TOMRA Systems — Earnings Release 2014

Feb 18, 2015

4 TH QUARTER 2014 RESULTS ANNOUNCEMENT

TOMRA SYSTEMS ASA 18th February 2015

HIGHLIGHTS FROM THE QUARTER INCLUDE

Revenues	• All time high Revenues of 1,400 MNOK (1,169 MNOK in fourth quarter 2013) Currency adjusted revenues were: - Up 13% for TOMRA Group - Up 10% in TOMRA Collection Solutions - Up 18% in TOMRA Sorting Solutions
Gross margin	• Gross margin 44%, unchanged from fourth quarter 2013 - Stable margin in TOMRA Collection Solutions - Stable margin in TOMRA Sorting Solutions
Operating expenses	• Operating expenses of 344 MNOK (313 MNOK in fourth quarter 2013) - Up 3% adjusted for currency and one time costs
EBITA	• All time high EBITA of 266 MNOK (199 MNOK in fourth quarter 2013)
Cashflow	• Cashflow from operations of 312 MNOK (234 MNOK in fourth quarter 2013)
TOMRA Collection Solutions	• Strong performance in all markets • Compaction divested
TOMRA Sorting Solutions	• All time high order intake of 568 MNOK, compared to 509 MNOK same period last year • Order backlog of 657 MNOK, down from 672 MNOK at the end of third quarter 2014

HIGHLIGHTS FROM 2014

Revenues	• Revenues of 4,749 MNOK (4,421 MNOK in 2013) Currency adjusted revenues were: - Up 2% for TOMRA Group - Up 1% in TOMRA Collection Solutions - Up 3% in TOMRA Sorting Solutions
Gross margin	• Gross margin 43%, unchanged from 2013 - Stable margin in TOMRA Collection Solutions - Stable margin in TOMRA Sorting Solutions
Operating expenses	• Operating expenses 1,313 MNOK (1,210 MNOK in 2013) - Up 1% adjusted for currency and one time costs
EBITA	• EBITA of 737 MNOK (701 MNOK in 2013)
Cashflow	• Cashflow from operations of 696 MNOK (567 MNOK in 2013)

CURRENCY EXPOSURE

Revenues and expenses per currency;

NOTE: Rounded figures

	EUR*	USD	NOK	SEK	OTHER	TOTAL
Revenues	45 %	30 %	5 %	10 %	10 %	100 %
Expenses	45 %	25 %	10 %	10 %	10 %	100 %
EBITA	45%	50 %	- 15 %	10 %	10 %	100 %

* EUR includes DKK

10% change in NOK towards other currencies will impact;

	Revenues	Expenses	EBITA
EUR*	4.5%	4.5%	4.5%
USD	3.0%	2.5%	5.0%
SEK	1.0%	1.0%	1.0%
OTHER	1.0%	1.0%	1.0%
ALL	9.5%	9.0%	11.5%
* EUR includes DKK

TOMRA COMPACTION

• TOMRA acquired Orwak Group in 2005.
• Orwak (later named TOMRA Compaction) has been a business stream within TOMRA Collection Solutions, leveraging potential front-end synergies (sales and service) based on overlapping customer segments
• Actual synergies between compaction and reverse vending have proven to be insignificant.
• TOMRA's former strategy of providing recycling technology equipment has changed into creating sensor-based solutions for optimal resource productivity
• As a consequence of TOMRA's strategic shift and the lack of tangible synergies between Compaction and reverse vending solutions, TOMRA has divested TOMRA Compaction (Orwak).
• Agreement signed 12 December 2014, Transaction closed 30 January 2015
• Buyer: San Sac Nordic AB, owned by investment fund Accent Equity 2012
• TOMRA to continue as distributor in five markets in a period of up to two years

DISCONTINUED OPERATIONS

	2014				2013
		TOMRA	Continued		TOMRA	Continued
	TOTAL	Compaction	operations	TOTAL	Compaction	operations
Operating revenues	4 953,1	204,1	4 749,0	4 602,1	181,1	4 421,0
Cost of goods sold	2 765,3	129,1	2 636,2	2 562,3	113,1	2 449,2
Depreciations/write-down	63,3	-	63,3	60,9	-
Gross contribution	2 124,5	75,0	2 049,5	1 978,9	68,0	1 910,9
Operating expenses	1 290,4	65,2	1 225,2	1 180,9	59,7	1 121,2
Depreciations/write-down	91,6	3,8	87,8	92,0	3,3
EBITA	742,5	6,0	736,5	706,0	5,0
Amortizations	110,4	1,4	109,0	105,0	1,3
EBIT	632,1	4,6	627,5	601,0	3,7
Net financial income	(24,1)	-	(24,1)	(39,9)	-
Profit before tax	608,0	4,6	603,4	561,1	3,7
Taxes	149,7	1,3	148,4	139,0	1,0
Profit from continuing operations	458,3	3,3	455,0	422,1	2,7
Discontinued operations	(64,0)	(3,3)	(60,7)	(9,7)	(2,7)
Net profit	394,3	-	394,3	412,4	-
Non-Controlling interest (Minority interest)	(33,4)	-	(33,4)	(35,7)	-
Earnings per share (EPS)	2,44	-	2,44	2,55	-

• Sales price of 110 MSEK, net of cash and interest bearing debt
• Loss of 64 MNOK recorded in 4Q2014
• Compaction business classified as discontinued operations
• Assets and liabilities classified as "held for sale"

FINANCIAL HIGHLIGHTS P&L STATEMENT

Continuing operations		4th Quarter		YTD
Amounts in NOK million	2014	2013	13 Adj*	2014	2013	13 Adj*
Revenues	1,400	1,169	1,241	4,749	4,421	4,663
• Collection Solutions	817	701	746	2,823	2,637	2,786
• Sorting Solutions	583	468	495	1,926	1,784	1,877
Gross contribution	610	512	546	2,050	1,911	2,012
in %	44%	44%	44%	43%	43%	43%
Operating expenses	344	313	329	1,313	1,210	1,275
EBITA	266	199	217	737	701	737
in %	19%	17%	17%	16%	16%	16%
One time costs included in operating expenses	8	4	4	33	12	12

** Adjusted for one-time costs

FINANCIAL HIGHLIGHTS BALANCE SHEET, CASH FLOW AND CAPITAL STRUCTURE

Amounts in NOK million	31 Dec 2014	31 Dec 2013
ASSETS	6,625	5,623
• Intangible non-current assets	2,623	2,487
• Tangible non-current assets	683	608
• Financial non-current assets	307	267
• Inventory	913	874
• Receivables	1,537	1,224
• Cash and cash equivalents	436	164
• Assets held for sale	126	-
LIABILITIES AND EQUITY	6,625	5,623
• Equity	3,244	2,741
• Minority interest	115	83
• Interest bearing liabilities	1,649	1,557
• Non-interest bearing liabilities	1,593	1,242
• Liabilities held for sale	24	-

Ordinary cashflow from operations in 4Q

• 312 MNOK (234 MNOK in 4Q 2013)

Solidity

• 49% equity
• NIBD/EBITDA = 1.4 (Rolling 12 months)
• Board propose dividend of NOK 1.45 (NOK 1.35 last year)

TOMRA Collection Solutions

HIGHLIGHTS COLLECTION SOLUTIONS

Overall	• Revenues equaled 817 MNOK in fourth quarter 2014, up from 701 MNOK in fourth quarter 2013. Revenues were up 10% in local currencies • Gross margin was 42% in the quarter, unchanged from same period last year • Operating expenses was 170 MNOK, up 10 MNOK from same quarter last year (currency adjusted). Negatively influenced by one-time costs of 8 MNOK • EBITA increased from 146 MNOK to 172 MNOK		last year
Europe	• Currency adjusted revenues were up 9% in Europe • Increased activity in all regions, particularly strong in Germany	•	T9 well received
US	• Currency adjusted revenues up 10% in USA • Flat through-put volumes • Stronger machine sales		RVM

• Revenues equaled 2,823 MNOK in 2014, up from 2,637 MNOK in 2013. Adjusted for currency, revenues increased by 1%
• Gross margin was 42%, unchanged from
• Operating expenses was 628 MNOK, up 2 MNOK from last year (currency adjusted)

• EBITA increased from 526 MNOK to 561 MNOK due to stronger EUR and USD

• Stable sales in regions (in local currencies)

• New markets in Croatia and Lithuania
• Stable overall performance in the US
• Increased activities within Material Recovery offsets slower activities within

COLLECTION SOLUTIONS FINANCIALS

Continuing operations		4th Quarter		YTD
Amounts in NOK million	2014	2013	13 Adj*	2014	2013	13 Adj*
Revenues	817	701	746	2,823	2,637	2,786
• Nordic	125	92		417	402
• Central Europe & UK	385	361		1,272	1,196
• Rest of Europe	1	1		8	3
• US East/Canada	298	245		1,094	1,018
• Rest of the world	8	2		32	18
Gross contribution	342	297	319	1,189	1,113	1,184
in %	42%	42%	43%	42%	42%	42%
Operating expenses	170	151	160	628	587	618
EBITA	172	146	159	561	526	566
in %	21%	21%	21%	20%	20%	20%
One time costs included in operating expenses	8	-	-	8	-	-

*2013 actual restated at 2014 exchange rates, estimated ** Adjusted for one-time costs

GERMANY REPLACEMENT

TOMRA Sorting Solutions

HIGHLIGHTS SORTING SOLUTIONS

• Revenues equaled 583 MNOK in fourth quarter 2014, up from 468 MNOK in fourth quarter 2013. Revenues were up 18% in local currencies
• Gross margin was 46% in the quarter, unchanged from same period last year
• Operating expenses was 167 MNOK, up from 163 MNOK same quarter last year (currency adjusted).
• EBITA increased from 64 MNOK to 101 MNOK (currency adjusted)

• All time high order intake of 568 MNOK, compared to 509 MNOK same period last year

• Order backlog of 657 MNOK, down from 672 MNOK at the end of third quarter 2014

4Q 2014 FULL YEAR 2014

• Revenues equaled 1,926 MNOK in 2014, up from 1,784 MNOK in 2013. Adjusted for currency, revenues increased by 3%
• Gross margin was 45%, unchanged from last year
• Operating expenses was 657 MNOK, up from 633 MNOK last year (currency adjusted), negatively influenced by 25 MNOK in one-time costs
• EBITA increased from 195 MNOK to 204 MNOK (currency adjusted)
• Strong increase in order intake in 2014 vs 2013
• Order backlog of 657 MNOK, compared to NOK 475 MNOK at the end 2013

Other

Orders

Overall

• Strong quarter in all business streams

• Improved revenues within Recycling and Mining, slightly down in Food (due to lower order backlog in the beginning of the year)

SORTING SOLUTIONS FINANCIALS

	4th Quarter				YTD
Amounts in NOK million	2014	2013	13 Adj*	2014	2013	13 Adj*
Revenues	583	468	495	1,926	1,784	1,877
• Nordic	8	13		17	33
• Central Europe & UK	205	131		626	554
• Rest of Europe	104	56		244	135
• US East/Canada	106	122		576	577
• Rest of the world	160	146		463	485
Gross contribution	268	215	227	861	798	828
in %	46%	46%	46%	45%	45%	44%
Operating expenses	167	156	163	657	599	633
EBITA	101	59	64	204	199	195
in %	17%	13%	13%	11%	11%	10%
One time costs included in operating expenses	-	4	4	25	12	12

BACKLOG DEVELOPMENT AND MOMENTUM

Comments

• The order backlog declined in the period 1Q13- 3Q13, explained by
• Large US order signed in 2012 and delivered in 2013
• Generally lower order intake in the first three quarters of 2013
• Resulting in a low order backlog end 3Q13
• Good order intake the last five quarters combined fewer orders taken to P/L during the first 9 months of 2014, lead to
• all time high order backlog at the end of 3Q14
• Strong financial performance in 4Q14
• Continued high order order intake in 4Q14 leads to good momentum into 2015
• Seasonality in Food will lead to somewhat fewer order taken to P/L in 1Q15. Estimated backlog conversion ratio in 1Q15: 55-60%*

Outlook and shareholder structure

OUTLOOK

Long term trends:

• The long term demand for better resource productivity is a result of megatrends such as population increase, a growing middle class consumer base and greater urbanization.
• TOMRA, as a leader in sensor based solutions, is favorably positioned to capitalize on these trends

Collection Solutions:

• Activity in Collection Solutions is assumed to be higher in 2015 than in 2014.
• However, due to timing of orders, first quarter 2015 is expected to be somewhat weaker than first quarter 2014 whereas second half is expected to be stronger than prior year..

Sorting Solutions:

• Improved backlog by the end of 2014 compared to end of 2013, indicates better momentum in TOMRA Sorting.
• Due to timing of installations, the conversion rate (order taken to P/L compared to order backlog) is expected to be low in first quarter 2015. Revenues is consequently expected to be in line with first quarter 2014.

TOMRA SHAREHOLDER STRUCTURE

	Top 10 shareholders as of 6th	of January 2015			Shareholders by country
1	Investment AB Latour	36 560 000	24,7 %
2	Folketrygdfondet	15 232 640	10,3 %
3	Jupiter European Fund	6 079 651	4,1 %
4	Skandinaviska Enskil A/C Clients account	5 407 010	3,7 %	(NOM)
5	Nordea Nordic Small	4 438 693	3,0 %
6	ODIN Norge	3 542 532	2,4 %
7	The Bank of New York BNY Mellon	2 910 431	2,0 %	(NOM)
8	Verdipapirfondet DNB	2 737 868	1,8 %
9	Clearstream Banking	2 382 602	1,6 %	(NOM)
8	Skandinaviska Enskil A/C Finnish Resident	2 285 518	1,5 %	(NOM)
	Sum Top 10	81 576 945	55.1%
	Other shareholders	66 443 133	44.9%
	TOTAL (5,763 shareholders)	148 020 078	100.0%

Source: VPS

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Disclaimer

This Document (which may be a presentation, video, brochure or other material), hereafter called Document, may include and be based on, inter alia, forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. The content of this Document may be based on current expectations, estimates and projections about global economic conditions, including the economic conditions of the regions and industries that are major markets for TOMRA Systems ASA and its subsidiaries and affiliates. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions, if not part of what could be clearly characterized as a demonstration case. Important factors that could cause actual results to differ materially from those expectations include, among others, changes in economic and market conditions in the geographic areas and industries that are or will be major markets for TOMRA Systems ASA. Although TOMRA Systems ASA believes that its expectations and the Document are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Document. TOMRA Systems ASA does not guarantee the accuracy, reliability or completeness of the Document, and TOMRA Systems ASA (including its directors, officers and employees) accepts no liability whatsoever for any direct or consequential loss arising from the use of this Document or its contents. TOMRA Systems ASA consists of many legally independent entities, constituting their own separate identities. TOMRA is used as the common brand or trade mark for most of these entities. In this Document we may sometimes use "TOMRA", "TOMRA Systems", "we" or "us" when we refer to TOMRA Systems ASA companies in general or where no useful purpose is served by identifying any particular TOMRA Company