TOMRA Systems — Interim / Quarterly Report 2013

Feb 19, 2014

4 TH QUARTER 2013 RESULTS ANNOUNCEMENT

TOMRA SYSTEMS ASA 19th February 2014

HIGHLIGHTS FROM 2013

• Revenues of 4,602 MNOK (2012: 4,073 MNOK)
• 13% Growth (1% Organic, currency adjusted)
• Gross margin of 43.0% (2012: 45.9%)
• Product and market mix changes within both business areas
• EBITA of 706 MNOK (2012: 739 MNOK)
• Reduced EBITA due to lower GM%
• Operating cashflow of 567 MNOK (2012: 550 MNOK)
• TCS: Launch of T-9
• The first of a new generation RVMs
• TSS: Several new products launched
• Cross-utilizing technologies developed within the different business streams

HIGHLIGHTS FROM THE QUARTER INCLUDE

Revenues	• Revenues of 1,228 MNOK (1,188 MNOK in fourth quarter 2012). Organic, currency adjusted revenues were: - Down 4% for TOMRA Group - Unchanged in TOMRA Collection - Down 11% in TOMRA Sorting
Gross margin	• Gross margin 44%, down from 46% in fourth quarter 2012 - Changes in product and market mix in both business areas
Operating expenses	• Operating expenses of 330 MNOK - Down 3% currency adjusted
EBITA	• EBITA of 204 MNOK (231 MNOK in fourth quarter 2012) - Down due to reduced gross margin in both business areas
Cashflow from operations	• Cashflow from operations of 234 MNOK (235 MNOK in fourth quarter 2012)
Orders TSS	• All time high order intake of 509 MNOK compared to 464 MNOK same period last year • Order backlog amounted to 475 MNOK in TOMRA Sorting, up from 434 MNOK at the end of third quarter 2013
Other	• Post merger integration and streamlining of TOMRA Sorting ongoing

FINANCIAL HIGHLIGHTS P&L STATEMENT

	4th Quarter			Full Year
Amounts in NOK million	2013	2012	12 Adj*	2013	2012	12 Adj*
Revenues	1,228	1,188	1,285	4,602	4,073	4,205
• Collection Solutions	760	699	758	2,818	2,649	2,729
• Sorting Solutions	468	489	527	1,784	1,424	1,476
Gross contribution	534	545	590	1,979	1,871	1,932
in %	44%	46%	46%	43%	46%	46%
Operating expenses	330	314	340	1,273	1,132	1,166
EBITA	204	231	250	706	739	766
in %	17%	19%	19%	15%	18%	18%

*2012 actual restated at 2013 exchange rates, estimated

FINANCIAL HIGHLIGHTS BALANCE SHEET, CASH FLOW AND CAPITAL STRUCTURE

Amounts in NOK million	31 Dec 2013	31 Dec 2012
ASSETS	5,623	5,159
• Intangible non-current assets	2,487	2,295
• Tangible non-current assets	608	563
• Financial non-current assets	267	257
• Inventory	874	789
• Receivables	1,224	1,078
• Cash and cash equivalents	164	177
LIABILITIES AND EQUITY	5,623	5,159
• Equity	2,741	2,283
• Minority interest	83	74
• Interest bearing liabilities	1,557	1,551
• Non-interest bearing liabilities	1,242	1,251

Ordinary cashflow from operations

• 234MNOK (235 MNOK in 4Q 2012)

Cashflow from investments

• 74 MNOK (65 MNOK 4Q 2012)

Solidity

• 50% equity
• NIBD/EBITDA = 1.8 (Rolling 12 months)

DIVIDEND

• 0,00 0,10 0,20 0,30 0,40 0,50 0,60 2007 2008 2009 2010 2011 2012 2013 Dividend in % of EPS
• Tomra aims to distribute 40% to 60% of its earnings per share. When deciding the annual dividend, the Board takes into consideration expected cashflow, capital expenditure plans, acquisitions, financing requirements and the need for appropriate financial flexibility
• Based on this, the Board will propose a dividend of 1.35 NOK per share (53% of EPS), up from 1.25 NOK per share last year

TOMRA Collection Solutions

HIGHLIGHTS COLLECTION SOLUTIONS

4Q 2013 FULL YEAR 2013

	• Revenues equaled 760 MNOK in fourth quarter 2013, up from 699 MNOK in fourth quarter 2012. Adjusted for currency, revenues were unchanged	• Revenues equaled 2,818 MNOK in 2013, up from 2,649 MNOK in 2012. Adjusted for currency, revenues increased by 3%
Overall	• Gross margin was 42%, down from 44% in the same quarter last year, negatively influenced by market and product mix	• Gross margin was 42%, down from 43% last year, explained by change in market and product mix
	• EBITA increased to 151 MNOK from 146 MNOK, as a consequence of higher volume (in NOK) and positive currency development	• EBITA increased from 516 MNOK to 531 MNOK as a consequence of higher volumes and positive currency effects
Europe	• Sales are slightly down in the Nordic region and stable in Central Europe	• Sales are slightly down in the Nordic region, but up in Central Europe
US	• Increased sales in Material Recovery and somewhat lower sales within RVM	• Stable overall performance in US • Increased activities within Material Handling offsets slower activities within RVM

COLLECTION SOLUTIONS FINANCIALS

	4th Quarter			Full Year
Amounts in NOK million	2013	2012	12 Adj*	2013	2012	12 Adj*
Revenues	760	699	758	2,818	2,649	2,729
• Nordic	135	140		524	539
• Central Europe & UK	369	322		1,225	1,059
• Rest of Europe	3	3		12	11
• US East/Canada	249	221		1,032	1,011
• Rest of the world	4	13		25	29
Gross contribution	319	310	340	1,181	1,151	1,193
in %	42%	44%	45%	42%	43%	44%
Operating expenses	168	164	176	650	635	649
EBITA	151	146	164	531	516	544
in %	20%	21%	22%	19%	19%	20%

*2012 actual restated at 2013 exchange rates, estimated

T-9: CUSTOMER ACCEPTANCE

• 23rd September, TOMRA presented the first machine of the new generation of machines to come
• T-9 features the first ever 360 degree recognition system applied inside an RVM
• The machine is faster, cleaner and able to take all types of beverage containers
• The launch has been successful
• Several machines already installed in core markets

CLIENT TESTIMONIAL:

http://www.youtube.com/watch?v=ZSrWcp MYqqg&list=UUqcVu43ebS4OtsFAuu8aWw&index=1

TOMRA Sorting Solutions

HIGHLIGHTS SORTING SOLUTIONS

	4Q 2013	FULL YEAR 2013
Revenues	• Revenues were down 4% Q-o-Q • Adjusted for currency effects revenues decreased 11%	• Revenues up 25% Y-o-Y • Adjusted for the BEST acquisition and currencies, revenues were down 4%
Gross margin	• Gross margin decreased from 48% in fourth quarter 2012 to 46% in fourth quarter 2013 • Change in market and product mix	• Gross margin decreased from 51% in 2012 to 45% in 2013 • Change in market and product mix
EBITA	• EBITA down from 90 MNOK in fourth quarter 2012 compared to 59 MNOK fourth quarter 2013 • Due to lower revenues and GM%	• EBITA down from 243 MNOK in 2012 from 199 MNOK in 2013 • Due to lower gross margin
Orders	• Strong order intake of 509 MNOK • Order backlog of 475 MNOK compared to NOK 434 MNOK at the end of third quarter 2013	• Order backlog of 475 MNOK, down compared to NOK 525 MNOK at the end 2012
Other	• Post merger integration and streamlining of the TOMRA Sorting organization ongoing in several locations	• Several new products launched – cross utilizing the technologies from the different business streams

SORTING SOLUTIONS FINANCIALS

	4th Quarter			Full Year
Amounts in NOK million	2013	2012	12 Adj*	2013	2012	12 Adj*
Revenues	468	489	527	1,784	1,424	1,476
• Nordic	13	1		33	22
• Central Europe & UK	131	122		554	419
• Rest of Europe	56	44		135	112
• US East/Canada	122	164		577	493
• Rest of the world	146	158		485	378
Gross contribution	215	235	250	798	720	739
in %	46%	48%	47%	45%	51%	50%
Operating expenses	156	145	159	599	477	497
EBITA	59	90	91	199	243	242
in %	13%	18%	17%	11%	17%	16%

* 2012 actual restated at 2013 exchange rates, estimated

INTEGRATION PROCESS

• Centralize Process Analytics business unit activities in Leuven
• Centralize R&D activities within Mining, moving it from Australia and Canada to Germany
• Intention to centralize the European production activities currently in Leuven to Pezinok
• Centralize Finance & Administration (F&A) Food activities currently in Dublin within Leuven
• Centralize Food Service Back-Office and Service parts storage for Belgium and the Netherlands in Leuven

PRODUCT LAUNCH NIMBUS BIOMETRIC SIGNATURE IDENTIFICATION

TITECH NIR + BEST LASER

Nimbus BSI

• An NIR sensor has been added to the NIMBUS machine platform
• The new machine increases our competitiveness in the nuts segment

Several more projects with cross utilization of our technologies into new products in the pipeline

BACKLOG DEVELOPMENT AND MOMENTUM

Comments

• The order backlog has been declining Q1-Q3
• Partly explained by large US order signed in 2012 and delivered in 2013
• Leading to a lower level backlog end Q3
• Orders have picked up during Q4
• All time high order intake, measured in NOK
• Resulting in a higher level backlog end Q4
• Continued high order intake through first half 2014 important to increase revenues in 2014

Business Outlook

OUTLOOK

Collection Solutions:

• No new markets are expected to generate significant revenues in the coming quarters and activity is consequently assumed to be stable

Sorting Solutions:

• Order intake improved in fourth quarter 2013, leading to a strengthened order backlog, but it is still below the order backlog at the end of 2012. To improve revenues in 2014 compared to 2013, order intake must continue to be strong in the coming quarters.
• Business stream "Food" has its weakest period revenue wise in the beginning of the year, when winter in the Northern Hemisphere means that harvesting and food producing activities are low.
• Integration cost of 25 MNOK to be taken in first and second quarter (combined). The initiatives are assumed to generate yearly savings of close to 30 MNOK per year, starting 2015.

Currency:

• Reporting in NOK and with some NOK cost base, TOMRA will in general benefit from a weak NOK, measured particularly against EUR and USD. TOMRA will consequently continue to gain from a strong USD and EUR, provided current exchange rate levels are maintained.

Copyright

The material in this Document (which may be a presentation, video, brochure or other material), hereafter called Document , including copy, photographs, drawings and other images, remains the property of TOMRA Systems ASA or third party contributors where appropriate. No part of this Document may be reproduced or used in any form without express written prior permission from TOMRA Systems ASA and applicable acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction

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

TOMRA SHAREHOLDER STRUCTURE

	st Top 10 shareholders as of 31 of Dec 2013	Shareholders by country
1	Investment AB Latour	31 320 000	21.2 %
2	Folketrygdfondet	16 137 053	10.9 %
3	Jupiter European Fund	9 355 330	6.3 %
4	Skandinaviska Enskilda A/C Clients account	6 757 554	4.6 % (NOM)
5	JP Morgan Chase Bank Nordea Treaty account	4 950 802	3.3 % (NOM)
6	Nordea Nordic Small	4 418 693	3.0 %
7	Skandinaviska Enskilda A/C Finnish Resident	2 900 065	2.0 % (NOM)
8	ODIN Norge	2 368 905	1.6 %
9	The Bank of New York BNY Mellon	2 235 162	1.5 % (NOM)
10	Clearstream Banking	1 911 442	1.3 % (NOM)	Total shares held abroad: 76.7%
	Sum Top 10	82 355 066	55.6%
	Other shareholders	65 665 072	44.4%
	TOTAL (6,014 shareholders)	148 020 078	100%

Source: VPS