboratories are leased within a building that hosts multiple

scientific companies, and it is not possible to isolate Avantium's

emissions from the combined building emissions.

In 2022, we will finalise our scope 1 chemical emissions

measurement strategy, as well as ensuring that we have robust,

verifiable sources of information for all of our GHG impact

factors.

Our scope 2 emissions footprint covers indirect emissions:

electricity-related emissions and indirect heating emissions. Our

Geleen site already uses electricity from renewable sources and

is heated by steam. In 2021, our Zekeringstraat site used

electricity from 'grey' power, but has now transitioned to using

renewable electricity as of 1 January 2022. Our Delfzijl site is

supplied with electricity and heating from a combined-cycle gas

turbine plant. In 2022, we will work to find verifiable GHG

emission conversion factors for all electricity and heating

supplies, allowing us to state a final, confirmed scope 2

emissions value.

Hazardous Materials Management

SDG

Subtargets

12.4: By 2020, achieve the environmentally sound

management of chemicals and all wastes throughout

their life cycle, in accordance with agreed international

frameworks, and significantly reduce their release to

air, water and soil in order to minimise their adverse

impacts on human health and the environment.

12.5: By 2030, substantially reduce waste generation

through prevention, reduction, recycling and re-use.

As a company operating in the chemicals industry, Avantium

handles both hazardous and non-hazardous materials and

generates both hazardous and non-hazardous waste.

Avantium has strict guidelines for employees to follow when

handling (potentially) hazardous materials. In 2021, we

strengthened these guidelines in response to the accident

discussed in the Occupational Health & Safety section, and we

will continue to look for areas where we can improve our safety

practices in 2022 and beyond.

We also take very seriously our duty to handle all waste

responsibly, for the sake of our environment and the people in it.

We are working towards separating waste streams as much as

possible, to enable re-use and recycling rather than incineration.

The nature of Avantium's chemical testing technology, centred

around small-scale testing, naturally minimises hazardous

waste production. We also enact a safety policy based on the

Hierarchy of Control (a system for controlling risks in the

workplace), in which our first action is to eliminate the use of

hazardous materials whenever possible.

Meanwhile, we recycle hazardous waste residues where we

can, and the remainder is sent for incineration. In both cases, we

partner with waste experts to ensure the safe disposal of

materials that could pose a risk to people or habitats. Often, our

38

partners can recover energy from this waste thanks to thermal

processing. In 2021, Avantium produced 107,056 kg of

hazardous waste. Please see the table for full details of our

management of this waste at our different sites. The tables are

included based on input from our waste vendors, but this data is

not validated. The data from Delfzijl is not complete, as we have

been unable to acquire an accurate breakdown of some waste

categories from this site.

Hazardous Waste

in kg

2021

Amount

%

Amsterdam (Zekeringstraat and

Science Park)

Incineration with energy recovery

6,718

78%

Re-use or recycling

1,943

22%

Total Amsterdam

8,661

Pilot plant Geleen

Incineration with energy recovery

67,773

92%

Re-use or recycling

5,839

8%

Total Geleen

73,612

Pilot plants Delfzijl

Incineration with energy recovery

9,958

40%

Re-use or recycling

14,825

60%

Total Delfzijl

24,783

Total hazardous waste

107,056

Non-Hazardous Waste Management

SDG

Subtargets

12.4: By 2020, achieve the environmentally sound

management of chemicals and all wastes throughout

their life cycle, in accordance with agreed international

frameworks, and significantly reduce their release to

air, water and soil in order to minimise their adverse

impacts on human health and the environment.

12.5: By 2030, substantially reduce waste generation

through prevention, reduction, recycling and re-use.

Within Chain Reaction 2030, Avantium has a concrete target

related to this important material issue: to send zero non-

hazardous waste to incineration and landfill by 2025. In line

with this, Avantium already sends zero waste to landfill, and

separates paper, glass, metal, wood and construction materials

from regular waste for re-use or recycling.

In 2021, the volume of non-hazardous waste produced at our

sites was 23,625 kg. The table provides a full site-by-site

breakdown of the volume and treatment of our non-hazardous

waste in 2021. The tables are included based on input from our

waste vendors, but this data is not validated. The data from

Delfzijl is not complete, as we have been unable to acquire an

accurate breakdown of some waste categories from this site.

Non-Hazardous Waste

in kg

2021

Amount

%

Amsterdam (Zekeringstraat and

Science Park)

Incineration with energy recovery

6,228

46%

Re-use or recycling

7,180

54%

Total Amsterdam

13,408

Pilot plant Geleen

Incineration with energy recovery

3,252

88%

Re-use or recycling

425

12%

Total Geleen

3,677

Pilot plants Delfzijl

Incineration with energy recovery

0

0%

Re-use or recycling

6,540

100%

Total Delfzijl

6,540

Total hazardous waste

23,625

To ensure continued progress on this target, in 2022 we will

review our non-hazardous waste facilities at each site and

optimise the separation of waste wherever possible. We will

also work to identify the main contributing factors to our

incinerated waste, and create an action plan to reduce these.

39

Our People

As the driving force behind Avantium’s

success, our people are at the heart of

everything we do. We believe our mission,

strategy and objectives can only be

achieved through highly talented,

motivated and engaged employees.

By fostering a safe, inclusive and inspiring

workplace, we attract talented colleagues

from diverse backgrounds and create an

environment where everyone can reach

their full potential.

Our Core Values and Culture

Our employees are guided by five core values that define what

we stand for and how we work with colleagues, customers and

partners. These core values are not only central to our culture but

also enable the execution of our strategy.

1.We make a lasting impact: We think big. We understand our

customers through and through. We improve the world

around us. We drive – and thrive on – change. We have an

impact on the environmental footprint of the wider industry.

2.We are determined team players: We embrace challenges.

We value complementary talents and diverse perspectives.

We actively engage with partners. We work in teams to solve

problems. We go the extra mile to deliver results.

3.We do the right things right: We behave ethically. We make

bold choices. We take responsibility for our actions. We

operate safely.

4.We are pragmatic idealists: We always find a way. We think

outside the box, but never lose sight of reality. We keep our

feet on the ground. We always sail towards our destination,

adjusting course when necessary.

5.We have fun and the rest of the world is a little bit weird: We

disrupt. We appreciate unconventional solutions. We

celebrate success and learn from setbacks. We view things

with a positive eye and an open mind.

At Avantium, we are united by a common purpose: to make a

positive and lasting impact on our world. Our team of 226 people

is highly motivated to contribute to our mission to facilitate the

transition to a sustainable, fossil-free future.

We do this through our individual and collective imagination,

creativity and perseverance. Setting high ambitions and daring to

take on big challenges is deeply ingrained in our culture, because

we know that innovation is not a linear process but is

characterised by highs and lows.

40

Bringing successful innovation to the market therefore requires

persistence, flexibility and focus – traits that are common to

Avantium’s people and culture alike. To help us achieve

successful innovation, we maintain a flat organisation that

empowers colleagues at every level, champions diversity and

puts sustainability at the centre of every decision we make.

Health & Well-Being

SDG

Subtargets

3.9 By 2030, substantially reduce the number of deaths

and illnesses from hazardous chemicals and air, water

and soil pollution and contamination.

The health and well-being of our people are imperative. We

recognise that, in order to achieve our goal of a fossil-free

industry, we need to foster an environment where all employees

feel safe, included and supported – both as people and as the

innovators our industry needs. In 2021, we continued to work

towards our target of being one of the 10 best companies to work

for in the Netherlands by 2030, and to build health and well-

being into all areas of our company.

COVID-19

We closely monitored the Dutch COVID-19 guidelines and acted

on all government directions as they continued to change

throughout the year. As in 2020, we used more stringent hygiene

practices to keep people safe in our offices and laboratories.

During periods of remote working, we paid extra attention to the

mental and physical health of employees. We continued to supply

the equipment and support they needed to carry out their roles

safely, comfortably and efficiently, whether at home or in the

workplace. This support has included a range of online resources

– to help colleagues optimise their physical environment and look

after their mental well-being – and a hotline, via Avantium’s

healthcare provider, for any employees who require additional

help.

We also took steps to maintain social cohesion even at a

distance. Bi-monthly company meetings and business unit town

hall meetings were organised virtually. Colleagues also stayed

connected through our social intranet, Your Information Platform

(YIP), even when they were not able to meet in person. In 2021, a

total of 661 messages were posted on YIP by colleagues.

Alongside this, Friday night socials and team events took place

when COVID-19 restrictions allowed, and we hope to be able to

hold more such events in 2022.

The pandemic has clarified the importance of embedding flexible

working practices into our company. As restrictions were

loosened and re-tightened towards the end of 2021, we held

active dialogues between line managers and their teams on

future ways of working at Avantium. The majority of employees

expressed a clear preference for flexibility and hybrid-working

possibilities. We appreciate that finding the right balance of

home- and office-working is important, and we will assess this,

with a number of internal stakeholders, early in 2022.

Absenteeism

The absenteeism rate in 2021 was 6.1% (2020: 3.8%). Even

though 45.1% of all employees recorded no absence due to illness

in 2021, the high rate of absenteeism has our full attention. Our

social medical team holds regular consultations with our

company doctor and involved leadership, with the aim of

supporting recovery and reintegration and, as a result, reducing

the absenteeism rate due to illness.

Becoming a Top-10 Place to Work

In December 2021, we carried out a Trust Index survey with Great

Place to Work, in line with our sustainability target of becoming

one of the top 10 places to work in the Netherlands by 2030. In

this way, we aim to ensure we provide a dynamic and welcoming

workplace for all our people. Our first goals were to identify

Avantium’s strengths as an employer and find areas where we

can do better – thus establishing a baseline for improvements in

the years to come.

With an employee response rate of 82%, this first survey gave

Avantium a Great Place to Work Trust Index score of 63%, which

means that nearly two-thirds of responses to the Trust Index

statements were ‘Often true’ or ‘Almost always true’.

Out of the five dimensions of the Trust Index model, Avantium

scored most highly on Camaraderie (72%) and Pride (69%).

Camaraderie measures whether employees believe their

company is a strong community where colleagues are friendly,

supportive and welcoming. Pride measures how employees feel

about their own individual impact through their work, their pride

in the work of their team and their pride in the company overall.

Within this, Avantium received its highest scores for the following

themes:

•People here are treated fairly regardless of their sexual

orientation (95%).

•People here are treated fairly regardless of their race (94%).

•I am able to take time off from work when I think it's

necessary (87%).

•People here are treated fairly regardless of their gender

(87%).

•I can be myself around here (85%).

Avantium received lower scores for Fairness (63%), Credibility

(60%) and Respect (57%). 'Fairness' measures (i) whether

employees believe management practices and policies are fair

and (ii) the equity, impartiality and justice employees experience

in the workplace. 'Credibility' measures (i) employees' view on

management's credibility (that is, how believable and trustworthy

they are) and (ii) employees’ perceptions of leadership

communication practices, competence and integrity. Finally,

'Respect' measures (i) the extent to which employees feel

respected by leadership and (ii) employees’ perceptions of

professional support, collaboration and involvement in decisions,

and the level of care leaders show for employees as people.

Specifically, the lowest scores were recorded for the following

statements:

•We have special and unique benefits here (18%).

•People here are paid fairly for the work they do (28%).

41

•I feel I receive a fair share of the profits made by this

organisation (33%).

•Management makes its expectations clear (38%).

•I am offered training and/or development to further myself

professionally (39%).

Our overall Trust Index score of 63% means Avantium does not

yet qualify for Great Place to Work certification. Guided by the

survey results, we will define short-, medium- and long-term

goals to gain certification and reach Avantium’s 2030 target. To

this end, a working group of employees from different business

units has been established. We aim not only to improve in areas

where our employees have asked for more support, but also to

challenge ourselves to keep building on areas in which we are

already strong. In five years’ time, we will repeat the Great Place

to Work survey, allowing us to measure our progress against the

current baseline.

Talent Attraction & Retention

SDG

Subtargets

5.5: Ensure women’s full and effective participation and

equal opportunities for leadership at all levels of

decision-making in political, economic and public life.

8.2: Achieve higher levels of economic productivity

through diversification, technological upgrading and

innovation, including through a focus on high-value

added and labour-intensive sectors.

8.5: By 2030, achieve full and productive employment

and decent work for all women and men.

We recognise that skilled, imaginative and resilient employees

are the key not only to Avantium’s continued success but also to

our mission of shaping a fossil-free chemical industry. Attracting

and retaining the very best people ensures our competitive

advantage and remains a central objective for us.

Since innovation is driven by the creative and pioneering minds of

our people, we aim to provide everyone with purposeful and

fulfilling work within a stimulating and inspiring environment. As

well as helping us to attract and retain the high-calibre people

our business needs, we see this goal as being deeply embedded

in our efforts to reach our sustainability target of becoming one of

the 10 best companies to work for in the Netherlands by 2030.

A Magnet for Talent

Fostering a safe and vibrant place where people can make an

impact is a key pillar of our strategy. To support and enable this,

we offer a number of benefits to our employees, beginning with

our remuneration policy. Naturally, recognising and rewarding our

people for their work and achievements is an important part of

our approach to providing a great place to work. Employee

remuneration increases are dependent on performance and

results, encouraging our people to aim higher, take on new

challenges and make a real, lasting impact through their work. In

2022, ESG-related topics will be included in individuals'

performance targets.

Other Avantium employee benefits include company pension

contributions and reduced health insurance costs. We also have

an Avantium Mobility Plan, which supports greener employee

travel through NS Business chip cards for public transport, electric

vehicles for management use and a company-wide bicycle

scheme, which brings benefits for employees’ mental and

physical well-being as well as for the environment.

Avantium has a highly educated workforce of experts across a

wide range of chemistry and engineering specialisms. In

preparation for the next phase of our strategy execution –

commercialising our renewable chemistry technologies and

constructing our FDCA Flagship Plant – we have broadened our

talent pool in terms of expertise in recent years, shifting our focus

from competencies such as innovation and creativity towards the

skills required for engineering, deployment and

commercialisation.

We believe the level of interest shown in Avantium by potential

candidates reflects positively on our workplace, in terms of both

the work we do and the way we do it. On average, we receive

close to 2,000 applications each year – approximately 43

applications per vacancy (2020: 47) – and it usually takes us

around 44 days to fill a vacancy. Diversity is a key factor in the

depth of our talent pool, and Avantium is proud to attract

candidates from all over the world: we currently employ

colleagues representing 20 different nationalities. For further

information, see the Diversity & Inclusion section.

As part of our aim to make Avantium an engaging and supportive

workplace, we are expanding our range of onboarding activities,

including a lunch meeting with leadership in the first few months

after they arrive. This will offer new joiners a chance to talk about

their transition into the company, and we will use this valuable

feedback to keep fine-tuning our talent acquisition procedure.

Training and Development

As well as attracting the best talent for our company, we have a

duty to ensure we help all Avantium colleagues reach their full

potential, no matter their role in our business. We therefore

continued to grow our portfolio of personal and professional

training programmes in 2021.

We provide all employees with access to the online training

platform GoodHabitz, home to more than 80 personal

development programmes. We also have a ‘Lead to Grow’ series,

which aims to bring leaders in the business together, helping

them focus on personal growth, leadership skills and relationship-

building. We encourage leaders to work together to solve

business challenges, which contributes towards a shared

leadership consciousness that thrives at Avantium.

This year, we introduced two new Lead to Grow modules:

‘Empathise to Connect’ and ‘Delegate to Empower’. These

modules focus on keeping our colleagues inspired, engaged and

connected during a time of uncertainty, and on boosting

creativity, initiative and a delivery mindset. Similar to our other

programmes in the series, these modules consist of group

42

learning sessions, self-reflection activities and ‘fireside chats’ with

Management Team members, who share their personal stories.

Employees are then encouraged to put together personal action

plans to help them implement their learnings, supporting their

growth and progression at Avantium.

Each of our three business units also has its own development

budget to allow its employees to take part in specific training

sessions. This encourages our colleagues to stay curious, take

ownership of their work and drive their own career paths in the

direction they choose.

Diversity & Inclusion

SDG

Subtargets

4.4: By 2030, substantially increase the number of youth

and adults who have relevant skills, including

technical and vocational skills, for employment, decent

jobs and entrepreneurship.

5.5: Ensure women’s full and effective participation and

equal opportunities for leadership at all levels

of decision-making in political, economic and public life.

8.5: By 2030, achieve full and productive employment and

decent work for all women and men, including for young

people and persons with disabilities, and equal pay for

work of equal value.

We aspire to be a diverse and inclusive company: a place where

everyone belongs, with a safe and open culture where colleagues

of all backgrounds feel valued and supported. Our employees

may be strongly united by a shared sense of purpose in the work

we do, but we believe that, to reach our goals and bring our

vision of a fossil-free world to life, fostering and encouraging a

diversity of perspectives is fundamental.

Avantium’s Chain Reaction 2030 sustainability plan describes a

series of sub-targets in this area:

•To refine our diversity and inclusion (D&I) key performance

indicators (KPIs), conduct a baseline assessment and

establish a plan for improving this baseline;

•To maintain the diversity of nationalities within our company;

•To reach gender equality in leadership positions by 2030.

Strengthening Our Diversity and Inclusion Policy

We have a D&I policy in place, ensuring that we are

representative of the societies and communities we operate

within.

The fundamental principles of Avantium's D&I policy are: to

maintain a balanced workforce composition based on age,

gender, cultural or ethnic origin, physical and mental capacity,

beliefs and working styles; to provide equal development

opportunities for all employees; and to promote a balanced

composition in leadership positions through a policy of gender

and cultural diversity.

Diversity of our Workforce

Site

Number of

employees

Of which female

% Full-time contract

% Part-time contract

Male

Female

Male

Female

Delfzijl

29

3.4%

82.1%

-

17.9%

100.0%

Geleen

23

-

95.7%

n/a

4.3%

n/a

Science Park

9

22.2%

71.4%

100.0%

28.6%

0.0%

Zekeringstraat

165

33.9%

72.5%

39.3%

27.5%

60.7%

Total

226

26.1%

77.2%

40.7%

22.8%

59.3%

Gender and Background

In 2021, the Avantium workforce was made up of 226 employees

of 20 different nationalities. In 2021, women made up 26.1% of

our total workforce, versus 24.5% in 2020. This small

improvement is nowhere near enough: we pay close attention to

our gender balance in an industry where women have historically

been severely underrepresented, and we are committed to

improving our company’s overall gender balance.

Currently, we have strong female representation on our

Supervisory Board: in 2021, four out of its five members were

women. At the Extraordinary General Meeting of Shareholders on

25 January 2022, a new male candidate was appointed as a sixth

member of the Supervisory Board, complying with the target of at

least 30% male or female Supervisory Board members prescribed

by Dutch legislation. Nonetheless, we have more work to do at

other levels of the company: one of the Management Team’s

seven members is female, and at the end of 2021, 28% of the

Management Team’s direct reports in leadership positions were

women.

43

Embedding Inclusion

At Avantium, we know that diversity alone is not enough. We are

therefore committed to weaving inclusion into the fabric of our

business. To create sustainable change, we recognise that all

employees must continue to learn, grow and challenge their

perceptions and biases.

In 2021, we developed a comprehensive training programme on

unconscious bias, which we will roll out with the aim of a 100%

completion rate in 2023. This training will both mitigate the

effects of implicit bias in our business and help all colleagues

engage meaningfully with this issue.

Ensuring Equal Opportunities

We are committed to providing equal opportunities to our staff,

contractors, agents of and applicants to the company, and to not

discriminating on the basis of age, gender, race, disability, faith,

beliefs or sexual orientation. Avantium aims to ensure that its

employees are selected, trained, compensated, promoted or

transferred solely on the basis of abilities, qualifications and

merit.

Employees who feel they have suffered or witnessed harassment,

discrimination, bullying or victimisation, or who struggle with

dilemmas in this field, can contact one of our Confidants to

address their situation and/or follow Avantium’s complaints

procedure. The Confidant acts according to our Confidant

Regulations, keeping all discussions and information shared

strictly confidential and advising the employee under the

conditions described in the Confidant Regulations. The following

Great Place to Work Trust Index statements will be used to

measure how our employees score Avantium on equality over

time:

•People here are treated fairly regardless of their age

(2021: 81%).

•People here are treated fairly regardless of their race

(2021: 94%).

•People here are treated fairly regardless of their gender

(2021: 87%).

•People here are treated fairly regardless of their sexual

orientation (2021: 95%).

•If I am unfairly treated, I believe I’ll be given a fair shake if

I appeal (2021: 62%).

Next Generation of Scientists

SDG

Subtargets

4.4: By 2030, substantially increase the number of youth

and adults who have relevant skills, including technical

and vocational skills, for employment, decent jobs and

entrepreneurship.

4.7: By 2030, ensure that all learners acquire the

knowledge and skills needed to promote sustainable

development, including, among others, through education

for sustainable development and sustainable lifestyles,

human rights, gender equality, promotion of a culture of

peace and non-violence, global citizenship and

appreciation of cultural diversity and of culture’s

contribution to sustainable development.

8.2: Achieve higher levels of economic productivity through

diversification, technological upgrading and innovation,

including through a focus on high-value added and labour-

intensive sectors.

We use Avantium’s scientific expertise to excite the next

generation about sustainability and renewable chemistry. In

recent years, we have opened our laboratories to students,

showcasing sustainable materials and demonstrating how our

company works to advance new technologies for a more

sustainable future, including the role of polyethylene furanoate

(PEF) in the circular economy.

Investing in Our Future

In 2021, we continued these efforts, reaching 2,070 students.

Among other activities, we:

•Held an open Weekend of Science to attract young people’s

attention to the opportunities of innovation and the journey to

a fossil-free world.

•Invited a high-school student to take over from CEO Tom van

Aken for a day as part of JINC's 'Boss of Tomorrow'

programme. The student shared her insights on the question

'How can we make young girls excited about sustainable

chemistry?'

•Participated in Imagination at Work, a C3 programme

mentoring students through their end-of-year project, with a

focus on helping them understand how chemistry and life

sciences contribute to sustainability solutions.

•Five students from De Kleine Consultant (the Young

Consultant – a non-profit organisation) worked on a 10-week

study to identify the market potential of Avantium’s PEF in the

apparel industry and develop a market entry strategy

identifying sustainable brands in the industry. This study was

presented to a broader group of students from the Young

Consultant organisation.

•Gave an online presentation on Girls Day, aiming to inspire

young girls to follow a career in STEM.

•Gave a 'teach-the-teacher' lecture to chemistry teachers as

part of a C3 conference with the theme 'Sustainability in

chemistry and education'. Teachers then integrated their

learnings into their own lessons.

•Hosted Inholland students at Avantium's headquarters for a

lecture and laboratory tour.

•Gave a lecture entitled 'Making sustainability work: Successful

examples from industry' to students at the University of

Leiden.

•Participated in the Da Vinci project, an interdisciplinary

honours programme on sustainability for second- and third-

year Bachelor's students from Utrecht University. We invited

these students to share ideas on, and build a case for, the

best ways to deploy Avantium's Volta Technology in

industrial settings.

44

Avantium at the Cutting Edge

To nurture and accelerate innovation, we collaborate and

establish partnerships with universities and academic institutes.

This gives us access to a large pool of scientists, students and

academics, and presents opportunities for scouting new talent for

our company.

Our Chief Technology Officer, Gert-Jan Gruter, is Extraordinary

Professor of Industrial Sustainable Chemistry at the Van ’t Hoff

Institute for Molecular Sciences, one of the eight research

institutes of the University of Amsterdam’s Faculty of Science. He

also leads Avantium’s Corporate Technologies team, which sits

outside our three business units and explores all aspects of

polymer materials transitions, acting as an early-stage pipeline of

new ideas for existing and future technologies. PhD students

form the core of the team, with nine working on their theses at

Avantium in 2021 while contributing to the development of our

technologies.

Avantium also works with the University of Amsterdam’s

Psychology Research Institute, where doctoral students in Social

Psychology research sustainable consumer behaviour.

Investigating the psychology of green consumer habits, such as

the public’s willingness to pay a premium for greener packaging,

is vital if we are to successfully commercialise new sustainable

materials and decouple our industry from fossil feedstocks.

45

Our Leadership and Governance

Avantium has long made its voice heard

among the calls for a fossil-free chemical

industry. Alongside our actions to bring

sustainable, high-performing and

commercially viable chemicals and

technologies to the world, we are proud

advocates for the global transition to

sustainable chemical feedstocks. In 2021,

we continued to use our position as a

leader in this field to have a positive

impact on our wider society and create a

better future for our planet.

Golden Sustainability Rules

Our approach to sustainability is governed by the following

principles. These are our Golden Sustainability Rules, placing our

work towards a fossil-free world at the heart of all we do.

Climate Advocacy

SDG

Subtargets

9.5: Enhance scientific research, upgrade the

technological capabilities of industrial sectors in

all countries, in particular developing countries,

including, by 2030, encouraging innovation and

substantially increasing the number of research and

development workers per 1 million people and

public and private research and development

spending.

13.3: Improve education, awareness-raising and

human and institutional capacity on climate change

mitigation, adaptation, impact reduction and early

warning.

17.6: Enhance regional and international cooperation

on and access to science, technology and innovation

and enhance knowledge sharing on mutually agreed

terms, including through improved coordination among

existing mechanisms, in particular at the United

Nations level, and through a global technology

facilitation mechanism.

17.7: Promote the development, transfer,

dissemination and diffusion of environmentally sound

technologies.

Avantium's Chain Reaction 2030 sustainability plan includes the

target of ensuring that 100% of our advocacy focuses on

transforming the chemicals industry to circular and fossil free. In

order to advocate for changes that support the transition to

circular and sustainable chemicals and materials, Avantium

regularly gives interviews and publishes thought leadership and

trade journal articles.

46

In 2021, Avantium employees gave 26 interviews (including

three podcasts) about our technologies and the way they

address the climate crisis and plastic waste pollution. We also

wrote 17 thought leadership and by-line articles and blogs,

advocating for change in the chemicals industry and calling for

partnerships and collaborations to tackle the climate crisis.

Avantium employees published 17 further articles in peer-

reviewed journals and other publications.

We also made our voice heard through digital platforms,

especially LinkedIn and Twitter. Moreover, we participated in

more than 40 conferences, speaker events and webinars in

2021, giving presentations at more than half of these events.

The scale of the climate crisis challenge demands that we

actively engage in and work through partnerships and

collaborations. We therefore work with stakeholders across the

plastics value chain, for instance in industry associations such

as European BioPlastics (EUPB), Biobased Industry Consortium

(SME member), Industry Table Northern Netherlands and the

Royal Association of the Dutch Chemical Industry (VNCI).

Avantium CEO Tom van Aken is the SME representative in the

Chemistry Top Team in the Netherlands, aiming to stimulate

good cooperation between science, industry and government.

Ed de Jong, our Vice President Development, is a board member

of the Top Consortium for Knowledge and Innovation for the

Biobased Economy (TKI BBE) in the Netherlands, as a

representative of the chemicals industry.

In the summer of 2021, Avantium also became a member of the

Renewable Carbon Initiative (RCI), an interest group of more

than 30 well-known companies active in the chemical and

material value chains. The overarching goal of the RCI is to

completely replace below-ground fossil carbon with renewable

carbon (that is, carbon from all alternative above-ground

sources: biomass, CO2 and recycling). This is the only way for

chemicals and materials to become sustainable, circular and

climate friendly. The RCI wants to spread this message and

initiate further actions by bringing stakeholders together,

providing information and shaping policy, in order to support

progress towards a climate-neutral circular economy.

Stakeholder Engagement

SDG

Subtargets

17.16: Enhance the global partnership for sustainable

development, complemented by multi-stakeholder

partnerships that mobilise and share knowledge,

expertise, technology and financial resources, to

support the achievement of the sustainable

development goals in all countries.

Continuous stakeholder engagement, in which we embrace

open dialogue and knowledge-sharing, is important in an

innovation-driven industry and helps us to identify areas for

improvement. We communicate with our stakeholders through

various channels and at a variety of levels. The methods of

engagement vary depending on the stakeholders, the issues of

concern and the purpose of engagement. The following tables

provide an overview of our main stakeholder groups, the way

we communicate with them and the topics most relevant to

them.

47

How We Engage with Our Stakeholders

Stakeholder

Form and frequency of dialogue

Topics discussed

Effect of dialogue on Avantium

Employees

•Social intranet (YIP)

•Company meetings with all employees (every two months or when

appropriate)

•Leadership Team meetings (every two months or when appropriate)

•Business unit town hall meetings (every two months or when

appropriate)

•Performance reviews (twice a year)

•Training and development programmes (when appropriate)

•Works Council (at least every two months or when appropriate)

•Onboarding programme for new employees (when appropriate)

•Strategy

•Business highlights and performance

•Health and safety

•Human Resources-related topics,

including vitality

•Diversity and inclusion

•Training and development

With a continuous and open dialogue, we aim to help our

employees embrace our values and familiarise themselves with

our strategy and mission. We celebrate our successes and share

our challenges and setbacks. We believe employee engagement

is key to Avantium’s business, and that our success is built on

the commitment, ambition and expertise of our people.

(Prospective)

Partners and

customers

•Business meetings and site visits, joint (research) projects and

business development (when appropriate)

•Phone and video calls, email exchanges and virtual tours by

commercial or technical teams (daily)

•Conferences, symposia and special events (when appropriate)

•Technologies, lead products and

services

•Business development and innovation

•Customer support and quality

•Technology licences

•Environmental, social and governance

(ESG) targets (e.g. circular business

models, carbon footprint)

An integral part of Avantium’s strategy and our

commercialisation roadmap is close collaboration with strong

partners and customers throughout the entire value chain. We

work with companies who share our values and want to build a

better world for future generations. This helps us develop

innovative solutions that deliver sustainability benefits to

customers and beyond.

Shareholders

•Direct interaction with Investor Relations, CEO or CFO in (video and

audio) calls, email exchanges, site visits (daily)

•Annual General Meeting (annually)

•Extraordinary General Meeting (when appropriate)

•Capital Markets Day (Technology & Markets Day/Retail Investors

Day) (annually or when appropriate)

•Annual or half-year results presentation and press release (bi-

annually)

•Investor conferences and roadshows (when appropriate)

•Strategy, business activities and

performance

•Financial results

•Funding options

•Market outlook

•Company roadmap and technology

portfolio

•Lead products and end-market

•ESG performance

•Board composition and remuneration

This group consist of current shareholders, potential investors

and financial analysts. We aim to help them understand the

(long-term) investment opportunities Avantium offers. With

shareholders, we discuss our funding strategies and

opportunities, financial performance and outlook, as well as our

sustainable solutions.

48

Stakeholder

Form and frequency of dialogue

Topics discussed

Effect of dialogue on Avantium

Suppliers and

contractors

•Direct interaction via supplier account teams/procurement in calls,

email exchanges, virtual meetings (daily)

•Site visits at Avantium and/or at the supplier’s office (when

appropriate)

•Products and technology

•Innovation

•Supply chain of renewable feedstock

•Supplier performance and risk management

•Health and safety

•Compliance

•Human rights and labour standards

•Environmental topics, including biodiversity

•IP/information security

•Business continuity

We rely heavily on our supplier network. Our suppliers

and contractors are integral as partners in the efficient

and seamless scale-up of our technologies and in

delivering on our customer commitments. We are

committed to a responsible and sustainable supply

chain.

Governments &

Authorities

•(Pro)active dialogue with government, regulators and authorities and

municipalities (when appropriate)

•Safety and compliance reporting (when appropriate)

•Our technologies and lead products

•Strengthening innovation in the industry and

society where we operate

•Compliance

•Safety

•Permitting

Avantium takes part in open dialogues with relevant

governments and authorities. We hold meetings with

government bodies, authorities and local municipalities

to discuss Avantium's business, opportunities and

challenges, with the aim of strengthening our licence to

operate and generally promoting an environment

conducive to investment and development, as well as to

mitigate regulatory and political risk.

Society

Industry associations

•Member conferences, regular meetings, round tables of relevant

industry associations (when appropriate)

Community, universities, media, NGOs and other

•www.avantium.com (continuously)

•Avantium's social media channels (continuously/when appropriate)

•Press releases, interviews, engagement calls/meetings (when

appropriate)

•Collaboration with University of Amsterdam (continuously)

•Community engagement programmes (when appropriate)

•Company visits (when appropriate)

•Our technologies and lead products

•Strengthening innovation in the industry, society

and where we operate

•Compliance

•Circular economy

•Community engagement

•Our people

•Exciting the next generation about renewable

chemistry

•Local developments

We align our business strategy and sustainability goals

with the needs of our wider society, beyond our direct

value chain. We also engage with students at schools

and universities, sharing our expertise and exciting the

next generation about sustainable and renewable

chemistry.

49

Corporate Partnerships

SDG

Subtargets

13.3: Improve education, awareness-raising and

human and institutional capacity on climate change

mitigation, adaptation, impact reduction and early

warning.

17.6: Enhance regional and international cooperation

on and access to science, technology and innovation

and enhance knowledge sharing on mutually agreed

terms, including through improved coordination among

existing mechanisms, in particular at the United

Nations level, and through a global technology

facilitation mechanism.

17.7: Promote the development, transfer,

dissemination and diffusion of environmentally sound

technologies.

17.16: Enhance the global partnership for sustainable

development, complemented by multi-stakeholder

partnerships that mobilise and share knowledge,

expertise, technology and financial resources, to

support the achievement of the sustainable

development goals in all countries.

Avantium is committed to becoming a world leader in

sustainable chemistry – but we also know that by working

collaboratively across our industry and beyond, we can make an

even bigger impact.

In order to develop, scale and commercialise our YXY

Technology, we have built a strong ecosystem of partnerships

with multiple players throughout the value chain; from feedstock

providers to converters and global consumer brands. One prime

example is our collaboration with PEFerence, a consortium of

organisations aiming to replace a significant share of fossil-

based polyesters with the 100% plant-based PEF; another is the

Paper Bottle Project (Paboco®), an innovation community of

leading brands united by their wish to develop a paper bottle.

Avantium's PEF will provide the superior barrier properties

needed for beverages such as beer and carbonated soft drinks.

For our Ray Technology, we collaborate with partners in

consortia such as VEHICLE and IMPRESS. We have also joined

forces with Cosun Beet Company, with the aim of establishing a

joint venture to convert beet sugar into plantMEG and plantMPG

using Ray Technology.

Our Dawn Technology is is supported by a consortium

consisting of Nouryon, energy company RWE, the Dutch

Forestry Agency (Staatsbosbeheer) and Chemport Europe. We

also collaborate with partners in consortia such as CHAPLIN XL,

VEHICLE and IMPRESS.

Turning to our Volta Technology, we collaborate with more than

35 partners in several EU projects, such as ELCOREL, PERFORM,

RECODE, SunCoChem and OCEAN. We jointly perform R&D

work to accelerate our progress and reach deployment.

Avantium is also a founding member of the industrial

association CO2 Value Europe, where we engage with

companies and research institutions who share our belief that

carbon capture and utilisation (CCU) technologies are necessary

for our circular future.

Meanwhile, our Avantium Catalysis business unit serves the

catalysis R&D needs of international blue-chip players, as well

as collaborating closely with partners in consortia such as

IMPRESS and PROVE IT.

IP & Data Protection

Responsible, active management of our intellectual property (IP)

and our data, including that of employees, clients and suppliers,

is imperative. We handle our IP portfolio in line with Avantium's

strategy and the external IP landscape, and review and decide

on the appropriate systems to secure data within our company.

Intellectual Capital

Throughout our innovation process, we record inventions, write

invention disclosures and register patents to secure and protect

our IP rights – a critical factor in Avantium’s success. To

safeguard our proprietary technologies and products, we have

developed, and continue to maintain and strengthen, an

extensive IP position. We consider a patent family fully granted

if it is granted in both Europe and the USA.

We further expanded and strengthened our ecosystem of

patented technologies in 2021. Additional patent applications

were filed on features closely related to the commercial use of

our YXY Technology, while a number of valuable patents on PEF

applications were granted or filed, both in Europe and in the

USA. In order to increase our commercial opportunities, we also

lodged oppositions against third-party European patents.

In February 2021, to build on our progress towards establishing

the YXY Technology Flagship Plant, Avantium Renewable

Polymers signed a patent licence agreement with Eastman

Chemical Company, giving us the freedom to operate under its

FDCA-related patent portfolio. Under this agreement, we have

the flexibility to keep developing our technologies and to work in

partnership with Eastman to bring circular innovation to the

market.

Further developments in Ray Technology were protected by the

filing of several patent applications. Together with the University

of Amsterdam, we are also seeking patent protection for new

polymers and improved polymerisation methods arising from

early-stage research.

The table 'Our Intellectual Capital' gives an overview of our

current patents and patent applications, including invention

disclosures.

50

Our Intellectual Capital

Business unit

IP portfolio

Current number of patent

families (incl. newly filed

patent applications)4

Newly filed patent

applications in

20215

Newly granted

patents in Europe

(EPO) or the USA in

20216

Newly reported

inventions in

20216

Renewable Polymers

YXY Technology

60

2

8

8

Renewable Chemistries

Ray Technology

16

3

2

6

Renewable Chemistries

Dawn Technology

9

0

1

0

Renewable Chemistries

Volta Technology7

37

1

6

11

Catalysis

Catalysis

11

2

0

10

Corporate Technology

Early stage

11

6

0

4

Total

144

14

17

39

Data Management

In 2021, we embarked on an information technology (IT)

improvement programme to make our IT infrastructure and

security environment more robust against today's (cyber)

challenges. Under the initiative, we migrated Avantium

employees to Microsoft 365, replaced company firewalls and

launched a Cyber Security Awareness programme, among other

things.

This programme consists of a knowledge assessment,

computer-based trainings and tests. Based on the assessment

results, specific trainings are assigned to relevant target groups,

from individual users to all Avantium employees. The training

content covers a range of areas – including email phishing,

password strength, social engineering, physical security, safe

web browsing, travel security and social media – and is adjusted

to ever-changing threats. The Cyber Security Awareness

programme continues to run in 2022.

In 2021 we did not receive any substantiated complaints

concerning breaches of customer privacy or losses of customer

data.

Climate-Related Regulation

SDG

Subtargets

13.3: Improve education, awareness-raising and

human and institutional capacity on climate change

mitigation, adaptation, impact reduction and early

warning.

17.16: Enhance the global partnership for sustainable

development, complemented by multi-stakeholder

partnerships that mobilise and share knowledge,

expertise, technology and financial resources, to

support the achievement of the sustainable

development goals in all countries.

We actively engage with governments and authorities, both as

Avantium and through industry associations, to help shape

climate policy and plastics regulations. In recent years,

regulatory bodies have increasingly focused on the issues of

climate breakdown and plastic waste. Through its Green Deal,

the EU leads the way on actions for a sustainable economy –

with aggressive targets not only for carbon, but also for plastics.

More governmental regulations, legislation and policies on

plastic emerged in 2021. In July, for example, the EU banned

single-use plastics in 10 common waste items, and the

Netherlands expanded its deposit charges on bottles for

carbonated soft drinks and water to also cover those with a

volume of less than 1 litre. In December, the UN Food and

Agriculture Organization called for action to replace

conventional polymers with bio-based, bio-degradable

polymers. Meanwhile, plastic packaging on many fruits and

vegetables is now banned in France, and the United Kingdom

has announced a forthcoming tax on all plastic packaging with

less than 30% recycled content.

51

4 A patent family is a collection of several national and/or regional patents and/or patent applications covering the same invention.

5 A patent application is a request pending at a patent office for the grant of a patent for an invention. Once the patent application complies with the laws of the country or region concerned, a patent may be granted for the invention.

6 Newly reported inventions may mature into a publication or patent application or may be kept as a trade secret.

7 Including former Liquid Light patent families.

Avantium applauds these regulatory demands on the chemicals

and plastics industry as well as on brand owners and retailers.

Such actions are forcing companies to make important positive

adjustments to their environmental impact.

Product Stewardship

SDG

Subtargets

12.4: By 2020, achieve the environmentally sound

management of chemicals and all wastes throughout

their life cycle, in accordance with agreed international

frameworks, and significantly reduce their release to

air, water and soil in order to minimise their adverse

impacts on human health and the environment.

Avantium is working on a product stewardship plan to be

implemented across our entire organisation. This will involve all

stages of our product life cycle, from manufacturing to waste.

In 2021, we focused on coordinating our product stewardship

with regard to FDCA and PEF products, and made significant

progress on product safety documentation and toxicological

studies. The developments in our product safety information

have been made available to all FDCA and PEF product

development partners and transport companies. The safety

data sheets are available for all operators to ensure safe

handling of the products in all process streams during

manufacturing.

The chemical registration of new substances is a critical step to

allow chemicals to be produced and/or imported in different

jurisdictions. The rules for registration differ from region to

region; nevertheless, registration allows a risk assessment on

the impact of the substances on human health and the

environment to be carried out. Depending on the region,

polymers may be exempt from registration, either because the

monomers are registered or because the polymer is considered

a polymer of low concern. In 2021, Avantium completed the

REACH registration for FDCA up to the tonnage band of 1000

ton/year, by completing studies to demonstrate its low toxicity.

These studies have been uploaded to the ECHA website.

Avantium also completed the polymer exemption of PEF in

Korea.

The authorisation of a material to be used in food contact

applications also requires a full assessment of the polymer to

ensure consumer safety. In 2021, Avantium developed a resin-

grade RP90Nx that is safe to be in direct contact with acetic

foods, alcoholic drinks with an alcoholic strength less than 20%

and clear and cloudy drinks, compliant with European

Regulations.

Responsible Business Principles

Underpinning everything we do at Avantium is our firm

commitment to being a responsible business: in terms of both

what we do and how we do it. We have numerous principles

and policies that guide our work and stand as the bedrock on

which we build our success.

Code of Conduct

Our Code of Good Business Conduct covers ethical business

practices in a wide range of areas, including (but not limited to)

integrity at work, discrimination, working conditions, equal

opportunities, conflicts of interest, privacy, financial practices,

harassment and bullying and complaints procedures.

In 2021, there were no confirmed incidents of corruption or legal

actions on anti-competitive behaviour or anti-trust. There were

furthermore no incidents on discrimination reported in 2021.

Golden Safety Rules

We strive to be an accident- and incident-free workplace. All

our employees commit to Avantium’s Golden Safety Rules, full

details of which can be found in the Our Operations section of

this chapter.

Golden Sustainability Rules

Our eight Golden Sustainability Rules have been in place for

several years, full details can be found in the Our Leadership

and Governance section of this chapter.

Core Values

Avantium aims to uphold five core values, which guide our work

to achieve our vision of a fossil-free chemical industry. For more

information, see the Our People section of this chapter.

Oversight and Accountability

Avantium builds progressive partnerships with companies,

government agencies, non-governmental organisations and

academic institutions to develop consistent measurements and

make continuous progress. We also engage in regular and

meaningful dialogues with our stakeholders. Our Articles of

Association, Supervisory Board Terms of Reference and

regulations governing our various committees are available to

view online.

Transparency

We are transparent about our technologies, products and

processes, and have a number of mechanisms for enabling and

ensuring transparency.

•Our Whistleblower Policy sets out the procedures under

which employees can and must report relevant irregularities.

•Our Bilateral Contracts Policy covers contact and

information-sharing with shareholders.

•We use comprehensive life-cycle assessments (LCAs) to

provide transparency about the impact of our products over

their whole lifetime. Not only do we feel it is crucial for us to

be open about this information to our stakeholders, but we

also believe that LCAs should be carried out as standard

throughout our industry. More information can be found in

the Our Technologies section of this report.

52

Financial Performance in 2021

Income Statement

Revenue

in millions of €

2021

2020

% change

Catalysis

10.0

9.2

9%

Renewable Chemistries

0.5

0.4

23%

Renewable Polymers

0.4

0.3

36%

Total revenue

10.9

9.9

11%

Despite the challenges caused by continuing travel restrictions

during 2021, revenues in all of the Avantium business segments

increased. Avantium Catalysis received several orders for

Flowrence® systems and contract R&D projects from companies and

academic institutions around the world. As a result, Avantium’s

consolidated revenues increased by 11% from €9.9 million in 2020

to €10.9 million in 2021.

Other Income: Government Grants

Income from government grants showed a decrease of 20%, from

€8.4 million in 2020 to €6.7 million in 2021. The lower grant

recognition was predominantly in Avantium Renewable Chemistries

and was due to income milestones from two major grant

programmes being fully recognised by 2020. The grant income in

2021 is predominantly the result of previously awarded grant

programmes (PEFerence, IMPRESS, Bio-MEG Proeffabriek and

DEI+). Avantium successfully secured additional grants in 2021,

including grants for participation in the consortia CATCO2NVERS,

CO2SMOS and VIVALDI.

EBITDA8

in millions of €

2021

2020

% change

Catalysis

2.7

2.6

4%

Renewable Chemistries

-2.3

-1.6

44%

Renewable Polymers

-7.1

-7.3

-3%

Company overheads/other

-9.4

-8.6

9%

EBITDA of business segments

(16.1)

(14.9)

8%

In Avantium Catalysis, there was an increase in EBITDA as a result

of the higher revenues; this was partially offset by an increase in

raw materials and contract costs throughout the year. In Avantium

Renewable Chemistries, the EBITDA decreased as a result of the

lower income from government grants; this was partially

compensated by a delay in costs incurred, due to the accident in the

Delfzijl pilot plant, as well as further measures implemented to

control costs. The lower EBITDA of Avantium Renewable Polymers

was mainly due to an accelerated spending on pre-FID activities.

For further information on the EBITDA of Avantium's business

segments, please refer to note 19 in the Financial Statements.

Total EBITDA for the group decreased from €-14.9 million in 2020 to

€-16.1 million in 2021. The EBITDA for 2020 included a one-off €0.5

million reversal of an onerous lease provision.

Operating Expenses

in millions of €

2021

2020

% change

Raw materials and contract

costs

(3.0)

(2.3)

30%

Employee benefit expenses

(19.2)

(19.3)

-1%

Office and housing expenses

(2.0)

(2.0)

—%

Patent, licence, legal and

advisory expenses

(4.3)

(4.2)

2%

Laboratory expenses

(2.9)

(3.7)

-22%

Advertising and

representation expenses

(0.7)

(0.7)

—%

Reversal due for onerous

contract

—

0.5

-100%

Other operating expenses

(1.6)

(1.5)

7%

Net operating expenses

(33.7)

(33.2)

2%

Net operating expenses amounted to €33.7 million in 2021, an

increase of €0.5 million compared to 2020 (€33.2 million). This

increase is primarily due to the one-off reversal of an onerous lease

provision in 2020.

Raw materials and contract costs increased compared to the prior

year and are connected to the increase in revenues in 2021.

Laboratory expenses decreased compared to prior year, related to

the delayed start-up of the Ray demonstration plant in Delfzijl.

53

8EBITDA is an important measure for the company as it measures the financial performance before taking the cost of capital, depreciation and taxes into consideration. EBITDA margins provide a view on the operational efficiency and a more

accurate and relevant comparison between peer companies.

Balance Sheet and Financial Position

Avantium’s cash position (including restricted cash) was €34.9

million as at 31 December 2021 (31 December 2020: €26.6 million).

The increase in Avantium's cash position is due to the successful

capital raise that took place in April 2021, raising €27.8 million

through an accelerated bookbuild.

The balance sheet total assets increased to €77.7 million (2020:

€70.0 million). Total net equity increased to €50.0 million (2020:

€46.2 million). The company has no debt or borrowings.

Financial lease obligations increased from €9.7 million in 2020 to

€10.7 million in 2021, and primarily consist of lease agreements on

offices and laboratory facilities. This increase is due to the extension

of a number of lease agreements during the year.

Non-current assets decreased from €34.8 million in 2020 to €34.6

million in 2021, which is primarily as a result of depreciation and

limited new capital investments during the year.

Cash Outflow

in millions of €

2021

2020

% change

EBITDA

(16.1)

(14.9)

8%

Lease payments

(1.7)

(1.9)

-11%

Working capital movement

3.2

1.2

167%

Capital expenditures

(5.3)

(3.5)

52%

Other9

1.7

0.3

467%

Net cash outflow

(18.1)

(18.8)

-4%

Net cash outflow (cash flow excluding capital raise) for the year

was €18.1 million, versus €18.8 million in 2020. Avantium’s cash

outflow therefore improved by €0.7 million compared with the prior

year. This was mainly due to improvements in working capital

management. Furthermore, Avantium invested €5.3 million in capital

expenditure during 2021 (2020: €3.5 million) which primarily related

to the investment in the early EPC work and FEED studies for the

Flagship Plant by the Avantium Renewable Polymers division.

Avantium’s changes in working capital in 2021 amounted to a net

positive movement of €3.2 million, compared with €1.2 million in

2020. The 2021 positive working capital movement is the result of

€0.5 million lower receivables and €1.4 million higher trade and

other payables as the company has accelerated spending in

preparation to the Financial Investment Decision.

54

9 Other includes non cash movements such share-based payments and onerous contract expenses.

Going Concern

The financial statements have been prepared on a going

concern basis.

Avantium N.V. (“Avantium”)

Avantium is a leading technology company in renewable

chemistry, dedicated to developing and commercialising

breakthrough technologies for the production of chemicals from

renewable sources and circular plastic materials.

Avantium consists of the three business segments in various

stages of maturity, Avantium Catalysis, Avantium Renewable

Polymers and Avantium Renewable Chemistries:

•Avantium Catalysis: Our main revenue generating business

unit is Catalysis Services & Systems which serves the R&D

catalysis needs of international blue-chip players.

•Avantium Renewable Polymers commercialises its YXY

Technology for the production of FDCA (furandicarboxylic

acid), which is a key ingredient for PEF (polyethylene

furanoate). PEF is a novel 100% plant-based and fully

recyclable polymer, which has the potential to outperform

today’s packaging materials, such as plastic, glass and

aluminum. PEF has huge potential in the packaging, film and

textile sectors, which are large and growing markets.

Avantium Renewable Polymers has operated a pilot plant in

Geleen as of 2011 and is planning to build its full scale

Flagship Plant at the Groningen SeaPorts site in Groningen.

This Flagship Plant will operate at commercial scale and will

further support Avantium Renewable Polymers’s licensing

strategy. We expect that construction of the Flagship Plant

for FDCA will start in April 2022 and will be completed by

Q4 2023.

•Avantium Renewable Chemistries develops, among other

technologies, plantMEG™ (mono-ethylene glycol), which is a

plant-based, fully recyclable and competitive alternative for

fossil-based MEG. This is an important chemical building

block for PET and PEF resin, both of which are used in

bottles and packaging; fibres for clothing, furniture and the

automotive industry; and solvents and coolants. Avantium

Renewable Chemistries opened a demonstration plant in

Delfzijl in 2019, which was successfully commissioned and

became fully operational in 2020. Avantium plans to scale-

up the plantMEG™ technology in order to subsequently

implement its licensing business model.

Funding Avantium

Due to its nature as a technology development company, with

significant R&D expenses and negative cash flows over 2021 of

€-18.1 million (2020: €-18.8 million) and in the near future,

Avantium remains dependent on additional external funding.

Fundamental to Avantium’s continuity is:

•the construction of the FDCA flagship plant for Avantium

Renewable Polymers, for which financing is arranged and

for which the Financial Close is planned by April 2022; and

•the funding for Avantium as a group excluding Renewable

Polymers which includes further development of Avantium's

other technologies. This funding has not been secured yet.

Failure to achieve new funding in a timely fashion may result in

the company being unable to fulfil its obligations or to fund

capital expenditure and working capital, all of which are

necessary to execute the company's strategy, retain contract

partners, retain key employees and meet our payment

obligations. Without timely funding, the company's going

concern is at risk.

These events indicate the existence of a material uncertainty

that may cast significant doubt on Avantium’s ability to continue

as a going concern and therefore, that it may be unable to

realise its assets and discharge its liabilities in the normal course

of businesses.

In light of the above, management has assessed the going

concern assumption on the basis of which Avantium’s financial

statements for 2021 have been prepared.

55

FDCA Flagship Plant Business Plan Avantium

Renewable Polymers

On 9 December 2021, Avantium announced that it had taken a

positive Final Investment Decision (FID) to construct the FDCA

Flagship Plant. The positive FID was taken after Avantium

fulfilled all three key conditions: (i) obtaining sufficient offtake

commitments (ii) finalising the engineering and establishing the

supply chain, and (iii) obtaining sufficient financing.

On 9 December 2021, Avantium announced that it signed a

detailed term sheet for a three-year debt financing package of

€90 million with a consortium of lenders for the financing of the

construction (including contingency) and the operational

expenses until project completion date of the FDCA Flagship

Plant of Avantium Renewable Polymers. The consortium of

lenders comprise four Dutch banks; (ABN AMRO Bank, ASN

Bank, ING Bank and Rabobank) and the government backed

Dutch impact investment fund Invest-NL. Each bank has

committed €15 million under the debt financing, and Invest-NL

has committed €30 million. The interest over this debt financing

is EURIBOR based and is, at today’s rates, approximately 8% on

an annualized basis over the amounts drawn. With this €90

million debt financing, Avantium Renewable Polymers has now

secured (subject to Financial Close) a total of €192.5 million

funding, to be used for capital expenditure, start-up costs and

working capital.

The total financing package of €192.5 million includes €27.5

million in grants (“PEFerence”-EU Horizon 2020 and the

National Programme Groningen), €30 million in equity by

minority shareholders Groningen consortium and Worley, €90

million in debt financing and an equity investment by Avantium

in its subsidiary Avantium Renewable Polymers. Avantium

agreed to invest an additional €10 million in equity in Avantium

Renewable Polymers in order to absorb the additional costs of

one year delay in taking the FID. This increase brings the total

committed equity investment by Avantium in its subsidiary

Avantium Renewable Polymers to €45 million.

Upon Financial Close, Avantium Renewable Polymers will be

fully funded with the goal of becoming cash flow positive upon

the start-up and scale-up of the production of FDCA and PEF at

the Flagship Plant. All Financial close related agreements

(offtake agreements, supply chain contracts, the engineering,

procurement and construction contract and financing

agreements) are subject to customary terms and conditions and

will be effectuated at Financial Close. At the first drawdown of

the loan, expected at the end of 2022, several conditions must

be met. Avantium expects to successfully reach Financial Close

by April 2022 and to fully secure funding for Avantium

Renewable Polymers, and is confident that it is on track to meet

all conditions and complete all documents required.

Funding Avantium - other technologies

Avantium N.V. cannot use above mentioned financing package,

which will be ringfenced financing for Avantium Renewable

Polymers, for its other business segments. For this reason,

management also assessed its ability to obtain financing for the

group's other technologies in order to assess the going concern

assumption of the group.

Avantium's consolidated cash position was €34.9 million as at

31 December 2021. As at 31 December 2021, Avantium should

still provide €18.5 million to Avantium Renewable Polymers

based on the committed €45 million equity funding.

For the group, excluding Avantium Renewable Polymers, the

monthly cash spend is forecasted at approximately €1.2 million

per month. At Financial Close, which is planned by April 2022,

the group excluding Avantium Renewable Polymers and

remaining committed equity funding, expects to have a cash

balance of approximately €12 million. Based on this

assessment, it is management expectation that there is enough

cash to fund ongoing operations for a period of approximately

10 months as of the date of these financial statements,

therefore additional funding will be required in the course of

2022.

Avantium has received a mandate to raise €45 million in equity

capital from its shareholders at the Extraordinary General

Meeting of Shareholders held on 25 January 2022.

Although management has not decided on the final transaction

structure, it has a preference for a public offering. To that end,

management is regularly engaging with existing and potential

new investors. Management has also appointed a syndicate of

banks to manage the capital raise and the process is already

underway. Management is fully focused on the careful planning

and execution of all aspects of the proposed capital raise.

There is still however a possibility that recent geopolitical

developments or unknown developments result in the capital

raise not being successful, partially successful, or that the

capital raise cannot be executed in an appropriate timeframe.

In case the capital raise cannot be executed in an appropriate

timeframe for the full amount, management is exploring

alternatives sources of funding. Avantium is exploring multiple

options to strengthen its financial position and evaluate

strategic choices to execute its strategy. As such, Avantium is

working on attracting additional sources of financing, consisting

of a combination of equity and/or government grants to provide

for the company's operations beyond 12 months. Furthermore,

the company is always exploring possibilities for new grant

applications on both a national and on European level in order

to (partly) finance its technology development activities.

If the capital raise or the finding of alternative sources of funding

are not successful, or materially delayed , this may result in

uncertainty with regards to the agreed financing plan for

Avantium Renewable Polymers, as the company and the banks,

in that case, would not find it prudent to proceed with the debt

financing arrangement. In that scenario, the company will have

to implement substantial cost savings in both Avantium

Renewable Polymers and other businesses to extend the cash

run rate.

Based on management's analyses and assessments, although a

material uncertainty remains for the company's going concern,

management believes it is appropriate to prepare Avantium’s

financial statements using the going concern assumption.

56

Investor Relations and Share Performance

Investor Relations

Avantium values its strong relationship with shareholders and

the broader investment community. We set high standards for

our communications strategy to ensure that we always provide

transparent, accurate and relevant information to our

shareholders and investors, thereby helping them make

informed investment decisions. We are committed to providing

high-quality and timely information to all stakeholders, and we

ensure that the public market also has access to this information

(including price-sensitive data). To that end, Avantium regularly

updates the markets on our financial performance, the progress

we are making on the execution of our strategy and any other

relevant developments in the company, through press releases,

webcasts, conference calls and other forms of communication.

To ensure we maintain an open and continuous dialogue with

the financial community, we engage with investors extensively

through (virtual) roadshows, investor meetings and conferences.

We also accommodate meeting requests from the financial

community wherever feasible and in adherence with all

applicable regulatory and confidentiality obligations.

Our policy is to have at least two representatives of Avantium

present at each conversation with shareholders and investors,

where possible. Bilateral meetings and conference calls with

analysts, investors and shareholders are not held during ‘closed

periods’, which normally start one month prior to the publication

of Avantium’s annual or half-yearly results. Our policy of holding

bilateral meetings with shareholders is set out in the Bilateral

Contact Policy that can be found in the corporate governance

section of our website.

Dialogue with the Investment Community

We aim to maintain an active and open dialogue with

shareholders, investors, research analysts and the rest of the

financial community. When we publish our annual and half-

yearly results, or when we provide an update on significant

strategic events, our CEO and CFO host a conference call for

research analysts to discuss our recent business and financial

performance. We release transcripts of these calls on our

website immediately thereafter. We also use events to inform

both retail and institutional investors about our business and

strategy.

In 2021, Avantium participated in various investor conferences,

organised by Berenberg, Bryan Garnier, Degroof Petercam and

ABN AMRO – ODDO BHF, and we also organised various

Virtual Management Roadshows to provide insights into our

strategy for PEF and plantMEG™. During these digital and

physical investor meetings, our CEO, CFO and Investor Relations

team engaged with more than 110 UK, US, Benelux and

European investors.

General Meetings of Shareholders

On 19 May 2021, our Annual General Meeting of Shareholders

(AGM) took place virtually. More information about the meeting,

including the minutes, key decisions and attendance, can be

found in the corporate governance section of our website.

Capital Raising

In April 2021, Avantium successfully raised €28 million in new

capital (or 20% of the existing share capital) through an

overnight accelerated bookbuild offering, targeted at existing

institutional shareholders and new institutional investors.

Pricing of the capital increase was fixed at €5.35 per share, an

8.2% discount versus the previous closing price. The proceeds

from this equity raise were used primarily for our Flagship Plant

in Delfzijl, including funding the balance of Avantium’s

committed €45 million contribution to Avantium Renewable

Polymers equity. The remaining part of the net proceeds was

used for working capital and other general corporate purposes.

Listing and Indices

Avantium’s shares are listed and traded on both Euronext

Amsterdam and Euronext Brussels, under the ticker symbol

AVTX. In 2021, Avantium was included in the Euronext

Amsterdam SmallCap Index (AScX). The AScX consists of the 25

listed companies ranked 51–75 (in terms of size) on Euronext

Amsterdam, the Dutch stock exchange.

Share Capital and Voting Rights

At the end of 2021, the number of issued and outstanding

ordinary shares amounted to 31,286,447. The ordinary shares

issued and outstanding have equal voting rights (one share =

one vote).

Indicative Free Float

Avantium's free float amounts to approximately 49%.

Major Shareholders

The Dutch Financial Markets Supervision Act requires

Avantium’s investors who hold a (potential) capital and/or

voting interest of 3% or more to disclose this to the Netherlands

Authority for the Financial Markets (AFM). The AFM publishes

these major shareholding disclosures in its publicly available

register, which can be found at www.afm.nl.

On 15 April 2021, following the capital raise in April 2021, APG

Asset Management N.V. notified the AFM that it had increased

its shareholding in Avantium to 12.0% (from 9.93%). A few days

later, on 19 April 2021, Sofinnova Partners reported to the AFM

that it had lowered its shareholding in Avantium to 2.47% (from

57

9.34%). On the same date, Robeco Institutional Asset

Management B.V. exceeded the 3% threshold of issued capital

and reported a 3.17% shareholding in Avantium. Also on 19

April 2021, Cooperative Aescap Venture I U.A. notified the AFM

that it had lowered its shareholding in Avantium to 4.81% (from

6.68%). Finally, on 20 December 2021, John Swire & Sons Ltd

reported to the AFM that it had fallen below the 3% threshold of

issued capital of Avantium.

In 2021, Avantium continued to have a large shareholder base

of Dutch and Belgian retail investors who actively trade the

Avantium stock.

A summary of these shareholder percentages (at year-end

2021) can be found in the graph.

Liquidity

The total number of Avantium shares traded in 2021 amounted

to circa 24.9 million shares (25.7 million shares in 2020). Velocity

(the total number of shares traded divided by the average

number of shares issued) was 79.6 % compared to 99.7 % in

2020. Following the successful completion of the €28 million

capital raise in April, we witnessed significant trading volumes

in April and May of over 100,000 shares traded daily. In

December 2021, in response to the 9 December 2021

announcement that the company had taken a Final Investment

Decision on the construction of the FDCA Flagship Plant, the

Avantium share price substantially increased (a 40% increase

on 10 December 2021). In the following weeks, the Avantium

stock was traded at high volumes of almost 400,000 shares

traded daily.

Dividend Policy

Avantium has not paid dividends since being listed and we do

not expect to pay dividends in the foreseeable future.

Share Performance

Share Price Development

Avantium’s share price ended the year 2021 at €5.40, under the

2020 closing price of €6.42.

Analyst Recommendations

Five equity analysts currently have research coverage on

Avantium (versus four analysts in 2020): ING, KBC, Kepler

Cheuvreux, Degroof Petercam and Berenberg.

The research recommendations at the end of 2021 were as

follows:

Bank

Target price

Recommendation

ING

€13.44

Buy

Berenberg

€8.40

Buy

Degroof Petercam

€6.00

Buy

Kepler Cheuvreux

€5.00

Hold

KBC

€3.00

Reduce

58

Risk and Opportunity Management

Framework

Risk management is one of the key responsibilities of Avantium’s Management Team and Supervisory

Board. Avantium’s principal risks and uncertainties – whether under our control or not – are highly

dynamic and our assessment of and responses to them are critical to the company’s future business

and prospects. Avantium’s approach to risk management is framed by the ongoing challenge of

understanding the risks that the company is exposed to, the assessment of the company’s risk

appetite and how these risks change over time.

This section provides an overview of Avantium’s Risk and Control Framework and its effectiveness, in

order to substantiate the Risk and Control Statement.

Risk Appetite

The Management Team determines Avantium’s risk appetite, monitors Avantium’s risk exposure and

sets the group-wide targets, which are reviewed on an ongoing basis. This process is supported and

supervised by the Supervisory Board. Avantium manages its risks and opportunities through the

boundaries defined by the risk appetite. Our risk appetite is broken down into the following risk areas:

Risk areas

Description of risk areas

Appetite

Strategy and

Technology

Avantium develops new technologies through R&D projects, which are

‘industry disruptive’. In doing so, Avantium seeks to protect its

proprietary technology. We aim to demonstrate scale-up of these

technologies from laboratory scale via a pilot plant to a flagship plant,

and subsequently to sell technology licences. Funding these technologies

is inherently risky.

High

Operations

Avantium’s operational risk is related to managing its laboratories and

offices, starting up and operating its pilot plants and building and

operating a flagship plant.

Low

Finance and

Reporting

Avantium has a conservative financial strategy and strives to ensure

that there are no reporting errors.

Low

Legal and

Compliance

Avantium strives to avoid non-compliance with laws and regulations,

which include health and safety regulations, competition law and

environmental laws, and aims to limit any liability risk.

Low

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Control Environment

The control environment relates to our standards, processes, culture and structures.

At the top of Avantium, the Management Team sets the tone on the importance of internal risk control

by demonstrating its commitment to integrity and ethical values. Avantium’s Code of Good Business

Conduct supports this open culture.

Avantium is committed to adequate business controls and disciplined processes. Business controls are

incorporated into our automated systems as far as possible. The focus of financial reporting is on cash

management and bottom-up cash forecasting.

Avantium regularly reviews our insurable risk and our insurance policies together with our insurance

broker to determine whether we have sufficient coverage.

Assessments and Audits

The audit function supports Avantium in accomplishing its objectives by providing an independent and

professional view on its processes and controls.

The Management Board has decided, in consultation with the Audit Committee, that the company is

too small to install its own dedicated internal audit officer. Senior staff members in the company’s

Finance department are partially dedicated to risk and control management. The CFO oversees risk

management tasks. An update on risk management activities, findings, conclusions and actions are

provided to the Audit Committee, where priorities are set and guidance is provided to follow up on

identified areas of concern and to further enhance risk and control management. This internal audit

function is further supported by the relevant subject matter experts throughout the company.

The Technology Board is established and appointed by the Management Board to act in an advisory

capacity. The Technology Board provides advice and recommendations to the Management Board

regarding technology aspects of major investment decisions, as well as technology strategies the

company is pursuing or plans to implement, including risks and risk mitigation strategies.

In January 2021, the Industrialisation Committee of Avantium was established and appointed by the

Supervisory Board to serve as its advisory and risk review forum for (i) the company’s technology

strategy, (ii) its industrialisation roadmaps and (iii) its technology portfolio, all as determined,

formulated and executed by the company’s Management Board and Management Team.

Professional external operational auditing is brought in on a case-by-case basis. In 2021, external

technological, financial and operational auditing was contracted for the scale-up process of YXY®

Technology and the related Final Investment Decision to start the construction of the FDCA Flagship

Plant. Before taking this investment decision, management carried out an extensive risk assessment.

During the year, Avantium contracted external auditing for information and communication technology

(ICT) security. Based on this ICT audit, the company started the ICT Security Project in 2021. The

project is focused on technical improvements relating to ICT security and on awareness training for our

employees.

In 2021, Avantium also conducted an internal audit on our grant programmes. Grants form an

important source of income for Avantium and it is therefore important to ensure that Avantium is

compliant with all regulations and controls surrounding these programmes. There were multiple risks

identified, but none of these risks was deemed critical. An action plan for areas of improvement has

been agreed for the audit issues identified.

In light of the serious environmental situation we face, Avantium has assessed the possible effects of

climate change on its financial position. Based on the various positive developments in the

groundbreaking technologies we develop (as shared throughout this report), Avantium's management

has concluded that climate change does not negatively impact the financial position of the company.

On the contrary, climate change may accelerate the demand for alternative renewable materials and

provide further opportunities for Avantium.

Risk Assessment

The Management Team, the business units and the functional department heads are responsible for

their respective risk management; they perform a risk assessment at least once a year. These

assessments are supported and prepared by senior staff members of the Finance department.

These risk assessments identify risks, taking into account the likelihood of risks occurring and the

impact on the company, both reputational and financial. Mitigating actions are subsequently defined

and monitored. Material conclusions of these assessments are shared with and analysed by the Audit

Committee.

Key Risks in 2021

The key risks identified are those that threaten the achievement of Avantium’s objectives.

Below is an overview of the key risk factors and mitigating actions. These risk factors are viewed by

Avantium’s Management Team as being the most relevant. The company has put in place mitigating

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actions to counter the identified risks, which are categorised as follows: Strategy and Technology;

Operations; Finance and Reporting; and Legal and Compliance.

61

Strategy and Technology

Financing

•Avantium may fail to obtain timely necessary equity, grants or debt funding, thereby preventing

the company from continuing as a going concern, violating loan covenants, as well as preventing

the company from executing its strategy, delivering on its commitments and obligations towards

partners and in grant programmes, retaining key employees and meeting payment obligations.

Capital markets are currently very volatile and it is possible that this will make it difficult for

Avantium to complete a successful capital raise in the timeframe anticipated.

•Not meeting certain loan conditions, having major capital expenditure, overspending on

operational costs or having major project delays can result in higher funding needs, which can

trigger bank guarantees, pledges, sales of assets at depressed prices, capital raises at steep

discounts or even bankruptcy.

•Avantium may not be able to refinance its loans when due at acceptable rates or may be unable

to refinance at all. Failure to refinance can trigger bank guarantees, pledges, sales of assets at

depressed prices, capital raises at steep discounts or even bankruptcy.

•Avantium may continue to incur financial losses for the foreseeable future and may never achieve

or sustain profitability.

•Executing commercial, technical and business plans by strict project management, adequate

staffing, project governance and oversight.

•Actively managing relationships with all relevant stakeholders, including existing shareholders,

potential new investors/partners, financial institutions, customers and licensees.

•Managing cash prudently, without jeopardising strategic progress or compromising the safety of

employees or the security of the company's technologies and freedom to operate.

•Constantly monitoring the national/international grant landscape for new opportunities. Actively

monitoring commitments and compliance under grant programmes.

•Managing portfolios or prioritising scarce resources.

Commercial validation of YXY Technology

•Avantium Renewable Polymers may not be able to commercialise its YXY Technology through the

production and sale of its products FDCA and PEF and may not be able to subsequently execute

its licensing strategy. This may be due to a variety of factors, including unforeseen operational

challenges for which Avantium Renewable Polymers is unable to develop a workable solution,

that may result in significant additional costs or that could even prevent production of FDCA at

sufficient volumes, in sufficient quality and in accordance with the planned timelines.

•Actively managing a sales funnel process targeting and engaging potential and future customers.

•Implementing a market entrance strategy based on YXY Technology's value propositions in

different applications and market segments. In time, when volumes increase and cost price

decreases, additional segments become accessible.

•Selling licences for larger, industrial-scale plants. Due to economies of scale, operational

excellence and continuous technology development, cost price will decrease further.

•Developing a detailed marketing plan for licensing the technology.

Commercialise Ray Technology

•Avantium Renewable Chemistries may not be able to commercialise its Ray Technology through

the licensing and subsequent production and sale of plantMEG at the right specifications, quality,

yields, cost price and volumes.

•Optimising and stabilising Avantium's Ray Technology and the production of plantMEG in the

operating pilot plant in Delfzijl, the Netherlands. These activities assist in narrowing down and

optimising operational parameters, such as yields and required capital expenditures.

•Continuing to apply a strict portfolio management and stage-gate approach, to bring projects

from ideation, via proof-of-principle, to a fully developed business case that forms the basis for

finding like-minded partners and attracting funding.

•Monitoring competitors' technologies and market entrance strategies for Ray Technology.

•Maintaining Avantium's strong connections with partners in the plantMEG value chain to de-risk

the sourcing of feedstock, operations, financing and commercialisation of plantMEG.

Risks

Mitigating factors

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Strategy and Technology (continued)

Risks

Mitigating factors

Realisation of Ray Technology industrial scale factory

•Due to financing (grant and equity), setup of the joint venture and not obtaining sufficient offtake

agreements, the Ray Technology industrial scale factory may not be built. Without a factory,

Avantium Renewable Chemistries will not be able to sell licences for Ray Technology.

•A delay in the timeline of setting up the joint venture may cause difficulties in attracting partners.

•Incorporation of the joint venture may be delayed by factors outside Avantium's control. These

factors could include items impacting the business case.

•Co-operating with our announced joint venture partner on fine-tuning the business case, site

selection and funding.

•Negotiating offtake agreements with other parties, with a strict portfolio and pipeline approach.

•Ensuring an organisational focus on the success of this joint venture; sufficient qualified resources

to be made available for this key project.

•Optimising and stabilising Avantium's Ray Technology and the production of plantMEG in the

operating pilot plant in Delfzijl, the Netherlands. These activities assist in narrowing down the

required capital expenditures.

•Maintaining Avantium's strong connections with partners in the plantMEG value chain to de-risk

the sourcing of feedstock, operations, financing and commercialisation of plantMEG.

Competition

•The technologies Avantium is developing may not be competitive with other new emerging

technologies and systems, which provide similar functions, lower cost or better solutions for

potential customers. Avantium may not have full oversight of the technologies developed by

competitors.

•Keeping up continuous technology development to maintain competitiveness.

•Maintaining strong industry and business partner relationships.

•Monitoring and analysing competitors through various sources (trade associations, universities,

banks, etc.) and their IP filings.

•Actively maintaining, protecting and expanding our current IP portfolio.

•Warning potential violators on infringement and the consequences.

COVID-19 and other pandemic scenarios

•Measures including travel restrictions increase the difficulty of closing commercial deals and

providing technical services to customers.

•Potential customers delay decision-making or are less eager to close new deals due to uncertainty

in their own business.

•In the case of an outbreak of COVID-19 in one of our facilities or plants, Avantium might need to

fully close down operations, with an impact on technical progress and grant programme

milestones.

•The safety, well-being, engagement and productivity of employees decreases.

•Implementing all instructions from, and best practices provided by, government agencies and

health officials to reduce COVID-19 infection risks.

•Coordinating, at Management Team level, all relevant aspects of health, safety, well-being and

operations.

•Organising frequent Management Team town hall and functional meetings via video-

conferencing, to keep in close contact with teams and individual employees.

•Defining a working-from-home policy suitable for the post-pandemic era. Ensuring employees

who work from home are supported by appropriate ergonomic tools and infrastructure.

•Making the HR department and the company doctor available to employees with concerns about

physical and mental well-being.

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Operations

Risks

Mitigating factors

Construction and operations of FDCA Flagship Plant

•Due to operational, environmental and/or technical reasons, or in the context

of geopolitical developments, Avantium Renewable Polymers may not be

able to build, start up and operate its Flagship Plant for the production of

FDCA on time, in budget and in specification.

•If construction and commissioning of the FDCA Flagship Plant takes longer

than expected, Avantium Renewable Polymers may not be able to meet the

demands of (potential) customers, which may hamper and/or delay the

commercialisation of FDCA and PEF products.

•Ensuring effective and strict project management; supervision, forecasting, risk and cost (spending) control; adequate

resourcing including staffing; and quality of the engineering, procurement and construction (EPC) contract. Risk sharing

is an important element, as foreseen in the EPC contract.

•Ensuring, by hiring the appropriate expertise, that the Flagship Plant operates robustly after commissioning, covering all

disciplines including staffing, systems, safety, logistics, regulations and finance.

•Assessing risks: establishing and continuous monitoring an appropriate risk register. Managing construction and

operation risks diligently together with constant monitoring of their potential influence on capital and operational

expenditure.

Recruit, retain, develop and engage employees

•Avantium may not be able to recruit and/or retain the highly skilled and

engaged employees it needs, which will have a direct negative impact on

reaching its strategic objectives and may result in business interruptions.

•Offering employees competitive compensation, the opportunity to make a direct business impact, autonomy, an

inspiring culture and colleagues and a multitude of development opportunities.

•Using Avantium’s sustainability plan, titled Chain Reaction 2030, as a communication instrument for engaging new and

existing talents.

•Initiating learning workshops where people can share knowledge on a variety of topics to promote development.

Avantium invests in skill development courses, management trainings and leadership programmes to enable the

personal and professional growth of all our employees.

•Securing equal opportunities and a feel-safe culture.

Intellectual property (IP) protection

•Avantium may not be successful in adequately protecting its proprietary

technology, products and processes, information, trade secrets and know-

how.

•Actively maintaining, protecting and expanding Avantium’s IP portfolio in line with the company's IP strategy.

•Actively monitoring and analysing worldwide trends and technology developments, especially with respect to the

patent landscape.

•Ensuring regular reviews with the technical teams and committees to consider proactively publishing or seeking patent

protection.

•Imposing IP assignment obligations for employees (and – if applicable – consultants, interns and secondees).

•Maintaining adequate ICT and HR security and IP protection controls.

•Providing recurring confidentiality and IP protection awareness training to Avantium staff.

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Operations (continued)

Risks

Mitigating factors

Freedom to operate

•Avantium may not be able to ensure and maintain its required freedom to

operate, and/or Avantium may inadvertently infringe the IP rights of third

parties in its commercial operations.

•Litigation or third-party claims of alleged IP infringement could require

substantial time and money to resolve even if proven unfounded.

•Unfavourable outcomes in these proceedings could limit Avantium in

commercialising its lead technologies.

•Actively maintaining, protecting and expanding our current IP portfolio, for use, if required, in cross-licensing.

•Publishing on technologies for which exclusivity is not desired.

•Actively monitoring and analysing the patent landscape, reviewing competitors’ patent portfolios, lodging oppositions

and filing third-party observations where appropriate.

Food safety

•Food safety is an important qualifier for many of our future customers.

Inability to adhere to food contact materials regulations will negatively

affect the company’s ultimate ability to sell products for the desired

applications and to sell subsequent licences under the company’s licensing

strategy. Avantium may not be able to obtain the required food contact

approvals.

•Registering Avantium products in accordance with applicable regulations allowing the manufacture, distribution and use

of these products.

•Co-operating closely with potential customers to ensure appropriate product application testing to support the

submissions for food contact approvals. Where possible, the company aims to obtain initial food contact approval with

the material produced at pilot-plant phase.

•Retaining reputable consultants to support the food contact approval submission process in different regions.

•Following strict manufacturing protocols and quality assurance procedures in future operations to ensure that our

products are fully in line with specifications according to regulations and customer needs.

•Where possible, including liability caps in customer contracts.

•Establishing product liability insurance to partially cover the risk.

Cybersecurity and ICT

•ICT security risks are changing rapidly. Not keeping ICT infrastructure,

systems, procedures and user awareness up to date may result in security

risks, business interruptions, information loss or leakage and reporting

omissions.

•Implementing recommendations on Avantium’s ICT infrastructure and security.

•Regularly updating ICT security and data governance policies. Actively managing compliance with these through

preventive, monitoring and detection controls.

•Providing compulsory training for employees and building their awareness on cybersecurity.

•Making daily backups of our critical systems/servers and conducting regular restore tests.

•Keeping hardware, software and firewall solutions and accessibility up to date.

•Upgrading the enterprise resource planning system (planned as part of the scale-up of Avantium Renewable Polymers

and the Flagship Plant project).

Permits and regulations

•Risks such as (i) new or changing regulations, (ii) non-compliance with

Avantium’s current permits and/or environmental regulations applicable to

an Avantium location or company sub-contractors or (iii) unwanted

(unintentional) emissions and/or wastewater release.

•Regularly engaging with the relevant regulatory bodies and other stakeholders.

•Diligently and swiftly acting upon observations and recommendations made during inspections by line management,

staff, consultants and relevant regulatory bodies.

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Operations (continued)

Risks

Mitigating factors

Handling hazardous substances

•Handling hazardous substances within Avantium's operations brings a risk

of spills (environmental damage) and personal exposure (health damage).

Inherent health and safety hazards in our operations and insufficient

awareness of unsafe plant conditions can lead to injuries or casualties and

a (temporary) plant shutdown.

•Applying strict design criteria for the factories handling hazardous substances.

•Implementing systems and sensors to detect leakage, formation or presence of chemicals near production installations

and laboratories, to provide timely warnings to avoid incidents and accidents.

•Prior to commencing any operational activities, carrying out thorough assessments in which all eventualities are

considered, risks are assessed and necessary preventive measures are implemented.

•Maintaining a system to register all (hazardous) chemicals in process streams and inventories.

•Developing advanced analytical techniques to measure the formation or presence of small concentrations of chemicals

and assess their toxicity.

•Giving every employee (and student, intern, contractor and consultant) adequate safety training at the start of their

engagement as well as a list of all standard operating policies that apply to their relevant activities and locations

(laboratory/office/plant), including the proper use of personal protective equipment.

•Creating awareness through training procedures, safety systems, internal memos, instructions and company meetings,

as well as a continuous safety culture programme across the company.

•Monthly reporting of all safety incidents and non-conformities to monitor safety performance, maximise learnings,

enable follow-up and implement corrective or preventive measures.

•Implementation of an ISO-certified quality programme to promote standard operating procedures and working

instructions for day-to-day operations and supervision for safe execution of extraordinary activities (such as

maintenance and troubleshooting).

•Working with safety experts, occupational work consultants and toxicologists to assess the hazardous nature of

chemicals and find ways to best minimise exposure to hazardous substances, and training employees on how to

manage safety risks and avoid exposure to toxic chemicals.

Inflation and rising commodity and energy costs, including due to

geopolitical developments

•Rising costs may result in increased operational and financing costs and

may adversely affect Avantium's business.

•Management will continue to closely monitor market developments. Through monitoring, the company may better

anticipate and assess any impact on the relevant parts of its supply chain and business activities.

•More frequent reviews of the budget and forecasts by management will provide insight on the effect of any increased

cost on the company's supply chain and business.

•Continuous review of alternatives for sourcing, actively negotiating applicable terms,(pro-) active and transparent

dialogue with business partners, vendors and subcontractors.

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Finance and Reporting

Risks

Mitigating factors

Safeguarding Avantium's cash

•The banks and/or financial institutions where Avantium deposits its cash may experience

disruptions or defaults, leading to a situation where cash is no longer accessible to Avantium.

•Regularly checking the risk profiles of the financial institutions where we have deposited cash.

•Following the company policy of not speculating with its cash reserves.

IFRS and sustainability compliance

•Non-compliance with International Financial Reporting Standards (IFRS) and sustainability

reporting requirements. Not informing our shareholders and other stakeholders in conformity with

reporting might lead to a loss of trust, reputational damage, a declining share price and, possibly,

legal claims.

•Maintaining corporate accounting policies and making them available across the company. Our

control framework includes financial reporting controls for compliance with IFRS.

•Using external expert advice if necessary.

•Implementing a sustainability reporting roadmap.

Grant reporting

•Non-compliance with internal process and external grant rules and regulations may result in a

correction (at least) or pay-back of the full amount received (in the worst-case scenario) or missed

opportunities under grant programmes.

•Maintaining grant policies and communicating them across the company.

•Working actively to train employees on internal processes (e.g. time writing) and external

regulations, including monitoring compliance on the processes.

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Legal and Compliance

Risks

Mitigating factors

New laws and regulations

•New government laws, regulations or measures, including increased regulations on the production

and use of sustainable versus oil-based products, may have a major impact on our business and

financial position, and could lead to a threat to our activities.

•Monitoring and adapting to relevant (changes in) rules and regulations.

•Maintaining a dialogue with authorities, where possible.

Sanction regulation compliance

•Avantium may unknowingly or unwilfully have partners, customers, agents, consultants or other

company contacts in breach of sanctions regulations which could adversely affect our business.

•Continuing to adhere to (sanctions) laws and regulations, with Avantium’s policies, procedures

and ethics codes prohibiting us from entering into business with sanctioned parties.

•Using up-to-date sanctions-screening software tools for business relationships the company

enters into.

Bribery and corruption

•Avantium may be exposed to bribery and corruption.

•Managing a stringent approach to bribery and corruption with internal controls, coordinated by

the Finance and Legal teams.

•Retaining an external, independent organisation to assist, where necessary, in monitoring

interactions with suppliers, agents and distributors.

•Including clauses on anti-bribery, corruption and appropriate remedial actions in many different

agreements the company enters into.

Fraud

•Avantium may be subject to fraudulent activities.

•Clearly setting the tone at the top that any fraud is not tolerated.

•Implementing segregation of duties and other internal control activities.

•Continuous awareness communication and training.

•Encouraging employees to safely report any suspicion of non-compliance with our ethics code.

Following a report, any potential violation will be investigated. The outcome may lead to

disciplinary action, the severity of which is determined by the nature and circumstances of the

incident. Impacts may include termination of employment. If necessary, the company takes

additional action to prevent similar incidents in the future.

•Using the processes described in the Whistleblower and Confidant policies.

•Including clauses on fraud and appropriate remedial actions in many different agreements the

company enters into.

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Legal and Compliance (continued)

Risks

Mitigating factors

Confidential information

•An employee or former employee of Avantium or a third party may, intentionally or otherwise,

disclose unauthorised confidential information belonging to Avantium, or confidential information

received from a customer or business partner.

•Entering into a non-disclosure agreement (NDA) with each employee and where necessary with

any third party (such as business partners, customers, suppliers and consultants), to cover the

protection of the company’s confidential information. In most cases the company NDA template is

used (governed by Dutch law).

•Creating awareness and ensuring that employees understand their confidentiality obligations.

Employees are educated during in-house training sessions on the handling of Avantium’s

confidential information.

•Making employees aware that it is important to strictly limit the disclosure of Avantium’s

confidential information only to the particular third parties concerned.

•Using the standard operating procedure policy stipulating how to handle confidential information

(belonging either to Avantium or to a third party).

Compliance with market abuse regulation

•Avantium, or a (former) employee of Avantium, may fail to comply with market abuse regulations,

and may misuse and/or disclose Avantium’s inside information (intentionally or unintentionally).

•Creating employee awareness around adherence to Avantium’s insider trading policy and

legislation through training programmes and communication.

•Establishing timely log files on classified information that will likely develop to become inside

information.

•Establishing and maintaining insider lists of Avantium employees who have access to and

knowledge of insider information.

•Having an appropriate meeting schedule (in terms of frequency) for the Disclosure Committee,

which reports to the Management Board and Supervisory Board.

•If applicable, notifying insiders, in a timely manner, about their obligations, creating explicit status

acceptance.

•Disclosing inside information to the market when appropriate.

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In-Control Statement

Avantium’s assessment is that there are no major failings in its internal risk management and control

systems in the reporting year.

It should be noted that the above does not imply that our systems and procedures provide certainty as

to the realisation of strategic, operational, compliance and reporting objectives, nor that they can

prevent all misstatements, inaccuracies, errors, fraud and non-compliance with laws and regulations.

On this basis, Avantium’s Management Board states that to the best of its knowledge:

•the Annual Report provides sufficient insight into the effectiveness of Avantium’s internal risk

management and control systems;

•the aforementioned risk management and control systems provide reasonable assurance that the

financial reporting does not contain any material inaccuracies; and

•based on the current state of affairs, financial reporting on a going concern basis is justified (refer

to going concern note).

In accordance with provision 1.4.3. of the Dutch Corporate Governance Code and Article 5:25c of the

Financial Supervision Act, the Management Board declares that, to the best of its knowledge:

•the sections in the Report of the Management Board as included in this report provide sufficient

insights into any deficiencies in the effectiveness of Avantium’s internal risk management and

control systems;

•the financial reporting systems provide reasonable assurance that Avantium’s financial reporting

does not contain any material errors;

•based on Avantium’s current state of affairs, it is justified that the financial reporting is prepared

on a going concern basis (refer to going concern note);

•the sections in the Report of the Management Board list those material risks and uncertainties

relevant to expectations regarding Avantium’s continuity for the period of 12 months after the

preparation of the Report of the Management Board;

•the financial statements as included in this report provide a true and fair view of the assets,

liabilities, financial position and results for the financial year of both Avantium and the group

companies included in the consolidation; and

•the sections in the Report of the Management Board provide a true and fair view of the situation

on the balance sheet date and the business development during the financial year of Avantium

and of our affiliated group companies included in the financial statements.

Amsterdam, 22 March 2022

Tom van AkenBart Welten

Chief Executive OfficerChief Financial Officer

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Management Team

Tom van Aken (1970, Dutch)

Chief Executive Officer (CEO) and member of the

Management Board

•Joined Avantium in 2002

•Appointed CEO of Avantium in 2005

•Current term of appointment 2021–2025

Before his appointment as CEO in 2005, Tom van Aken was

Avantium's Vice President of Business Development (2002–

2004) and Vice President of Global Marketing and Sales (2004–

2005).

Prior to joining Avantium, he was Business Development

Director at DSM Fine Chemicals, Inc. He earned a master’s

degree in Chemistry from the University of Utrecht, the

Netherlands.

Bart Welten (1960, Dutch)

Chief Financial Officer (CFO) and member of the

Management Board

•Joined Avantium in 2020

•Appointed CFO of Avantium in 2020

•Current term of appointment 2020–2024

Before joining Avantium, Bart Welten served as the CFO of

Centrient Pharmaceuticals (formerly a joint venture of DSM and

Sinochem) in Singapore. Before leaving Centrient, he oversaw

the sale of the company to Bain Capital. Prior to this, he was

CFO of DSM Resins and DSM Anti-Infectives. He holds a Law

degree from Leiden University (the Netherlands) and an MBA

from Boston College (USA).

Gert-Jan Gruter (1963, Dutch)

Chief Technology Officer (CTO)

•Joined Avantium in 2000

•Appointed CTO of Avantium in 2004

Gert-Jan Gruter has been Avantium’s CTO since 2004. Before

this, he was responsible for setting up the Chemicals Service

Business (2000–2004) and was a Group Leader in New Catalyst

Research at DSM (1993–2000).

He is also Professor of Industrial Sustainable Chemistry at the

University of Amsterdam, and holds a master's degree in

Organic Chemistry and a PhD in Organometallic Chemistry &

Catalysis from the Vrije Universiteit (both in the Netherlands). He

is the inventor on more than 100 patents and was elected

European CTO of 2014.

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Carmen Portocarero (1967, Dutch)

General Counsel

•Joined Avantium in 2012

•Appointed General Counsel in 2012

Carmen Portocarero joined Avantium in 2012. Prior to this,

Carmen held various corporate legal positions, including more

than 17 years at US telecommunications company AT&T. She

holds a master's degree in Law from the Catholic University of

Nijmegen (the Netherlands) and completed various law

programmes at Harvard University to obtain US qualifications.

Steven Olivier (1964, Dutch)

Managing Director Avantium Catalysis

•Joined Avantium in 2015

•Appointed Managing Director of Avantium Catalysis in 2015

Steven joined Avantium in 2015 as Managing Director of

Avantium’s Catalysis business unit. In his role, Steven is

responsible for P&L, capital, strategy and overall operations,

helping customers in the fields of refining & energy, chemicals

and renewables accelerate their catalyst R&D.

Prior to joining Avantium, Steven worked at Albemarle (2005–

2014) and at AkzoNobel (1994–2004) in a range of senior

executive and commercial roles in the catalyst industry. From

2011 to 2013, he was a representative director of Nippon Ketjen

(Japan). He holds a master’s degree in Chemistry from Leiden

University, the Netherlands.

Bas Blom (1964, Dutch)

Managing Director Avantium Renewable

Polymers

•Joined Avantium in 2017

Prior to joining Avantium, Bas worked for more than 20 years in

commercial leadership roles in companies such as GE, SABIC

and Renewi.

A Dutch native, Bas has an MSc in Aerospace Engineering from

Delft University of Technology, the Netherlands.

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Supervisory Board

Edwin Moses (1954, British)

Chair of the Supervisory Board

•Member of the Supervisory Board since 2019

•Current term of appointment 2019−2023

Background

Edwin Moses is a serial entrepreneur and value creator in

European life science companies. He has expertise in high-value

service provision to the pharmaceutical industry and in drug

discovery and development. His primary focus is on high growth

businesses and change management, with 25 years of Board-

level experience in more than 15 companies, mostly as Chair.

Responsibilities

Edwin Moses is Chair of the Supervisory Board, Chair of the

Nomination Committee, Chair of the Remuneration Committee

and a member of the Audit Committee.

Cynthia Arnold (1957, American)

•Member of the Supervisory Board since 2020

•Current term of appointment 2020−2022

Background

Cynthia Arnold served as Senior Vice President and CTO at The

Valspar Corporation and was also CTO at Sun Chemical

Corporation. Prior to this, she worked for nine years at General

Electric Plastics, including three years at GE Plastics Europe in

the Netherlands. She holds a PhD from the Virginia Polytechnic

Institute & State University in Blacksburg (USA), as well as both

an MBA and a BS in Chemical Engineering from the University of

California in Berkeley (USA).

Responsibilities

Cynthia Arnold is Chair of the Industrialisation Committee and a

member of the Nomination Committee and of the Remuneration

Committee.

Michelle Jou (1969, Taiwanese)

•Member of the Supervisory Board since 2020

•Current term of appointment 2020−2024

Background

Michelle Jou worked for around 19 years at Covestro (formerly

Bayer Material Science) in various senior management positions

in Asia and Europe. In her last role at Covestro, she was

President of Covestro’s global Polycarbonates Segment

(Shanghai). She holds a BA in French from Fu-Jen University

(Taiwan) and an MBA from the EMLYON Business School

(France).

Responsibilities

Michelle Jou is a member of the Nomination Committee, of the

Remuneration Committee and of the Industrialisation

Committee.

74

Margret Kleinsman (1963, Dutch)

•Member of the Supervisory Board since 2017

•Current term of appointment 2017−2021

Background

Margret Kleinsman, CFO of Agrifirm, graduated from the

University of Twente and completed her post-doctoral research

at the Vrije Universiteit in Amsterdam (both in the Netherlands).

She was CFO of Holland Colours N.V. from 2014 until 2020.

Before this, she worked for AkzoNobel, with particular

responsibilities in the areas of chemicals, fibres and coatings,

and including two longer-term assignments in the USA.

Responsibilities

Margret Kleinsman is Chair of the Audit Committee.

Trudy Schoolenberg (1958, Dutch)

•Member of the Supervisory Board since 2020

•Current term of appointment 2020−2024

Background

Trudy Schoolenberg served in various senior management

positions at Shell, Wärtsilä and AkzoNobel in research,

operations and strategy. She has a PhD in Technical Sciences

and an MSc in Industrial Engineering from the Delft University of

Technology (the Netherlands). She is certified as a Non-

Executive Director at ESAA, Erasmus University Rotterdam.

Responsibilities

Trudy Schoolenberg is a member of the Audit Committee and of

the Industrialisation Committee.

75

Report of the Supervisory Board

Introduction

This report explains how Avantium’s Supervisory Board fulfilled its responsibilities in 2021. The Report

of the Supervisory Board should be read in conjunction with the Corporate Governance section, which

provides information on the company’s corporate governance structure.

Composition, Diversity and Independence

The Supervisory Board currently consists of five members: Edwin Moses (Chair), Cynthia Arnold,

Michelle Jou, Margret Kleinsman and Trudy Schoolenberg. The biographies of the Supervisory Board

members are available on the preceding pages of this report and on the Avantium website.

In August 2021, the Supervisory Board proposed the appointment of Mr Nils Björkman as a sixth

member of the Supervisory Board. At the Extraordinary General Meeting (EGM) held on 25 January

2022, Nils Björkman was appointed as Supervisory Board member for a term of four years.

Due to personal circumstances, Cynthia Arnold has notified the company of her decision to resign as

Supervisory Board member at the end of the first quarter of 2022. Avantium is planning to continue to

have access to her valuable expertise and advice. The company will initiate a search process for a new

Supervisory Board member.

As described under Diversity & Inclusion in the Our People section, Avantium aspires to be an inclusive

and diverse company with an open and inspiring culture. This also applies to the composition of the

Supervisory Board. The Supervisory Board seeks to promote diversity among its members in terms of

age, gender, nationality, experience within the industry, background, skills, knowledge and insights. As

far as possible, we aim to create a balance among the Supervisory Board’s members where this

diversity is represented. The objective is to comply with the Supervisory Board Profile that can be

found on Avantium’s website. In 2021, the percentage of women on the Supervisory Board was 80%.

With the appointment of Nils Björkman at the EGM on 25 January 2022, Avantium now complies once

again with the target of at least 30% male or female Supervisory Board members prescribed by Dutch

legislation on gender balance.

Diversity Profile

Name

Year of birth

Nationality

Expertise and experience

Gender

E. Moses

1954

British

•Scaling up innovative companies

•Executive and non-executive

experience

•International experience

Male

C.A. Arnold

1957

American

•Chemicals and plastics industry

•International industry experience

Female

M.B.B. Jou

1969

Taiwanese

•International executive

experience, especially Asian

region

•Commercial experience from

chemicals and plastics industries

Female

M.G. Kleinsman

1963

Dutch

•Financial expertise in chemicals

and plastics industries

•International experience

Female

G.E. Schoolenberg

1958

Dutch

•Operational and engineering

expertise in chemical industry

•International industry experience

Female

Retirement and Re-Election Schedule

Name

Appointment date

Year of possible re-election

End of final term

E. Moses

20 December 2019

2023

2031

C.A. Arnold

30 September 2020

n.a.

n.a.

M.B.B. Jou

14 May 2020

2024

2032

M.G. Kleinsman

14 June 2017

2021

2029

G.E. Schoolenberg

30 September 2020

2024

2032

76

All members of the Supervisory Board are deemed independent. In the Supervisory Board’s opinion,

the composition of the Supervisory Board is such that the members can act critically and

independently from one another and from the Management Board, as stipulated in the Dutch

Corporate Governance Code (principles 2.1.7 to 2.1.9). This means that the tasks of the Supervisory

Board as laid down in Avantium’s Articles of Association can be fulfilled, including providing the

Management Board with solicited and unsolicited advice and support.

In 2021, there was no actual or potential conflict of interest between Avantium and any Supervisory

Board member. In line with legislation and as part of the key control framework of the company,

members of the Supervisory Board (as well as the Management Board) are required to annually state

their related parties and transactions, if any, between these related parties and the company. It was

confirmed that no related-party transactions occurred in 2021, except for those cases in which

members of the Supervisory Board use a management company to invoice their related directors' fees

to Avantium.

Education and Self-Evaluation

Ongoing education is an important part of good governance. When not prevented by the COVID-19

pandemic, in which case audio and video conferencing solutions are used instead, members of the

Supervisory Board regularly visit Avantium's offices to meet with senior management and to develop

deeper knowledge of operations, opportunities and challenges. Direct, one-on-one contact between

Supervisory Board members and Management Team members generally follows naturally from

discussions in the meetings of the Supervisory Board. These discussions draw on the expertise of

individual Supervisory Board members, whose advice is sought on a wide range of specialist topics as

required. Due to the COVID-19 pandemic, most contact and dialogue in 2021 occurred electronically

by means of audio and video conferencing.

Based upon the Dutch Corporate Governance Code and Section 2.2 of the Supervisory Board

Regulations of Avantium N.V., the Supervisory Board is responsible for evaluating its own functioning,

that of its various committees and that of the individual Supervisory Board members, and for

evaluating the functioning of the Management Board as a whole and that of the individual

Management Board members (in both cases outside the presence of the Management Board). In 2021,

the Supervisory Board performed a self-assessment and discussion of its own performance and that

of its committees and members. Face-to-face meetings, both formal and informal, were sorely missed

in 2021, especially since the Supervisory Board in its current composition has been working together

for less than a year. The self-assessment as completed in 2021 was positioned as a benchmark for a

more thorough evaluation once the Board has been functioning in a more ordinary course of business

and over a longer period of time.

The following aspects were assessed:

1.Responsibilities and composition of the Supervisory Board

2.Meetings of the Supervisory Board (information, effectiveness of the meetings and decision-

making)

3.Performance of the Supervisory Board (including Board dynamics)

4.Performance of the Supervisory Board Committees

5.Performance of the Chairman

6.Relationship between Supervisory Board and Management Board

The outcome of this evaluation was discussed by the members of the Supervisory Board and the

Corporate Secretary, and subsequently with the members of the Management Board. The overall

conclusion of the self-assessment was that Avantium has a well-functioning Supervisory Board. The

Supervisory Board also has an open and constructive relationship with the Management Board. During

the year, the Supervisory Board continued to discuss its composition, its own and its committees'

performance and its relationship with the Management Board and senior management. With respect

to the composition of the Supervisory Board, it was decided to add a sixth (male) member, Nils

Björkman, who brings additional specific knowledge and expertise while giving substance to the

continuity of the Supervisory Board.

77

Supervisory Board Meetings in 2021

Meetings and Attendance

Supervisory Board meetings are held regularly to discuss the company’s achievements and plans, the

functioning and composition of the Supervisory Board and the performance of the Management Board.

In its oversight capacity, Avantium’s Supervisory Board has frequent communications with the

Management Board, both in and between Supervisory Board meetings. The Supervisory Board met

five times and had eight additional update calls in 2021. All meetings were also attended by the full

Management Board, apart from the closed sessions of the Supervisory Board under the agenda item

‘Supervisory Board only’. Additionally, the Supervisory Board organised one informal dinner in the

autumn of 2021.

The individual attendance per meeting can be found in the table below.

Name

Supervisory

Board meeting

Audit

Committee

meeting

Industria-

lisation

Committee

meeting

Nomination

Committee

meeting

Remuneration

Committee

meeting

E. Moses

13/13

10/10

n.a.

3/3

3/3

C.A. Arnold

13/13

n.a.

8/8

3/3

3/3

M.B.B. Jou

13/13

n.a.

8/8

3/3

3/3

M.G. Kleinsman

13/13

10/10

n.a.

n.a.

n.a.

G.E. Schoolenberg

13/13

10/10

8/8

n.a.

n.a.

N. Björkman10

5/13

n.a.

n.a.

n.a.

n.a.

Topics Discussed in 2021

The Supervisory Board meets at least five times a year and always prior to the publication of

Avantium’s annual and half-year results, which are discussed with the Management Board along with

related documents, such as the draft press release and the independent auditor's report on procedures

performed. These results and related documents are discussed by the Audit Committee prior to the

Supervisory Board meeting. The external auditor was present for the discussion of the 2021 Annual

Report and accounts.

In addition to the standard agenda items for meetings, such as the development of financials and the

business performance throughout the year, the Supervisory Board discussed (with the Management

Board) the following topics in 2021:

•topics related to safety;

•detailed progress reports on individual business units' results and progress on strategic milestones;

•financial planning and financing;

•new technology developments;

•reports on any matters related to material risks and control and compliance issues;

•Avantium’s value creation and capital allocation strategy;

•the preparation, evaluation and follow-up of the General Meeting;

•topics related to sustainability;

•the views of analysts and investors, as well as changes in the shareholder structure and base;

•initiatives related to public relations and thought leadership;

•senior leadership performance, organisational changes and senior management appointments;

•the budget for 2022.

The following topics in particular were discussed extensively by the Supervisory Board.

Progress Towards the Final Investment Decision Concerning the Construction of the

FDCA Flagship Plant

The planned construction of the FDCA Flagship Plant and the progress towards a Final Investment

Decision (FID) thereon was discussed at length in the Supervisory Board meetings in 2021. The

Management Team and the Supervisory Board (with and without the Management Team being

present) met on a very frequent basis to discuss the preparations, developments and progress in

relation to the scale-up towards the FDCA Flagship Plant, as well as the considerations underlying key

decisions in connection with the implementation of Avantium Renewable Polymers’ overall business

plan. The Supervisory Board gave careful consideration to all aspects, including strategic, commercial,

financial, operational and legal. The Board closely monitored, discussed and mandated the

negotiations with financial institutions, the key terms of the conditional offtake agreements with

commercial parties and the engineering of the FDCA Flagship Plant. The discussion in the Supervisory

78

10 Mr Björkman was appointed as member of the Supervisory Board as per 25 January 2022; meetings that he attended as an observer in 2021 are taken into account.

Board meetings was often prepared by one of the committees, in particular the Industrialisation

Committee and the Audit Committee.

Debt Financing

In relation to the FID, the Supervisory Board and the Management Team held regular, in-depth

discussions on Avantium's funding options and scenarios. Avantium and the Renewable Polymers

business unit have had direct and indirect discussions with more than 10 lenders and 150 investors.

Those meetings have given management and the Supervisory Board great insight into the current

terms and conditions associated with such a debt financing package. The Management Board and the

Supervisory Board are of the opinion that the terms of the €90 million debt financing as offered by the

consortium of lenders represents an appropriate balance of risk and reward in the current

environment. The Supervisory Board therefore supported and approved the terms and conditions of

the debt financing package.

Funding Options

The Supervisory Board and management also discussed funding options and funding scenarios based

on short- and medium-term operational cashflow forecasts and required minimum cash balances.

Moving into 2022, the Supervisory Board discussed with management material uncertainty on the

going concern of the company.

Avantium Renewable Chemistries Technologies

The Supervisory Board also engaged in important discussions with the Management Board about the

overall technology portfolio within Avantium Renewable Chemistries and the strategic choices for

each technology. The Supervisory Board closely monitored and approved developments regarding Ray

Technology, including the envisaged joint venture with sugar beet processor Cosun Beet Company.

The Supervisory Board also monitored developments regarding Volta Technology and Dawn

Technology.

Safety

The Supervisory Board spent significant time discussing the accident in the Ray Technology

demonstration plant, including the root cause analysis, the unknown cause analysis and the

implementation of safety measures.

COVID-19 Pandemic and Its Impact on Avantium

Throughout 2021, the Supervisory Board continued to discuss the ongoing uncertainties and volatility

due to the COVID-19 pandemic. It continuously monitored the risks and developments in terms of

strategy and scenario planning in relation to the COVID-19 crisis. This included the financial

performance of the company and its ability to attract funding and partnerships for commercialising the

technologies in the Renewable Polymers and Renewable Chemistries business units, as well as the

ability of Avantium Catalysis to close certain sales transactions.

Stakeholder Management

The Supervisory Board takes an active interest in understanding Avantium’s stakeholders, their

perceptions and their positions on various topics related to the company's areas of business. The

Supervisory Board was informed of stakeholders’ positions by the Management Board, and also

collected such information through its own network.

Supervisory Board Committee Activities in 2021

The Supervisory Board divides its tasks among four committees: the Audit Committee, the

Industrialisation Committee, the Remuneration Committee and the Nomination Committee. These

Committees are responsible for preparing specific topics on which the respective committee makes

recommendations for decisions to be made in the plenary meetings of the Supervisory Board.

At the end of 2021, the composition of the Supervisory Board committees was as follows:

Audit Committee

Industrialisation

Committee

Remuneration

Committee

Nomination

Committee

Margret Kleinsman (Chair)

Cynthia Arnold (Chair)

Edwin Moses (Chair)

Edwin Moses (Chair)

Edwin Moses

Michelle Jou

Michelle Jou

Michelle Jou

Trudy Schoolenberg

Trudy Schoolenberg

Cynthia Arnold

Cynthia Arnold

Report of the Audit Committee

The Audit Committee supports the Supervisory Board in its responsibility to oversee Avantium’s

financing, financial reporting process and financial statements, and its internal control, risk

management and audit systems. In 2021, the Audit Committee met four times and held two calls to

approve the annual and half-year results. The meetings were also attended by the CEO, the CFO, the

Compliance Officer, the Head of Accounting and Reporting and the external independent auditor.

Additionally, four calls were held to discuss the progress of the debt funding of the FDCA Flagship

Plant. Minutes of all meetings were submitted to the Supervisory Board. At each meeting, the Audit

Committee discussed relevant financial reporting and accounting topics, including the Going Concern

Note in the 2021 Annual Report, specific accounting papers linked to the FID and the new

Sustainability Reporting Directive. The Audit Committee also discussed Risk Management targets and

the findings of internal and external risk assessments, including the findings of the risk assessment

performed on Avantium's grant programmes. The Audit Committee paid specific attention to the

project to improve ICT security. Moreover, the Audit Committee monitored the company's progress on

risk identification and implementation of risk mitigation actions and approved the 2022 Risk Planning.

79

Report of the Industrialisation Committee

The Industrialisation Committee serves as the Supervisory Board's advisory and risk review forum in

providing oversight of (i) the company's technology strategy; (ii) industrialisation roadmaps; and (iii)

technology portfolio, all as determined, formulated, and executed by the company's Management

Board and senior management. The Industrialisation Committee met eight times in 2021 and

discussed in detail the commercialisation strategy for YXY Technology and the progress towards a FID

on the construction of the FDCA Flagship Plant. The Industrialisation Committee thoroughly reviewed

a significant number of in-scope topics, such as the business case and financial model, application

development, market outlook, competitive landscape, the YXY Technology IP position, risk register-

related topics, the technology and the licensing technology roadmap.

Report of the Remuneration Committee

The Remuneration Committee is responsible for advising the Supervisory Board on remuneration. One

of its standard duties is to assess whether the Management Board’s performance targets have been

achieved. The Remuneration Committee met three times in 2021 to discuss and formulate proposals

for the remuneration of the individual members of the Management Board. The Remuneration

Committee presented its findings and proposals to the Supervisory Board, which then finalised the

performance appraisals and related remuneration of the individual Management Board members.

Report of the Nomination Committee

The Nomination Committee’s standard duties include assessing the composition of the Supervisory

Board and the Management Board, evaluating the functioning of individual members, succession

planning and monitoring corporate governance. The meetings of the Nomination Committee are

attended by the CEO, except when issues relating to his performance and remuneration are discussed.

The Nomination Committee met three times in 2021.

Report of the Annual General Meeting of Shareholders

At the General Meeting held on 19 May 2021, the CEO and CFO reported on the overall state of affairs

at Avantium as well as its financial performance and remuneration in 2020. The General Meeting

adopted the 2020 financial statements and gave positive advice on the Remuneration Report 2020.

The members of the Management Board were granted discharge of liability for their management in

2020, and the members of the Supervisory Board for their supervision thereof. Tom van Aken was re-

appointed as CEO and a statutory member of the Management Board, while Margret Kleinsman was

re-appointed to the Supervisory Board. The General Meeting also approved the proposal to authorise

the Management Board to issue up to 5% ordinary shares in connection with the company’s long-term

incentive and share-based compensation plans. PricewaterhouseCoopers Accountants N.V. (PwC) in

the Netherlands was appointed external auditor for the financial year 2021. As in previous years, the

Chair of the Audit Committee elaborated on the work of the Audit Committee in 2020, on the

company's collaboration with PwC and on other items relevant in the past year. The lead partner of

PwC was given the floor to elaborate on the audit procedure and the auditor's report on 2020.

Following the Dutch government’s Temporary Act COVID-19 Justice and Safety (the ‘Emergency Act’),

Avantium decided to make the General Meeting on 19 May 2021 accessible to shareholders only via

electronic means, namely a live webcast hosted on Avantium’s website. Shareholders could therefore

attend the General Meeting online but were not granted physical access; however, Avantium provided

shareholders with the opportunity to participate interactively and to exercise their shareholders’ rights

in line with the Emergency Act.

Financial Statements 2021 and Profit Appropriation

The financial statements for the financial year 2021 were prepared by the Management Board in

compliance with Articles 20 and 21 of the Articles of Association. Attached to these statements was

the unqualified report from the independent auditor PwC, with an emphasis of matter regarding a

material uncertainty related to going concern. The financial statements and the outcome of the

external audit were discussed by the Audit Committee with the Management Board in the presence of

the external independent auditor.

The 2021 financial statements were endorsed by all Management Board and Supervisory Board

members and are, together with PwC’s independent auditor’s report, included in this Annual Report.

The Management Board will present the 2021 financial statements at the General Meeting on 18 May

2022.

Gratitude

The Supervisory Board wishes to thank all Avantium employees for their dedication, creativity and

perseverance, enabling Avantium to move to an exciting new chapter in commercialising the plant-

based, fully recyclable plastic material PEF. The Supervisory Board is very grateful to the Management

Board and senior management of Avantium for their leadership and for their constructive and

transparent dialogue with the Supervisory Board.

Amsterdam, 22 March 2022

On behalf of the Supervisory Board,

Edwin Moses, Chair

Cynthia Arnold

Michelle Jou

Margret Kleinsman

Trudy Schoolenberg

80

Remuneration Report 2021

Letter from the Chair of the Remuneration Committee

On behalf of the Remuneration Committee, I am pleased to report on the Committee’s activities in

2021. Below, I will reflect briefly on the year, our remuneration policy and the key motivations behind

our decisions with regard to rewards and targets.

Looking back, 2021 was a defining year for Avantium on its way to commercialising its breakthrough

technology. The company made significant progress in the execution of its business plan, and an

important number of strategic targets were met.

In December 2021, Avantium announced that it had taken a positive Final Investment Decision (FID)

with regard to the construction of its FDCA Flagship Plant. This positive FID concluded two intense

years during which the company worked diligently to satisfy the three key conditions it had defined as

being necessary to meet prior to starting the construction of its FDCA Flagship Plant: (i) securing

sufficient financing; (ii) finalising the engineering and establishing the supply chain; and (iii) obtaining

sufficient offtake commitments for the FDCA Flagship Plant. In early December 2021, Avantium

secured the financing for the construction of the FDCA Flagship Plant with €90 million in debt

financing from a consortium of Dutch banks and the Dutch government-backed impact investment

fund, Invest-NL. As a consequence, all three key conditions had been fulfilled, allowing the company to

take a positive FID to proceed with the construction of the FDCA Flagship Plant.

Avantium also achieved important milestones in relation to its other technologies. For example, for its

Ray Technology, Avantium completed the application validation for both plantMEG™ and plantMPG™.

In April 2021, Avantium and sugar beet processor Cosun Beet Company agreed a term sheet to

establish a joint venture to construct a first commercial plant to produce plantMEG™ and plantMPG™

using Ray Technology. In addition, Avantium commenced pre-pilot testing of its Volta Technology at

various partners’ sites in Europe.

The company has also encountered some setbacks. In particular, due to an accident, operations were

temporarily halted in the Ray Technology demonstration plant in Delfzijl.

In 2021, revenues in all of the Avantium business segments started to recover, as problems related to

the pandemic began to resolve. Avantium Catalysis continued to be affected by COVID-19 travel

restrictions, which prevented installations, maintenance and upgrades of Flowrence® systems at

customers’ sites. However, the division was able to maintain business continuity in contract research –

running catalysis experiments on behalf of customers throughout the year. Avantium’s consolidated

revenues increased by 11% from €9.9 million in 2020 to €10.9 million in 2021.

During 2021, Avantium continued to manage its cash prudently. The company’s cash position

(including restricted cash) was €34.9 million as at 31 December 2021, as a result of a successful

capital raise that took place in April 2021, raising €27.8 million through an accelerated bookbuild. Net

cash outflow (cash flow excluding the capital raise) for the year was €18.1 million, versus €18.8 million

in 2020.

Our remuneration policy for the Management Board aims to support the long-term development of the

company in a highly dynamic environment. To optimally balance all relevant interests, it takes account

of Avantium’s long-term strategic objectives, seeks to be consistent with the company’s overall

remuneration policy and respects the interests and opinions of the various stakeholder groups.

In 2021, the Remuneration Committee met three times. In addition to detailed discussions on the

corporate targets, and then assessment of their level of subsequent achievement, special attention

was paid to the topic of further refining the strategic key performance indicators (KPIs) and

considering the extent to which they could be more transparently communicated externally without

releasing commercially sensitive information.

The Remuneration Committee had intended to propose, if necessary, a revision of the remuneration

policy in 2022. After careful consideration, the Remuneration Committee concluded that no revisions

were currently necessary. The Committee had listened carefully to shareholders’ feedback on the

Remuneration Report 2020 and the remuneration policy for the members of the Management Board

and the Supervisory Board. This resulted in an adjusted approach in reporting, including the level of

reporting transparency on target setting and achievement, which is reflected in the Remuneration

Report 2021. The Committee also concluded that taking into account all relevant factors, no

adjustments would be proposed to the Management Board’s and senior management’s remuneration

at this time.

The Remuneration Committee has carefully weighed all aspects of this challenging but in many ways

successful year, and has taken care to ensure that the impact of the year’s events were reflected in a

fair application of the remuneration policy and the assessment of this year’s target achievement. The

fact that Avantium made significant progress on the delivery of its business plan, and was able to

81

meet important strategic milestones and targets, is reflected in the remuneration to be paid to the

Management Board.

After careful consideration and following the proposal made by the Remuneration Committee on the

target achievements for each of the goals identified for 2021, the Supervisory Board made the

following decisions:

•The annual performance-related cash and non-cash variable remuneration (Bonus) for 2021

realised a target achievement of 83.75% of the on-target Bonus pay-out percentage (the on-

target Bonus, i.e. the Bonus in case of on-target performance, is equal to 100% of (i) 70% of base

salary for the CEO, and (ii) 50% of base salary for the CFO).

•The assessment of the achievement of the company’s 2021 goals will form the basis for the cash

incentive bonus payment to all staff, and will be used, together with the assessment of the

achievement of an individual’s personal goals, to determine the Management Board’s and senior

management’s annual performance-related cash bonus component (Short-Term Incentive) and the

non-cash long-term annual variable incentive component (Long-Term Incentive).

•The actual timing of the (cash) pay-out of the Bonus will be decided in Q2 2022.

Based on feedback by shareholders on the remuneration policy and the Remuneration Report 2020, as

discussed during and after the General Meeting of 2021, the Remuneration Committee reviewed

Avantium’s decision to be restrictive with regard to the disclosure of the Management Board's exact

targets, both in advance and retrospectively in view of the Remuneration Committee’s assessment of

the targets’ realisation. Although the Committee maintains its view that these goals qualify as

strategically and commercially sensitive information, it realises that more transparency towards its

external stakeholders is strongly desired. The company has therefore sought to continue to evolve its

level of disclosure related to corporate targets, in order, among other reasons, to confirm that the

targets set are fully in line with the long-term strategy of Avantium to maximise the value of its

technologies. The 2022 targets represent a list of long- and short-term goals that are aligned with the

company’s execution of its strategy. As an important element thereof, these goals should drive the

company’s performance on environmental, social and governance (ESG) criteria. As a technology

leader in sustainable and circular chemicals and plastics, Avantium aims to meet ESG standards and

plans to report in a transparent way on its progress in implementing its Sustainability Plan (Chain

Reaction 2030).

The Remuneration Committee continues to believe that the one-off fixed award of share options to

members of the Supervisory Board upon their appointment is important in attracting the required level

of talent to the company. The remuneration package for its Supervisory Board members should enable

Avantium to attract and retain diverse members with a broad international background and the right

balance of personal skills, competences and experience required to oversee the company’s

performance and the ongoing development and execution of its long-term strategy. The Committee

believes that the one-off fixed award of share options contributes to Avantium’s long-term value

creation and serves as a long-term investment in Avantium, aiming to align the Supervisory Board

members’ respective interests with those of the other shareholders.

The Remuneration Committee will continue to regularly assess Avantium’s remuneration policy and

advise the Supervisory Board on the need for further changes. The Remuneration Committee intends

to submit an updated version of Avantium’s remuneration policy for the Management Board and the

Supervisory Board for approval during the 2023 General Meeting, including any updates to address

further developments in remuneration practices and taking into consideration any adjustments

resulting from remuneration benchmark assessments and feedback received from shareholders. We

remain committed to remuneration practices and policies that allow us to attract, retain and motivate

high-performing employees while paying close attention to appropriate alignment with all

stakeholders.

I look forward to discussing the policy and actual remuneration practices in the 2022 Annual General

Meeting of Shareholders, and will be happy to answer any questions you may have.

Edwin Moses

Chair of the Remuneration Committee

82

Introduction

This Remuneration Report provides a summary of the remuneration policy of Avantium’s Management

Board and Supervisory Board, as well as an overview of the remuneration of the members of the

Management Board and the Supervisory Board paid in the financial year 2021. This Remuneration

Report is prepared in accordance with the relevant parts of Section 135, Book 2 of the Dutch Civil

Code, in line with the EU guidelines based on the EU Shareholders' Rights Directive. The remuneration

is furthermore determined in accordance with the remuneration policy adopted at the General Meeting

on 14 May 2020, with an effective date of 1 January 2020. After approval by the Supervisory Board,

the Remuneration Report will be submitted to the General Meeting on 18 May 2022 for an advisory

vote of our shareholders, in line with Section 135b subsection 2, Book 2 of the Dutch Civil Code.

Remuneration Policy

Introduction and Governance of the Remuneration Policy

The last update of the remuneration policy was adopted by the General Meeting on 14 May 2020 and

became effective as per 1 January 2020. In view of the new Dutch legislation resulting from Directive

(EU) 2017/828 (Shareholder Rights Directive II), the Supervisory Board conducted a comprehensive

review and comparison of its remuneration policy for the members of the Management Board and the

Supervisory Board, which has led to the latest remuneration policy.

The remuneration policy supports the long-term development and strategy of the company, while

aiming to fulfil all stakeholders’ requirements and keeping an acceptable risk profile. The Supervisory

Board ensures that the policy and its implementation are linked to Avantium’s strategic goals and

objectives. The policy is designed to encourage behaviour that is focused on long-term value creation

for all stakeholders, while the highest standards of good corporate governance are adopted. The

remuneration policy is aimed at motivating the accomplishment of outstanding achievements, using a

combination of non-financial and financial performance measures.

The Remuneration Committee intended to propose, if necessary, a revision of this remuneration policy

in 2022. After careful consideration, the Remuneration Committee concluded not to endorse any

revisions this year. Revisions would primarily comprise adjustments resulting from the Committee’s

due consideration to the feedback received from shareholders on the Remuneration Report 2020 and

the remuneration policy for the members of the Management Board and the Supervisory Board. The

Remuneration Committee concluded that the adjusted approach in reporting, including its level of

reporting transparency on target setting and achievement, may for this year be addressed in the

Remuneration Report 2021. It furthermore concluded that given that the Management Board’s and

senior management’s remuneration continues to fall within a competitive range of approximately 20%

around the median market levels payable within the reference groups of industrial companies in our

sector, no adjustments are proposed at this time.

Based on feedback from shareholders on the remuneration policy and the Remuneration Report 2020,

as discussed during and after the General Meeting of 2021, the Remuneration Committee reviewed

Avantium’s decision to be restrictive on the disclosure of the Management Board's exact actual

targets, both in advance and retrospectively in view of the Remuneration Committee’s assessment of

the targets’ realisation. Although the Committee maintains its view that these qualify as strategically

and commercially sensitive information, it realises that more transparency towards its external

stakeholders is strongly desired, among other reasons in order to confirm that the targets set are fully

in line with the long-term strategy of Avantium to maximise the value of its technologies.

The 2022 targets represent a list of long- and short-term goals that are aligned with the company’s

execution of its strategy. As an important element thereof, these goals should drive the company’s

performance on environmental, social and governance (ESG) criteria. As a technology leader in

sustainable and circular chemicals and plastics, Avantium aims to meet ESG standards and plans to

report in a transparent way its progress on implementing its Sustainability Plan (Chain Reaction 2030).

The Remuneration Committee maintains its view on the one-off fixed award of share options to

members of the Supervisory Board upon their appointment. The remuneration package for its

Supervisory Board members should enable Avantium to attract and retain diverse members with a

broad international background and the right balance of personal skills, competences and experience

required to oversee Avantium’s (execution of its) long-term strategy and performance. The one-off

fixed award of share options contributes to Avantium’s long-term value creation and serves as a long-

term investment in Avantium, aiming to align the members’ respective interests with those of the other

shareholders.

The Supervisory Board is responsible for the execution of the remuneration policy. The Remuneration

Committee will continue to regularly assess the remuneration policy and advise the Supervisory Board

on the further alignment of the interests of management with those of shareholders and other

stakeholders.

The Remuneration Committee intends to submit an updated version of Avantium’s remuneration policy

for the Management Board and the Supervisory Board for approval during the 2023 Annual General

Meeting of Shareholders, including any updates to address further developments in remuneration

practices or to take into consideration any adjustments resulting from remuneration benchmark

assessments and feedback received from shareholders during and prior to the General Meeting.

83

External Perspective: Reference Group and Market Positioning

As with the remuneration philosophy for all Avantium employees, the remuneration of the

Management Board should be competitive compared with a relevant reference market. To define this

market, a reference group is created by the Supervisory Board, consisting of companies that are

selected on criteria such as geography, governance framework, scope and type of industry. In

principle, a benchmark is conducted at least once every four years. In the years without a benchmark,

the Supervisory Board considers the appropriateness of any change of base salary based on the

market environment as well as the salary adjustments for other Avantium employees.

As a guiding principle, the total direct remuneration of the Management Board is set at or around the

median of the reference market.

In 2021, in line with the remuneration policy, the Supervisory Board conducted a remuneration

benchmark assessment of the market competitiveness of the current compensation package of the

members of the Management Board. The Supervisory Board carefully reviewed the reference group for

the benchmark assessment and amended it according to the above-mentioned criteria.

Geographically, the amended reference group consists primarily of listed western European companies

and, exceptionally, some non-European companies that are highly relevant from a talent market

perspective or industry perspective. Furthermore, the weighting of UK, US and Swiss companies does

not exceed 50% of the reference group. From a scope and type-of-industry point of view, the reference

group includes companies of comparable size that are primarily active in the (specialty) chemicals and

materials and biotechnology industries.

The companies in the reference group for the Management Board remuneration benchmark

assessment performed in 2021 are:

•Accsys Technologies PLC (UK)

•Amyris Inc (US)

•BRAIN Biotechnology Research and Information Network AG (DE)

•Carbios SA (FR)

•Evolva Holding SA (CH)

•Global Bioenergies SA (FR)

•Holland Colours NV (NL)

•IBU-tec advanced materials AG (DE)

•Iofina PLC (UK)

•Isagro SpA (IT)

•Metabolic Explorer SA (FR)

•Nabaltec AG (DE)

•SICIT Group SpA (IT)

•Treatt PLC (UK)

•Versarien PLC (UK)

•Zotefoams PLC (UK)

The remuneration benchmark assessment was performed on the following compensation elements:

•Base salary

•Target short-term incentive (STI)

•Total cash compensation (TCC) – base salary plus STI

•Annualised expected value of the long-term incentive (LTI)

•Total direct compensation (TDC) – TCC plus LTI

The outcome of the 2021 benchmark resulted in the conclusion that for all of the compensation

elements, the Management Board remuneration falls within a competitive range of +/-20% around the

median market levels payable within the reference group, which is in line with our remuneration policy.

84

Management Board Remuneration 2021

The remuneration paid to the members of the Management Board in 2021 was based on Avantium’s

remuneration policy and its governance process.

The remuneration of the members of the Management Board consists of the following components:

i)fixed annual base salary;

ii)short-term annual variable remuneration (in cash);

iii)long-term annual variable remuneration in the form of shares (LITP) and options (employee stock

option plan, or ESOP); and

iv)allowance for pension and fringe benefits.

Avantium does not grant any personal loans, guarantees or advance payments to members of the

Management Board.

i) Fixed Annual Base Salary

The objective of the fixed annual base salary is to compensate for the performance of day-to-day

activities. The fixed annual base salary of the members of the Management Board is based on the level

of responsibility and performance and is set at or around the median of the remuneration levels

payable within the reference group.

In line with the remuneration policy, in 2021 the full year base salary of the CEO, Tom van Aken,

remained at €267,800. The full year base salary for the CFO, Bart Welten, remained at €235,000.

In view of the COVID-19 pandemic and owing to the partial achievement of the company’s strategic

goals in 2020, at the request of the Management Board, any considered salary increases were not

implemented in 2021.

ii) Short-Term Annual Variable Remuneration

The objective of the short-term annual variable remuneration is to ensure that the members of the

Management Board focus on realising their short-term operational objectives, leading to longer-term

value creation.

The bonus refers to the annual performance-related cash and non-cash incentive that is applicable to

the members of the Management Board and comprises (i) a cash component consisting of no more

than 50% of the aggregate bonus, if any, and (ii) a non-cash component equivalent to the cash

component which must be invested in Investment Shares (see under iii.a Long-Term Investment Plan

in the Form of Matching Shares).

The Supervisory Board has the discretionary power to adjust the incentive pay-out up- or downwards

if it feels that the outcome is unreasonable due to exceptional circumstances during the performance

period, such as by taking into account the long-term interests and sustainability of the company as a

whole. Scenario analyses of the possible outcomes of the variable remuneration components and their

effect on the remuneration of the Management Board are conducted. This power was not used in

2020, nor was any remuneration recovered from present or former Management Board members.

Performance Measures

The performance measures form a balanced mix of strategic, commercial and operational performance

targets, which together ensure a focus on both the (financial) performance of the company in the short

term and the sustained company future in reaching its long-term strategic objectives. For each of the

performance measures, the Supervisory Board sets challenging, but realistic, targets and target levels.

The performance targets are specific and measurable and are formulated and communicated at the

beginning of each financial year (except for circumstances where the Supervisory Board considers

semi-annual target-setting more appropriate), although the Supervisory Board may adjust the targets

and their relative weighting if required by significantly changed strategic priorities in any given year.

Following a presentation by the Management Board, the Supervisory Board sets the targets, based on

strategic progress, commercial performance and operational performance, in relation to Avantium’s

strategy and long-term objectives, as set out in the remuneration policy (www.avantium.com/

corporate-governance/#remuneration). When the performance criteria are set, the interests of all

stakeholders are taken into account.

In order to achieve alignment in the remuneration structure of the Management Board and other

Avantium employees, a subset of the bonus performance measures, target-setting and pay-out

schemes as set out in the remuneration policy is applicable to Avantium employees.

The strategic progress targets are based on value creation for shareholders and realising strategic

focus. The targets for commercial performance are based on securing strategic partnerships for the

commercialisation of technology programmes and reaching the commercialisation phase of the

different technology programmes (path from laboratory scale to demonstration scale and finally

commercialisation scale). One such target was to take a positive FID on the construction of the FDCA

Flagship Plant and formalise approval for the project by the end of 2021. The operational performance

targets are financial targets, consisting of budget cash runway components.

Although Avantium maintains its view that detailed targets qualify as strategically and commercially

sensitive information, it realises that more transparency towards its external stakeholders is strongly

desired, both in advance on target setting and retrospectively in view of the Remuneration

Committee’s assessment of the targets’ realisation. Among other reasons, this will confirm that the

targets set are fully in line with the long-term strategy of Avantium to maximise the value of its

technologies.

85

For the annual bonus 2021, the on-target bonus, i.e. the bonus in case of on-target performance, is

equal to 100% of (i) 70% of base salary for the CEO and (ii) 50% of base salary for the CFO. The

maximum bonus, i.e. the bonus in case of above-target performance, is equal to 150% of the on-target

bonus. If performance is below a predefined threshold level, no bonus will be paid out. The members of

the Management Board are, together with senior management, obligated to invest the total non-cash

component of their (net) bonus in investment shares. The non-cash component percentage of the

bonus is 50%. The cash component of the bonus may, at the discretion of the relevant member of the

Management Board, also be invested in investment shares.

The bonus pay-out levels are prorated upon the level of achievement of the aforementioned

performance targets.

For the annual bonus 2021, the performance targets and their relative weighting were set in the

middle of February 2021 as follows:

Name

Weight factor

Target

T.B. van Aken

73%

Strategic Differentiators

8%

Commercial Performance

20%

Operational Performance

B.J.J.V. Welten

73%

Strategic Differentiators

8%

Commercial Performance

20%

Operational Performance

As set out in the section 'Letter from the Chair of the Remuneration Committee’, 2021 was a defining

year for Avantium on its way to commercialising its breakthrough technologies. Avantium made

significant progress in the execution of its business plan, and an important number of strategic targets

were met in 2021.

The Remuneration Committee has carefully weighed all aspects of this challenging but in many ways

successful year, and has taken particular care to ensure that the impact of the year’s events were

reflected in a fair application of the remuneration policy and this year’s target achievement. The fact

that Avantium made significant progress on the delivery of its business plan, and was able to meet

some of its important strategic milestones and targets, is reflected in the remuneration to be paid to

the Management Board.

After careful consideration and following the proposal made by the Remuneration Committee on the

target achievements for each of the goals identified for 2021, the Supervisory Board made the

following decisions:

•The annual performance-related cash and non-cash variable remuneration (Bonus) realised a

target achievement of 83.75% of the maximum of 100% of the on-target Bonus pay-out

percentage.

•The evaluation of the company’s 2021 targets will form the basis for the cash incentive bonus

payment to all staff, and will be used to determine the pay-out to the Management Board and

senior management’s annual performance related cash bonus component (Short-Term Incentive)

and the non-cash long term annual variable incentive component (Long-Term Incentive).

•The actual timing of the (cash) pay-out of the Bonus will be decided in Q2 2022.

In line with Avantium's performance in 2021, as set out in the section 'The Value We Created in 2021',

it was concluded that Strategic Differentiator targets were partly achieved, Commercial targets were

partly achieved and Operational Performance targets were partly achieved. This resulted in the

conclusion of the Supervisory Board that 83.75% of the targets have been achieved. The Supervisory

Board has not used any upwards or downwards discretion.

The overall average achievement of the Management Board members for performance year 2021

amounts therefore to 83.75% of the maximum achievable bonus. The maximum achievable bonus for

Tom van Aken is 70% (therefore resulting in a variable remuneration for 2021 of 59% of his annual

base salary). The maximum achievable bonus for Bart Welten is 50% (therefore resulting in a variable

remuneration for 2021 of 42% of his annual base salary).

Name

Weight

factor

Target

Measured

performance

Total

performance

in 2021

T.B. van Aken

73%

Strategic Differentiators

91%

84%

8%

Commercial Performance

67%

20%

Operational Performance

63%

B.J.J.V. Welten

73%

Strategic Differentiators

91%

84%

8%

Commercial Performance

67%

20%

Operational Performance

63%

iii) Long-Term Variable Remuneration in the Form of Shares (LTIP) and Options

(ESOP)

On 5 October 2016, Avantium adopted the ESOP for all key employees, senior management and

members of the Management Board and the LTIP for the members of the Management Board and the

86

management team (collectively, the Incentive Plans). The Incentive Plans encourage a long-term focus

and alignment with Avantium’s strategy.

iii.a) Long-Term Investment Plan in the Form of Matching Shares

The members of the Management Board are obligated to invest the total non-cash component of their

(net) bonus in shares to be delivered by the company (Investment Shares). The non-cash component

percentage is 50%. The cash component of the bonus may, at the discretion of the relevant member of

the Management Board, also be invested in Investment Shares. The Investment Shares are subject to a

retention period of five years following the investment date. After the end of the retention period,

Avantium will match the Investment Shares in a 1:1 ratio (Matching Shares); that is, one Matching

Share is granted for each Investment Share. Based on the feedback from shareholders on the

remuneration policy and the Remuneration Report 2020, as discussed prior to and after the General

Meeting of 2021, the delivery of the Matching Shares requires a clarification. These Matching Shares

are delivered by the company at the end of the five-year retention (lock-up) period of the Investment

Shares.

The objective of the plan is that Management Board members build an equity position in the company.

iii.b) Long-Term Variable Remuneration in the Form of Share Options (under the

ESOP)

On an annual basis, share options under the ESOP (Options) may be conditionally awarded to

members of the Management Board in accordance with the performance parameters pre-determined

by the Supervisory Board. These parameters are consistent with the performance measures applied

for the senior management and key employees of Avantium, to ensure optimal alignment with the

employees of Avantium who receive Options. Options are awarded within a pre-determined range, as

stated in the remuneration policy (Section 4.6), where the actual annual award is set by the

Supervisory Board.

The Options are fully vesting on the third anniversary following the date of the award. The exercise

period of the Options will be up to five years after the date of vesting. Based on the feedback from

shareholders on the remuneration policy and the Remuneration Report 2020, as discussed prior to and

after the General Meeting of 2021, the vesting period of the Options requires a clarification. The

Options vest at the end of a three-year vesting term and not on an annual pro rata basis during this

three-year vesting period. Only in the event that the member of the Management Board is no longer

employed by the company at the date of vesting will the number of options be decreased as provided

for in the ESOP (depending on the employment termination date and cause of leave, on an annual pro

rata basis during a period of three years).

iii.3) Adjustments to Variable Remuneration

In line with Dutch law, the variable remuneration of the members of the Management Board may be

reduced, or Management Board members may be obliged to repay (part of) their remuneration to the

company, if one of the circumstances as described in Section 5 (Management Board Remuneration:

Adjustments to Variable Remuneration) of the remuneration policy apply. In 2021, no adjustments

based upon this section of the remuneration policy were made.

iv) Allowance for Pension and Fringe Benefits

The members of the Management Board are allowed to participate in Avantium’s pension plan,

available to all Avantium employees, whereby Avantium carries the employer’s contribution of the

pension contributions. The pension plan is based on a defined contribution system. Legislation in 2015

reduced the maximum pension accrued to 1.875% (from 2.15%) of the full pensionable salary. The

members of the Management Board can choose to build up the part of the pensionable salary above

€110,111 (2020) in a separate defined contribution plan. There are no arrangements for early

retirement.

The members of the Management Board are entitled to additional remuneration elements, such as

company car costs, travel expenses, social security costs and a contribution to health and disability

insurance, all in line with applicable Avantium policies, plans and arrangements. The table hereafter

provides a breakdown of the remuneration of the members of the Management Board in 2021.

Employment Agreements and Severance Payments

The members of the Management Board continued their current employment agreements with

Avantium Support B.V., a subsidiary of the company. These agreements are for an indefinite period of

time and do not contain severance payment provisions.

The Supervisory Board may determine that a member of the Management Board is entitled to a

severance payment for the loss of income resulting from a non-voluntary termination as Management

Board member. In line with the Dutch Corporate Governance Code, any severance payment is limited

to one year’s base salary.

87

Total Remuneration Received by Members of the Management Board

(In €1,000)

Fixed remuneration

Variable

Management

Board member

Salary

Other benefits11

Short-term

bonus12

Long-term

award13

Post-employee

benefits

Total remuneration

% of fixed

remuneration

% of variable

remuneration

T.B. van Aken

2021

268

25

157

119

20

589

53%

47%

2020

268

26

—

127

19

440

71%

29%

B.J.J.V. Welten

2021

235

27

98

25

27

411

70%

30%

2020

228

26

—

25

25

304

92%

8%

Total - 2021

503

52

255

144

46

1,000

60%

40%

Total - 2020

495

52

—

152

44

744

80%

20%

The total remuneration based on IFRS in 2021 for Tom van Aken amounted to €584,000 (2020:

€430,000) due to the share-based payment expenses of €114,000 recognised during the year (2020:

€117,000). The total remuneration based on IFRS in 2021 for Bart Welten amounted to €439,000

(2020: €307,000) due to the share-based payment expenses of €52,000 recognised during the year

(2020: €29,000).

Internal Pay Ratio

In setting the remuneration policy for the members of the Management Board, the Supervisory Board

also takes into account the internal pay ratio. The internal pay ratio between the average pay of

Avantium employees vis-à-vis the average pay of the CEO is calculated based on the average 2021

remuneration of all Avantium employees vis-à-vis the 2021 remuneration of the CEO. Since 2020, we

have also included pension contributions and long-term incentive components.

88

11 Other benefits mainly include contributions to social security plans and benefits in kind such as company cars, medical expenses and legal expenses.

12 Including the cash and non-cash part of the awarded bonus for the specific performance year.

13 Including the value of the various performance share-based plans that vested during the year. The value of the LTIP reward is calculated based on the number of matching shares that have vested and of the share price at the date of vesting.

The value of the ESOP reward is calculated based on the number of share options that have vested during the year and the net of the share price at vesting date less the exercise price.

The 2021 pay ratio is 6:1 for the CEO. The pay ratio for 2020 would have been 5:1 based on the

specific guidance provided by the Monitoring Commissie Corporate Governance Code in December

2020 on the calculation methodology of the pay ratio.14

The following table provides an overview of the remuneration of the members of the Management

Board compared with the average total remuneration of an Avantium employee (defined as gross

wages, holiday allowance, other benefits, pension, Bonus and long-term awards) and company

performance since the listing of the company’s shares in 2017.

(In €1,000)

2021

% change

2020

% change

2019

% change

2018

% change

2017

Management Board

member

T.B. van Aken

589

34%

440

2%

432

41%

306

-17%

368

B.J.J.V. Welten

411

35%

304

0%

—

0%

—

0%

—

F.C.H Roerink

(former CFO)

—

0%

—

-100%

616

120%

280

-13%

321

Average employee

salary

91

12%

81

15%

70

0%

70

7%

66

2021

% change

202015

% change

2019

% change

2018

% change

2017

Total company

performance

84%

—%

—%

-100%

65%

122%

29%

-66%

86%

Strategic

Differentiators

73%

—%

—%

-100%

67%

168%

25%

-63%

68%

Commercial

Performance

8%

—%

—%

-100%

55%

175%

20%

-80%

100%

Operational

Performance

20%

—%

—%

-100%

100%

11%

90%

-10%

100%

The table includes information on a four-year period as of 2017, the year Avantium became a publicly

traded company.

It is noted that Frank Roerink's severance payment is included in his total remuneration for the year

2019.

89

14 Starting as of 1 January 2021, the value of the share-based component of the remuneration is determined at the time of assignment in accordance with the applicable rules under IFRS. Before 1 January 2021, the value of the share-based

component of the remuneration was determined based on the value of the options that vested during the year and the net of the share price at vesting date less the exercise price.

15 The company’s performance and achievement of the performance measures for 2020 was set to zero percent herein; as the Management Board and senior management decided to forfeit their respective annual cash bonus, the company

elected not to disclose the realised achievement of the 2020 performance targets.

Number of Investment Shares and Matching Shares Outstanding and Awarded to the Management Board

The main conditions of share plans

Information regarding the reported financial year

Management

Board member

Specification

of plan

Performance

period

Award date

Vesting date

End of

retention

period

Number of

awards

outstanding

1 January

Shares

allocated

during the

year

Shares

forfeited

during the

year

Shares

vested during

the year

Value of

matching

shares vested

during the year

in EUR16

Matching

shares

unvested as at

31 December

Shares subject

to retention

period as at 31

December

T.B. van Aken,

CEO

LTIP- Investment

shares

2017-2018

16/3/2018

16/3/2018

16/3/2023

7,441

—

—

—

—

—

7,441

2019-2020

14/5/2020

14/5/2023

14/5/2025

15,365

—

—

—

—

—

15,365

LTIP- Matching

shares

n/a

16/3/2018

16/3/2021

16/3/2023

7,441

—

—

413

2,216

—

—

n/a

14/5/2020

14/5/2023

14/5/2025

15,365

—

—

5,122

27,452

10,243

—

F.C.H Roerink,

former CFO

LTIP- Investment

shares

2017-2018

16/3/2018

16/3/2018

16/3/2023

5,789

—

—

—

—

—

5,789

LTIP- Matching

shares

n/a

16/3/2018

16/3/2021

16/3/2023

1,930

—

—

—

—

—

1,930

Total Management Board members

45,612

—

—

5,535

29,668

10,243

22,806

Total former Management Board members

7,719

—

—

—

—

—

7,719

90

16 The value of matching shares vested during the year is expressed in EUR and is determined by the share price at vesting date.

Number of Options Outstanding and Awarded to the Management Board

The main conditions of share option plans

Information regarding the reported financial year

Management

Board

member

Specification

of plan

Award date

Vesting date

Exercise

period

Exercise price

of the option

in EUR

Number of

options

outstanding

as at 1

January

Share

options

granted

during the

year

Share

options

forfeited

during the

year

Share

options

vested during

the year

Value of

share options

vested during

the year17

Share

options

unvested as

at 31

December

Share

options

vested as at

31 December

T.B. van

Aken, CEO

ESOP

19/10/2006

19/10/2009

10 years

7.60

20,230

—

—

—

—

—

20,230

1/10/2008

1/10/2011

10 years

0.10

20,657

—

—

—

—

—

20,657

1/5/2009

1/5/2012

10 years

0.10

35,000

—

—

—

—

—

35,000

1/5/2010

1/5/2013

10 years

0.10

29,770

—

—

—

—

—

29,770

4/11/2010

4/11/2013

10 years

0.10

28,000

—

—

—

—

—

28,000

30/11/2011

30/11/2014

10 years

0.10

135,000

—

—

—

—

—

135,000

1/10/2015

15/3/2017

10 years

0.10

22,000

—

—

—

—

—

22,000

1/10/2015

15/3/2017

10 years

9.80

7,500

—

—

—

—

—

7,500

2/3/2017

15/3/2017

10 years

0.10

13,000

—

—

—

—

—

13,000

2/3/2017

15/3/2017

10 years

9.80

18,000

—

—

—

—

—

18,000

17/5/2017

17/5/2020

8 years

10.58

50,000

—

—

—

—

—

50,000

28/3/2018

28/3/2021

8 years

5.34

50,000

—

—

2,778

—

—

50,000

16/5/2019

16/5/2022

8 years

2.60

100,000

—

—

33,333

64,521

11,111

88,889

14/5/2020

14/5/2023

8 years

3.59

50,000

—

—

16,667

24,679

22,222

27,778

19/5/2021

19/5/2024

8 years

4.56

—

50,000

—

11,111

—

38,889

11,111

B.J.J.V

Welten, CFO

ESOP

14/5/2020

14/5/2023

8 years

3.59

50,000

—

—

16,667

24,679

22,222

27,778

19/5/2021

19/5/2024

8 years

4.56

—

30,000

—

6,667

—

23,333

6,667

Total Management Board members

629,157

80,000

—

87,222

113,878

117,778

591,379

In 2021, 80,000 additional share options were granted to the Management Board. The share-based

payment expenses of the Management Board of €167,000 comprise the part of the share-based

compensation (note 12) contributable to the share options granted in previous years.

91

17 The value of share options vested during the year is expressed in EUR and is determined by the share price at vesting date less the exercise price.

Number of Options Outstanding and Awarded to Former Management Board

Member

The main conditions of share option plans

Information regarding the reported financial year

Management

Board

member

Specification

of plan

Award date

Vesting date

Exercise

period

Exercise price

of the option

in EUR

Number

of options

outstanding

as at

1 January

Share

options

exercised

during the

year

Share

options

forfeited

during the

year

Share

options

vested during

the year

Value of

share options

exercised

during the

year18

Share

options

unvested as

at 31

December

Share

options

vested as at

31 December

F.C.H.

Roerink,

former CFO

ESOP

4/11/2010

4/11/2013

10 years

0.10

16,500

(16,500)

—

—

108,930

—

—

30/11/2011

30/11/2014

10 years

0.10

90,000

(90,000)

—

—

560,851

—

—

1/10/2015

15/3/2017

10 years

0.10

14,300

(14,300)

—

—

84,272

—

—

2/3/2017

15/3/2017

10 years

0.10

13,000

(13,000)

—

—

76,611

—

—

28/3/2018

28/3/2021

8 years

5.34

18,333

(18,333)

—

—

99719

—

—

16/5/2019

16/5/2022

8 years

2.60

13,333

—

—

—

—

—

13,333

Total former Management Board members

165,467

(152,133)

—

—

831,662

—

13,333

92

18 The value of share options exercised during the year is expressed in EUR and is determined by the share price at exercise date less the exercise price.

19 The exercise of this series resulted in limited proceeds due to the series not being in the money at the time of exercise.

Management Board Remuneration 2022

The Remuneration Committee intended to propose, if necessary, a revision of this remuneration policy

in 2022. After careful consideration, the Remuneration Committee concluded not to endorse any

revisions this year. Revisions would primarily comprise adjustments resulting from the Committee’s

due consideration to the feedback from shareholders on the Remuneration Report 2020 and the

remuneration policy for the members of the Management Board and the Supervisory Board. The

Remuneration Committee concluded that the adjusted approach in reporting, including its level of

reporting transparency on target setting and achievement, may for this year be addressed in the

Remuneration Report 2021. It furthermore concluded that given that the Management Board’s and

senior management’s remuneration continues to fall within a competitive range of approximately 20%

around the median market levels payable within the reference groups of industrial companies in our

sector, no adjustments are proposed at this time.

For 2022, salary increases for the Management Board and senior management are not yet considered;

such may be addressed in due course.

As per the Remuneration Policy, the performance measures form a balanced mix of strategic,

commercial and operational performance targets, which together ensure a focus on both the (financial)

performance of the company in the short term and the sustained company future in reaching its long-

term strategic objectives.

Based on feedback from shareholders on the remuneration policy and the Remuneration Report 2020,

as discussed during and after the General Meeting of 2021, the Remuneration Committee reviewed

Avantium’s decision to be restrictive on the disclosure of the Management Board's exact actual

targets, both in advance and retrospectively in view of the Remuneration Committee’s assessment of

the targets’ realisation. Although it maintains its view that these qualify as strategically and

commercially sensitive information, the Committee realises that more transparency towards its

external stakeholders is strongly desired, in order, among other reasons, to confirm that the targets set

are fully in line with the long-term strategy of Avantium to maximise the value of its technologies.

For 2022, the targets represent a list of long- and short-term goals that are aligned with the

company’s execution of its strategy. As an important element thereof, these goals should drive the

company’s performance on environmental, social and governance (ESG) criteria. As a technology

leader in sustainable and circular chemicals and plastics, Avantium aims to meet ESG standards and

plans to report in a transparent way its progress on implementing its Sustainability Plan (Chain

Reaction 2030). The Remuneration Committee therefore recommended to the Supervisory Board to

include additional performance measures on ESG criteria in the performance measures mix.

For the annual bonus 2022, the performance measures therefore include ESG performance targets in

addition to the mix of strategic, commercial and operational performance targets. Their focus and

relative weighting will be as reflected in the below table:

Performance measure

CEO

CFO

Strategic

60%

40%

Commercial

15%

15%

Operational

15%

35%

ESG

10%

10%

Total performance

100%

100%

These targets are only being disclosed to the extent they are not share-price or competition sensitive.

For this reason, some of these targets are reflected with a generic description.

The maximum achievable bonus for Tom van Aken is 70% of his annual base salary. The maximum

achievable bonus for Bart Welten is 50% of his annual base salary.

Performance

measure

Objective

Target

Strategic

Secure financing and

partnerships

1.Ensure that the group's business operations are

timely, prudently and sufficiently funded, on the

basis of obtaining the mandate from its

shareholders to raise €45 million in equity capital

and against satisfactory conditions.

2.Secure sustainable progress in the area of

partnerships.

Strategic

Achieve strategic

milestones

1.Timely execute Financial Close following

Renewable Polymers' positive FID.

2.Meet strategic milestones in relation to the Cosun

Beet Company joint venture partnering.

Strategic

Business &

Technology Planning

Meet strategic milestones in relation to Avantium's

earlier-stage technologies.

93

Performance

measure

Objective

Target

Commercial

Drive commercial

performance

1.Meet strategic milestones on Renewable Polymers

offtake commitments.

2.Meet Catalysis business performance parameters.

Operational

Drive operational

performance

1.Meet EPC milestones and financials.

2.Meet Ray Technology operational milestones.

ESG

Chain Reaction 2030

implementation

1.Ecological: complete certified LCAs for YXY

Technology (PEF) and Ray Technology (plantMEG,

plantMPG).

2.Operations: calculate direct GHG emissions from

our Flagship Plant, pilot plants and laboratory

activities and improve on the baseline.

3.Supply chain: develop and initiate a supplier code

of conduct and product stewardship plan.

4.People: establish a diversity and inclusion plan

(including KPIs) and improve on the baseline.

ESG

Safety and health

1.Safety #1 organisation: 0 accidents using OSHA

LTI classification.

2.Engage staff and minimise staff turnover <10%

(FY).

Supervisory Board Remuneration 2021

Remuneration Policy for the Supervisory Board

The remuneration of the members of the Supervisory Board consists of the following components:

i.annual fee;

ii.travel expenses and other expenses; and

iii.one-off fixed awards of Options (ESOP) related to the member’s appointment.

i) Annual Fee

The remuneration policy determines the annual (gross) fees for each position of the Supervisory Board,

separated into membership and chairpersonship of the Supervisory Board and membership and

chairpersonship of a committee.

In line with the remuneration policy, the members of the Supervisory Board received the following

annual (gross) fees:

•Membership of the Supervisory Board: €40,000;

•Chairpersonship of the Supervisory Board: €35,000 (additional);

•Membership of a committee of the Supervisory Board: €5,000 (per committee); and

•Chairpersonship of the Audit Committee of the Supervisory Board: €5,000 (additional).

The table hereafter provides a breakdown of the Supervisory Board members’ remuneration in 2021.

Avantium does not grant any personal loans, guarantees or advance payments to members of the

Supervisory Board.

ii) Travel Expenses and Other Expenses

Supervisory Board members are reimbursed for all reasonable costs incurred in connection with their

attendance of meetings. Travel costs are reimbursed in line with Avantium’s travel policy. Any other

expenses are only reimbursed, either in whole or in part, if incurred with the prior consent of the Chair

of the Supervisory Board. Over the year 2021, physical attendance of meetings was reduced to a

minimum in light of the COVID-19 pandemic. Travel costs were therefore limited.

iii) One-Off Fixed Awards of Options (ESOP) Related to the Member’s Appointment

The members of the Supervisory Board may participate in the ESOP. Options are awarded under the

ESOP upon a member’s appointment, or as per date of adoption of the proposed remuneration policy

for the current members of the Supervisory Board, whereby the Chair of the Supervisory Board is

entitled to eighty-five thousand (85,000) Options, and the other members of the Supervisory Board are

entitled to thirty thousand (30,000) Options. A member may choose not to receive the award.

Based on the feedback by shareholders on the remuneration policy and the Remuneration Report

2020, as discussed prior to and after the General Meeting of 2021, the vesting period of the Options

requires a clarification. The Options vest at the end of a three-year vesting term and not on an annual

pro rata basis during this three-year vesting period. Only if the membership of a member of the

Supervisory Board is terminated or has ended prior to the date of vesting will the number of options be

decreased as provided for in the ESOP (on an annual pro rata basis during a period of three years). A

lock-up period of four (4) years applies from the date of the award, with the exception of a limited right

of sale for sell to cover purpose.

The exercise period of the Options will be up to four (4) years after the date that the awarded Options

have fully vested.

94

Total Overview of Supervisory Board Remuneration 2021

(In €1,000)

Fixed remuneration

Variable remuneration

Membership20

Committees

Other compensation21

Long-term award22

Total remuneration

% of fixed

remuneration

% of variable

remuneration

E. Moses

66

13

—

42

121

65%

35%

M.B.B. Jou

40

15

—

15

70

79%

21%

C.A. Arnold

35

13

5

—

53

91%

9%

M.G. Kleinsman

40

10

—

—

50

100%

—%

G.E. Schoolenberg

35

9

—

—

44

100%

—%

Total - 2021

216

60

5

57

338

82%

18%

The following table provides detail on the total remuneration received by each Supervisory Board member in accordance with the period the company's shares are traded on Euronext:

(In €1,000)

2021

2020

2019

2018

2017

E. Moses

121

133

3

—

—

M.G. Kleinsman

50

50

50

50

27

M.B.B. Jou

70

47

—

—

—

C.A. Arnold

53

14

—

—

—

G.E. Schoolenberg

44

13

Total Supervisory Board members

338

257

53

50

27

Remuneration of former Supervisory Board members

D.J. Lucquin (member until 30 September 2020)

—

44

50

50

53

R.W. van Leen (member until 31 December 2019)

—

—

30

—

—

K. Verhaar (member until 20 December 2019)

—

—

90

80

6

G.E.A Rijnen (member until 15 May 2019)

—

—

21

55

50

J.S. Wolfson (member until 15 May 2019)

—

—

18

50

45

Total former Supervisory Board members

—

44

209

235

154

Total remuneration

338

301

262

285

181

95

20 The membership fee excludes the fee covering the onboarding period prior to the respective appointments, being equal to the prorated base membership fee (€40,000 on pro rata basis). The 2021 membership fees exclude the fees covering

the onboarding period of Nils Björkman prior to his appointment, amounting to €13,000.

21 Other compensation includes expenditures related to travel.

22 Long-term award includes the value of the ESOP plan. The value of the ESOP reward is calculated based on the number of share options that have vested during the year and the net of the share price at vesting date less the exercise price.

Number of Options Supervisory Board

The main conditions of share option plans

Specification of plan

Award date

Vesting date

Exercise period

Exercise price of the option in EUR

E. Moses

ESOP

14/5/2020

14/5/2023

8 years

3.59

M.B.B. Jou

ESOP

14/5/2020

14/5/2023

8 years

3.59

C.A. Arnold

ESOP

30/9/2020

30/9/2023

8 years

5.78

J.S. Wolfson (former member)

ESOP

2/3/2017

2/3/2020

10 years

9.80

J.M. van der Eijk (former

member)

ESOP

2/3/2017

2/3/2020

10 years

9.80

Information regarding the reported financial year

Specification of plan

Number of options

outstanding

1 January

Share options

granted during

the year

Share options

exercised

during the year

Share options

forfeited

during the year

Share options

vested during

the year

Value of share

options vested

during the year23

Value of share

options exercised

during the year24

Share options

unvested as at

31 December

Share options

vested as at

31 December

E. Moses

ESOP

85,000

—

—

—

28,333

41,954

—

37,778

47,222

M.B.B. Jou

ESOP

30,000

—

—

—

10,000

14,807

—

13,333

16,667

C.A. Arnold

ESOP

30,000

—

—

—

10,000

—

—

16,667

13,333

J.S. Wolfson

(former member)

ESOP

4,000

—

—

—

—

—

—

—

4,000

J.M. van der Eijk

(former member)

ESOP

4,000

—

—

—

—

—

—

—

4,000

Total Supervisory Board members

145,000

—

—

—

48,333

56,761

—

67,778

77,222

Total former Supervisory Board members

8,000

—

—

—

—

—

—

—

8,000

As per 31 December 2021, the following Supervisory Board members held Options:

•Edwin Moses, Chair of the Supervisory Board: eighty-five thousand (85,000) options;

•Michelle Jou, member of the Supervisory Board: thirty thousand (30,000) options; and

•Cynthia Arnold, member of the Supervisory Board: thirty thousand (30,000) options.

Margret Kleinsman and Trudy Schoolenberg chose not to receive the award.

96

23 The value of share options vested during the year is expressed in EUR and is determined by the share price at vesting date less the exercise price.

24 The value of share options exercised during the year is expressed in EUR and is determined by the share price at exercise date less the exercise price.

Deviation from the Dutch Corporate Governance Code

Best Practice Provision 3.3.2

Best Practice Provision 3.3.2 states that Supervisory Board members may not be awarded

remuneration in the form of shares and/or rights to shares. However, Avantium believes that the

remuneration package for its Supervisory Board members should enable Avantium to attract and

retain top talent – and the right balance of personal skills, competences and experience – in a

competitive and global environment. This enables the Supervisory Board to focus on the creation of

sustainable added value and to oversee Avantium’s (execution of its) long-term strategy and

performance. This one-off fixed award of share options contributes to the long-term value creation of

Avantium and serves as a long-term investment in Avantium, aiming to align the members’ respective

interests with those of the other shareholders. Based on the feedback from shareholders on the

remuneration policy and the Remuneration Report 2020, as discussed prior to and after the General

Meeting of 2021, the company, in particular the Remuneration Committee, understands that this

deviation from the Dutch Corporate Governance Code Best Practice Provision 3.3.2 continues to be a

controversial remuneration topic. The company would like to continue the dialogue on this topic in

view of an updated remuneration policy.

97

Corporate Governance

Overview

Avantium N.V. is a Dutch public limited company based and

registered in Amsterdam, the Netherlands. It acts as the holding

company for its Dutch operating companies: Avantium

Renewable Polymers, Avantium Renewable Chemistries and

Avantium Catalysis. Avantium’s shares are listed on Euronext

Amsterdam and Euronext Brussels (symbol: AVTX).

We have a two-tier governance structure consisting of the

Management Board and the Supervisory Board. There is also a

third governing body: the General Meeting. In the following

sections, we provide information on these governing bodies and

their responsibilities and duties.

Since the financial year 2017, Avantium has been subject to the

Dutch Corporate Governance Code (the Dutch Code), as

amended and published on 8 December 2016. The Dutch Code

contains principles and best practice provisions for management

boards, supervisory boards, shareholders, general meetings of

shareholders and audit and financial reporting. Below, we give

information on how Avantium applies the Dutch Code.

Avantium’s corporate governance framework is based on the

requirements of the Dutch Civil Code, the Dutch Code, the

company’s Articles of Association of 14 March 2017, the

applicable securities laws and the regulations concerning the

Management Board and the Supervisory Board. Our Articles of

Association, which are published online, include most of the

Dutch Code’s principles and best practice provisions applicable to

a two-tier governance structure.

Management Board

The Management Board is the statutory executive body. Together

with the Management Team, it is responsible for the day-to-day

management of Avantium. It formulates the company strategy

and policies and takes responsibility for internal control systems.

The Management Board’s duties may be divided among its

members.

The Management Board may take any actions necessary or

useful for achieving Avantium’s objectives, except those

prohibited by or expressly attributed to the General Meeting or

Supervisory Board by law or by the Articles of Association.

In performing its duties, the Management Board must consider

the interests of Avantium’s stakeholders (including shareholders,

employees, partners and customers) as well as the corporate

social responsibility issues relevant to the business.

The Management Board must submit certain important decisions

to the Supervisory Board or the General Meeting for approval. The

Management Board must, in a timely way, provide the

Supervisory Board with all the information it needs to carry out its

own duties.

At least once a year, the Management Board evaluates itself and

its individual members. The performance of the Management

Board and its individual members is also evaluated at every

closed session of the Supervisory Board, and the findings are

communicated by the Chairperson to the Management Board.

Supervisory Board

The Supervisory Board supervises and advises the Management

Board and guides the general course of company affairs and

business. In performing their duties, the Supervisory Board

members act in accordance with the interests of the company,

considering stakeholder interests as well as the relevant

corporate social responsibility issues.

The Supervisory Board is responsible for nominating and

supervising an external accountant who audits, reports on and

issues a statement concerning the company’s annual financial

statements to the General Meeting.

The Supervisory Board consists of at least three members and is

authorised to make binding nominations for the appointment of a

Supervisory Board member. It appoints one of its members to be

Chairperson.

Each member is appointed for no more than four years, with their

appointment period ending immediately after the General

Meeting held in the fourth calendar year after their initial

appointment. The Supervisory Board member may then be

reappointed for up to two further two-year periods. For an

appointment to continue beyond eight years, justification should

be given in the consultative Report of the Supervisory Board.

At least once a year, the Supervisory Board evaluates its own

performance as well as the performance of its Committees, the

Management Board and all individual members thereof.

98

Supervisory Board Committees

The Supervisory Board’s Audit Committee, Industrialisation

Committee, Remuneration Committee and Nomination Committee

advise the Supervisory Board and inform its decision-making,

although the Supervisory Board remains collectively responsible

for the fulfilment of the duties delegated to its committees. The

Committee Regulations are published on Avantium’s website.

Audit Committee

The Audit Committee assists the Supervisory Board in overseeing

the integrity and quality of the financial reporting and the

effectiveness of the internal risk management and control

systems, including supervising the enforcement of the relevant

legislation and regulations, and supervising the effect of codes of

conduct. The Audit Committee supervises the financing of the

company. It assesses the external audit process and the scope

and approach of the external auditor, and monitors progress and

performance. The relationship with the external auditor is

evaluated annually. Together with the Management Board, the

Audit Committee reviews half-year and full-year financial

statements, independent auditor's reports and the Management

Letter. The Audit Committee supervises the company’s policy on

tax planning and the applications of information and

communication technology (ICT), including risks relating to

cybersecurity.

Remuneration Committee

The Remuneration Committee reviews and makes

recommendations regarding the remuneration policy for the

Management Board and the Supervisory Board, for adoption by

the General Meeting. The approved policy then forms the basis for

the fixed and variable remuneration of the Management Board.

Nomination Committee

The Nomination Committee is tasked with advising on candidates

to fill vacancies in the Management Board and Supervisory

Board, assessing the functioning of both Boards and their

members, supervising the policy of the Management Board on the

selection criteria and appointment procedures for senior

management and ensuring long-term succession planning.

Industrialisation Committee

The Industrialisation Committee has been established to serve as

the Supervisory Board's advisory and risk review forum in

providing oversight of the company’s (i) technology strategy, (ii)

industrialisation roadmaps and (iii) technology portfolio, all as

determined, formulated and executed by the company's

Management Board and senior management.

Technology Board

The Technology Board acts in an advisory capacity to the

Management Board and senior management concerning the

company’s technology strategy and innovation portfolio. The

Technology Board reviews and provides guidance on technology

strategy and materially significant aspects of technology

management, such as technology priorities and the execution of

the company’s portfolio of its technology projects.

The Technology Board comprises of independent experts with

relevant expertise and experience. Technology Board members

shall be considered subject matter experts in areas such as:

innovation management, chemistry, chemical engineering,

polymer development, (renewable) feedstocks and project and

operations management, and/or have a relevant network in the

chemical, polymer, renewables, engineering, manufacturing or

related industries.

Board Compliance

Both the Management Board and the Supervisory Board,

including the committees of the Supervisory Board, have their

own regulations, which set rules regarding duties and

responsibilities, composition and working methods. These

regulations are available on our website.

In line with the Supervisory Board Regulations, the Management

Board Regulations and the Dutch Code, Board members must

immediately report any real or potential conflict of interest to the

Chair of the Supervisory Board and/or to the other members of

the Management Board.

Diversity Policy

Avantium aspires to be an inclusive and diverse company with an

open and inspiring culture, where people feel safe to develop and

share ideas. The Avantium Diversity & Inclusion Policy is

published on our corporate website.

The Supervisory Board seeks to promote diversity among its

members in terms of age, sex, nationality, experience within the

industry, background, skills, knowledge and insights. As far as

possible, we aim to create a balance among the Supervisory

Board’s members where this diversity is represented. The

objective is to comply with the Supervisory Board Profile that can

be found on Avantium’s website.

In 2021, the percentage of women on the Supervisory Board was

80%. At the Extraordinary General Meeting of Shareholders on 25

January 2022, a new male candidate was appointed as a sixth

member of the Supervisory Board, complying with the target of at

least 30% male or female Supervisory Board members prescribed

by Dutch legislation on gender balance.

99

Annual General Meetings of Shareholders

An Annual General Meeting of Shareholders (General Meeting) is

held within six months of the end of every financial year. The

general purpose is to discuss the Board report, to discuss and

adopt the financial statements and to discharge the Management

Board members and the Supervisory Board members of their

respective management and supervision duties. Extraordinary

General Meetings (EGMs) are held if the Management Board and

Supervisory Board deem it necessary or at the request of one or

more shareholders who, alone or jointly, represent at least one-

tenth of Avantium’s issued share capital.

A General Meeting is called by a convening notice sent by the

Management Board or the Supervisory Board. Shareholders who,

alone or jointly, represent at least 0.03% of the company’s issued

capital may ask for items to be added to the agenda.

Every shareholder may attend, speak and vote at the General

Meeting. Unless Dutch law or the Articles of Association require a

larger majority, resolutions of the General Meeting are adopted by

a simple majority of votes cast. Certain resolutions require a

qualified majority of two-thirds of the votes cast, if less than half

of the issued share capital is represented at the General Meeting.

Corporate Governance Statement

Avantium acknowledges the importance of good corporate

governance and agrees with the principles of the Dutch Code. We

have taken, and will take, further appropriate steps to apply its

principles and best practice provisions.

Compliance with the Dutch Code

Avantium is committed to applying the principles and best

practice provisions of the Dutch Code. Below, we list the

principles and best practice provisions where we deviate from the

Dutch Code.

Principle 1.3: Internal Audit Function

The internal audit function assesses the design and operation of

the internal risk management and control systems. The

Management Board is responsible for the internal audit function;

the Supervisory Board oversees this function and maintains

regular contact with the people involved. In 2021, the duties and

responsibilities of the internal audit function were allocated to

various senior support staff functions within the company (e.g.,

Legal and Finance). These support staff functions have direct

access to the Audit Committee and the external auditor. Minutes

are taken to record how the Audit Committee is informed by the

internal audit function. The Supervisory Board annually assesses

whether or not the allocation to various senior support functions

within the company is still adequate.

Best Practice Provision 3.3.2: Remuneration of

Supervisory Board Members

This provision states that Supervisory Board members may not

receive remuneration in the form of shares and/or rights to

shares. To continue to attract and retain top talent in a

competitive global environment, and to help the Supervisory

Board create sustainable added value, Avantium introduced, in

view of the initial public offering (IPO), a renewed Employee

Share Option Plan (ESOP) in 2016. Approval was given at the

EGM on 10 February 2017, and this was confirmed by the

adoption of the Remuneration Policy for the Supervisory Board at

the Annual General Meeting of Shareholders on 14 May 2020.

As per the Remuneration Policy, Supervisory Board members may

be awarded share options upon their appointment. Reference is

made to the Remuneration Policy for the Supervisory Board, in

particular the remuneration component "one-off fixed awards of

Options (ESOP) related to the member’s appointment", as

explained in the Remuneration Report.

Based on feedback by shareholders on the Remuneration Policy

and the Remuneration Report 2020, as discussed during and

after the General Meeting of 2021, the company reviewed its

position related to Best Practice Provision 3.3.2: Remuneration of

Supervisory Board Members. In submitting a proposal to the

General Meeting on the designation of the Management Board to

issue ordinary shares in connection with the company’s long-term

incentive and share-based compensation plans, the company will

not make use of any such authority in view of this one-off fixed

award of Options to a member’s appointment. Instead, when

submitting a proposal for appointment of a new Supervisory

Board member, the Management Board will separately seek

authority to issue ordinary shares in view of this one-off fixed

award of Options to such new member.

Best Practice Provision 4.3.3: Cancelling the Binding

Nature of a Nomination or Dismissal

This provision states that General Meetings of a company that

does not have statutory two-tier status (structuurregime) may, by

an absolute majority of the votes cast, cancel the binding nature

of a nomination for the appointment and/or dismissal of a

Management Board or Supervisory Board member. It may be

provided that this majority should represent a given proportion

(maximum one-third) of the issued capital. If this proportion is not

represented at the meeting, but an absolute majority of the votes

cast is in favour of a resolution to cancel the binding nature of a

nomination or dismissal, a new General Meeting may be

convened where the resolution may be passed by an absolute

majority of the votes cast, regardless of the proportion of the

capital represented at the new meeting.

Avantium’s Articles of Association allow the Supervisory Board to

make binding nominations. If it makes a binding nomination for

the appointment of a Management Board or Supervisory Board

member, the nominee shall be appointed regardless of the

majority of the votes cast in favour. The General Meeting may

override the binding nature of such a nomination by a majority of

two-thirds of the votes cast, when these votes represent more

than half of the issued share capital.

If the Supervisory Board has not made a binding nomination, the

General Meeting can appoint a member of the Management

Board or Supervisory Board at its discretion by a simple majority

representing at least one-third of the issued share capital. In line

with the company’s Articles of Association, the General Meeting

may at any time dismiss a member of the Management Board or

the Supervisory Board. To pass, the resolution needs a two-thirds

100

majority of the votes cast, representing more than half of the

issued share capital. However, if the dismissal is proposed by the

Supervisory Board, a simple majority is sufficient. Avantium

deviates from the Dutch Code on this provision in order to

safeguard the continuity of the company.

101

102

Contents

Page

Consolidated Financial Statements 2021

Consolidated Statement of Financial Position

Consolidated Statement of Comprehensive

Income

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Main Notes to the Consolidated Financial

Statements

1. General Information

2. Summary of Significant Accounting Policies

3. Financial Risk Management

4. Critical Accounting Estimates and Judgments

Notes to the Consolidated Statement of

Financial Position

5. Property, plant and equipment

6. Intangible assets

7. Leases

8. Inventories

9. Trade and other receivables

10. Cash and cash equivalents

11. Share capital and other reserves

12. Share-Based Payments

Page

13. Earnings per Share

14. Trade and Other Payables

15. Borrowings

16. Provisions for Other Liabilities and Charges

Notes to the Consolidated Statement of

Comprehensive Income

17. Revenues

18. Other Income

19. Segment Information

20. Expenses by Nature

21. Employee Benefits

22. Finance Income and Costs

23. Income Tax Expense

24. Dividends

Other Notes to the Consolidated

Financial Statements

25. Contingencies

26. Commitments & Guarantees

27. Related-Party Transactions

28. Proposed Appropriation of Result

29. Events After the Balance Sheet Date

Page

Company Financial Statements 2021

Company Balance Sheet

Company Income Statement

Notes to the Company Financial

Statements

30. General Information

31. Equity Attributable to Equity Holders of the

Company

32. Financial Fixed Assets

33. Provisions

34. Commitment and Contingencies

35. Audit Fees

36. Remuneration of the Management Board

and the Supervisory Board

37. Employee Information

Other information

Independent Auditor's Report

103

Consolidated Financial Statements 2021

Consolidated Statement of Financial Position

As at December 31

ASSETS

Non-current assets

Property, plant and equipment

5

23,324

25,198

Intangible assets

6

1,835

559

Right-of-use assets

7

9,479

9,042

Total non-current assets

34,638

34,799

Current assets

Inventories

8

1,238

1,225

Trade and other receivables

9

6,888

7,333

Cash and cash equivalents

10

34,911

26,626

Total current assets

43,037

35,184

Total assets

77,675

69,983

in Euro x 1,000

Notes

2021

2020

104

EQUITY

Equity attributable to owners of the parent

Ordinary shares

11

3,129

2,591

Share premium

230,252

204,296

Other reserves

11

11,936

10,407

Accumulated losses

(195,291)

(171,057)

Total equity attributable to the owners of the parent

50,026

46,238

Total equity

50,026

46,238

LIABILITIES

Non-current liabilities

Lease liabilities

7

9,099

8,003

Total non-current liabilities

9,099

8,003

Current liabilities

Lease liabilities

7

1,604

1,703

Trade and other payables

14

16,750

13,894

Provisions for other liabilities and charges

16

196

145

Total current liabilities

18,550

15,742

Total liabilities

27,649

23,745

Total equity and liabilities

77,675

69,983

in Euro x 1,000

Notes

2021

2020

The accompanying notes are an integral part of these consolidated financial statements.

105

Consolidated Statement of Comprehensive Income

For the financial year ended December 31

Revenues

17

10,917

9,863

Other income

18

6,686

8,403

Total revenues and other income

17,603

18,266

Operating expenses

Raw materials and contract costs

20

(3,042)

(2,339)

Employee benefit expenses

21

(19,226)

(19,262)

Office and housing expenses

20

(1,968)

(1,990)

Patent, license, legal and advisory expenses

20

(4,312)

(4,204)

Laboratory expenses

20

(2,864)

(3,664)

Advertising and representation expenses

20

(707)

(679)

Reversal due for onerous contract

7

—

492

Other operating expenses

20

(1,568)

(1,528)

Net operating expenses

(33,687)

(33,173)

EBITDA

(16,084)

(14,907)

Depreciation, amortisation and impairment charge

20

(7,837)

(7,597)

EBIT25

(23,921)

(22,504)

Finance income

22

2

37

Finance costs

22

(497)

(362)

Loss before income tax

(24,416)

(22,830)

Income tax expense

23

—

—

Loss for the period

(24,416)

(22,830)

Other comprehensive income

—

—

in Euro x 1,000

Notes

2021

2020

Total comprehensive expense for the year

(24,416)

(22,830)

Loss attributable to:

Owners of the parent

(24,416)

(22,830)

(24,416)

(22,830)

Total comprehensive expense attributable to:

Owners of the parent

(24,416)

(22,830)

(24,416)

(22,830)

in Euro x 1,000

Notes

2021

2020

in Euro

Note

2021

2020

Earnings per share for loss from continuing operations

attributable to the ordinary equity holders of the

company

Basic earnings per share

13

(0.82)

(0.88)

Diluted earnings per share

13

(0.82)

(0.88)

Earnings per share for loss attributable to the ordinary

equity holders of the company

Basic earnings per share

13

(0.82)

(0.88)

Diluted earnings per share

13

(0.82)

(0.88)

The accompanying notes are an integral part of these consolidated financial statements.

106

25 EBIT: Earnings Before Interest and Taxes is used in the annual report as a measure, since it provides a view on the core operations of the company alone without the capital structure and tax expenses.

Consolidated Statement of Changes in Equity

For the year ended December 31

Balance at 1 January 2020

2,583

204,296

9,863

(148,527)

68,215

Comprehensive expense

Result for the year

—

—

—

(22,830)

(22,830)

Other Comprehensive expense

for the year

—

—

—

—

—

Total Comprehensive expense

for the year

—

—

—

(22,830)

(22,830)

Transactions with owners

–Employee share schemes -

value of Employee services

—

—

702

—

702

–Employee share schemes-

LTIP investment shares

granted

—

—

137

—

137

–Transfer value share scheme

to accumulated losses

—

—

(300)

300

—

–Issue of ordinary shares

8

—

—

—

8

–Shares delivered from

treasury shares

—

—

5

—

5

Total transactions with owners

8

—

545

300

852

Balance at 31 December 2020

2,591

204,296

10,407

(171,057)

46,238

in Euro x 1,000

Attributable to equity holders of the company

Ordinary

shares

Share

premium

Other

reserves

Accumulated

losses

Total

Equity

107

Balance at 1 January 2021

2,591

204,296

10,407

(171,057)

46,238

Comprehensive expense

Result for the year

—

—

—

(24,416)

(24,416)

Other Comprehensive expense

for the year

—

—

—

—

—

Total Comprehensive expense

for the year

—

—

—

(24,416)

(24,416)

Transactions with owners

–Employee share schemes-

value of Employee services

—

—

828

—

828

–Share-based payment -

purchase of intangible assets

—

—

884

—

884

–Transfer value share scheme

to accumulated losses

—

—

(183)

183

—

–Issue of ordinary shares from

the capital raise

521

25,855

—

—

26,376

–Issue of ordinary shares from

share option plan

17

101

—

—

117

Total transactions with owners

537

25,956

1,528

183

28,205

Balance at 31 December 2021

3,129

230,252

11,936

(195,291)

50,026

in Euro x 1,000

Attributable to equity holders of the company

Ordinary

shares

Share

premium

Other

reserves

Accumulated

losses

Total

Equity

The accompanying notes are an integral part of these consolidated financial statements.

108

Consolidated Statement of Cash Flows

For the year ended December 31

Cash flows from operating activities

Loss for the year from continuing operations

(24,416)

(22,830)

Adjustments for:

–Depreciation of property, plant and equipment

5

5,778

5,818

–Amortisation

6

56

152

–Depreciation of right of use assets

7

2,003

1,589

–Share-based payment

12

1,711

839

–Finance costs - net

22

495

325

–Non cash portion of onerous contract reversal

7

—

(492)

–Impairment of property, plant and equipment

5

22

38

–Lease adjustment

28

—

Changes in working capital (excluding exchange

differences on consolidation):

–(Increase)/decrease in inventories

8

(12)

215

–Decrease in trade and other receivables

9

456

4,251

–Increase/(decrease) in trade and other payables

14

1,429

(3,228)

–Increase in provisions

16

51

7

(12,398)

(13,315)

Interest paid on current accounts

22

(120)

(69)

Interest received on current accounts

22

2

37

in Euro x 1,000

Notes

2021

2020

Other interest and bank charges

(94)

(72)

Net cash used in operating activities

(12,610)

(13,419)

Cash flows from investing activities

Purchases of property, plant and equipment (PPE)

5

(3,926)

(3,425)

Purchases of intangible assets

6

(6)

(27)

Net cash used in investing activities

(3,932)

(3,453)

Cash flow from financing activities

Net proceeds from Capital raise

26,376

—

Net proceeds of option exercises

117

—

Principal elements of lease payments

7

(1,663)

(1,946)

Net cash generated from/(used in) financing activities

24,830

(1,946)

Net increase/(decrease) in cash and cash equivalents

8,288

(18,817)

Cash and cash equivalents at beginning of the year

10

26,626

45,443

Effect of exchange rate changes

22

(2)

(1)

Cash and cash equivalents from continuing operations

at end of financial year

10

34,911

26,626

Cash and cash equivalents at end of financial year

10

34,911

26,626

in Euro x 1,000

Notes

2021

2020

The accompanying notes are an integral part of these consolidated financial statements.

109

Main Notes to the Consolidated Financial Statements

1. General Information

Avantium N.V. (‘the company’) is a company incorporated and domiciled in the Netherlands, with its

statutory seat at Zekeringstraat 29-31, 1014 BV in Amsterdam. The company is listed on Euronext

Amsterdam and Brussels. The consolidated financial statements of the company for the year ended 31

December 2021 comprise of the company and its subsidiaries (together referred to as 'the group'). The

company is also the ultimate parent of the group.

The company is primarily involved in developing and commercialising next generation bio-based

plastics and chemicals based on our unique technological capabilities in advanced catalysis research &

development. Avantium also provides advanced catalysis R&D services and systems (such as our

Flowrence systems) to customers in the refinery and chemical industries.

For setting the principles for the recognition and measurement of assets and liabilities and

determination of the result of its company financial statements, Avantium N.V. makes use of the option

provided in Section 2:362 (8) of the Dutch Civil Code. This means that the principles of the recognition

and measurements of assets and liabilities and determination of the result (hereafter referred to as

accounting policies) of the company financial statements of Avantium N.V. are the same as those

applied for the consolidated financial statements under IFRS (refer to note 2). By applying this option,

reconciliation is maintained between the group’s and the company’s equity.

These consolidated financial statements were approved for issue by both the Supervisory Board and

the Management Board on 22 March 2022.

2. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements

are set out below. These policies have been consistently applied to all the years presented, unless

otherwise stated.

2.1. Basis of Preparation

The consolidated financial statements of Avantium N.V. have been prepared in accordance with

International Financial Reporting Standards (IFRS) as adopted by the European Union. The

consolidated financial statements have been prepared under the historical cost convention unless

otherwise stated.

2.1.1 Going Concern

The financial statements have been prepared on a going concern basis.

Avantium N.V. ("Avantium")

Avantium is a leading technology company in renewable chemistry, dedicated to developing and

commercialising breakthrough technologies for the production of chemicals from renewable sources

and circular plastic materials.

Avantium consists of the three business segments in various stages of maturity, Avantium Catalysis,

Avantium Renewable Polymers and Avantium Renewable Chemistries:

Avantium Catalysis: Our main revenue generating business unit is Catalysis Services & Systems

which serves the R&D catalysis needs of international blue-chip players.

Avantium Renewable Polymers commercialises its YXY Technology for the production of FDCA

(furandicarboxylic acid), which is a key ingredient for PEF (polyethylene furanoate). PEF is a novel

100% plant-based and fully recyclable polymer, which has the potential to outperform today’s

packaging materials, such as plastic, glass and aluminum. PEF has huge potential in the packaging,

film and textile sectors, which are large and growing markets. Avantium Renewable Polymers has

operated a pilot plant in Geleen as of 2011 and is planning to build its full scale Flagship Plant at the

Groningen SeaPorts site in Groningen. This Flagship Plant will operate at commercial scale and will

further support Avantium Renewable Polymers’s licensing strategy. We expect that construction of the

Flagship Plant for FDCA will start in April 2022 and will be completed by Q4 2023.

Avantium Renewable Chemistries develops, among other technologies, plantMEG™ (mono-

ethylene glycol), which is a plant-based, fully recyclable and competitive alternative for fossil-based

MEG. This is an important chemical building block for PET and PEF resin, both of which are used in

bottles and packaging; fibres for clothing, furniture and the automotive industry; and solvents and

coolants. Avantium Renewable Chemistries opened a demonstration plant in Delfzijl in 2019, which

was successfully commissioned and became fully operational in 2020. Avantium plans to scale-up the

plantMEG™ technology in order to subsequently implement its licensing business model.

110

Funding Avantium

Due to its nature as a technology development company, with significant R&D expenses and negative

cash flows over 2021 of €-18.1 million (2020: €-18.8 million) and in the near future, Avantium remains

dependent on additional external funding. Fundamental to Avantium’s continuity is:

•the construction of the FDCA flagship plant for Avantium Renewable Polymers, for which financing

is arranged and expected to be effectuated at Financial Close planned by April 2022; and

•the funding for Avantium as a group excluding Renewable Polymers which includes further

development of Avantium's other technologies. This funding has not been secured yet.

Failure to achieve new funding in a timely fashion may result in the company being unable to fulfil its

obligations or to fund capital expenditure and working capital, all of which are necessary to execute

the company's strategy, retain contract partners, retain key employees and meet our payment

obligations. Without timely funding, the company's going concern is at risk.

These events indicate the existence of a material uncertainty that may cast significant doubt on

Avantium’s ability to continue as a going concern and therefore, that it may be unable to realise its

assets and discharge its liabilities in the normal course of businesses.

In light of the above, management has assessed the going concern assumption on the basis of which

Avantium’s financial statements for 2021 have been prepared.

FDCA Flagship Plant Business Plan Avantium Renewable Polymers

On 9 December 2021, Avantium announced that it had taken a positive Final Investment Decision

(FID) to construct the FDCA Flagship Plant. The positive FID was taken after Avantium fulfilled all three

key conditions: (i) obtaining sufficient offtake commitments (ii) finalising the engineering and

establishing the supply chain, and (iii) obtaining sufficient financing.

On 9 December 2021, Avantium announced that it signed a detailed term sheet for a three-year debt

financing package of €90 million with a consortium of lenders for the financing of the construction

(including contingency) and the operational expenses until project completion date of the FDCA

Flagship Plant of Avantium Renewable Polymers. The consortium of lenders comprise four Dutch

banks; (ABN AMRO Bank, ASN Bank, ING Bank and Rabobank) and the government backed Dutch

impact investment fund Invest-NL. Each bank has committed €15 million under the debt financing, and

Invest-NL has committed €30 million. The interest over this debt financing is EURIBOR based and is, at

today’s rates, approximately 8% on an annualized basis over the amounts drawn. With this €90

million debt financing, Avantium Renewable Polymers has now secured (subject to Financial Close) a

total of €192.5 million funding, to be used for capital expenditure, start-up costs and working capital.

The total financing package of €192.5 million includes €27.5 million in grants (“PEFerence”-EU Horizon

2020 and the National Programme Groningen), €30 million in equity by minority shareholders

Groningen consortium and Worley, €90 million in debt financing and an equity investment by

Avantium in its subsidiary Avantium Renewable Polymers. Avantium agreed to invest an additional

€10 million in equity in Avantium Renewable Polymers in order to absorb the additional costs of one

year delay in taking the FID. This increase brings the total committed equity investment by Avantium in

its subsidiary Avantium Renewable Polymers to €45 million.

Upon Financial Close, Avantium Renewable Polymers will be fully funded with the goal of becoming

cash flow positive upon the start-up and scale-up of the production of FDCA and PEF at the Flagship

Plant. All Financial close related agreements (offtake agreements, supply chain contracts, the

engineering, procurement and construction contract and financing agreements) are subject to

customary terms and conditions and will be effectuated at Financial Close. At the first drawdown of

the loan, expected at the end of 2022, several conditions must be met. Avantium expects to

successfully reach Financial Close by April 2022 and to fully secure funding for Avantium Renewable

Polymers, and is confident that it is on track to meet all conditions and complete all documents

required.

Financing Avantium excluding Renewable Polymers

Avantium N.V. cannot use above mentioned financing package, which will be ringfenced financing for

Avantium Renewable Polymers, for its other business segments. For this reason, management also

assessed its ability to obtain financing for the group's other technologies in order to assess the going

concern assumption of the group.

Avantium's consolidated cash position was €34.9 million as at 31 December 2021. As at 31 December

2021, Avantium should still provide €18.5 million to Avantium Renewable Polymers based on the

committed €45 million equity funding.

For the group, excluding Avantium Renewable Polymers, the monthly cash spend is forecasted at

approximately €1.2 million per month. At Financial Close, which is planned by April 2022, the group

excluding Avantium Renewable Polymers and remaining committed equity funding, expects to have a

cash balance of approximately €12 million. Based on this assessment, it is management expectation

that there is enough cash to fund ongoing operations for a period of approximately 10 months as of

the date of these financial statements, therefore additional funding will be required in the course of

2022.

Avantium has received a mandate to raise €45 million in equity capital from its shareholders at the

Extraordinary General Meeting of Shareholders held on 25 January 2022.

Although management has not decided on the final transaction structure, it has a preference for a

public offering. To that end, management is regularly engaging with existing and potential new

investors. Management has also appointed a syndicate of banks to manage the capital raise and the

111

process is already underway. Management is fully focused on the careful planning and execution of all

aspects of the proposed capital raise.

There is still however a possibility that recent geopolitical developments or unknown developments

result in the capital raise not being successful, partially successful, or that the capital raise cannot be

executed in an appropriate timeframe.

In case the capital raise cannot be executed in an appropriate timeframe for the full amount,

management is exploring alternatives sources of funding. Avantium is exploring multiple options to

strengthen its financial position and evaluate strategic choices to execute its strategy. As such,

Avantium is working on attracting additional sources of financing, consisting of a combination of

equity and/or government grants to provide for the company's operations beyond 12 months.

Furthermore, the company is always exploring possibilities for new grant applications on both a

national and on European level in order to (partly) finance its technology development activities.

If the capital raise or the finding of alternative sources of funding are not successful, or materially

delayed , this may result in uncertainty with regards to the agreed financing plan for Avantium

Renewable Polymers, as the company and the banks, in that case, would not find it prudent to

proceed with the debt financing arrangement. In that scenario, the company will have to implement

substantial cost savings in both Avantium Renewable Polymers and other businesses to extend the

cash run rate.

Based on management's analyses and assessments, although a material uncertainty remains for the

company's going concern, management believes it is appropriate to prepare Avantium’s financial

statements using the going concern assumption.

2.1.2 Changes in Accounting Policy and Disclosures

New Standards, Amendments and Interpretations not yet Adopted

There were no changes to the financial reporting requirements this year that affected the disclosures

in the financial statements of the Group.

New Standards, Amendments and Interpretations not yet Adopted

A number of new standards and amendments to standards and interpretations have been published

that are not mandatory for 31 December 2021 reporting periods and have not been early adopted by

the company. These standards are not expected to have a material impact on the company in the

current or future reporting periods and on foreseeable future transactions.

Change in accounting policy

During 2021 management assessed the useful life of machinery, laboratory equipment and vehicles

and determined the useful life should be amended to include a useful life period of up to 7 years,

instead of only 5 years. The change in the accounting policy has no effect on prior or current years.

Use of Estimates

The preparation of financial statements in accordance with IFRS requires the use of certain accounting

estimates. It also requires management to exercise its judgement in the process of applying the

group's accounting policies. Estimates and judgments are continually evaluated, and are based on

historical experience and other factors, including expectations of future events that are believed to be

reasonable under the circumstances.

2.2 Consolidation

2.2.1 Subsidiaries

Subsidiaries are all entities over which the group has control. The group controls an entity when the

group is exposed to, or has rights to, variable returns from its involvement with the entity and has the

ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from

the date on which control is transferred to the group. They are deconsolidated from the date that

control ceases.

The consolidated companies are listed below:

•Avantium Technologies B.V., Amsterdam (100%)

•Avantium Support B.V., Amsterdam (100%)

•Renewable Technologies B.V. Amsterdam (100%)

•Avantium Chemicals B.V., Amsterdam (100%)

•Avantium Knowledge Centre B.V., Amsterdam (100%)

•Furanix Technologies B.V., Amsterdam (100%)

•YXY Technologies B.V., Amsterdam (100%)

•Stichting Administratiekantoor Avantium, Amsterdam (100%)

•Stichting Stock Options Avantium, Amsterdam (100%)

•Feedstock Technologies B.V., Amsterdam (100%)

•Avantium Renewable Polymers B.V., Amsterdam (100%)

•Avantium RNP Flagship Plant B.V., Amsterdam (100%)

•Avantium Japan K.K, Tokyo (100%)

•Synvina C.V., Amsterdam (100%)

On 23 September 2021, Avantium RNP Flagship B.V. was incorporated. Avantium Renewable

Polymers B.V. obtained 100% shareholding in Avantium RNP Flagship B.V. and controls Avantium

RNP Flagship B.V. as of the date of incorporation.

112

Inter-company transactions, balances and unrealised gains on transactions between group companies

are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by

subsidiaries have been adjusted to conform to the group’s accounting policies.

2.2.2 Changes in Ownership Interests in Subsidiaries Without

Change of Control

Transactions with non-controlling interests that do not result in loss of control are accounted for as

equity transactions – that is, as transactions with the owners in their capacity as owners. The

difference between fair value of any consideration paid and the relevant share acquired of the carrying

value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-

controlling interests are also recorded in equity.

2.2.3 Disposal of Subsidiaries

When the group ceases to have control, any retained interest in the entity is remeasured to its fair

value at the date when control is lost with the change in carrying amount recognised in profit or loss.

The fair value is the initial carrying amount for the purposes of subsequently accounting for the

retained interest as an associate, joint venture or financial asset. In addition, any amounts previously

recognised in other comprehensive income in respect of that entity are accounted for as if the group

had directly disposed of the related assets or liabilities. This may mean that amounts previously

recognised in other comprehensive income are reclassified to profit or loss.

2.2.4 Principles of Consolidation and Equity Accounting

When the group ceases to consolidate or equity account for an investment because of a loss of control,

joint control or significant influence, any retained interest in the entity is remeasured to its fair value

with the change in carrying amount recognised in profit or loss. This fair value becomes the initial

carrying amount for the purposes of subsequently accounting for the retained interest as an associate,

joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive

income in respect of that entity are accounted for as if the group had directly disposed of the related

assets or liabilities. This may mean that amounts previously recognised in other comprehensive income

are reclassified to profit or loss.

If the ownership interest in a joint venture or an associate is reduced but joint control or significant

influence is retained, only a proportionate share of the amounts previously recognised in other

comprehensive income are reclassified to profit or loss where appropriate.

2.2.5 Segment Reporting

Operating segments are reported in a manner consistent with the business responsibilities and

internal reporting. The Management Board has appointed the management team which assesses the

financial performance and position of the group, and makes strategic decisions. The management

team, consists of the Chief Executive officer, the Chief Financial Officer, the Chief Technology Officer,

the Group Legal Counsel, the Managing Director of Avantium Renewable Chemistries, the Managing

Director of Avantium Catalysis and the Managing Director of Avantium Renewable Polymers.

2.3 Foreign Currency Translation

Functional and Presentation Currency

Items included in the financial statements of each of the group’s entities are measured using the

currency of the primary economic environment in which the entity operates (‘the functional currency’).

The consolidated financial statements are presented in euros, which is the company’s functional

currency.

Transactions and Balances

Foreign currency transactions are translated into the functional currency using the exchange rates

prevailing at the dates of the transactions or valuations where items are remeasured. Foreign

exchange gains and losses resulting from the settlement of such transactions and from the translation

at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are

recognised in the statement of comprehensive income.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are

presented in the statement of comprehensive income within ‘finance income or cost’.

Group Companies

The results and financial position of all the group entities (none of which has the currency of a hyper-

inflationary economy) that have a functional currency different from the presentation currency are

translated into the presentation currency as follows:

•Assets and liabilities for each balance sheet presented are translated at the closing rate at the

date of that balance sheet.

•Income and expenses for each statement of comprehensive income are translated at the average

exchange rates.

•All resulting exchange differences are recognised as a separate component of other

comprehensive income.

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2.4 Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities, disclosure of contingencies at

the date of the financial statements and the reported amounts of revenues and expenses during the

reporting period. The use of estimates is or could be a significant factor affecting the reported carrying

values of property, plant and equipment, intangibles, trade and other receivables and trade and other

payables. Despite management’s best efforts to accurately estimate such amounts, future results

could materially differ from those estimates.

2.5 Property, Plant and Equipment

Property, plant and equipment comprise mainly of laboratory equipment, hardware and leasehold

improvements. Leasehold improvements include machinery that is located in at the various pilot plant

sites. All property, plant and equipment is stated at historical cost less accumulated depreciation.

Historical cost includes expenditures that are directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as

appropriate, only when it is probable that future economic benefits associated with the item will flow

to the group and the cost of the item can be measured reliably. All other repairs and maintenance

charges are expensed in the financial period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate their cost of the assets to their

residual values over their estimated useful lives as follows:

•Leasehold improvements

5-20 years

•Machinery, laboratory equipment and vehicles

5 -7 years

•Computer hardware

3 years

•Office furniture and equipment

3-5 years

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount.

Gains and losses are included in the consolidated statement of comprehensive income.

2.6 Intangible Assets

Research and Development

Research expenditures are recognised as expenses as incurred. Development costs that are directly

attributable to the design and testing of identifiable and unique products controlled by the group are

recognised as intangible assets when the following criteria are fulfilled:

•It is technically feasible to complete the intangible asset so that it will be available for use or sale.

•Management intends to complete the intangible asset and use or sell it.

•There is an ability to use or sell the intangible asset.

•It can be demonstrated how the intangible asset will generate probable future economic benefits.

•Adequate technical, financial and other resources to complete the development and to use or sell

the intangible asset are available.

•The expenditure attributable to the intangible asset during its development can be reliably

measured.

Other development expenditures that do not meet these criteria are recognised as an expense as

incurred. Development costs previously recognised as an expense are not recognised as an asset in a

subsequent period. Capitalised development costs are recorded as intangible assets and amortised

from the point at which the asset is ready for use on a straight-line basis over its estimated useful life

of five years. Intangible assets not ready for use are tested for impairment at least on an annual basis.

Amortisation of development costs is included in depreciation, amortisation and impairment charge in

the statement of comprehensive income. All development costs arose from internal development.

Computer Software and Other Intangibles

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and

use the specific software. These costs are amortised straight-line over their estimated useful lives of

three years.

Costs associated with developing or maintaining computer software programmes are recognised as

expenses as incurred. Development costs that are directly attributable to the design and testing of

identifiable and unique software products controlled by the group, that will probably generate

economic benefits exceeding costs beyond one year, are recognised as intangible assets.

Other intangibles consisting of an in-kind contribution of a shareholder for their software at the

foundation of the group and compensation paid to a third party to exclusively use parts of their

technology. Amortisation is calculated using the straight-line method over the estimated useful life of

three years.

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Intellectual Property

Following the acquisition of Liquid Light on 30 December 2016, the company records intellectual

property (patent portfolio acquired) on its consolidated balance sheet. The intellectual property is

stated at historical cost, which will subsequently be lowered with accumulated amortisation in the

following years, when the technology on which the intellectual property is filed is ready to deploy

commercially.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as

appropriate, only when it is probable that future economic benefits associated with the item will flow

to the group and the cost of the item can be measured reliably.

Amortisation is calculated using the straight-line method to allocate their cost of the assets to their

residual values over their estimated useful lives (average lifetime of patent portfolio) as follows:

•Intellectual property

5-20 years

License rights

Acquired licenses that grants the company the right to use technologies not owned/developed by the

company are recorded on its consolidated balance sheet. The license rights are stated at historical

cost, which will subsequently be lowered with accumulated amortisation in the following years.

License rights contain variable royalty fee payment terms that are linked to production of the License

Products once the FDCA Flagship Plant is constructed and starts production. The fees will equal to $20

USD per metric ton of Licensed Products produced from the FDCA Flagship Plant. Variable royalty fee

payments that depend on the volume of production of the Licensed Products will be recognised in

profit or loss in the period in which the condition that triggers those payments.

Amortisation is calculated using the straight-line method to allocate their cost of the assets to their

residual values over their estimated useful lives (average lifetime of license rights) as follows:

•License rights

5-20 years

2.7 Impairment of Non-Financial Assets

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in

circumstances indicate that the carrying amount may not be recoverable. An impairment loss is

recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The

recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the

purposes of assessing impairment, assets are grouped at the lowest levels for which there are

separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill

that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.8 Non-Current Assets (or Disposal Groups) Held for Sale

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying

amount is to be recovered principally through a sale transaction and a sale is considered highly

probable. They are stated at the lower of carrying amount and fair value less costs to sell.

2.9 Financial Assets

2.9.1 Classification

The group classifies its financial assets in assets to be measured at amortised cost.

The classification depends on the company’s business model for managing the financial assets and

the contractual terms of the cash flows. Management determines the classification of its financial

assets at initial recognition. The group classifies its financial assets as assets held for collection of

contractual cash flows.

2.9.2 Recognition and Measurement

Regular purchases and sales of financial assets are recognised on the trade-date, the date on which

the group commits to purchase or sell the asset. Financial assets are derecognised when the rights to

receive cash flows from the financial assets expire or if the company transfers the financial asset to

another party and does not retain control or substantially all risks and rewards of the asset. Financial

liabilities are derecognised when the company’s obligations specified in the contract expire or are

discharged or cancelled.

Financial assets that are held for collection of contractual cash flows where those cash flows

represent solely payments of principal and interest are measured at amortised cost. Interest income

from these financial assets is included in finance income using the effective interest rate method. Any

gain or loss arising on derecognition is recognised directly in the statement of comprehensive income

and presented in other gains/ (losses). Impairment losses are presented as separate line item in the

statement of comprehensive income.

2.10 Offsetting Financial Instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there

is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a

net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must

not be contingent on future events and must be enforceable in the normal course of business and in

the event of default, insolvency or bankruptcy of the company or the counterparty.

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2.11 Impairment of Financial Assets

Assets Carried at Amortised Cost

Impairment provisions for trade receivables are recognised based on the simplified approach within

IFRS 9 to measuring expected credit losses which uses a lifetime expected loss allowance for all trade

receivables and contract assets.

To measure the expected credit losses, trade receivables and contract assets have been grouped

based on shared credit risk characteristics and the days past due. The contract assets relate to

unbilled work in progress and have substantially the same risk characteristics as the trade receivables

for the same types of contracts. The group has therefore concluded that the expected loss rates for

trade receivables are a reasonable approximation of the loss rates for the contract assets.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be

related objectively to an event occurring after the impairment was recognised (such as an

improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is

recognised in the consolidated statement of comprehensive income.

Other assets are tested for impairment whenever events or changes in circumstances indicate that the

carrying amount may not be recoverable. An impairment loss is recognised for the amount by which

the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of

an asset’s fair value less costs of disposal. For the purposes of assessing impairment, assets are

grouped at the lowest levels for which there are separately identifiable cash inflows which are largely

independent of the cash inflows from other assets or groups of assets (cash-generating units).

2.12 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-

in, first-out (FIFO) method. The cost of raw materials, finished goods and work in progress comprises

all purchase costs including charges incurred to bring inventories to their current location and into their

current state. It excludes borrowing costs. Net realisable value is the estimated selling price in the

ordinary course of business, less applicable variable selling expenses.

2.13 Trade Receivables

Trade receivables are amounts due from customers for products sold or services performed in the

ordinary course of business. If collection is expected in one year or less (or in the normal operating

cycle of the business if longer), they are classified as current assets. If not, they are presented as non-

current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost

using the effective interest method, less provision for impairment. Refer to note 2.11 for further

information about the group’s impairment policy on financial assets.

2.14 Cash and Cash Equivalents

In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand,

deposits held at call with banks, other short-term highly liquid investments with original maturities of

three months or less and bank overdrafts. In the consolidated statement of financial position, bank

overdrafts are shown within borrowings in current liabilities.

Restricted Cash

The restricted cash includes cash deposits, which is measured at an amount equal to the current

outstanding bank guarantees issued to third parties. The restricted cash is not available for use by the

company to meet the short-term cash obligations. In the consolidated statement of financial position

the restricted cash is shown within cash and cash equivalents as current assets.

2.15 Share Capital

Ordinary Shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new

ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Treasury Shares

Where any group company or liquidity provider appointed by the group, purchases the company’s

equity share capital (treasury shares), the consideration paid, including any directly attributable

incremental costs (net of income taxes), is deducted from equity attributable to the company’s equity

holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently

reissued, any consideration received, net of any directly attributable incremental transaction costs and

the related income tax effects, is included in equity attributable to the company’s equity holders. No

gain or loss is recognised in the statement of comprehensive income on the purchase, sale, issuance or

cancellation of the company’s own equity instruments.

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2.16 Trade and Other Payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary

course of business from suppliers. Accounts payable are classified as current liabilities if payment is

due within one year or less (or in the normal operating cycle of the business if longer). If not, they are

presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost

using the effective interest method.

2.17 Current and Deferred Income Tax

The tax expense for the year comprises current and deferred tax. Tax is recognised in the statement of

comprehensive income, except to the extent that it relates to items recognised in other comprehensive

income or directly in equity. In this case, the tax is also recognised in other comprehensive income or

directly in equity respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively

enacted at the balance sheet date in the countries where the company’s subsidiaries and associates

operate and generate taxable income. Management periodically evaluates positions taken in tax

returns with respect to situations in which applicable tax regulation is subject to interpretation. It

establishes provisions where appropriate on the basis of amounts expected to be paid to the tax

authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising

between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial

statements. However, the deferred income tax is not accounted for if it arises from initial recognition of

an asset or liability in a transaction other than a business combination that at the time of the

transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined

using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date

and are expected to apply when the related deferred income tax asset is realised or the deferred

income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable

profit will be available against which the temporary differences can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset

current tax assets against current tax liabilities and when the deferred income tax assets and liabilities

relate to income taxes levied by the same taxation authority on either the taxable entity or different

taxable entities where there is an intention to settle the balances on a net basis.

2.18 Employee Benefits

Pension Obligations

The group operates a defined contribution pension plan for all employees funded through payments to

an insurance company. The group has no legal or constructive obligations to pay further contributions

if the plan does not hold sufficient assets to pay all employees the benefits relating to employee

service in the current and prior years. The contributions are recognised as employee benefit expense

when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund

or a reduction in the future payments is available.

Share-Based Payments

The group operates a share-based compensation plans for its employees, which consist of an

Employee Stock Option Plan (ESOP) and a Long-term Incentive Plan (LTIP), also refer to note 12. These

plans are classified as an equity-settled share-based payment plans.

Share options granted to employees are measured at the fair value of the equity instruments granted

under the indirect method of measurement. Fair value is determined through the use of an option-

pricing model considering, amongst others, the following variables:

a)The exercise price of the option

b)The expected life of the option

c)The current value of the underlying shares

d)The expected volatility of the share price

e)The dividends expected on the shares

f)The risk-free interest rate for the life of the option

For the company’s share option plan, management’s judgment is that the Black-Scholes valuation

model is most appropriate for determining fair values as this model allows accounting for non-

transferability and early exercise. Since the company became listed in March 2017, there is published

share price information available to determine the fair value of its shares and the expected volatility of

that value. These assumptions and estimates are further discussed in note 12 to the IFRS consolidated

financial statements. The result of the share option valuations and the related compensation expense

is dependent on the model and input parameters used.

For the equity-settled Avantium ESOP, the fair value of the grant is determined at the grant date. For

the LTIP, the fair value is determined by the share price of the award at the grant date.

The fair value of the employee services received in exchange for the grant of the awards is recognised

as an expense. For share-based payments that do not vest until the employees have completed a

specified period of service, the group recognises the cost of services received as the employees render

service during that period.

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At each balance sheet date, the company revises its estimates of the number of awards that are

expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in

the statement of comprehensive income and a corresponding adjustment to equity.

The proceeds received from exercised options net of any directly attributable transaction costs are

credited to share capital (nominal value) and share premium.

Profit-sharing and Bonus Plans

The group recognises a liability and an expense for bonuses and profit-sharing where contractually

obliged or where there is a past practice that has created a constructive obligation.

Termination Benefits

Termination benefits are payable when employment is terminated by the group before the normal

retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits.

The group recognises termination benefits at the earlier of the following dates: (a) when the group can

no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a

restructuring that is within the scope of IAS 37 and involves the payment of terminations benefits. In

the case of an offer made to encourage voluntary redundancy, the termination benefits are measured

based on the number of employees expected to accept the offer. Benefits falling due more than 12

months after the end of the reporting period are discounted to present value.

2.19 Provisions

Provisions are recognised when the group has a present legal or constructive obligation as a result of

past events; it is probable that an outflow of resources will be required to settle the obligation; and the

amount can be reliably estimated.

The group provides for the estimated cost of product warranties at the time revenue is recognised and

the group has a constructive obligation. Warranty provision is established based on the group’s best

estimates of the amounts necessary to settle future and existing claims on products sold as of the

balance sheet date.

Provisions are measured at the present value of the expenditures expected to be required to settle the

obligation using a pre-tax rate that reflects current market assessments of the time value of money

and the risks specific to the obligation.

2.20 Revenue Recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and

services in the ordinary course of the group’s activities. Revenue is shown net of value-added tax,

returns, rebates and discounts and after eliminating sales within the group.

The group recognises revenue when specific criteria have been met for each of the group’s activities as

described below. The group bases its estimates on historical results, taking into consideration the type

of customer, the type of transaction and the specifics of each arrangement.

Sales of Goods

For the supply of goods, revenue is recognised at a point in time, as soon as the control relating to the

title of the goods have been transferred to the customer and the entity has a present right to payment.

In practice, this is at the shipment date or after installation (if applicable). Contracts related to sale of

goods are typically the following:

–System parts

–Consumables

–Material offtake agreements originating from Avantium Renewable Polymers and Avantium

Renewable Chemistries

A receivable is recognised when the goods are shipped as this is the point in time that the

consideration is unconditional because only the passage of time is required before the payment is due.

Construction Contracts

Revenue and expenses related to Flowrence systems are accounted over time, which recognises

revenue as performance of the contract progresses. The company satisfies the criteria prescribed

under IFRS 15 for recognising revenue over time, since each sales contract agreed with a customer

relates to the creation of a Flowrence system, a tailor-made machine, with varying components for the

various chemistries which cannot be used for alternative purposes by the company and the company

has an enforceable right to payment for the performance completed to date. The customer has full

control over the Flowrence as it is being created. The customer can direct the specifics of how the

asset is to be used and has input on the varying components of the Flowrence being created. The

stage of completion is measured by referring to the contract costs incurred up to the end of the

reporting period as a percentage of total estimated costs for each contract. Costs incurred in the year

in connection with future activity on a contract are excluded from contract costs in determining the

stage of completion.

On the balance sheet, the group reports the net contract position for each contract as either a contract

asset or a contract liability. A contract represents a contract asset where costs incurred plus

recognised profits (less recognised losses) exceed progress billings; a contract represents a contract

liability where the opposite is the case.

Variations in contract work, claims and incentive payments are included in contract revenue to the

extent that may have been agreed with the customer and can be reliably measured.

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Where the income of a revenue contract cannot be estimated reliably, contract revenue that is likely to

be recovered is recognised to the extent of contract costs incurred. Contract costs are recognised as

expenses in the period in which they are incurred.

Multiple Element Arrangements

In certain circumstances, it is necessary to apply the recognition criteria to the separately identifiable

components of a single transaction in order to reflect the substance of the transaction. Conversely, the

recognition criteria are applied to two or more transactions together when they are linked in such a

way that the commercial effect cannot be understood without reference to the series of transactions

as a whole.

The group offers arrangements whereby a customer purchases systems and installations services

under one arrangement. When such multiple element arrangements exist, an element is accounted for

as a separable element if it has value to the customer on a standalone basis and the fair value can be

determined objectively and reliably. The transaction price is allocated to each separate element based

on the stand-alone selling prices.

When Catalysis systems revenues and installation service revenues are identified as separable

elements in a multiple element transaction, the systems revenue recognised is determined based on

the standalone selling price of the systems in relation to the transaction price of the arrangement

taken as a whole and is recognised as discussed above. The revenue relating to the installation service

element, which represents the standalone selling price of the installation services in relation to the

transaction price of the arrangement, is recognised on completion of the installation services.

This separation is justified due to the fact that the supply and installation of the goods are offered to

the customer separately as the installation can also be executed by an independent third party.

Timing of payment by the customer from the supply of goods is based on the contractual identified

instalments. This could result, on a product by product basis, in advanced payments. These amounts

are reported as contract liabilities on the balance sheet under other current liabilities.

Sales of Services

Revenue from the sales of services is recognised over time recognising revenue based on the actual

services provided to the end of the accounting period as a proportion of the total services to be

performed.

Timing of payment by the customer from sale of services is based on the contractual identified

technical milestones. This could result, on a project by project basis, in contract assets or contract

liabilities. These amounts are reported on the balance sheet under other receivables or other current

liabilities.

As part of the Renewable Chemistries business development agreements, which constitute solely a

step-in, management identified this as one-off revenue recognition at moment of signing the

agreements, in accordance with IFRS 15, since it is deemed that once the agreement is signed, no

future obligation is to be fulfilled.

If circumstances arise that may change the original estimates of revenues, costs or extent of progress

toward completion, estimates are revised. These revisions may result in increases or decreases in

estimated revenues or costs and are reflected in income in the period in which the circumstances that

give rise to the revision become known by management.

2.21 Grants

Grants and subsidies from third parties are recognised at their fair value when there is a reasonable

assurance that the grant will be received, and the group will comply with all attached conditions. Any

outstanding receivables related to these grants are recorded as other receivables under current

receivables.

Government grants pre-financed amounts received are deferred and recognised in the income

statement over the period necessary to match them with the costs that they are intended to

compensate.

Government grants relating to property, plant and equipment are included in non-current liabilities as

deferred government grants and are credited to the income statement on a straight-line basis over the

expected lives of the related assets.

2.22 Interest Income

Interest income is recognised using the effective interest method. When a loan and receivable is

impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future

cash flow discounted at the original effective interest rate of the instrument and continues unwinding

the discount as interest income. Interest income on impaired loan and receivables is recognised using

the original effective interest rate.

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2.23 Leases

The group leases various offices and a number of vehicles. Rental contracts are generally made for

fixed periods of 3 to 10 years but may have extension options. Lease terms are negotiated on an

individual basis and contain a wide range of different terms and conditions. The lease agreements do

not impose any covenants, but leased assets may not be used as security for borrowing purposes.

Contracts may contain both lease and non-lease components. The group allocates the consideration in

the contract to the lease and non-lease components based on their relative stand-alone prices.

Leases are recognised as right-of-use asset and a corresponding liability at the date at which the

leased asset is available for use by the group. Each lease payment is allocated between the lease

liability and finance cost. The finance cost is charged to the statement of comprehensive income over

the lease period so as to produce a constant periodic rate of interest on the remaining balance of the

liability for each period. Right-of-use asset are depreciated on a straight-line basis over the remaining

term of the lease or over the remaining economic life of the asset, if this is judged to be shorter than

the lease term.

Assets and liabilities arising from a lease are initially measured on a present value basis.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and

conditions. The lease agreements do not impose any covenants other than the security deposits in the

leased assets that are held by the lessor. Leased assets may not be used as security for borrowing

purposes.

Lease Liability

Lease liabilities include the net present value of the following lease payments:

–fixed payments (including in-substance fixed payments), less any lease incentives receivable;

–variable lease payments are based on an index or a rate - decommissioning costs; and

–payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that

option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be

determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have

to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic

environment with similar terms and conditions.

The group is exposed to potential future increases in variable lease payments based on an index or

rate, which are not included in the lease liability until they take effect. When adjustments to lease

payments based on an index or rate take effect, the lease liability is reassessed and adjusted against

the right-of-use asset.

Right-of-Use Assets

Right-of-use assets are measured at cost comprising the following:

–the amount of the initial measurement of the lease liability;

–any lease payments made at or before the commencement date less any lease incentives received

- any initial direct costs; and

–onerous contract provisions .

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease

term on a straight-line basis. If the group is reasonably certain to exercise a purchase option, the right-

of-use asset is depreciated over the underlying asset's useful life.

Payments associated with short-term leases and leases of low-value assets are recognised on a

straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12

months or less. Low-value assets comprise IT-equipment and small items of office furniture.

The group has no financial lease obligations.

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2.24 Earnings per Share

Basic Earnings per Share

Basic earnings per share is calculated by dividing:

–The profit attributable to owners of the company, excluding any costs of servicing equity other

than ordinary shares

–By the weighted average number of ordinary shares outstanding during the financial year,

excluding treasury shares (note 13).

Diluted Earnings per Share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to

take into account:

–The after-income tax effect of interest and other financing costs associated with dilutive potential

ordinary shares

–The weighted average number of additional ordinary shares that would have been outstanding

assuming the conversion of all dilutive potential ordinary shares

.

2.25 Cash Flow Statement

The cash flow statement is presented using the indirect method. Cash flow in foreign currencies are

converted at the exchange rate on the date of the cash flow, or based on the average rate. A

distinction is made in the cash flow statement between the cash flows from operating, investment and

financing activities.

3. Financial Risk Management

3.1 Financial Risk Factors

The group’s activities expose it to a variety of financial risks: market risk (including currency risk,

interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The group’s

risk management programme focuses on the unpredictable nature of financial markets and seeks to

limit any potential adverse effects on financial performance.

Risk management is carried out by the central Finance & Accounting department (Group F&A) under

policies approved by the Management Board. Group F&A identifies, evaluates and covers financial

risks in close cooperation with the group’s operating units. The board provides principles for overall

risk management, as well as written policies covering specific areas such as foreign-exchange risk,

interest rate risk, credit risk, use of non-derivative financial instruments, and investment of excess

liquidity.

Financial instrument by category

Current Financial assets as at December 31:

in Euro x 1,000

Notes

2021

2020

Trade receivables

9

1,015

1,049

Other receivables

9

6,024

6,434

Cash and cash equivalents

10

34,911

26,626

Current Financial liabilities as at December 31:

in Euro x 1,000

Notes

2021

2020

Trade payables

14

4,714

1,910

Other liabilities

14

7,123

6,114

Deferred government grant

14

4,913

5,870

Lease liabilities

7

1,604

1,703

121

The carrying amounts of these financial assets and liabilities are assumed to approximate their fair

values due to their short-term nature. Also refer to note 14 for an overview of trade and other

payables.

Interest Rate Risk

As at 31 December 2021 there were no current or non-current borrowings. As the company has no

significant interest bearing assets and liabilities, the direct impact of changes to the group's income

and operating cash flow is limited.

Currency Risk

The group operates internationally and is exposed to foreign exchange risk primarily in relation to the

US dollar. Foreign exchange risk arises from future commercial transactions, recognised assets and

liabilities. Management has set up a policy that requires group companies to manage their foreign

exchange risk against their functional currency. The group companies are required to close commercial

transactions in euros. Certain US-based customers negotiate US-dollar contracts. There are a limited

number of these contracts, and the group companies can only close these with management’s written

approval. The group’s operations are therefore not subject to significant foreign exchange rate risks.

Foreign exchange risk arises when future commercial transactions or recognised assets and liabilities

are denominated in a currency that is not the entity’s functional currency.

The group had outstanding trade receivables in US dollars of $nil (2020: $24,000). The group had no

trade receivables in another foreign currency. The group had outstanding trade payables in US dollars

of $1,545,000 (2020: $44,000), in British pound of £13,000 (2020: £29,000) and in Japanese Yen of

¥8,404,000 (2020: ¥1,128,000).

If at 31 December 2021, the euro had weakened by 10% against the US dollar with all other variables

held constant, post-tax result for the year would have been €132,000 higher (2020: €1,500 higher).

The US dollar cash position as at 31 December 2021 is $26,069 (2020: $16,833). The group had no

cash position in other foreign currencies.

Credit Risk

Credit risk is managed on group basis. The group does not have any significant concentrations of

credit risk and is limited to outstanding trade receivables, cash and cash equivalents. On 31 December

2021, the largest single client exposure consisted of 32% of the outstanding trade receivables. The

group clients are subject to creditworthiness tests. Sales are subject to payment conditions varying

between payments in advance and 30 days after invoice date. For certain projects, deviations to this

rule may apply only after approval of group F&A, in which case additional security, including

guarantees and documentary credits, may be required. Management does not expect any losses from

non-performance by its clients nor from concentration of this risk.

In 2021, €0 (2020: €0) of trade or other receivables was written off; €464,000 was past due, of which

39% had been paid before 1 March 2022.

The amount of trade and other receivables past due as at December 31, were as follows:

in Euro x 1,000

2021

2020

More than 1 month past due

181

207

More than 3 months past due

—

81

More than 6 months past due

283

150

464

438

Impairment provisions for trade receivables are recognised based on the simplified approach within

IFRS 9 to measuring expected credit losses which uses a lifetime expected loss allowance for all trade

receivables and contract assets.

To measure the expected credit losses, trade receivables and contract assets have been grouped

based on shared credit risk characteristics and the days past due. The contract assets relate to

unbilled work in progress and have substantially the same risk characteristics as the trade receivables

for the same types of contracts. The group has therefore concluded no provision for credit losses is

required on trade receivables and contract assets, since after careful consideration of each customer’s

payment profile and likelihood to default on payments, the credit losses was deemed to be immaterial.

Trade receivables and contract assets are written off where there is no reasonable expectation of

recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the

failure of a customer to engage in a repayment plan with the group, and a failure to make contractual

payment for a period of greater than 6 months past due. The group has therefore concluded that a

provision of doubtful debt of €150,000 on the trade receivables had to be recognised as at 31

December 2021.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of

receivable mentioned above. The group does not hold any collateral as security. The long-term credit

ratings of banks used by the group, as at 31 December 2021 at Moody’s and S&P subsequently, are as

follows. Group funds are held at Rabobank with a long-term credit rating of Aa2 and A+, ABN AMRO

bank with a long-term credit rating of between A1 and A, and at ING Bank with a long-term credit

rating between A- and A+.

122

Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the

availability of funding through an adequate amount of committed credit facilities and the ability to

close out market positions.

The table below analyses the group’s financial liabilities into relevant maturity groupings based on the

remaining period at the balance sheet to the contractual maturity. The amounts disclosed in the table

are the contractual discounted cash flows for continuing operations. The specific time buckets are not

mandated by the standard but are based on a choice of management. The tables include both interest

and principal cash flows:

As at December 31, 2021:

in Euro x 1,000

Less than 1

year

Between 1

and 2 years

Between 2

and 5 year

Over 5 years

Total

Lease liabilities

(1,604)

(1,497)

(5,408)

(2,194)

(10,703)

Trade payables

(4,714)

—

—

—

(4,714)

Deferred

government grant

(4,913)

—

—

—

(4,913)

Other current

liabilities

(7,123)

—

—

—

(7,123)

(18,354)

(1,497)

(5,408)

(2,194)

(27,453)

As at December 31, 2020:

in Euro x 1,000

Less than 1

year

Between 1

and 2 years

Between 2

and 5 year

Over 5 years

Total

Lease liabilities

(1,703)

(1,330)

(4,078)

(2,595)

(9,706)

Trade payables

(1,910)

—

—

—

(1,910)

Deferred

government grant

(5,870)

—

—

—

(5,870)

Other current

liabilities

(6,114)

—

—

—

(6,114)

(15,598)

(1,330)

(4,078)

(2,595)

(23,601)

The carrying amounts of these financial liabilities are assumed to approximate their fair values due to

their short-term nature.

3.2 Capital Management

The group’s objective when managing capital is to safeguard its ability to continue as a going concern

(also refer to 2.1.1) in order to provide returns for shareholders and benefits for other stakeholders, and

to maintain an optimal capital structure to reduce the cost of capital. To maintain or adjust the capital

structure, the group monitors capital on the basis of its adjusted solvency ratio. This ratio is calculated

as adjusted equity divided by the adjusted balance sheet total.

The adjusted equity is calculated as equity:

–Minus the intangible assets, participating interests and receivables from shareholders

The adjusted balance sheet total is calculated as total assets:

–Minus the intangible assets, participating interest, receivables from shareholders and shares held

in the own company

The adjusted solvency ratios as at December 31, were as follows:

in Euro x 1,000

2021

2020

Equity attributable to owners of the parent

50,026

46,238

Intangible assets

(1,835)

(559)

Adjusted equity total

48,191

45,678

Adjusted balance sheet total

75,840

69,424

Adjusted solvency ratio

64%

66%

4. Critical Accounting Estimates and Judgments

The preparation of financial statements in accordance with IFRS requires the use of certain accounting

estimates. It also requires management to exercise its judgement in the process of applying the

group's accounting policies. Estimates and judgments are continually evaluated, and are based on

historical experience and other factors, including expectations of future events that are believed to be

reasonable under the circumstances.

The resulting accounting estimates will, by definition, seldom equal the related actual results.

The estimates and assumptions that have a significant risk of causing a material adjustment to the

carrying amounts of assets and liabilities within the next financial year are addressed below.

123

Income Taxes

The group, which has a history of recent tax losses, recognises deferred tax assets arising from unused

tax losses or tax credits only to the extent that the relevant fiscal unity has sufficient taxable

temporary differences or there is convincing other evidence that sufficient taxable profit will be

available against which the unused tax losses or unused tax credits can be utilised by the fiscal unity.

Management’s judgment is that there is not a high degree of certainty that sufficient profits will be

earned to utilise the losses. Consequently, based on management’s judgment, sufficient convincing

other evidence is not available, and a deferred tax asset is therefore not recognised.

Share-based Payments

Share options granted to employees are measured at the fair value of the options granted (indirect

method of measurement). For the company’s share option plan, management’s judgment is that the

Black-Scholes valuation method is most appropriate for determining fair values. The assumptions and

estimates used in the valuation are further discussed in note 12 to the consolidated financial

statements.

The result of the share option valuations and the related compensation expense is dependent on the

model and input parameters used. Even though management considers the fair values reasonable and

defensible based on the methodologies applied and the information available, others might derive at a

different fair value for the options granted under the company’s share option plan.

Research and Development Expenditures

The project stage forms the basis in the decision of whether costs made for the group’s product

development programmes should be capitalised or not. Management judgment is required in

determining when the group should start capitalising development costs as intangible assets.

Management determined that for a system, commercial feasibility is, in general, probable when the

group has built a successful prototype and has interested customers for the commercial product.

Management determined that for product development, (note 2.6) commercial feasibility is, in general,

probable when the group has successfully completed essential testing phases and are in a late stage

of discussions with potential partners for commercialisation opportunities.

Revenue Recognition

The group recognises revenue over time or at point in time depending on the agreed contract

performance obligations. For Flowrence® systems and services contracts the group recognises

revenue over time as performance of the contract progresses. The performance on a contract relates

to fixed-price contracts to construct tailor-made Flowrence® systems which the customers control and

cannot be of alternative use to the company. For the Flowrence® systems, the stage of completion is

measured by reference to the total contract costs incurred up to the end of the reporting period as a

percentage of total estimated costs for each contract. Value is delivered to customers up to each of

these points. For services, in order to recognise revenue over time, the group is required to estimate the

series of distinct services performed to date as a proportion of the total services to be performed,

where also stage gates are present, and value is added up to that point. To define the recognised

revenues, the group estimates the required total costs (Flowrence®) or man-hours (services) to

complete each project. On a regular basis a review of the total costs or man-hours is performed.

Going Concern

For the critical accounting judgment with regard to the going concern assumption, see note 2.1.1.

Government Grants

The group uses the percentage-of-completion (POC) method in accounting for its government grants it

has been awarded. For grant programmes, use of the POC method requires the group to estimate the

services/actions performed to date as a proportion of the total services or actions to be performed. For

further considerations and assumptions with regard to the critical accounting estimate in relation to

government grants, see note 2.21.

Impairment

Judgments and estimates are required, not only to determine whether there is an indication that an

asset may be impaired, but also whether indications exist that impairment losses previously

recognized may no longer exist or may have decreased (impairment reversal). After indications of

impairment have been identified, judgments and estimates are also involved in the determination of

the recoverable amount of a non-current asset. The recoverable amount is determined based on the

higher of the fair value less cost to sell and the value-in-use. These involve estimates of expected

future cash flows (based on future growth rates and remaining useful life) and residual value

assumptions, as well as discount rates to calculate the present value of the future cash flows.

124

Notes to the Consolidated Statement of Financial Position

5. Property, Plant and Equipment

At At 1 January 2020

Cost

24,953

33,224

2,901

2,121

2,763

65,962

Accumulated depreciation

(9,008)

(24,895)

(2,510)

(1,871)

—

(38,285)

Net book amount

15,944

8,329

391

250

2,763

27,677

Year ended 31 December 2020

Opening net book amount

15,944

8,329

391

250

2,763

27,677

Additions

349

707

78

—

2,291

3,425

Disposals

—

(87)

—

—

(18)

(105)

Transfers

61

713

195

7

(976)

—

Accumulated depreciation on disposals

—

58

—

—

—

58

Impairment charge

—

(38)

—

—

—

(38)

Depreciation charge

(3,297)

(2,161)

(201)

(159)

—

(5,818)

Closing net book amount

13,058

7,521

463

97

4,060

25,198

At 31 December 2020

Cost

25,364

34,519

3,174

2,127

4,060

69,244

Accumulated depreciation

(12,305)

(26,999)

(2,712)

(2,030)

—

(44,045)

Net book amount

13,058

7,521

463

97

4,060

25,198

Year ended 31 December 2021

Opening net book amount

13,058

7,521

463

97

4,060

25,198

Additions

847

166

55

3

2,855

3,926

Disposals

—

(80)

—

—

—

(80)

Transfers

—

137

—

—

(137)

—

Accumulated depreciation on disposals

—

59

—

—

—

59

Impairment charge

—

—

—

—

—

—

Depreciation charge

(3,377)

(2,154)

(182)

(66)

—

(5,778)

Closing net book amount

10,528

5,649

336

34

6,777

23,324

At 31 December 2021

Cost

26,209

34,743

3,229

2,131

6,777

73,089

Accumulated depreciation

(15,682)

(29,094)

(2,893)

(2,096)

—

(49,765)

Net book amount

10,528

5,649

336

34

6,777

23,324

in Euro x 1,000

Leasehold improvements

Laboratory equipment

Hardware

Office furniture and equipment

Construction in

progress1

Total

The additions in property plant and equipment during 2021 predominantly relate to the investment in the (early) EPC work by Avantium Renewable Polymers segment, investment in product purification and

handling in the pilot plant in Delfzijl for the Avantium Renewable Chemistries segment and upgrades to equipment for the Avantium Catalysis segment.

125

6. Intangible Assets

At 1 January 2020

Cost

2,159

7,165

433

—

1,064

10,821

Accumulated amortization and impairment

(2,159)

(7,011)

—

—

(967)

(10,137)

Net book amount

—

155

433

—

97

684

Year ended 31 December 2020

Opening net book amount

—

155

433

—

97

684

Additions

—

27

—

—

—

27

Amortization charge

—

(152)

—

—

—

(152)

Closing net book amount

—

30

433

—

97

559

At 31 December 2020

Cost

2,159

7,193

433

—

1,064

10,848

Accumulated amortization and impairment

(2,159)

(7,163)

—

—

(967)

(10,289)

Net book amount

—

30

433

—

97

559

Year ended 31 December 2021

Opening net book amount

—

30

433

—

97

559

Additions

—

6

—

1,326

—

1,331

Amortization charge

—

(36)

—

—

(20)

(56)

Closing net book amount

—

—

433

1,326

77

1,835

At 31 December 2021

Cost

2,159

7,199

433

1,326

1,064

12,180

Accumulated amortization and impairment

(2,159)

(7,199)

—

—

(987)

(10,345)

Net book amount

—

—

433

1,326

77

1,835

(In Euro x 1,000)

Development costs

Software

Intellectual Property

License rights

Other

Total

The additions in intangible assets during 2021 predominantly relate to the patent license acquired from Eastman Chemical Company by Avantium Renewable Polymers. The settlement of this patent license

acquired will be in three equal instalments. The first instalment will be settled in cash in January 2022. The other two instalments will be settled in cash or in shares in Avantium NV. Avantium may decide how it

proposes to settle the two remaining instalments.

126

Development Costs

The development costs consist of the development and prototype expenses of the Flowrence system

and are all fully amortised.

Software and Other Intangibles

Software mainly comprises purchased general laboratory and office-related software.

Other intangibles are the in-kind contribution of a shareholder relating to software at the foundation of

the group and compensation paid to a third party to exclusively use parts of their technology.

Intellectual Property

Following the Liquid Light acquisition in 2016, the company records intellectual property (patent

portfolio acquired) on its consolidated balance sheet, which will subsequently be lowered with

accumulated amortisation the following years, when the technology on which the intellectual property

is filed, is ready to deploy commercially. As at 31 December 2021, the recoverable amount of the

intellectual property exceeds the carrying amount.

Total of research expenditures recognised as an expense in the consolidated statement of

comprehensive income amounted to €1,011,000 (2020: €1,008,000) and mainly constitute of early

stage research trials.

License Rights

The license rights consists of the licenses acquired for technologies not owned or developed by the

company.

Included in the license rights is the Eastman license acquired by Avantium Renewable Polymers during

2021. As part of the license agreement, royalty fees will be payable to Eastman. The fees will equal to

$20 USD per metric ton of Licensed Products produced from the FDCA Flagship Plant. The

commencement of the operations will be in 2024. The foregoing running royalty will be payable by

Avantium in shares of Avantium N.V. (in equivalent value) on a semi-annual basis for the first two

years of operation of the FDCA Flagship Plant, after which all such payments will be paid in cash.

Avantium may decide how it proposes to settle the royalty fees for the first two years.

7. Leases

This note provides information for leases where the group is a lessee.

Amounts Recognised in the Balance Sheet

The balance sheet shows the following amounts relating to leases:

in Euro x 1,000

31-12-2021

31-12-2020

Properties

9,372

8,877

Motor vehicles

107

165

Total right-of-use assets

9,479

9,042

in Euro x 1,000

31-12-2021

31-12-2020

Current lease liabilities

1,604

1,703

Non-current lease liabilities

9,099

8,003

Total Lease liabilities

10,703

9,706

Additions to the right-of-use assets during the 2021 financial year were nil (2020: nil). The increase in

the right-of-use assets are due to modifications in the lease agreements. The lease modifications are

due to lease terms being modified and lease assumptions changing.

Amounts Recognised in the Statement of Comprehensive Income

The statement of comprehensive income shows the following amounts relating to leases:

in Euro x 1,000

2021

2020

Properties

1,842

1,490

Motor vehicles

161

99

Total depreciation charge of right-of-use assets

2,003

1,589

in Euro x 1,000

2021

2020

Interest expense included in finance cost

230

217

Total interest charge on lease liabilities

230

217

The cash flow net of VAT related to principal elements of the lease payments amounted to €1,663,000

(2020: €1,608,000).

Some of the lease agreements contain variable lease elements that are linked to the usage of the

lease, which is not included in the measurement of the lease liability. The variable lease payments for

127

the year not included in the measurement of the lease liability amounted to €349,000 (2020:

€342,000).

The short term and low value lease expenses for 2021 amounted to €54,000 (2020: €43,000).

In 2020 management reassessed the onerous lease contract which was recognised in prior years.

Since management's intention for the use of the lease asset changed, they concluded that the

requirements of an onerous contract was no longer met. The onerous contract was therefore reversed

on 31 December 2020.

8. Inventories

(In Euro x 1,000)

31-12-2021

31-12-2020

Raw materials

883

875

Work in progress

355

350

1,238

1,225

The costs of inventories recognised as an expense and included in raw materials and contract costs,

amounted to €260,000 (2020: €269,000).

9. Trade and Other Receivables

(In Euro x 1,000)

31-12-2021

31-12-2020

Trade receivables

1,015

1,049

Less: Allowance for doubtful debt

(150)

(150)

Social security and other taxes

881

606

Prepayments

367

317

Contract assets

3,514

3,059

Other receivables

1,262

2,452

Current portion

6,888

7,333

The other receivables comprise primarily of funding to be received in relation to government grants

where the company has already complied with the attached conditions under the specific grant

program (€888,000) and deposits held at third parties (€252,000).

In 2021, €0 (2020: €0) of trade receivables was written off and €464,000 (30 days or more after

invoice date) was past due, of which 39% was paid before 1 March 2022 and of the remaining 61%,

53% is for a customer for which a provision for doubtful debt was recognised.

Trade receivables and contract assets are written off where there is no reasonable expectation of

recovery. The company assessed the trade receivables balance as at 31 December 2021 and

concluded that the provision for doubtful debt of €150,000 recognised during 2020 still represents the

expectation of recovery (see also note 3.1). The carrying amounts of these financial assets are

assumed to approximate their fair values.

Impairment provisions for trade receivables are recognised based on the simplified approach within

IFRS 9 to measuring expected credit losses which uses a lifetime expected loss allowance for all trade

receivables and contract assets.

To measure the expected credit losses, trade receivables and contract assets have been grouped

based on shared credit risk characteristics and the days past due. The contract assets relate to

unbilled work in progress and have substantially the same risk characteristics as the trade receivables

for the same types of contracts. The group has therefore concluded no provision for credit losses is

required on trade receivables and contract assets, since after careful consideration of each customer’s

payment profile and likelihood to default on payments, the credit losses was deemed to be immaterial.

10. Cash and Cash Equivalents

(In Euro x 1,000)

31-12-2021

31-12-2020

Cash at bank and on hand

33,411

25,126

Restricted cash

1,500

1,500

Cash and cash equivalents for cash flow purposes

34,911

26,626

The carrying amounts of these financial assets are assumed to approximate their fair values. A

notional cash pool agreement is in place for all Rabobank accounts where balances are netted on a

daily basis. Within the cash pool, there are €0 overdrafts.

The cash and cash equivalents presented in the consolidated statement of financial position and the

consolidated statement of cash flow include restricted cash of €1.5 million, deposit held with

128

Rabobank, which represent an amount equal to the current outstanding bank guarantees issued to

third parties. For further information on commitments issued to third parties, refer to note 26.

11. Share Capital and Other Reserves

Avantium N.V. listed on Euronext Amsterdam and Euronext Brussels.

11.1 Ordinary Shares

The authorised share capital amounted to €4,500,000 consisting of 45,000,000 ordinary shares, with a

nominal value of €0.10 each. The issued share capital at 31 December 2021 comprises 31,286,447

ordinary shares (2020: 25,912,170). In 2021, 167,688 options were exercised by employees, from

these option exercises, 167,688 resulted in additional ordinary shares issued. At 31 December 2021,

zero (2020: zero) shares were held by the Stichting Administratiekantoor Avantium (the Foundation)

and nil employee shares were repurchased. All 31,286,447 shares issued are fully paid and stated at

its par value of €0.10 each.

11.2 Other Reserves

The costs of equity settled share-based payments to employees are recognised in the statement of

comprehensive income, together with a corresponding increase in equity during the vesting period,

taking into account (deferral of) corporate income taxes. The accumulated expense of the share

incentive plan recognised in the statement of comprehensive income is shown as part of the equity

category ‘other reserves’ in the consolidated statement of changes in equity.

Additionally, included in the "other reserve " category is the share-based payment for the Eastman

license acquired in 2021. The settlement of the share-based payment will be in two equal instalments.

The first instalment will be made at the starting date of construction of the FDCA flagship plant or 8

months after the Final Investment Decision, which ever is sooner. The second instalment will be made

at the completion date of construction of the FDCA flagship plant or 24 months after the Final

Investment decision, which ever is sooner. Avantium has the option to settle the outstanding amounts

in shares or cash.

11.3 Currency Translation Difference

The group does not hold a company reporting in any other currency than euros and therefore does not

hold a currency translation reserve.

11.4 Treasury Shares

The total value of treasury shares outstanding at 31 December 2021 is €616,000 (2020: €616,000).

12. Share-based Payment

The group operates share-based compensation plans for its employees, which consists of an

Employee Share Option Plan (ESOP) and a Long-term Incentive Plan (LTIP). These plans are classified

as equity-settled share-based payment plans.

Long-term Investment Plan (LTIP)

The members of the management team are obligated to invest a percentage of their (net) bonus in

(depositary receipts for) shares to be delivered by the company under the LTIP. Each Investment share

relates to one share. The cash component of the bonus may, at the discretion of the relevant member

of the management team, also be invested in Investment shares. The Investment shares are subject to

a retention period of five years, during which the investment shares cannot be sold. After the end of

the retention period, the company will match the (depository receipts for) shares granted under the

LTIP at a 1:1 ratio, i.e. one Matching share is granted for each Investment share.

The entitlement to receive Matching shares will be reduced as follows in the case of termination: 100%

if the termination date is prior to the first anniversary of the date of Award; 66.67% if the termination

date is prior to the second anniversary but after the first anniversary of the date of Award; 33.33% if

the termination date is prior to the third anniversary but after the second anniversary of the date of

Award.

In 2021, no additional awards were granted under the Long term Investment Plan (LTIP).

The movements in outstanding LTIP awards with the Management Board and senior management

can be summarised as follows:

129

Long-term Investment Plan

2021

2020

Number of

awards

Weighted

Average

share price at

grant date (in

Euro)

Number of

awards

Weighted

Average

share price at

grant date (in

Euro)

Number of awards outstanding

1 January

179,494

4.45

87,254

5.36

Number of matching shares

forfeited

(3,739)

2.93

—

—

Number of awards granted

(including matching shares)

—

—

92,240

3.59

Number of awards outstanding

31 December

175,755

4.49

179,494

4.45

LTIP awards outstanding at the end of the year had the following share price at grant date:

Grant date

Share price at grant date

in Euro

Number of awards

1 July 2017

10.50

5,418

16 March 2018

5.36

65,155

21 March 2019

2.64

16,681

14 May 2020

3.59

88,501

At 31 December 2021

175,755

The fair value of LTIP awards under the Long-term Investment Plan is determined by the share price at

grant date and the weighted average fair value of LTIP awards granted during 2020 was €3.59 per

award.

Employee Share Option Plan (ESOP)

On an annual basis and on certain other occasions set out in the plan rules, options under the

Employee Share Option Plan (ESOP) may be conditionally granted to eligible employees of the

company. The options will vest yearly over a three-year vesting period. The vested options have an

exercise period of five years after vesting, after which the option expires.

In 2021, 417,500 share options were granted. In 2021, 167,688 options were exercised with a

weighted-average share price of €6.13 at the date of exercise by the employees.

Further details on the grants in 2021 can be found in the table below.

Grant date

Plan

Number of ESOP options

granted

Exercise price in

Euro per option

19 May 2021

ESOP

417,500

4.56

The movements in outstanding options with the Management Board, senior management and certain

other employees can be summarised as follows:

Share Option

2021

2020

Number of

options

Weighted

Average

exercise

price (in

Euro)

Number of

options

Weighted

Average

exercise

price (in

Euro)

Number of options outstanding

1 January

2,500,324

2.44

2,149,587

2.46

Number of options exercised

(167,688)

6.13

(136,640)

5.71

Number of options forfeited

(32,151)

4.25

(104,583)

5.85

Number of options granted

417,500

4.56

591,960

3.73

Number of options outstanding

31 December

2,717,985

2.52

2,500,324

2.44

Share options outstanding at December 31, 2021, amounted to 2,717,985. The exercise prices range

from €0.10 to €10.58. The weighted average remaining contractual term for options outstanding at

December 31, 2021, was 4.5 years.

Avantium N.V. has issued shares resulting from the exercise of options to the Stichting

Administratiekantoor Avantium (the Foundation).

The Foundation has issued depository receipts to members of the Management Board, senior

management and certain other employees. The Foundation is a consolidated special purpose entity set

up by Avantium N.V. The shares held by the Foundation, however, only represent the voting rights

associated with the issued shares and depository receipts representing all economic benefits issued by

the Foundation to members of the Management Board, senior management and certain other

employees, and consequently the shares held by the Foundation are not considered treasury shares.

130

The number of options which are exercisable at the end of the period (i.e. vested, but not yet exercised)

amounted to 1,220,963.

The fair value of options under the equity-settled share-based payment plans is determined using the

Black-Scholes valuation model and the weighted average fair value of options granted during 2021

was €1.98 per option (2020: €1.56).

The significant inputs into this model were as follows:

19 May 2021

Exercise price

€4.56

Volatility

42%

Risk free interest rate

-0.23%

Dividend yield

—

Expected life

7.6 years

Early exercise rate

5%

The historical volatility used is based on the volatility of the company’s own shares in combination

with the historical volatility of a peer group (five companies in total which are considered to be

comparable listed companies), of which the daily stock returns over a period equal to the maturities of

each plan related to the valuation dates was used.

During the year, a reclassification was made from other reserves to retained earnings, totalling

€182,856, to reflect the effect of exercised and expired options in 2021.

13. Earnings per Share

Earnings per Share

Earnings per share for the years 2021 and 2020 are derived below:

In Euro

31-12-2021

31-12-2020

Loss from continuing operations

(24,416,470)

(22,829,594)

Loss for the period - basic

(24,416,470)

(22,829,594)

Dilutive adjustments

—

—

Loss for the period - diluted

(24,416,470)

(22,829,594)

Weighted average number of ordinary shares

29,756,527

25,886,849

Number

Options per end of the year

2,717,985

2,500,324

LTIP awards per end of the year

175,755

179,494

Effect of dilutive / anti-dilutive securities

2,893,740

2,679,818

Weighted average number of shares - diluted

29,756,527

25,886,849

In Euro

Earnings per share - basic

(0.82)

(0.88)

Earnings per share - diluted

(0.82)

(0.88)

Basic earnings per share are calculated by dividing the net result for the period by the weighted

average number of ordinary shares. Diluted earnings per share are calculated by dividing the net

results for the period on a diluted basis by the weighted average number of shares on a diluted basis.

As the company is in a loss-making position, the options and LTIP awards have an antidilutive impact

on the diluted earnings per share, for this reason the options and LTIP awards for the year are not

considered in the calculation of diluted earnings per share.

131

14. Trade and Other payables

(In Euro x 1,000)

31-12-2021

31-12-2020

Trade payables

4,714

1,910

Social security and other taxes

360

428

Holiday pay and holiday days

1,338

1,292

Contract liabilities

1,328

1,580

Deferred government grants

4,913

5,870

Other current liabilities

4,096

2,814

16,750

13,894

The other current liabilities comprise primarily of other staff pay related accruals (€1,967,000) and

accrued expenses (€2,129,000). Deferred government grants comprise of advances received in relation

to government grants. The carrying amounts of these financial liabilities are assumed to approximate

their fair values.

Contract liabilities relating to systems contracts are balances due to customers under construction

contracts. These arise if a particular milestone payment exceeds the revenue recognised to date under

the percentage-of-completion method. Contract liabilities relating to services are balances due to

customers under services contracts. These arise if particular services are to be rendered over time for

which a prepayment has been received.

The following table shows how much of the revenue recognised in the current reporting period relates

to carried-forward contract liabilities:

In Euro x 1,000)

31-12-2021

31-12-2020

Revenue recognized that was included in the contract liability

balance at the beginning of the period

–Systems contracts

110

197

–Services contracts

385

161

–Renewable chemistries

—

—

495

358

15. Borrowings

The group had no borrowings in 2021 and 2020.

Bank Overdrafts

As at 31 December 2021, the group had no overdraft facilities with any bank.

16. Provisions for Other Liabilities and Charges

(In Euro x 1,000)

Warranty

provision

Balance at 1 January 2020

137

Additional provision

38

Unused amounts reversed

(27)

Settlement of provision

—

Used during the year

(4)

At Balance at 31 December 2020

145

Balance at 1 January 2021

145

Additional provision

78

Unused amounts reversed

(21)

Used during the year

(5)

Balance at 31 December 2021

196

Warranty

The provision for warranty consists of estimated costs for repairs of installed products during the

warranty period of one year. This estimate is based on historical experience of broken or repaired units

and the costs associated with that. This provision is current (shorter than one year). Unused amounts

are reversed after expiration of the warranty period.

132

Notes to the Consolidated Statement of Comprehensive Income

17. Revenues

Reported consolidated revenue from continuing operations increased by 11% from €9.9 million in 2020

to €10.9 million in 2021. All revenue is recognised over time, except for revenues from renewable

chemistry development agreements, systems revenue generated out of spare parts sold and Material

offtake agreements (MTA) from Renewable Polymers (see note 2.20). Revenues per segment are

reported under note 19. All revenue reported originates in the Netherlands.

The following table depicts the disaggregation of revenue from contracts with customers:

2021 (in Eurox 1,000)

Catalysis

services

revenue

Catalysis

systems

revenue

Renewable

Chemistry

development

agreements

Renewable

Polymers

MTA

agreements

Total

Segment revenue

3,227

6,802

500

388

10,917

Revenue from external

customers

3,227

6,802

500

388

10,917

Timing of revenue

recognision

–At a point in time

—

599

500

388

1,487

–Over time

3,227

6,203

—

—

9,430

Total

3,227

6,802

500

388

10,917

2020 (in Euro x 1,000)

Catalysis

services

revenue

Catalysis

systems

revenue

Renewable

Chemistry

development

agreements

Renewable

Polymers

MTA

agreements

Total

Segment revenue

3,323

5,851

405

285

9,863

Revenue from

external customers

3,323

5,851

405

285

9,863

Timing of revenue

recognision

–At a point in time

—

622

405

285

1,312

–Over time

3,323

5,229

—

—

8,552

Total

3,323

5,851

405

285

9,863

As of 31 December 2021, the aggregate amount of the transaction price in Catalysis allocated to the

remaining performance obligations is €6.1 million (2020: €7.8 million) and the group will recognise this

revenue as the progress on each contract is completed, which is estimated to occur over the next 9–24

months.

18. Other Income

(In Euro x 1,000)

2021

2020

Grants recognised

6,686

8,403

6,686

8,403

The group recognised total government grants of €6,686,000 (2020: €8,403,000) to contribute to

Avantium’s development programmes, where efforts are focused on developing a new catalytic

process for making bio-based ethylene-glycol and on developing an economical viable chemical

process to convert ligno-cellulosic biomass into high quality glucose as feedstock for bio-based

chemical, and in Renewable Polymers, for its plant-to-plastics YXY Technology®.

133

19. Segment Information

Description of the Segments and Principal Activities

In the company, the management team consists of the Chief Executive Officer, Chief Financial Officer,

Chief Technology Officer, Group Legal Counsel, and the Managing Directors of Avantium Renewable

Chemistries, Avantium Catalysis, and Avantium Renewable Polymers. It has identified three separate

business segments:

•Avantium Catalysis provides advanced catalysis R&D services, systems and testing to industry-

leading global customers. Catalysts help to limit the environmental impact of the petrochemical

industry by making processes more efficient, reducing unwanted side products, and removing

impurities and pollutants. With the scalable catalyst testing system, Flowrence®, Avantium

Catalysis helps customers reach their sustainability, profit and growth targets.

•Avantium Renewable Chemistries develops PlantMEG. PlantMEG is a plant-based and cost-

competitive alternative for fossil-based MEG – an important chemical building block for PET and

PEF resin, both of which are used in bottles and packaging; fibres for clothing, furniture and the

automotive industry; and solvents and coolants. The common basis, on which each activity rests, is

formed by Avantium’s unique technological capabilities that have been validated through the

execution of millions of experiments, covering a broad range of chemistries, including highly

complex and challenging R&D projects. The portfolio of programmes includes the Volta

programme, and the Dawn Technology and Ray Technology™.

•Avantium Renewable Polymers aims to commercialise our YXY plants-to-plastics Technology®.

This technology catalytically converts plant-based sugars into FDCA (furandicarboxylic acid) and

materials such as the new plant-based packaging material PEF (polyethylene furanoate). PEF is a

100% plant-based, 100% recyclable plastic with superior performance properties compared to

today’s widely used petroleum-based packaging materials.

All employees of Avantium are employed in the Netherlands. The average number of full time

equivalent employees of the group per business segment and other departments is as follows:

(in full time equivalent employees)

2021

2020

Catalysis

48

47

Renewable Chemistries

69

71

Renewable Polymers

55

54

Unallocated

40

40

Total average number of FTE during the year

213

211

EBITDA

The main KPI of the company within the profit & loss account is EBITDA. Note that the EBITDA figure

excludes company overheads and shared service activities.

The EBITDA is calculated in the following manner: Profit/loss for the period plus Finance costs-net plus

depreciation, amortisation and impairment charge.

The EBITDA figures of the business segments are as follows.

(In Euro x 1,000)

2021

2020

Catalysis

2,705

2,582

Renewable Chemistries

(2,320)

(1,605)

Renewable Polymers

(7,094)

(7,331)

Total EBITDA of business segments

(6,708)

(6,353)

134

Revenues per Segment

(In Euro x 1,000)

2021

2020

Catalysis

10,029

9,173

Renewable Chemistries

500

405

Renewable Polymers

388

285

Total segment revenue

10,917

9,863

Revenue is only generated from external customers and no transactions with other segments have

taken place.

Other Income per Segment

(In Euro x 1,000)

2021

2020

Catalysis

279

235

Renewable Chemistries

3,610

5,764

Renewable Polymers

2,683

2,288

Unallocated items

114

116

Total segment other income

6,686

8,403

Reconciliation

(In Euro x 1,000)

2021

2020

Total EBITDA of business segments

(6,708)

(6,353)

Amortisation

(56)

(152)

Depreciation of property, plant and equipment

(5,778)

(5,856)

Depreciation of right of use assets

(2,003)

(1,589)

Finance costs - net

(495)

(325)

Share based compensation

(828)

(895)

Rent

(241)

(179)

Reversal / (Expense) due for onerous contract

—

492

Company overheads/other

(8,307)

(7,971)

Loss before income tax from continuing operations

(24,416)

(22,830)

The ‘Other’ costs category comprises mainly of company overhead costs.

Depreciation and Amortisation

(In Euro x 1,000)

2021

2020

Catalysis

(396)

(513)

Renewable Chemistries

(3,547)

(3,474)

Renewable Polymers

(1,932)

(1,932)

Unallocated items

(1,962)

(1,677)

Total Depreciation and amortisation

(7,837)

(7,597)

135

20. Expenses by Nature

Net operating expenses in 2021 amounted to €33.7 million (2020: €33.2 million). The net operating

expenses of 2020 included a one-off reversal of the onerous lease provision of €0.5 million. Which

explains the increase in costs during 2021 compared to prior year.

Depreciation, amortisation and impairment charges increased to €7,837,000 (2020: €7,597,000). The

increase is mainly a result of the remeasurement of the right of use assets during 2021 due lease

modifications that took place during the year, resulting in an increase in the depreciation of right of use

assets.

Raw materials and contract costs in 2021 amounted to €3,042,000 (2020: €2,339,000 ) and comprises

of cost of goods sold, costs of laboratory consumables directly attributable to revenue projects, and

other specific costs related to revenues. The increase is mainly as a result of the higher revenues

recorded for the year.

Patent, license, legal and advisory costs in 2021 amounted to €4,312,000 (2020: €4,204,000). The

increase is mainly due to external advisors hired by Avantium Renewable Polymers in preparation for

the Final Investment Decision.

Other operating expenses in 2021 amounted to €1,568,000 (2020: €1,528,000) and comprises of

external development costs, such as trials, and other general costs including company insurances. The

increase is mainly related to the company insurances which have been indexed based on the triennial

taxation performed. The company insurances as of 2021 reflected the latest asset values after the

completion of assets of the Delfzijl pilot plant in the Renewable Chemistries segment.

Advertising and representation expenses in 2021 amounted to €707,000 (2020: €679,000) and

comprises of external and internal marketing, communications, and business development efforts,

including travel. Wages for internal business development staff is excluded, as this is included under

employee benefit expenses. The increase is mainly due to the relaxation of measures in relation to

COVID-19 travel restrictions, as travel to certain countries was possible again in 2021.

Employee benefit expenses in 2021 amounted to €19,226,000 (2020: €19,262,000) and includes

wages and salaries, social security costs, share options granted to directors and employees, pension

costs, and government grants received. The decrease is mainly as a result of the release of the 2020

bonus accrual of €905,000, since the bonus over 2020 was not paid out to employees. This decrease

was partially offset by and increase of the average number of FTE's during the year and the wage

increase.

Office and housing expenses in 2021 amounted to €1,968,000 (2020: €1,990,000) and comprises of

short-term rental agreements, other facility related costs, telephony and other IT related office

materials and costs. Laboratory expenses in 2021 amounted to €2,864,000 (2020: €3,664,000) and

comprises of laboratory consumables, spare parts, maintenance and repair work in the laboratory, and

small laboratory projects. The decrease in laboratory expenses is mainly a result of the delayed start

up of the pilot plant in Delfzijl after the accident that took place in the first quarter of 2021.

21. Employee Benefits

(In Euro x 1,000)

2021

2020

Wages and salaries

18,776

18,282

Government grants R&D (WBSO)

(3,316)

(3,032)

Social security costs

1,990

2,203

ESOP expense (note 12)

828

702

LTIP awards expense (note 12)

—

193

Pension costs - defined contribution plans

948

913

19,226

19,262

Number of full time equivalent employees at the end of the year

213

218

The average number of FTEs during 2021 was 213 (2020: 211).

In 2021, €3,316,000 (2020: €3,032,000) government grants in the form of WBSO were recognised

directly as an offset of employee benefit expenses.

136

22. Finance Income and Costs

(In Euro x 1,000)

2021

2020

Finance costs:

Net foreign exchange (gains) loss

2

1

Interest current accounts

120

69

Financing component of lease payments

230

217

Other finance costs

144

76

Finance costs

497

362

Finance income:

Interest current accounts

(2)

(37)

Finance income

(2)

(37)

Finance costs - net

495

325

23. Income Tax Expense

The company forms an income tax group with its subsidiaries. Under the standard conditions, the

members of the tax group are jointly and severally liable for any taxes payable by the group. At the

end of 2021, Avantium Renewable Polymers B.V. and Furanix Technologies B.V. left the Avantium N.V.

fiscal unity in preparation for the moment when minority shareholders will join (expected to be by April

2022).

As a consequence of Avantium Renewable Polymers B.V. and Furanix Technologies B.V. leaving the

Avantium N.V. fiscal unity, a taxable revaluation of certain assets took place within the Avantium N.V.

fiscal unity. The consolidated taxable profit of the Avantium N.V. fiscal unity in 2021 (including the

taxable revaluation) amounts to approximately €32 million (2020: Tax loss of €26 million). This tax

profit will be fully compensated by existing carry forward tax losses of the Avantium N.V. fiscal unity.

As a consequence no tax charge was identified for 2021 (2020: nil).

In line with last year, the company did not recognise any deferred tax asset in relation to the losses

carried forward as it is not considered probable that there will be sufficient taxable profit against

which the unused tax losses can be utilised.

Total remaining amount of tax losses carry forward for the fiscal unity as of 31 December, 2021 is

approximately €146 million. This was €178.3 million in 2020. The Avantium N.V. fiscal unity intends to

transfer approximately €41 million of its carry forward tax losses as of 31 December 2021 to

Avantium Renewable Polymers B.V. and Furanix Technologies B.V. who left the Avantium N.V. fiscal

unity. After such transfer of tax losses, the remaining amount of tax losses carried forward for the

Avantium N.V. fiscal unity will amount to approximately €106 million.

These losses will be subject to the new tax loss utilisation rules that apply as of 1 January 2022. As

part of the new rules, an indefinite carry forward loss set-off will apply as of 1 January 2022 (the

current carry- forward period is six years, the carry-back period is and will remain one year). However,

tax losses will only be fully available for carry-forward and carry-back set off up to an amount of €1

million of taxable profit per year. In the case of a profit which is higher than €1 million, the amount

above €1 million can only be set off up to 50% of that higher taxable profit.

The company does not use contrived or abnormal tax structures that are intended for tax avoidance.

(In Euro x 1,000)

2021

2020

Loss before tax

(24,416)

(22,830)

Tax at applicable tax rate in the Netherlands of 25% (2020: 25%)

6,104

5,708

Non-deductable expenses

590

793

Subtotal

6,694

6,501

Derecognition of deferred tax assets

—

(6,501)

Tax profit as a result from revaluation of certain assets

(13,970)

—

Utilisation of previously unrecognised deferred tax assets

7,276

—

Tax charge

—

—

The nominal tax rates and amount in 2021 are 15% up to €245,000 and 25% over €245,000.

24. Dividends

The company declared no dividends for any of the years presented in these consolidated financial

statements.

137

Other Notes to the Consolidated Financial Statements

25. Contingencies

During 2021, the company had no contingencies to report.

26. Commitments & Guarantees

Guarantees

In 2020, the company renegotiated a new €3.0 million cash-collateralised guarantee facility, which

replaced the initial €2.0 million guarantee facility the company had in the prior years.

This guarantee facility is also disclosed as part of the cash equivalents in note 10, which represents an

amount equal to the current guarantees issued to third parties totalling €999,000. These guarantees

are primarily issued in relation to payments from customers following a systems deal for which a bank

guarantee had to be issued.

27. Related-party Transactions

Identification of Related Parties

Key management is defined as those persons having legal authority and responsibility for planning,

directing and controlling the activities of the entity, directly or indirectly, including any director (whether

executive or otherwise) of that entity. Our key management comprises the members of the

Management Board and the Supervisory Board.

Key Management Changes 2021

In August 2021, the Supervisory Board proposed the appointment of Mr. Nils Björkman as as sixth

member of the Supervisory Board. At the Extraordinary General Meeting (EGM) held on 25 January

2022, Nils Björkman was appointed as Supervisory Board member for a term of four year.

The following persons were members of the Supervisory Board on 31 December 2021:

•Edwin Moses, Chairperson

•Margret Kleinsman, Vice Chairperson

•Trudy Schoolenberg

•Cynthia Arnold

•Michelle Jou

Key Management Remuneration Policy

Avantium does not grant its key management with any personal loans, guarantees or advance

payments. For further information on the remuneration policy refer to the Remuneration Report.

Key Management Remuneration 2021

The total remuneration paid to members of the Management Board and independent members of the

Supervisory Board amounted to €1,023,000 (2020: €737,000) and €403,000 (2020: €321,000)

respectively.

138

The following table provides a breakdown of the remuneration in 2021 of the members of the

Management Board:

(In Euro x 1,000)

Management

Board

Salary

Other benefits26

Cash bonus

Investment share

bonus

Share-based

payments

Post-employee

benefits

Severance

payments

Total

Remuneration

T.B. van Aken

2021

268

25

78

78

114

20

—

584

2020

268

26

—

—

117

19

—

430

B.J.J.V. Welten

2021

235

27

49

49

52

27

—

439

2020

228

26

—

—

29

25

—

307

Total - 2021

503

52

128

128

167

46

—

1,023

Total - 2020

495

52

—

—

145

44

—

737

139

26 Other benefits mainly include contributions to social security plans, benefits in kind such as company cars, medical expenses and legal expenses.

The following table provides a breakdown of the remuneration in 2021 of the members of the Supervisory Board:

(In Euro x 1,000)

Annual fee27

Share-based payments

Travel expenses

Total

Supervisory Board member

2021

2020

2021

2020

2021

2020

2021

2020

E. Moses

79

90

51

48

—

—

130

138

M.G. Kleinsman

50

50

—

—

—

—

50

50

G.E. Schoolenberg

44

13

—

—

—

—

44

13

M.B.B. Jou

55

32

18

17

—

1

73

50

CA. Arnold

48

13

40

12

5

1

93

26

Nils Bjorkman

13

—

—

—

—

—

13

—

Total Supervisory Board members

289

198

109

77

5

2

403

277

Former Supervisory Board members

D.J. Lucquin

—

37

—

—

—

7

—

44

Total former Supervisory Board members

—

37

—

—

—

7

—

44

28. Proposed Appropriation of Result

In anticipation of the Annual General Meeting’s adoption of the annual accounts, the net loss for the

year of €24,416,470 has been added to accumulated losses.

29. Events After the Balance Sheet Date

On 25 January 2022 at the Extraordinary General Meeting of Shareholders, Avantium's shareholders

approved the issuance of 2.84 million warrants, with an exercise price of € 0.10, to a consortium of

banks as part of a € 90 million debt as part of a financing package of the flagship. In the same meeting

the Management Board was authorised to issue €45 million in ordinary shares. The purpose of the

funding is to allow the company to develop its portfolio of technologies beyond FDCA and for general

corporate purposes. Refer to note 2.1.1 Going Concern for further details on the approval of the

warrant options and issue of ordinary shares.

Avantium closely monitors the geopolitical concerns around the Russian invasion in Ukraine and the

substantial impact on the global economy and financial markets, as well as the severe impact on

energy and commodity prices (including wheat), adding to inflationary pressures from supply chain

disruptions. Avantium’s commercial exposure to Russia is limited to €0.3 million collection risk in

Catalysis related to a system that is already delivered. The situation remains highly fluid and the

outlook is subject to extraordinary uncertainty, and therefore the ultimate impact on Avantium’s

business going forward is still impossible to accurately predict.

140

27 The membership fee included within the annual fee excludes the fee covering the onboarding period prior to the respective appointments, being equal to the prorated base membership fee (€40,000 on pro rate basis).

Company Financial Statements 2021

Company Balance Sheet

As at December 31

The balance sheet has been prepared before appropriation of current year result.

ASSETS

Non-current assets

Financial fixed assets

33

3,902

31,585

Receivables from group companies

34

72,473

44,300

Right-of-use assets

7,210

6,988

Total non-current assets

83,585

82,873

Current assets

Other receivables

419

333

Cash and cash equivalents

28,506

22,608

Total current assets

28,925

22,941

Total assets

112,510

105,814

EQUITY

Equity attributable to owners of the parent

Ordinary shares

11

3,129

2,591

Share premium

230,252

204,296

Other reserves

11

11,936

10,407

Accumulated losses

(195,291)

(171,057)

Total equity

50,026

46,238

(In Euro x 1,000)

Note

2021

2020

Restated28

LIABILITIES

Non-current liabilities

Lease liabilities

8,028

7,412

Provisions

36

1,729

24

Payables to group companies

35

52,284

51,896

Total Non-current liabilities

62,040

59,332

Current liabilities

Trade payables

229

244

Other current liabilities

215

—

Total current liabilities

444

244

Total liabilities

62,484

59,576

Total equity and liabilities

112,510

105,814

141

28 See note 31 for details regarding the restatement as a result of a material reclassification misstatement.

Company Income Statement

For the financial year ended December 31

in Euro x 1,000

2021

2020

Other revenues

—

—

Operating expenses

Employee benefit expenses

(848)

(722)

Office and housing expenses

13

(1)

Patent, license, legal and advisory expenses

(188)

(360)

Reversal due for onerous contract

—

492

Other operating expenses

(23)

(21)

Depreciation, amortisation and impairment charge

(1,313)

(986)

Operating loss

(2,359)

(1,598)

Finance costs - net

(382)

(232)

Result before income tax

(2,741)

(1,830)

Income tax expense

—

—

Result subsidiaries and joint ventures

(21,676)

(21,000)

Loss for the period

(24,416)

(22,830)

142

Notes to the Company Financial Statements

30. General Information

The company statements are part of the 2021 financial statements of Avantium N.V.

The financial statements of the company are prepared in accordance with the provision of Part 9, Book

2 of the Dutch Civil Code. For setting the principles for the recognition and measurement of assets and

liabilities and determination of the result of its company financial statements, Avantium N.V. makes

use of the option provided in Section 2:362 (8) of the Dutch Civil Code. This means that the principles

of the recognition and measurements of assets and liabilities and determination of the result

(hereinafter referred to as accounting policies) of the company financial statements of Avantium N.V.

are the same as those applied for the consolidated financial statements under IFRS (refer to note 2).

By applying this option, reconciliation is maintained between the group’s equity and the company’s

equity.

In the company financial statements, investments in group companies are stated as net asset value, in

accordance with the equity method, if the company effectively exercises influence of significance over

the operational and financial activities of these investments. The net asset value is determined on the

basis of the accounting principles applied by the company. In case the net asset value of an

investment in a group company is negative, any existing loans to group companies considered as net

investment are impaired. A provision for any remaining equity deficit is recognised when an outflow of

resources is probable and can be reliably estimated.

The consolidated financial statements have been prepared in accordance with International Financial

Reporting Standards (IFRS) as adopted by the European Union. Please refer to the notes to the

consolidated financial statements for a description of these principles.

31. Restatement as a result of a material reclassification

misstatement

In the 2020 company only financial statements a provision was recorded for investments in group

companies with negative net asset values. As per the accounting policy, any existing intercompany

receivables which are an extension of the net investment should have been impaired. To the extent

that the company has guaranteed all or part of the liabilities of the participating interest or has a

constructive obligation to ensure that the participating interest will pay (its share) of its liabilities, a

provision for any remaining equity deficit should have been recognised when an outflow of resources

is probable and can be reliably estimated. In addition intercompany receivables and payables were

presented on a net basis instead of on a gross basis. This has been adjusted in the 2020 comparative

years disclosed in the company only financial statements. This restatement did not impact the

company Income Statement nor Equity. The impact of the misstatement is disclosed in the table below.

(In Euro x 1,000)

As at 31 December 2020

Restatement

2020 Restated

ASSETS

Non-current assets

Financial fixed assets

60,921

(29,336)

31,585

Receivables from group companies

—

44,300

44,300

Total non-current assets

60,921

14,964

75,885

(In Euro x 1,000)

As at 31 December 2020

Restatement

2020 Restated

LIABILITIES

Non-current liabilities

Provisions

36,956

(36,932)

24

Payables to group entities

—

51,896

51,896

Total non-current liabilities

36,956

14,964

51,920

32. Equity Attributable to Equity Holders of the Company

For details of the movements in and components of equity, reference is made to the consolidated

statement of changes in equity of the consolidated financial statements and the notes to these.

143

33. Financial Fixed Assets

The company directly held 100% interests in the following subsidiaries on 31 December 2021:

–Avantium Technologies B.V., Amsterdam

–Renewable Technologies B.V., Amsterdam

–Avantium Support B.V., Amsterdam

–Avantium Knowledge Centre B.V., Amsterdam

–Feedstock Technologies B.V., Amsterdam

–Avantium Renewable Polymers B.V., Amsterdam

–Synvina C.V., Amsterdam

The movements in financial fixed assets can be summarised as follows:

(In Euro x 1,000)

Financial fixed assets

On January 1, 2020

34,857

Share of loss in group companies

(3,272)

Other equity movements in subsidiaries

—

On December 31, 2020

31,585

(In Euro x 1,000)

Financial fixed assets

On January 1, 2021

31,585

Share of loss in group companies

(3,651)

Other equity movements in subsidiaries

(24,032)

On December 31, 2021

3,902

Refer to note 31 for the restatement as a result of a material reclassification misstatement.

34. Receivables from group companies

(In Euro x 1,000)

2021

2020

Group receivables outstanding 1 January

44,300

42,604

Movements in receivables from group companies

28,173

1,696

Group receivables outstanding 31 December

72,473

44,300

The fair value of the intercompany amounts in Avantium N.V. to group companies approximates their

book values.

Refer to note 31 for the restatement as a result of a material reclassification misstatement.

During 2021, a number of intercompany balances have been contributed between the group entities

as part of a tax structuring step plan that was executed. This tax structuring step plan was executed

within the Avantium corporate tax fiscal unity and the purpose was to structure the Avantium

Renewable Polymers group appropriately before minority shareholders step in to Avantium

Renewable Polymers B.V. The intercompany balances were contributed through share premium

transactions.

35. Payables to group companies

(In Euro x 1,000)

2021

2020

Group payables outstanding 1 January

(51,896)

(51,867)

Movements in payables to group companies

(387)

(29)

Group payables outstanding 31 December

(52,284)

(51,896)

The fair value of the intercompany amounts in Avantium N.V. to group companies approximates their

book values.

Refer to note 31 for the restatement as a result of a material reclassification misstatement.

144

36. Provisions

a) Provisions for the year were as follows:

(In Euro x 1,000)

Provisions

On January 1, 2020

(23)

Share of loss in group companies

—

Movements in provisions

(1)

On December 31, 2020

(24)

(In Euro x 1,000)

Provisions

On January 1, 2021

(24)

Share of loss in group companies

—

Movements in provisions

(1,705)

On December 31, 2021

(1,729)

The provisions for financial fixed assets with a negative net equity as at 31 December 2021 relate to

the following:

–Equity deficit of Feedstock Technologies B.V. of €24,000 (2020: €24,000)

–Equity deficit of Avantium Renewable Polymers B.V. of €1,704,000 (2020: €0)

Refer to note 31 for the restatement as a result of a material reclassification misstatement.

37. Commitment and Contingencies

The company is part of a fiscal unity for corporate income taxes. As a consequence, the company

bears joint and several liability for the debts with respect to corporate income taxes. The company

settles corporate income taxes, in principle, based on the results before taxes of the subsidiaries

belonging to the fiscal unity.

Avantium has issued joint and several liability for the debts arising out of the legal acts of these

subsidiaries, in accordance with Section 403 Part 9, Book 2 of the Dutch Civil Code. Each of these

subsidiaries has filed Avantium’s 403 declaration with the Dutch trade register:

•Avantium Support B.V.

•Avantium Technologies B.V.

•Avantium Chemicals B.V.

38. Audit Fees

The fees listed below relate to the procedures applied to the company and its consolidated group

entities by PricewaterhouseCoopers Accountants N.V., the Netherlands, the independent external

auditor as referred to in section 1(1) of the Dutch Accounting Firms Oversight Act (Dutch acronym:

Wta), as well as by other Dutch and foreign-based PricewaterhouseCoopers Accountants N.V.

individual partnerships and legal entities, including their tax services and advisory groups:

(In Euro x 1,000)

2021

2020

Audit of the financial statements

377

234

Other audit procedures

—

—

Tax services

—

—

Other non-audit services

1

—

Total

378

234

39. Remuneration of the Management Board and the

Supervisory Board

The remuneration of the Supervisory Board amounted to €403,000 (2020: €321,000). The total

remuneration paid to or for the benefit of members of the Management Board in 2021 amounted to

€1,023,000 (2020: €737,000). For further details, refer to note 27 of the consolidated financial

statements.

40. Employee Information

The company had no employees in 2021 (2020: nil).

145

Signing

Amsterdam, 22 March 2022

Avantium N.V. (Chamber of Commerce number: 34138918)

Management Board

Tom van Aken, Chief Executive Officer

Bart Welten, Chief Financial Officer

Supervisory Board

Edwin Moses, Chairperson

Margret Kleinsman

Trudy Schoolenberg

Cynthia Arnold

Michelle Jou

The financial statements are authorised for issue by the Management Board on 22 March 2022.

T.B. van AkenB.J.J.V Welten

Chief Executive OfficerChief Financial Officer

146

Other Information

Articles of Association Governing Profit Appropriation

According to article 31 of the company’s Articles of Association, the Annual General Meeting

determines the appropriation of the company’s net result for the year.

147

Independent Auditor’s Report

To: the General Meeting and Supervisory Board of Avantium N.V.

Report on the financial statements 2021

Our opinion

In our opinion:

•the consolidated financial statements of Avantium N.V. together with its subsidiaries (‘the Group’)

give a true and fair view of the financial position of the Group as at 31 December 2021 and of its

result and cash flows for the year then ended in accordance with International Financial Reporting

Standards as adopted by the European Union (‘EU-IFRS’) and with Part 9 of Book 2 of the Dutch

Civil Code;

•the company financial statements of Avantium N.V. (‘the company’) give a true and fair view of the

financial position of the company as at 31 December 2021 and of its result for the year then ended

in accordance with Part 9 of Book 2 of the Dutch Civil Code.

What we have audited

We have audited the accompanying financial statements 2021 of Avantium N.V., Amsterdam. The

financial statements include the consolidated financial statements of the Group and the company

financial statements.

The consolidated financial statements comprise:

•the consolidated statement of financial position as at 31 December 2021;

•the following statements for 2021: the consolidated statements of comprehensive income,

changes in equity and cash flows; and

•the notes, comprising significant accounting policies and other explanatory information.

The company financial statements comprise:

•the company balance sheet as at 31 December 2021;

•the company income statement for the year then ended;

•the notes, comprising the accounting policies applied and other explanatory information.

The financial reporting framework applied in the preparation of the financial statements is EU-IFRS

and the relevant provisions of Part 9 of Book 2 of the Dutch Civil Code for the consolidated financial

statements and Part 9 of Book 2 of the Dutch Civil Code for the company financial statements.

The basis for our opinion

We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing.

We have further described our responsibilities under those standards in the section ‘Our

responsibilities for the audit of the financial statements’ of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our opinion.

Independence

We are independent of Avantium N.V. in accordance with the European Union Regulation on specific

requirements regarding statutory audit of public-interest entities, the ‘Wet toezicht

accountantsorganisaties’ (Wta, Audit firms supervision act), the ‘Verordening inzake de

onafhankelijkheid van accountants bij assuranceopdrachten’ (ViO, Code of Ethics for Professional

Accountants, a regulation with respect to independence) and other relevant independence regulations

in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels

accountants’ (VGBA, Dutch Code of Ethics).

Material uncertainty related to going concern

We draw attention to the going-concern paragraph in the note 2.1.1. Going Concern of the financial

statements, which indicates that the company, given its nature of operations, needs to obtain funding

to finance the ongoing operations and the further development of its technologies. With respect to the

Avantium Renewable Polymers business, the company is finalising obtaining funding for the

construction of the FDCA flagship plant. Subsequently, the company will need to obtain general

funding to finance the other ongoing operations in the course of 2022. This funding has not been

secured yet. These conditions indicate the existence of a material uncertainty which may cast

significant doubt about the company’s ability to continue as a going concern. Our opinion is not

modified in respect of this matter.

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Our audit approach

We designed our audit procedures in the context of our audit of the financial statements as a whole.

Our comments and observations regarding individual key audit matters, our audit approach regarding

fraud risks and our audit approach regarding going concern should be read in this context and not as a

separate opinion or conclusion on these matters.

Overview and context

Avantium N.V. is a chemical technology company, developing and commercialising innovative

renewable chemistry solutions. As of 31 December 2021, the company consisted of three business

units (Renewable Polymers, Renewable Chemistries and Catalysis), which were subject to our audit

procedures as set out in the section ‘The scope of our group audit’. We paid specific attention to the

areas of focus driven by the operations of the Group, as set out below.

Reaching a positive Final Investment Decision (FID) by Avantium management on the construction of

the FDCA Flagship Plant characterised the financial year 2021. Confirming the FID for the Flagship

Plant involved meeting three key conditions: (i) securing sufficient financing, (ii) obtaining sufficient

offtake commitments and (iii) finalising the engineering and establishing the supply chain. The FID is

subject to financial close, which is planned by April 2022, with which Avantium Renewable Polymers

business plan will be fully funded. The ringfenced financing for Avantium Renewable Polymers and

obtaining general funding for the Group is fundamental to the Group’s continuity as noted in section

2.1.1. Going Concern of the annual report.

The Management Board has made plans to successfully obtain financing at the level of the Group

consisting of a combination of equity and government grants to provide for the company’s operations.

Because of the significance of the Management Board’s assertion with respect to the probability of

obtaining financing and the Management Board’s assessment on the Group’s ability to continue as a

going concern, we have paid specific attention to this in our audit.

As part of designing our audit, we determined materiality and assessed the risks of material

misstatement in the financial statements. In particular, we considered where the Management Board

made important judgements, for example, in respect of significant accounting estimates that involved

making assumptions and considering future events that are inherently uncertain. In note 4 Critical

Accounting Estimates and Judgments of the financial statements, the company describes the areas of

judgement in applying accounting policies and the key sources of estimation uncertainty. Given the

significant estimation uncertainty and the related higher inherent risks of material misstatement in the

impairment assessment of property, plant and equipment, we considered this matter as a key audit

matter as set out in the section ‘Key audit matters’ of this report.

Other areas of focus, that were not considered as key audit matters, were project revenue recognition,

accounting for government grants and accounting for share-based payments. As in all of our audits,

we also addressed the risk of management override of controls, including evaluating whether there

was evidence of bias by the Management Board that may represent a risk of material misstatement

due to fraud.

We ensured that the audit team at group level included the appropriate skills and competences which

are needed for the audit of a listed chemical technology company. We therefore included experts and

specialists in the areas of business restructuring, IT audit, valuations and share-based payments in our

team.

Avantium N.V. assessed the possible effects of climate change on their financial position, in the section

The World Around Us of the Management Board Report, Avantium disclosed the climate-related risks.

We discussed their assessment and governance thereof with management and evaluated the

potential impact on the financial position including underlying assumptions and estimates. The impact

of climate change is not considered a key audit matter.

The outline of our audit approach was as follows:

Materiality

•Overall materiality: €750,000.

Audit scope

•All group components were in scope, being

Renewable Polymers, Renewable Chemistries and

Catalysis business unit. We audited all group

components as part of our audit.

•For all components, the group engagement team

performed the work.

Key audit matters

•Material uncertainty related to going concern

(included as a separate section in our report, as

required by the Dutch Standard 570).

•Impairment assessment of property, plant and

equipment.

Materiality

The scope of our audit was influenced by the application of materiality, which is further explained in

the section ‘Our responsibilities for the audit of the financial statements’.

Based on our professional judgement, we determined certain quantitative thresholds for materiality,

including the overall materiality for the financial statements as a whole as set out in the table below.

These, together with qualitative considerations, helped us to determine the nature, timing and extent

of our audit procedures on the individual financial statement line items and disclosures and to evaluate

149

the effect of identified misstatements, both individually and in aggregate, on the financial statements

as a whole and on our opinion.

Overall group materiality

€750,000 (2020: €750,000).

Basis for determining

materiality

We used our professional judgement to determine overall materiality.

We used 4% of the result before income tax as a guideline for our

judgement. As a result of this, we could increase our materiality in

comparison to last year, but we considered it more appropriate to

apply the same materiality level as last year.

Rationale for benchmark

applied

We used the result before income tax as the primary benchmark, a

generally accepted auditing practice, based on our analysis of the

common information needs of the users of the financial statements.

On this basis, we believe that the result before income tax is an

important metric for the financial performance of the company.

We also take misstatements and/or possible misstatements into account that, in our judgement, are

material for qualitative reasons.

We agreed with the Supervisory Board that we would report to them any misstatement identified

during our audit above €37,500 (2020: €37,500) as well as misstatements below that amount that, in

our view, warranted reporting for qualitative reasons.

The scope of our group audit

Avantium N.V. is the parent company of a group of entities. The financial information of this group is

included in the consolidated financial statements of Avantium N.V.

The group engagement team performed the audit work on all components, the group consolidation

and financial statement disclosures. By performing these procedures, we have been able to obtain

sufficient and appropriate audit evidence on the Group's financial information, as a whole, to provide a

basis for our opinion on the financial statements.

Audit approach fraud risks

We identified and assessed the risks of material misstatements of the financial statements due to

fraud. During our audit we obtained an understanding of the company and its environment and the

components of the system of internal control, including the risk assessment process and

management’s process for responding to the risks of fraud and monitoring the system of internal

control and how the Supervisory Board exercises oversight, as well as the outcomes.

We refer to section Risk and Opportunity Management of the annual report where the Management

Board reflects on its response to fraud risk.

We evaluated the design and relevant aspects of the system of internal control and in particular the

fraud risk assessment, as well as among others the Code of Good Business Conduct, whistle blower

procedures and Confidant policies. We evaluated the design and the implementation and, where

considered appropriate, tested the operating effectiveness, of internal controls designed to mitigate

fraud risks.

As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to:

•fraudulent financial reporting by management override of controls;

•fraudulent financial reporting by fraud in revenue recognition.

We evaluated these factors considering significance, likelihood and pervasiveness of each factor and

considered whether they indicate that a risk of material misstatement due to fraud is present. Based

on our evaluation, we identified the following fraud risks and performed the following specific

procedures:

150

Identified fraud risk

Our audit work and observations

Risk of management override

of controls

In our audit we paid attention to the

risk of management override of

controls, including the risk of potential

misstatements as a result of fraud in

estimates. This included risks of

potential misstatements due to fraud

based on an analysis of potential

interests of management.

In this context we paid specific

attention to tendencies in judgements

and conclusions with respect to

estimates as there could be incentives

for- and pressure on management to

realize results as included in the

budget.

We have, to the extent relevant to our audit, evaluated the

design of the internal control environment that reduces the

risk of breach of internal control.

Also, we paid specific attention to user access

management in the IT system.

We selected journal entries based on risk criteria and

conducted specific audit activities for these entries, as part

of which we also paid attention to significant transactions

outside the normal course of business.

We also performed specific audit procedures regarding

important management’s estimates as it relates to

impairment assessment of property, plant and equipment,

project cost estimates as well as government grants and

share-based payments related estimates. In our

assessment, we paid specific attention to the inherent risk

of bias of the management on estimates.

Our audit procedures did not lead to specific indications of

fraud or suspicions of fraud with respect to management

override of controls.

We incorporated elements of unpredictability in our audit. We also considered the outcome of our

other audit procedures and evaluated whether any findings were indicative of fraud or noncompliance.

We considered available information and made enquiries of relevant executives, finance department,

directors and the Supervisory Board. This did not lead to indications for fraud potentially resulting in

material misstatements.

Identified fraud risk

Our audit work and observations

Risk of fraud in revenue recognition

As part of our risk assessment and based on

a presumption that there are risks of fraud in

revenue recognition, we evaluated which

types of revenue transactions or assertions

give rise to the risk of fraud in revenue

recognition.

Avantium Catalysis Services & Systems is

the company’s revenue-generating business.

Avantium recognises revenue over time or at

point in time depending on the agreed

contract performance obligations. There

might be an incentive for management to

shift revenue between the periods in order to

satisfy stakeholders and-/or reach KPIs

outlined in compensation plans.

We consider cut-off as an assertion relevant

for the risk of fraud in revenue recognition for

catalysis service projects and testing

systems.

Where relevant to our audit, we assessed the design

of the internal control measures related to revenue

reporting and in the processes for generating and

processing journal entries related to the revenue.

We have used a primarily substantive testing

approach with respect to the cost to complete by

performing procedures to compare actual hours with

budgeted hours and to determine the progress of the

contracts.

Our audit procedures did not lead to specific

indications of fraud or suspicions of fraud with

respect to revenue recognition.

151

Audit approach going concern

As disclosed in section ‘Funding Avantium’ in note 2.1.1 in the financial statements, management

performed their assessment of the entity’s ability to continue as a going concern for the foreseeable

future and concluded that there is a material uncertainty which may cast significant doubt about the

company’s ability to continue as a going concern.

Due to its nature as a technology development company with significant R&D expenses and negative

cash flows over the past years and in the near future, Avantium remains dependent on additional

external funding and regularly needs new financing sources.

Management’s most significant assumptions underlying their plans/actions to address these

conditions that indicate the existence of a material uncertainty which may cast significant doubt about

the company’s ability to continue as a going concern (hereafter: going concern risks) are:

•realisation of a fully funded business plan for the construction of the FDCA flagship plant of

Avantium Renewable Polymers, subject to Financial Close, which is planned by April 2022;

•successful raise of additional funding for the technologies of the company other than Avantium

Renewable Polymers, and

•management’s forecast of the monthly cash spent for the other technologies.

In order to evaluate the appropriateness of management’s use of the going concern basis of

accounting, including management’s expectation that their plans sufficiently address the identified

going concern risks and the adequacy of the related disclosures, we, with support of business

restructuring specialists, amongst others performed the following procedures:

•Considered whether management’s going concern assessment includes all relevant information of

which we are aware as a result of our audit, inquire with management regarding management's

most important assumptions underlying their going concern assessment;

•Analysed the financial position per balance sheet date compared to prior year as well as the

liquidity scenarios and sensitivity analysis, including the assessment of the progress towards the

financial close of the company and towards additional equity funding;

•Read minutes of the meetings of shareholders, those charged with governance and relevant

committees, as well as agreements reached with the equity partners, banks and other investors for

reference to the progress towards the financial close for the FDCA flagship plant of Avantium

Renewable Polymers financing package and additional equity funding for the other technologies;

•Evaluated the latest available cash flow forecast and sensitivity analysis, corroborated these with

management’s budgets, performed look-back procedures, assessed if the cash flow forecast is in

line with all relevant information of which we are aware as a result of our audit;

•Assessed the disclosure of the facts and circumstances around the financing of the FDCA flagship

plant and the funding of the other ongoing operations in the financial statements;

•Evaluated whether the material uncertainty with respect to going concern triggers accounting

entries such as impairment of assets;

•Inquired with management as to their knowledge of going concern risks beyond the period of

management’s assessment.

We evaluated whether the going concern risks including management’s plans/actions to address the

identified risks and the most significant underlying assumptions have been sufficiently described in

note 2.1.1. Going Concern of the financial statements. We found the disclosure in note 2.1.1. Going

Concern of the financial statements, where management disclosed conditions that indicate the

existence of a material uncertainty which may cast significant doubt about the company’s ability to

continue as a going concern, to be adequate.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in

the audit of the financial statements. We have communicated the key audit matters to the Supervisory

Board. The key audit matters are not a comprehensive reflection of all matters identified by our audit

and that we discussed. In this section, we described the key audit matters and included a summary of

the audit procedures we performed on those matters.

We addressed the key audit matters in the context of our audit of the financial statements as a whole,

and in forming our opinion thereon. We do not provide separate opinions on these matters or on

specific elements of the financial statements. Any comment or observation we made on the results of

our procedures should be read in this context.

In addition to the matter described in the section ‘Material uncertainty related to going concern’ we

have determined the matter described below to be a key audit matter to be communicated in our

report.

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Key audit matter

Our audit work and observations

Impairment assessment of property, plant and equipment

(Refer to note 5 in the annual report)

As at 31 December 2021, the balance of property, plant and equipment of the company comprised

€23.3 million. The valuation of this balance depends on the substantiation of the company’s

technologies potential.

As part of the annual closing process and triggered by an accident in the demonstration plant in

Delfzijl as well as the material uncertainty related to going concern, the company performed an

assessment of the recoverable amounts for the relevant assets. Considering a positive Final

Investment Decision (FID) to construct the FDCA Flagship Plant, no impairment triggers were

identified as it relates to Avantium Renewable Polymers. The Management Board concluded that the

assets were not impaired as at 31 December 2021.

For purposes of performing the recoverability assessment, the Management Board identifies the

relevant cash-generating units (‘CGUs’). The recoverable amount of the underlying CGUs is

determined as the higher of the fair value less cost of disposal or the value in use. The assessment

contains a number of significant assumptions, both quantitative and qualitative, including revenue

growth rate, cost structure, discount rate and timely completion of development projects. Changes in

these assumptions may lead to potential impairment charges on the carrying value of the assets.

The use of assumptions in the assessment also requires estimates and judgment which may be

affected by unexpected future market, economic or political conditions. With respect to Avantium

Renewable Chemistries a fair value less cost of disposal model was applied and the Management

Board concluded that no impairment was required.

We focused on this area as the Company’s assets are significant to the company’s operations and

the assessment performed by the Management Board involved significant estimates and judgement.

We obtained the Management Board’s impairment assessment, which is based on the models calculating

the recoverable amount using the fair value less cost of disposal method based on cash flow projections at

the relevant CGU level.

Our audit of this matter focused on the Management Board’s impairment assessment, which included the

following procedures:

•Assessing the methodology used by the Management Board to estimate fair value less cost of

disposal, assessing the accuracy and relevance of the input data to supporting evidence, such as

approved budgets and considering the reasonableness of these budgets by comparing the budgets to

the historical results.

•Assessing the appropriateness of the cash flows projection in calculation of the fair value less cost of

disposal of these assets, challenging the reasonableness of key assumptions based on our knowledge

of the business and industry, by comparing the assumptions to historical results and published market

and industry data, and comparing the current year’s actual results with the prior year forecast and

other relevant information.

•Performing a sensitivity analysis in consideration of the potential impact of reasonably possible

downside changes in these key assumptions.

We note that valuation of Avantium’s property, plant and equipment is dependent on management ability

to timely attract new funding.

Based on the audit procedures performed, we found that the conclusion made by the Management Board

that no impairment was required was supported by reasonable assumptions, that were consistently

applied and supported by available evidence.

153

Report on the other information included in the annual report

The annual report contains other information. This includes all information in the annual report in

addition to the financial statements and our auditor’s report thereon.

Based on the procedures performed as set out below, we conclude that the other information:

•is consistent with the financial statements and does not contain material misstatements;

•contains all the information regarding the directors’ report and the other information that is

required by Part 9 of Book 2 and regarding the remuneration report required by the sections

2:135b and 2:145 subsection 2 of the Dutch Civil Code.

We have read the other information. Based on our knowledge and the understanding obtained in our

audit of the financial statements or otherwise, we have considered whether the other information

contains material misstatements.

By performing our procedures, we comply with the requirements of Part 9 of Book 2 and section

2:135b subsection 7 of the Dutch Civil Code and the Dutch Standard 720. The scope of such

procedures was substantially less than the scope of those procedures performed in our audit of the

financial statements.

The Management Board is responsible for the preparation of the other information, including the

directors’ report and the other information in accordance with Part 9 of Book 2 of the Dutch Civil Code.

The Management Board and the Supervisory Board are responsible for ensuring that the remuneration

report is drawn up and published in accordance with sections 2:135b and 2:145 subsection 2 of the

Dutch Civil Code.

Report on other legal and regulatory requirements and ESEF

Our appointment

We were appointed as auditors of Avantium N.V.by the Supervisory Board following the passing of a

resolution by the shareholders at the annual general meeting held on 19 May 2021. Our appointment

has been renewed annually by shareholders and now represents a total period of uninterrupted

engagement of 18 years.

European Single Electronic Format (ESEF)

Avantium N.V. has prepared the annual report, including the financial statements, in ESEF. The

requirements for this format are set out in the Commission Delegated Regulation (EU) 2019/815 with

regard to regulatory technical standards on the specification of a single electronic reporting format

(these requirements are hereinafter referred to as: the RTS on ESEF).

In our opinion, the annual report prepared in XHTML format, including the partially tagged

consolidated financial statements as included in the reporting package by Avantium N.V., has been

prepared in all material respects in accordance with the RTS on ESEF.

The Management Board is responsible for preparing the annual report, including the financial

statements, in accordance with the RTS on ESEF, whereby the Management Board combines the

various components into a single reporting package. Our responsibility is to obtain reasonable

assurance for our opinion whether the annual report in this reporting package, is in accordance with

the RTS on ESEF.

Our procedures, taking into account Alert 43 of the NBA (Royal Netherlands Institute of Chartered

Accountants), included amongst others:

•Obtaining an understanding of the entity’s financial reporting process, including the preparation of

the reporting package.

•Obtaining the reporting package and performing validations to determine whether the reporting

package, containing the Inline XBRL instance document and the XBRL extension taxonomy files,

has been prepared, in all material respects, in accordance with the technical specifications as

included in the RTS on ESEF.

•Examining the information related to the consolidated financial statements in the reporting

package to determine whether all required taggings have been applied and whether these are in

accordance with the RTS on ESEF.

No prohibited non-audit services

To the best of our knowledge and belief, we have not provided prohibited non-audit services as

referred to in article 5(1) of the European Regulation on specific requirements regarding statutory audit

of public-interest entities.

Services rendered

The services, in addition to the audit, that we have provided to the company or its controlled entities,

for the period to which our statutory audit relates, are disclosed in note 35 to the financial statements.

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Responsibilities for the financial statements and the audit

Responsibilities of the Management Board and the Supervisory Board for the

financial statements

The Management Board is responsible for:

•the preparation and fair presentation of the financial statements in accordance with EU-IFRS and

Part 9 of Book 2 of the Dutch Civil Code; and for

•such internal control as the Management Board determines is necessary to enable the preparation

of the financial statements that are free from material misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, the Management Board is responsible for

assessing the company’s ability to continue as a going-concern. Based on the financial reporting

frameworks mentioned, the Management Board should prepare the financial statements using the

going-concern basis of accounting unless the Management Board either intends to liquidate the

company or to cease operations or has no realistic alternative but to do so. The Management Board

should disclose in the financial statements any event and circumstances that may cast significant

doubt on the company’s ability to continue as a going concern.

The Supervisory Board is responsible for overseeing the company’s financial reporting process.

Our responsibilities for the audit of the financial statements

Our responsibility is to plan and perform an audit engagement in a manner that allows us to obtain

sufficient and appropriate audit evidence to provide a basis for our opinion. Our objectives are to

obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error and to issue an auditor’s report that includes our

opinion. Reasonable assurance is a high but not absolute level of assurance, which makes it possible

that we may not detect all material misstatements. Misstatements may arise due to fraud or error.

They are considered material if, individually or in the aggregate, they could reasonably be expected to

influence the economic decisions of users taken on the basis of the financial statements.

Materiality affects the nature, timing and extent of our audit procedures and the evaluation of the

effect of identified misstatements on our opinion.

A more detailed description of our responsibilities is set out in the appendix to our report.

Rotterdam, 22 March 2022

PricewaterhouseCoopers Accountants N.V.

Original has been signed by A.F. Westerman RA

155

Appendix to our auditor’s report on the financial statements 2021 of Avantium N.V.

In addition to what is included in our auditor’s report, we have further set out in this appendix our

responsibilities for the audit of the financial statements and explained what an audit involves.

The auditor’s responsibilities for the audit of the financial statements

We have exercised professional judgement and have maintained professional scepticism throughout

the audit in accordance with Dutch Standards on Auditing, ethical requirements and independence

requirements. Our audit consisted, among other things of the following:

•Identifying and assessing the risks of material misstatement of the financial statements, whether

due to fraud or error, designing and performing audit procedures responsive to those risks, and

obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The

risk of not detecting a material misstatement resulting from fraud is higher than for one resulting

from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the

intentional override of internal control.

•Obtaining an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the company’s internal control.

•Evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the Management Board.

•Concluding on the appropriateness of the Management Board’s use of the going-concern basis of

accounting, and based on the audit evidence obtained, concluding whether a material uncertainty

exists related to events and/or conditions that may cast significant doubt on the company’s ability

to continue as a going concern. If we conclude that a material uncertainty exists, we are required

to draw attention in our auditor’s report to the related disclosures in the financial statements or, if

such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit

evidence obtained up to the date of our auditor’s report and are made in the context of our opinion

on the financial statements as a whole. However, future events or conditions may cause the

company to cease to continue as a going concern.

•Evaluating the overall presentation, structure and content of the financial statements, including the

disclosures, and evaluating whether the financial statements represent the underlying transactions

and events in a manner that achieves fair presentation.

Considering our ultimate responsibility for the opinion on the consolidated financial statements, we are

responsible for the direction, supervision and performance of the group audit. In this context, we have

determined the nature and extent of the audit procedures for components of the Group to ensure that

we performed enough work to be able to give an opinion on the financial statements as a whole.

Determining factors are the geographic structure of the Group, the significance and/or risk profile of

group entities or activities, the accounting processes and controls, and the industry in which the Group

operates. On this basis, we selected group entities for which an audit or review of financial information

or specific balances was considered necessary.

We communicate with the Supervisory Board regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies in internal

control that we identify during our audit. In this respect, we also issue an additional report to the Audit

Committee in accordance with article 11 of the EU Regulation on specific requirements regarding

statutory audit of public-interest entities. The information included in this additional report is

consistent with our audit opinion in this auditor’s report.

We provide the Supervisory Board with a statement that we have complied with relevant ethical

requirements regarding independence, and to communicate with them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, related

actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Supervisory Board, we determine those matters that were of

most significance in the audit of the financial statements of the current period and are therefore the

key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes

public disclosure about the matter or when, in extremely rare circumstances, not communicating the

matter is in the public interest.

156

157

About This Report

Scope of the Annual Report

This Annual Report covers Avantium N.V., including all our

consolidated entities as stated in ‘Note 2.2.1 subsidiaries’.

Our financial and non-financial results are presented in one

report and relate to all consolidated entities for the period of

January 1 until December 31, 2021, unless stated otherwise.

Reporting Guidelines

Integrated reporting and transparency have become

increasingly important over the past few years. As such,

Avantium prepared this Annual Report in line with the IIRC

Integrated Reporting (IR) framework.

For the non-financial information included in this report, we

followed the Global Reporting Initiative (GRI) Standards (GRI 1:

Foundation 2021) and SASB (Sustainability Accounting

Standards Board) Standards. A GRI and SASB content index,

which has been included under supplementary information,

shows where in the Annual Report information can be found.

Reporting Structure

This Annual Report outlines how Avantium creates value for our

stakeholders in the long term. Our value creation model is

presented at the beginning of the report, showing how our

vision, mission and actions create a positive impact for our direct

value chain and beyond. We present the cohesion of the

different elements of our strategy, material topics, sustainability

targets and the UN’s Sustainable Development Goals, KPIs, and

related risks.

Assurance

Currently, the financial data and related information is covered

by external assurance. For non-financial information, we

decided to not seek external assurance at this moment.

Safe Harbor Statement

This Annual Report may include forward-looking statements.

Other than reported financial results and historical information,

all statements featured in this Annual Report, including, without

limitation, those regarding our financial position, business

strategy and management plans and objectives for future

operations, are forward-looking statements. These forward-

looking statements are based on our current expectations and

projections about future events and are subject to risks and

uncertainties that could cause actual results to differ materially

from those expressed in the forward-looking statements. Many

of these risks and uncertainties relate to factors that are beyond

Avantium’s ability to control or estimate precisely, such as future

market conditions, the behaviour of other market participants

and the actions of governmental regulators. Readers are

cautioned not to place undue reliance on these forward-looking

statements, which speak only as of the date of this Annual

Report and are subject to change without notice. Other than as

required by applicable law or the applicable rules of any

exchange on which our securities may be traded, we have no

intention or obligation to update forward-looking statements.

158

Our Contribution to the SDGs

SDG 3: Good Health and Well-Being

Our Contribution

We embed our safety culture into everything we do, striving to be an accident- and

incident-free workplace. We have robust safety procedures and systems in place, and

obligatory safety training is provided to all new joiners. All Avantium employees are

committed to our Golden Safety Rules.

Material Topics

•Occupational Health & Safety

•Health & Well-Being

Chain Reaction

2030Targets

Our Operations

•In 2023, all our plants will achieve ISO45001 certification.

Our People

•By 2030, we will be one of the 10 best companies to work for in the Netherlands.

Subtargets

3.9: By 2030, substantially reduce the number of deaths and illnesses from hazardous

chemicals and air, water and soil pollution and contamination.

159

SDG 4: Quality Education

Our Contribution

Avantium has a well-established collaboration with the University of Amsterdam,

accelerating product development using electrochemistry and linking the company to

pioneering research. Several PhD students are working on their theses at Avantium,

while contributing to the development of our technologies.

Given the scale of the climate emergency and the need to shift away from fossil sources,

Avantium wants to inspire the next generation of scientists to embrace sustainable

chemistry. For long-term success, we need an inspired and diverse workforce, and we

therefore engage with students at key moments throughout their education.

Material Topics

•Next Generation of Scientists

•Diversity & Inclusion

Chain Reaction

2030Targets

Our People

•By 2030, 100,000 students will have been engaged by Avantium on using chemistry

for a fossil-free world.

•By 2025, we will improve upon our baseline of being an inclusive and diverse

company, ensuring that we are representative of the societies and communities we

operate within.

Subtargets

4.4: By 2030, substantially increase the number of youth and adults who have relevant

skills, including technical and vocational skills, for employment, decent jobs and

entrepreneurship.

4.7: By 2030, ensure that all learners acquire the knowledge and skills needed to promote

sustainable development, including, among others, through education for sustainable

development and sustainable lifestyles, human rights, gender equality, promotion of a

culture of peace and non-violence, global citizenship and appreciation of cultural diversity

and of culture’s contribution to sustainable development.

SDG 5: Gender Equality

Our Contribution

We know that our differences unite us, and that diversity of thought has been shown to

breed creativity and drive innovation. We have therefore made Avantium a place where

everyone belongs: an international community with a universal goal: to create a fossil-

free chemical industry. Our differences strengthen us, lead to new ways of doing things

and help us meet the needs of our partners and stakeholders. We cultivate inclusion,

equality and diversity for all in our workplace.

Material Topics

•Diversity & Inclusion

•Talent Attraction & Retention

Chain Reaction

2030Targets

Our People

•By 2030, we will be one of the 10 best companies to work for in the Netherlands.

•By 2025, we will improve upon our baseline of being an inclusive and diverse

company, ensuring that we are representative of the societies and communities we

operate within.

Subtargets

5.5: Ensure women’s full and effective participation and equal opportunities for

leadership at all levels of decision-making in political, economic and public life.

160

SDG 7: Affordable and Clean Energy

Our Contribution

Our 2030 target states that Avantium will deliver net-zero carbon emissions from our

own operations (scope 1 and 2) as well as conducting a baseline assessment of our

scope 3 emissions and establishing a plan for reducing these emissions in line with

climate science. To achieve this target, Avantium will switch to 100% renewable

electricity.

Material Topics

•Greenhouse Gas Emissions of Our Operations

Chain Reaction

2030Targets

Our Operations

•By 2030, Avantium will deliver net-zero carbon emissions from our own operations.

Subtargets

7a: By 2030, enhance international cooperation to facilitate access to clean energy

research and technology, including renewable energy, energy efficiency and advanced

and cleaner fossil-fuel technology, and promote investment in energy infrastructure and

clean energy technology.

SDG 8: Decent Work and Economic Growth

Our Contribution

We promote inclusive and sustainable economic growth by working towards our mission

to transition the chemical industry to renewable feedstock and to secure a sustainable

future for all.

We strive to be a supportive employer where everyone feels they belong and have equal

opportunities. We have an inclusive work environment and aim to ensure that our people

have a good work–life balance. We also offer competitive primary and secondary

benefits including healthcare, paid holiday time, meal plans and transportation

programmes.

Material Topics

•Talent Attraction & Retention

•Next Generation of Scientists

•Diversity & Inclusion

Chain Reaction

2030Targets

Our People

•By 2030, we will be one of the 10 best companies to work for in the Netherlands.

•By 2030, 100,000 students will have been engaged by Avantium on using chemistry

for a fossil-free world.

•By 2025, we will improve upon our baseline of being an inclusive and diverse

company, ensuring that we are representative of the societies and communities we

operate within.

Subtargets

8.2: Achieve higher levels of economic productivity through diversification, technological

upgrading and innovation, including through a focus on high-value added and labour-

intensive sectors.

8.5: By 2030, achieve full and productive employment and decent work for all women

and men, including for young people and persons with disabilities, and equal pay for

work of equal value.

161

SDG 9: Industry, Innovation and Infrastructure

Our Contribution

The ground-breaking technologies Avantium develops are based on the use of

renewable feedstocks, underpinning our commitment to being a circular business. By

using Avantium technologies, it is possible to produce sustainable alternatives for fossil-

based chemicals and materials including plastic bottles for drinks, films for food

packaging and electronics and fibres for textiles, furniture and vehicles. Our strategy is to

develop licensing models for our renewable and sustainable technologies, scaling up

production and enabling economies of scale. This will allow Avantium to generate a more

circular impact.

Avantium specialises in accelerated R&D, applying its scientific and research expertise to

improve the efficiency of existing processes and invent new technologies for the chemical

industry. Our Renewable Polymers, Renewable Chemistries and Catalysis business units

all contribute to significant CO2 savings either through increased efficiency or novel

technologies that have an improved environmental impact over the fossil-based

incumbent.

Material

Topics

•Environmental Impact of Our Technologies

•Circularity

•Climate Advocacy

Chain Reaction

2030Targets

Our Technologies

•By 2030, Avantium’s technologies will deliver 1.5 million tonnes of CO2m savings

across the chemical industry.

•By 2030, Avantium will become a circular business.

Our Leadership

•100% of our advocacy will focus on transforming the chemical industry to become

circular and fossil-free.

Subtargets

9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable,

with increased resource-use efficiency and greater adoption of clean and

environmentally sound technologies and industrial processes, with all countries taking

action in accordance with their respective capabilities.

9.5: Enhance scientific research, upgrade the technological capabilities of industrial

sectors in all countries, in particular developing countries, including, by 2030,

encouraging innovation and substantially increasing the number of research and

development workers per 1 million people and public and private research and

development spending.

SDG 12: Responsible consumption and production

Our Contribution

The ground-breaking technologies Avantium develops are based on the use of

renewable (plant-based or air-based) feedstocks. Plant-based feedstocks come from

nature – these can be agricultural crops, residues from agriculture or forestry or waste

material that would otherwise be incinerated. Balancing productivity with the long-term

needs of land, water and biodiversity is an essential element of sustainable technologies

as well as the key to the future of using biomass as a major feedstock in the chemical

industry.

When developing new materials and technologies, we see it as our responsibility to avoid

creating waste and pollution before we introduce new products to the market.

Material Topics

•Environmental Impact of Our Technologies

•Circularity

•Greenhouse Gas Emissions of Our Operations

•Hazardous Materials

•Non-Hazardous Materials

•Product Stewardship

Chain Reaction

2030Targets

Our Technologies

•By 2030, Avantium’s technologies will deliver 1.5 million tonnes of CO2 savings

across the chemical industry.

•By 2030, Avantium will become a circular business.

•By 2030, 100% of our renewable polymers and chemistries plant-based feedstock

will come from sustainable sources.

Our Operations

•By 2030, Avantium will deliver net-zero carbon emissions from our own operations.

•By 2025, Avantium will send zero non-hazardous waste to incineration and landfill.

Subtargets

12.4: By 2020, achieve the environmentally sound management of chemicals and all

wastes throughout their life cycle, in accordance with agreed international frameworks,

and significantly reduce their release to air, water and soil in order to minimise their

adverse impacts on human health and the environment.

12.5: By 2030, substantially reduce waste generation through prevention, reduction,

recycling and reuse.

162

SDG 13: Climate Action

Our Contribution

The global climate breakdown demands an entirely new way of doing business, moving

the world away from its dependence on fossil-based resources towards a more

sustainable future. Avantium is focused on accelerating that transition and we will help

our customers and partners embrace the essential technologies and products of the

future and transition to circular chemicals and materials. We want to lead by example,

and we demand more from ourselves to step up to address the climate crisis. The scale of

the challenge demands that we actively engage in partnerships and collaborations with

a broad range of stakeholders.

Material Topics

•Environmental Impact of Our Technologies

•Circularity

•Sustainable Feedstock

•Climate Advocacy

•Corporate Partnerships

•Climate-Related Regulation

Chain Reaction

2030Targets

Our Technologies

•By 2030, Avantium’s technologies will deliver 1.5 million tonnes of CO2 savings

across the chemical industry.

•By 2030, Avantium will become a circular business.

•By 2030, 100% of our renewable polymers and chemistries plant-based feedstock

will come from sustainable sources.

Our Leadership

•100% of our advocacy will focus on transforming the chemical industry to become

circular and fossil-free.

Subtargets

13.3: Improve education, awareness-raising and human and institutional capacity on

climate change mitigation, adaptation, impact reduction and early warning.

SDG 15: Life on Land

Our Contribution

In order to ensure the integrity of our feedstocks, we aim to only partner with suppliers

that actively engage in sustainable practices. We will strive to adopt independently

certified sustainable standards of feedstock, but when these are not available or

appropriate, we will create our own sustainability standards in consultation with subject

matter experts and leading NGOs. Finally, we will incorporate sustainable sourcing

requirements into the licence agreements of our renewable technologies. This will ensure

that as our technologies are deployed, they will be a beacon not only for renewable

chemistry but also for promoting sustainable sourcing of plant-based materials.

Material

Topics

•Sustainable Feedstock

Chain Reaction

2030Targets

Our Technologies

•By 2030, 100% of our renewable polymers and chemistries plant-based feedstock

will come from sustainable sources.

Subtargets

15.2: By 2020, promote the implementation of sustainable management of all types of

forests, halt deforestation, restore degraded forests and substantially increase

afforestation and reforestation globally.

163

SDG 17: Partnerships for the Goals

Our Contribution

Our goal is to be a world leader in renewable and sustainable chemistry technology

solutions, and to commercialise them through partnerships and licensing.

We aim to license our sustainable technologies: aside from being the most capital-

efficient way to commercialise our technologies, we believe it is also the fastest way to

bring our sustainable solutions to market.

The scale of the climate challenge demands that we actively engage in partnerships and

collaborations with a broad range of stakeholders.

Material

Topics

•Climate Advocacy

•Stakeholder Engagement

•Corporate Partnerships

•Climate-Related Regulation

Chain Reaction

2030Targets

Our Leadership

•100% of our advocacy will focus on transforming the chemical industry to become

circular and fossil-free.

Subtargets

17.6: Enhance regional and international cooperation on and access to science,

technology and innovation and enhance knowledge sharing on mutually agreed terms,

including through improved coordination among existing mechanisms, in particular at the

United Nations level, and through a global technology facilitation mechanism.

17.7: Promote the development, transfer, dissemination and diffusion of environmentally

sound technologies.

17.16: Enhance the global partnership for sustainable development, complemented by

multi-stakeholder partnerships that mobilise and share knowledge, expertise, technology

and financial resources, to support the achievement of the sustainable development

goals in all countries.

164

GRI and SASB Content Index

GRI 2: General Disclosures 2021

2-1 Organizational details

Financial Statements, Note 1 General Information

2-2 Entities included in the organization’s sustainability reporting

Financial Statements, Note 2.2.1 Subsidiaries

The Value We Created in 2021

About This Report

2-3 Reporting period, frequency and contact point

About This Report

Back cover

2-5 External assurance

About This Report

2-6 Activities, value chain and other business relationships

Who We Are

Value Creation Model

The World Around Us

Our Strategy

Business Highlights 2021

2-7 Employees

Our People - Diversity & Inclusion

2-9 Governance structure and composition

Report of the Supervisory Board

2-10 Nomination and selection of the highest governance body

Corporate Governance

Corporate Website: https://www.avantium.com/corporate-governance/

2-11 Chair of the highest governance body

Message from the CEO

Management Board Biographies

Corporate Governance

2-12 Role of the highest governance body in overseeing the management of impacts

Corporate Governance

2-15 Conflicts of interest

Our Leadership and Governance - Responsible Business Principles

2-17 Collective knowledge of the highest governance body

Management Board Biographies

2-18 Evaluation of the performance of the highest governance body

Corporate Governance

Statement of Use

Avantium N.V. has reported the information cited in this GRI and SASB content index for the period 1 January 2021 to 31 December 2021 with reference to the GRI

Standards and SASB Standards

GRI 1 Used

GRI 1: Foundation 2021

Reporting Criteria (GRI and

SASB)

Disclosure

Location in annual report

165

2-19 Remuneration policies

Remuneration Report 2021

2-20 Process to determine remuneration

Remuneration Report 2021

Corporate Governance

2-21 Annual total compensation ratio

Remuneration Report 2021

2-22 Statement on sustainable development strategy

Message from the CEO

Our Strategy

2-23 Policy commitments

Our People

Our Leadership and Governance - Responsible Business Principles

2-24 Embedding policy commitments

Our People

Our Leadership and Governance - Responsible Business Principles

2-26 Mechanisms for seeking advice and raising concerns about ethics

Corporate Website: https://www.avantium.com/corporate-governance/

2-27 Compliance with laws and regulations

Corporate Website: https://www.avantium.com/corporate-governance/

2-28 Membership associations

Climate Advocacy

Stakeholder Engagement

Climate-Related Regulation

2-29 Approach to stakeholder engagement

Stakeholders and Materiality

Stakeholder Engagement

GRI 3: Material Topics 2021

3-1 Process to determine material topics

Stakeholders and Materiality

3-2 List of material topics

Stakeholders and Materiality

About This Report

3-3 Management of material topics

The Value We Created in 2021

GRI 201: Economic Performance

2016

201-1 Direct economic value generated and distributed

Consolidated Financial Statements

201-2 Financial implications and other risks and opportunities due to climate change

World Around Us

201-3 Defined benefit plan obligations and other retirement plans

Employee Benefits note 2.18 and Share-Based Payment note 12

201-4 Financial assistance received from government

Other Income note 18

GRI 205: Anti-corruption 2016

205-1 Operations assessed for risks related to corruption

Risks & Opportunities

Statement of Use

Avantium N.V. has reported the information cited in this GRI and SASB content index for the period 1 January 2021 to 31 December 2021 with reference to the GRI

Standards and SASB Standards

GRI 1 Used

GRI 1: Foundation 2021

Reporting Criteria (GRI and

SASB)

Disclosure

Location in annual report

166

205-3 Confirmed incidents of corruption and actions taken

Responsible Business Principles

GRI 206: Anti-competitive

Behavior 2016

206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices

Responsible Business Principles

GRI 207: Tax 2019

207-1 Approach to tax

Current and Deferred tax note 2.17; Income tax expense note 23

GRI 306: Waste 2020

306-1 Waste generation and significant waste-related impacts

Hazardous Materials Management

306-2 Management of significant waste-related impacts

Hazardous Materials Management; Non-Hazardous Waste Management

306-3 Waste generated

Hazardous Materials Management; Non-Hazardous Waste Management

306-4 Waste diverted from disposal

Hazardous Materials Management; Non-Hazardous Waste Management

306-5 Waste directed to disposal

Hazardous Materials Management; Non-Hazardous Waste Management

GRI 403: Occupational Health

and Safety 2018

403-1 Occupational health and safety management system

Occupational Health & Safety

403-2 Hazard identification, risk assessment, and incident investigation

Occupational Health & Safety

403-4 Worker participation, consultation, and communication on occupational health

and safety

Occupational Health & Safety

403-5 Worker training on occupational health and safety

Occupational Health & Safety

403-6 Promotion of worker health

Health & Well-Being

403-8 Workers covered by an occupational health and safety management system

Occupational Health & Safety

403-9 Work-related injuries

Occupational Health & Safety

SASB: Workforce Health & Safety

RT-CH-320a.2

Description of efforts to assess, monitor, and reduce exposure of employees and

contract workers to long-term (chronic) health risks

Occupational Health & Safety

SASB: Safety & Environmental

Stewardship of Chemicals RT-

CH-410b.2

Discussion of strategy to (1) manage chemicals of concern and (2) develop

alternatives with reduced human and/or environmental impact

Business Highlights 2021; Environmental Impact of Our Technologies; Product

Stewardship

SASB: Management of the Legal

& Regulatory Environment RT-

CH-530a.1

Discussion of corporate positions related to government regulations and/or policy

proposals that address environmental and social factors affecting the industry

Supply Chain Responsibility; Gender and Background; Climate-Related Regulation

GRI 405: Diversity and Equal

Opportunity 2016

405-1 Diversity of governance bodies and employees

Diversity & Inclusion; Report of the Supervisory Board

GRI 406: Non-discrimination

2016

406-1 Incidents of discrimination and corrective actions taken

Code of Conduct

Statement of Use

Avantium N.V. has reported the information cited in this GRI and SASB content index for the period 1 January 2021 to 31 December 2021 with reference to the GRI

Standards and SASB Standards

GRI 1 Used

GRI 1: Foundation 2021

Reporting Criteria (GRI and

SASB)

Disclosure

Location in annual report

167

GRI 413: Local Communities 2016

413-1 Operations with local community engagement, impact assessments, and

development programs

Next Generation of Scientists

SASB: Community Relations RT-

CH-210a.1

Discussion of engagement processes to manage risks and opportunities associated

with community interests

Stakeholder Engagement

GRI 416: Customer Health and

Safety 2016

416-1 Assessment of the health and safety impacts of product and service

categories

Product Stewardship

GRI 418: Customer Privacy 2016

418-1 Substantiated complaints concerning breaches of customer privacy and losses

of customer data

IP & Data Protection

Statement of Use

Avantium N.V. has reported the information cited in this GRI and SASB content index for the period 1 January 2021 to 31 December 2021 with reference to the GRI

Standards and SASB Standards

GRI 1 Used

GRI 1: Foundation 2021

Reporting Criteria (GRI and

SASB)

Disclosure

Location in annual report

168

Glossary

This glossary has been carefully compiled and we believe it to

be accurate. Definitions may however be based on Avantium’s

interpretation and such use of terms may differ from the

meaning assigned to them elsewhere in the industry or

otherwise.

Batchington

Avantium’s proprietary Batchington platform accelerates

customers’ research and development through screening and

optimisation experiments. It consists of two reactor blocks, each

containing 12 small-scale pressure vessels, meaning that 12

experiments can be run in parallel. It offers a new way of

carrying out high-pressure chemo-catalytic testing, and will

bring benefits to our customers in fields like petrochemicals, fine

chemicals and renewables.

Bio-Based Economy

A bio-based economy exists when predominantly plant-based

materials (i.e. biomass rather than fossil-based raw materials

like petroleum) are used as a feedstock for making the

chemicals, materials and products we consume.

Bio-Based Plastic

These are plastics derived from man-made polymers that can

be made from building blocks that originate from biological

(once living) systems. Most of these building blocks (monomers)

are derived from sugars. Examples are FDCA and PEF. At

Avantium, we prefer to call PEF and FDCA plant-based plastics,

in order to prevent confusion with the term bioplastic. Bioplastic

is a plastic derived from a biopolymer, such as DNA, insulin,

cellulose or starch.

Biodegradability/Biodegradation

Biodegradation is the breakdown of organic matter by

microorganisms, such as bacteria and fungi, to produce CO2 and

water. PET is considered to break down in 300-500 years. The

first results of tests by Organic Waste Systems Belgium show

that PEF degrades much faster than PET under industrial

composting conditions (full biodegradation in 250-400 days at

58° Celsius in soil). The degradability of PEF in the natural

environment is under investigation via a 10-year field trial and

we have observed that degradation starts within the first year.

PEF degradation does not occur during normal use of PEF. Only

when a PEF product unintentionally ends up in nature, does the

presence of bacteria and fungi cause it to degrade. How quickly

the degradation happens depends on environmental conditions

(like moisture (rain), heat and sunlight).

Biomass

Biomass is organic feedstock especially of plant origin.

These feedstocks are renewable and originally found in nature

in the form of agricultural and forestry products like corn, wheat,

sugar beet, sugar cane, rapeseed and woody plants.

The residues of these products also contain starch,

carbohydrates, fats and proteins.

Biorefinery/Biorefining

A biorefinery is a factory that processes biomass into a range of

products and where the goal is to make the most efficient use of

the biomass or raw material. Biorefining aims to use every

component of the raw material so that nothing goes to waste

thereby improving efficiencies and environmental impact.

Dawn Technology is the brand name of Avantium’s biorefinery

technology, which converts non-food plant-based feedstock into

industrial sugars and lignin.

Catalysis/Catalyst

A catalyst is a substance that enables and accelerates a

chemical reaction. Catalysis is the process of using a catalyst in

such a reaction. Catalysts are not consumed in the catalysed

reaction and can be reused repeatedly.

Catalyst Testing

Catalyst testing is an important practice in the process of

developing a new or improved catalyst. Over the years,

Avantium Catalysis has executed numerous catalyst testing

projects in the various phases of a catalyst development

trajectory, from discovery and screening to process optimisation

and commercial selection.

Circular Economy

A circular economy is based on the principles of designing out

waste and pollution, keeping products and materials in use, and

regenerating natural systems. Avantium works to advance new

technologies for a more sustainable future. PEF plays a

significant role in the circular economy.

Carbon Dioxide (CO2)

A greenhouse gas (GHG) that originates as waste from the

burning of fossil fuels and the production of electricity, fertilisers,

chemicals, steel and cement. It is the biggest contributor to

climate change. The development of electrochemistry has the

potential to use CO2 as a feedstock for the sustainable

production of chemicals and materials, and is seen as a ’game-

changer’ for the chemical industry. The result is that this GHG is

sequestered into products that can replace plastics and

chemicals that are traditionally produced from fossil feedstock.

Avantium’s Volta Technology is the leading electro-catalytic

platform developing CO2 utilisation solutions for a circular

future.

COVID-19

The disease resulting from the infection of the coronavirus

variant identified in 2019.

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Dawn Technology™

Dawn Technology is the brand name of Avantium’s biorefinery

technology, which converts non-food plant-based feedstock into

industrial sugars and lignin. These sugars, such as glucose, are

an excellent raw material for chemistry and fermentation

processes and are used to produce a broad range of products.

Furandicarboxylic Acid (FDCA)

2.5-furandicarboxylic acid is an intermediate chemical for

making PEF.

Flowrence®

Avantium’s Flowrence is an advanced high-throughput platform

for high-quality testing of catalysts and adsorbents.

The Flowrence system can be used for a broad range of

industrial applications that operate in gas, vapor or trickle

phases.

The parallel reactor system combines the reproducibility of

larger-scale reactors with the advantages of small-scale

reactors such as intrinsic safety, high accuracy, low costs per

experiment and, ultimately, faster time-to-market.

Glucose

A sugar consisting of six carbon atoms (C6). It is a core building

block for a bio-based economy. Glucose serves as a feedstock

for the production of a broad range of chemicals and materials

produced via chemistry or fermentation processes. The resulting

products can be existing and new plant-based chemicals, such

as such as plantMEG and plantMPG.

Glycols

A glycol is any of a class of organic compounds belonging to the

alcohol family. The term is often applied to the simplest member

of the class: mono-ethylene glycol or MEG, a colourless, oily

liquid. Avantium has developed plant-based MEG, a vital

ingredient for the production of polyester textiles and film, PET

and PEF resins and engine coolants.

Life Cycle Assessment (LCA)

The compilation and evaluation of the input, output and

potential environmental impact of a product system throughout

its life cycle. LCAs are fundamental to understanding how

Avantium’s technologies compete with fossil-based alternatives.

LCAs form the bedrock of how we measure our footprint and

describe the sustainability benefits of our innovations.

Lignin

In the Dawn Technology biorefining process, lignin is the mass

remaining after the sugars have been removed from the initial

raw material. It is very efficient for energy generation as its

energy content is up to 40% higher than the original wood chips

used in the process. Energy generation is currently the

predominant application for lignin. Additional higher value

applications are being developed, including bio-asphalt.

Management Board and Management Team

The Management Board (consisting of the CEO and the CFO) is

Avantium's statutory executive body and is, together with the

management team, (the CEO, CFO, CTO, General Counsel and

the Managing Directors of the business units), responsible for

the day-to-day management of Avantium.

Mono-Ethylene Glycol (MEG)

MEG is a vital ingredient for the production of polyester textiles

and film, PET and PEF resins and engine coolants. End uses for

plant-based MEG (plantMEG) range from clothing and other

textiles, to packaging, kitchenware, non-toxic coolants (eg.

antifreeze) and solvents (eg. paint and coatings). Ray

Technology™ is the brand name of Avantium’s technology to

produce plantMEG™.

Mono-Propylene Glycol (MPG)

MPG is a valuable intermediary and is used in airport operations

for the de-icing of airplanes, it is also used in unsaturated

polyester resins, for example in modern windmill blades, as well

as heat transfer fluids. Ray plantMPG™ is a wholly plant-based

version of MPG.

Polyethylene Furanoate (PEF)

PEF is, a polyester made form MEG and FDCA. PEF produced by

Avantium’s YXY® Technology is a 100% plant-based and

recyclable polymer that can be used in an enormous range of

applications, including bottles, packaging, textiles and film.

PEF’s barrier and thermal properties are superior to

conventional PET. In combination with a significantly reduced

carbon footprint, the added functionality gives PEF all the

attributes to needed become the next-generation polyester.

Polyethylene Terephthalate (PET)

PET is a, transparent polyester used for bottles and film.

Currently PET is made from fossil-based MEG and fossil-based

terephthalic acid.

Polyesters

Polyesters are polymers formed from a dicarboxylic acid and a

diol. Polyesters are very stable and strong and are particularly

useful in making fibres for clothing or plastics. Polyesters are

most commonly found as either PET or PEF.

Polymers

A polymer is a chemical compound with molecules bonded

together in long repeating chains. The term “polymer” is

commonly used today in the plastics and composites industry,

and it is often used as a synonym for “plastic” or “resin.”

Ray Technology™

Ray Technology is the brand name of Avantium’s technology to

produce plantMEG™ and plantMPG™.

Renewable Resources

These are agricultural or forestry raw materials used as

feedstock for industrial products. The use of renewable

resources by industry saves fossil resources and reduces the

amount of GHG emissions.

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Sustainable Development Goals

The United Nations launched its 17 Sustainable Development

Goals in 2013.

Throughput

The volume of chemicals a system can process per hour.

Volta Technology

Avantium’s Volta Technology, a carbon capture and utilisation

(CCU) technology, is the leading electrocatalytic platform

developing CO2 as a feedstock for a circular future.

YXY® Technology

Avantium’s YXY® technology helps to produce a wide range of

novel 100% plants-based materials and products by converting

plant-based sugars (fructose) into plant-based chemicals (e.g.

for the production of biobased plastics, such as PEF).

1st Generation Feedstock

Carbohydrate-rich plants such as sugar beet, sugar cane, corn

and wheat that can also be used as food or feed and for making

plant-based chemicals and materials.

2nd Generation Feedstock

Non-food feedstock resulting from agricultural and forestry

waste or residual streams. Dawn Technology™ is the brand

name of Avantium’s biorefinery technology, which converts non-

food plant-based feedstock into industrial sugars and lignin

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If you have any questions or remarks regarding this report,

we invite you to contact us.

Avantium N.V.

P.O. Box 2915

1000 CX Amsterdam

The Netherlands

Tel. +31 20 586 8080

E-mail [email protected]

Website www.avantium.com

Published on 23 March 2022

Design and Execution

CF Report, Amsterdam, the Netherlands

Pieter Vonk, Utrecht, the Netherlands

Editors

Avantium N.V., Amsterdam, the Netherlands

Narrative Labs, The Hague, the Netherlands

Project Support and Advice

Report Company, Soest, the Netherlands