TOMRA Systems — Earnings Release 2016

Feb 23, 2017

4 TH QUARTER 2016 RESULTS ANNOUNCEMENT

TOMRA SYSTEMS ASA 4 th Quarter Results 23.02.2017

HIGHLIGHTS FROM 2016

Revenues	• Revenues of 6,610 MNOK (6,143 MNOK in 2015) Currency adjusted revenues were: - Up 4% for TOMRA Group - Up 4% in TOMRA Collection Solutions - Up 5% in TOMRA Sorting Solutions
Gross margin	• Gross margin 43%, up from 42% in 2015 - Improved margin in TOMRA Collection Solutions - Stable margin in TOMRA Sorting Solutions
Operating expenses	• Operating expenses 1,695 MNOK (1,548 MNOK in 2015) - Up 5% adjusted for currency
EBITA	• EBITA of 1,119 MNOK (1,015 MNOK in 2015)
Cashflow	• Cashflow from operations of 1,095 MNOK (914 MNOK in 2015)

HIGHLIGHTS FROM THE QUARTER

Revenues	• Revenues of 1,766 MNOK (1,816 MNOK in fourth quarter 2015) Currency adjusted revenues were: - Stable for TOMRA Group - Down 7% in TOMRA Collection Solutions - Up 11% in TOMRA Sorting Solutions
Gross margin	• Gross margin 42%, up from 41% in fourth quarter 2015 - Slightly improved margin in TOMRA Collection Solutions - Slightly improved margin in TOMRA Sorting Solutions
Operating expenses	• Operating expenses of 427 MNOK (404 MNOK in fourth quarter 2015) - Including 6 MNOK in transaction costs for Compac
EBITA	• EBITA of 316 MNOK (347 MNOK in fourth quarter 2015)
Cashflow	• Cash flow from operations of 390 MNOK (343 MNOK in fourth quarter 2015)
TOMRA Collection	• Good momentum in Germany, due to replacement demand • High activity in the Nordic market, due to replacement in Sweden
TOMRA Sorting Solutions	• Order intake of 649 MNOK, up from 551 MNOK same period last year, currency adjusted up 20% • Order backlog of 704 MNOK, up from 659 MNOK at the end of fourth quarter 2015
Other	• TOMRA to acquire New Zealand sorting machine manufacturer Compac

CURRENCY

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 Including CNY

FINANCIAL HIGHLIGHTS P&L STATEMENT

		4th Quarter		YTD
Amounts in NOK million	2016	2015	15 Adj*	2016	2015	15 Adj*
Revenues	1,766	1,816	1,775	6,610	6,143	6,350
• Collection Solutions	1,028	1,139	1,110	4,065	3,803	3,921
• Sorting Solutions	738	677	665	2,545	2,340	2,429
Gross contribution	743	751	740	2,814	2,563	2,660
in %	42%	41%	42%	43%	42%	42%
Operating expenses	427	404	400	1,695	1,548	1,612
EBITA	316	347	340	1,119	1,015	1,048
in %	18%	19%	19%	17%	17%	16%
One time costs included in operating expenses	6	-	-	12	-	-

*2015 actual restated at 2016 exchange rates, estimated

FINANCIAL HIGHLIGHTS BALANCE SHEET, CASH FLOW AND CAPITAL STRUCTURE

Amounts in NOK million	31 Dec 2016	31 Dec 2015
ASSETS	7,115	7,317
• Intangible non-current assets	2,750	2,891
• Tangible non-current assets	801	838
• Financial non-current assets	342	316
• Inventory	1,127	1,209
• Receivables	1,696	1,751
• Cash and cash equivalents	399	313
LIABILITIES AND EQUITY	7,115	7,317
• Equity	4,192	3,945
• Minority interest	178	161
• Interest bearing liabilities	760	1,206
• Non-interest bearing liabilities	1,985	2,005

Ordinary cashflow from operations

• 390 MNOK (343 MNOK in 4Q 2015)

Solidity

• 59% equity
• NIBD/EBITDA = 0.3x (Rolling 12 months)
• The Board proposes a dividend of NOK 2.10 per share, up from NOK 1.75 last year

TOMRA COLLECTION SOLUTIONS

HIGHLIGHTS COLLECTION SOLUTIONS

	• Revenues of 1,028 MNOK, down from 1,139 MNOK in fourth quarter 2015
	- Revenues down 7% in local currencies
	• Gross margin was 39% in the period
	- Slightly up from same quarter last year
Overall	• Operating expenses of 204 MNOK
	- Up 4% currency adjusted
	• EBITA decreased from 242 MNOK to 198 MNOK
	- Down 16% currency adjusted, due to lower revenues
	• Currency adjusted revenues down 9% in Europe
Europe	- Still good momentum in Germany due to replacement demand, but revenues down compared to a strong fourth quarter 2016
	- High activity in the Nordic region due to replacement in Sweden and Lithuanian deposit introduction
	• US revenues up 2% in local currencies
North America	- Increased machine sales compensated for somewhat lower throughput volumes
Asiua/Pacific	• New South Wales (Australia) to implement deposit from 1 December 2017
	- Tomra's eventual role in the deposit scheme still to be defined

COLLECTION SOLUTIONS FINANCIALS

		4th Quarter			YTD
Amounts in NOK million	2016	2015	15 Adj*	2016	2015	15 Adj*
Revenues	1,028	1,139	1,110	4,065	3,803	3,921
• Nordic	157	152		665	526
• Europe (ex Nordic)	505	616		1,860	1,809
• North America	354	353		1,474	1,393
• Rest of the world	12	18		66	75
Gross contribution	402	441	430	1,664	1,510	1,562
in %	39%	39%	39%	41%	40%	40%
Operating expenses	204	199	195	821	749	777
EBITA	198	242	235	843	761	785
in %	19%	21%	21%	21%	20%	20%

*2015 actual restated at 2016 exchange rates, estimated

GERMANY REPLACEMENT UPDATE

TOMRA SORTING SOLUTIONS

HIGHLIGHTS SORTING SOLUTIONS

BUSINESS STREAM UPDATE

FOOD

• Overall good momentum
• Revenues in 4Q16 significantly up from 4Q15
• Order intake significantly up quarter over quarter

RECYCLING

• Continuing low commodity prices still have somewhat negative effect on performance
• Revenues in 4Q16 slightly down compared to 4Q15,
• Order intake up quarter over quarter

MINING

• Market remains depressed in most commodities
• Revenues and order intake both up from same quarter last year
• 227-carat stone found at the Lulo mine (see picture)

SORTING SOLUTIONS FINANCIALS

		4th Quarter		YTD
Amounts in NOK million	2016	2015	15 Adj*	2016	2015	15 Adj*
Revenues	738	677	665	2,545	2,340	2,429
• Europe	290	305		1,100	1,089
• North America	194	179		805	685
• South America	47	35		80	92
• Asia	122	132		368	366
• Oceania	48	13		115	52
• Africa	37	13		77	56
Gross contribution	341	310	310	1,150	1,053	1,098
in %	46%	46%	47%	45%	45%	45%
Operating expenses	207	195	193	822	763	798
EBITA	134	115	117	328	290	300
in %	18%	17%	18%	13%	12%	12%

** Adjusted for one-time costs ¹⁴

BACKLOG DEVELOPMENT AND MOMENTUM

• Order intake of 649 MNOK in the quarter (up from 551 MNOK same quarter last year)
• Revenues were 738 MNOK (compared to 677 MNOK in 4Q16)
• Order backlog of 704 MNOK, up from 659 MNOK at the end of fourth quarter 2015
• Estimated backlog conversion ratio in 1Q17: 70-75%*
• NOTE: Figures do not include Compac, which will be consolidated from 1 February 2017

* Based upon current production and delivery plans, the revenues in 1Q17 (ex Compac) are estimated to be approximately 70-75% of order backlog at the end of 4Q16

EXPANDING FURTHER IN FOOD SORTING

• TOMRA signed 11 October a sales and purchase agreement with the owners of Compac Holding Ltd (Compac), acquiring 100 per cent of the shares in the company.

• Closing of the transaction took place 31 January 2017, after Tomra obtained approval from the New Zealand Overseas Investment Office. Compac will be consolidated into the Tomra Group accounts from 1 February 2017

Accounting year July-June (Figures in MNZD)	FY14	FY15	FY16	FY17*
Profit and loss
Revenues	75	105	152	72
EBITDA	8	(1)	3	(3)
EBIT	7	(2)	(1)	(5)
Balance sheet
	June14	June15	June16	Dec16
Intangible non-current assets	1	8	14	11
Tangible non-current assets	6	10	12	14
Inventory	17	17	24	23
Receivables	8	22	19	17
Cash	4	4	4	9
Total assets	36	61	73	74
Equity	5	5	4	(5)
Interest bearing debt	8	23	29	39
Other liabilities	23	23	38	40
Total debt and equity	36	61	73	74
* 6 months

Compac - Historic performance Earn-out scheme for FY17, FY18 and FY 19

• Total consideration dependent upon financial performance for the period FY17 to FY19

• Progress payments after FY17 (August 2017), FY18 (August 2018) and FY19 (August 2019)

• Total consideration capped at NZD 300m, reached at an accumulated EBIT of NZD 84m for the three year period

NOTE: The Compac Group has as of 1st February 2017 disposed of businesses relating to operations in Spain, and is in the process of re-focusing its operations in Latin America to be sales and services, and not manufacturing. Full year revenue effect of this transactions are assumed to be approximatly 25 MNZD .

OUTLOOK AND SHAREHOLDER STRUCTURE

OUTLOOK

Collection Solutions

• The replacement demand in Germany is assumed to continue into 2017, but the replacement in Sweden was to a large extent finished at the end of 2016

Sorting Solutions

• Currently good momentum in Food, but low commodity prices continue to have a somewhat negative influence on the Recycling and Mining performance
• Compac to be consolidated from 1 February 2017

Currency

• Reporting in NOK and with some NOK cost base, TOMRA will be negatively impacted by a strengthening NOK, measured particularly against EUR and USD.

Q&A

TOMRA SHAREHOLDER STRUCTURE

	st Top 10 shareholders as of 31 of December 2016	Shareholders by country
1	Investment AB Latour	38 311 000	25.8%
2	Folketrygdfondet	9 529 819	6.4%		3% 5% 5%
3	The Bank of New York BNYM, Stitching Dep	7 845 000	5.3%	(NOM)	6%
4	Skandinaviska Enskilda A/C Clients account	4 055 568	2.7%	(NOM)	35% 7%
5	Goldman Sachs & Co	3 395 592	2.3%	(NOM)	12%
6	Clearstream Banking	2 751 495	1.9%	(NOM)
7	The Bank of New York BNYM	2 612 603	1.8%	(NOM)	27%
8	Nordea Nordic Small	2 349 276	1.6%
9	Odin Norge	2 280 188	1.5%		Sweden Norway USA
10	Danske invest Norske C/O Danske Capital A	2 219 530	1.5%	(NOM)	Great Britain Luxembourg Nederland Finland Others
	Sum Top 10	75 350 071	50.9%
	Other shareholders	72 670 007	49.1%
	TOTAL (5,595 shareholders)	148 020 078	100.0%

Sweden	Norway	USA
Great Britain	Luxembourg	Nederland
Finland	Others

Source: VPS

DISCLAIMER

Copyright

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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