TOMRA Systems — Interim / Quarterly Report 2016

Oct 21, 2016

21.10.2016

HIGHLIGHTS

3Q 2016

• Revenues of 1,715 MNOK (1,748 MNOK in third quarter 2015). Currency adjusted revenues were:
• Down 4% for TOMRA Group
• Down 5% in TOMRA Collection Solutions
• Down 2% in TOMRA Sorting Solutions
• Gross margin 43%, up from 41% in third quarter 2015 (currency adjusted)
• Improved margin in TOMRA Collection Solutions
• Stable margin in TOMRA Sorting Solutions
• Operating expenses of 408 MNOK (393 MNOK in third quarter 2015) — Up 2% adjusted for currency
• EBITA of 331 MNOK (324 MNOK in third quarter 2015)
• Cashflow from operations of 348 MNOK (384 MNOK in third quarter 2015)
• TOMRA Sorting Solutions
• Order intake of 613 MNOK, compared to 572 MNOK same period last year (up 5% currency adjusted)
• Order backlog of 793 MNOK, down from 816 MNOK at the end of second quarter 2016
• TOMRA Collection Solutions
• Good momentum in Germany, due to replacement demand
• Still high activity in the Nordic market, due to replacement in Sweden
• Subsequent event: TOMRA to acquire New Zealand sorting machine manufacturer Compac

CONSOLIDATED FINANCIALS

TOMRA Group

(MNOK)	3Q16	3Q15	YTD16	YTD15
Revenues	1 715	1 748	4 844	4 327
Gross contribution	739	717	2 071	1812
- in %	43 %	41 %	43 %	42 %
Operating expenses	408	393	1268	1144
EBITA	331	324	803	668
- in %	19 %	19 %	17 %	15 %
Incl. onetime costs
- In operating exp.	6	-	6	-

Third quarter

Revenues in the third quarter 2016 amounted to 1,715 MNOK compared to 1,748 MNOK in third quarter last year. Revenues in TOMRA Collection decreased by 3% (down 5% currency adjusted), while revenues in TOMRA Sorting were stable (down 2% currency adjusted).

Gross margin was 43% in the quarter, up from 41% in the corresponding period last year, explained by improved margins in TOMRA Collection (currencyand product-mix related). Gross margin in TOMRA Sorting Solutions was stable.

Operating expenses increased from 393 MNOK in third quarter 2015 to 408 MNOK in third quarter 2016, which was 2% currency adjusted.

EBITA was 331 MNOK in third quarter 2016 versus 324 MNOK in third quarter 2015.

Net finance was 32 MNOK positive, influenced by currency gains (NOK strengthened against most other currencies during the quarter, creating gains on forward contracts in EUR and USD)

Cash flow from operations in third quarter 2016 equaled 348 MNOK, compared to 384 MNOK in third quarter 2015.

The equity ratio was 54% at 30 September 2016, unchanged from 31 December 2015.

Net interest bearing debt decreased by 248 MNOK during the same period, as the free cash flow more than offset the dividend payment. At the end of third quarter 2016 NIBD/EBITDA on a rolling 12 month basis was equal to 0.5.

Cash flow from operations

Excluding one time cost

BUSINESS AREA REPORTING

TOMRA Collection Solutions

Revenues in the business area equaled 1,079 MNOK in the third quarter, down from 1,110 MNOK in third quarter last year. After adjustment for currency changes, revenues were down 5%.

Gross margin was 42%, up from 39% same period last year, positively influenced by product mix and currency effects.

EBITA was MNOK 261, up from 247 MNOK last year, due to higher gross margins.

Europe

Currency adjusted revenues in Europe were down 7% in third quarter 2016, compared to a strong third quarter 2015 (which was 60% up against third quarter 2014)

There is continued good momentum in Germany due to replacement demand. There is also high activity in the Nordic region, due to new regulations in Sweden effective from 1 January 2017 and the start-up of the Lithuanian deposit system (introduced February 2016).

North America

Currency adjusted revenues were up 4% in third quarter, compared to same period last year. Increased machine sales compensated for somewhat reduced throughput volumes.

TOMRA Collection Solutions
(MNOK)	3Q16	3Q15	YTD16	YTD15
Revenues
- Nordic	164	128	508	374
- Europe (ex Nordic)	493	563	1 355	1 193
- North America	408	385	1 120	1 040
- Rest of World	14	34	54	57
Total revenues	1 079	1 110	3 037	2 664
Gross contribution	455	431	1 262	1 069
- in %	42 %	39 %	42 %	40 %
Operating expenses	194	184	617	550
EBITA	261	247	645	519
- in %	24 %	22 %	21 %	19 %

BUSINESS AREA REPORTING

TOMRA Sorting Solutions

Revenues in the quarter were stable compared to same quarter in 2015. Adjusted for currency effects, revenues were down 2%.

Gross margin was stable at 45%.

Operating expenses were down 3%, currency adjusted.

EBITA decreased from 87 MNOK in third quarter 2015 to 86 MNOK in third quarter 2016.

TOMRA Sorting Solutions
(MNOK)	3Q16	3Q15	YTD16	YTD15
Revenues
- Europe	302	296	810	784
- North America	207	176	611	506
- South America	16	35	33	57
- Asia	89	94	246	234
- Oceania	12	11	67	39
- Africa	10	26	40	43
Total revenues	636	638	1 807	1 663
Gross contribution	284	286	809	743
- in %	45 %	45 %	45 %	45 %
Operating expenses	198	199	615	568
EBITA	86	87	194	175
- in %	14 %	14 %	11 %	11 %

Excluding one time cost

The overall performance in TOMRA Sorting was stable in third quarter 2016, with increased order intake and unchanged revenues.

Business streams

Food

Revenues in third quarter 2016 were in line with third quarter 2015 in the Food business stream. The order intake was up in the same period.

Recycling

Continuing low prices on several commodities has still a somewhat negative effect on the performance of the Recycling business stream. Both revenues and order intake were however stable in third quarter 2016 compared to third quarter 2015.

Mining

Depressed market in all commodities, apart from diamonds. Revenues and order intake have been stable at a low level.

Order intake TOMRA Sorting

Order backlog TOMRA Sorting

Revenues TOMRA Sorting

MARKET OUTLOOK

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.

TOMRA Collection Solutions

The replacement demand in Germany is assumed to continue into 2017, but the replacement in Sweden is expected to come to an end during fourth quarter 2016

TOMRA Sorting Solutions

Currently good momentum in Food, but low commodity prices are negatively influencing Recycling and Mining

Currency

Reporting in NOK and with some NOK cost base, TOMRA will in general benefit from a weak NOK, measured particularly against EUR.

SUBSEQUENT EVENTS

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.

Compac is a leading provider of lane sorting within the fresh fruit and vegetable segment

The company designs, manufactures, sells and services packhouse automation systems that sort fresh produce based on weight, size, shape, color, surface blemishes and internal quality.

With the acquisition of Compac, TOMRA will reinforce its leading position within the food segment and it will be the first player to offer its customers both lane and bulk sorting of fresh and processed foods.

Closing of the transaction is expected to take place during first quarter 2017 subject to approval by the New Zealand Overseas Investment Office.

TOMRA will pay a consideration of NZD 70m, free of cash and interest bearing debt. In addition to the initial purchase price, the sellers are entitled to an earn-out linked to the financial performance for the period July 2016 to June 2019.

THE TOMRA SHARE

The total number of issued shares at the end of third quarter 2016 was 148,020,078 shares, including 148,946 treasury shares. The total number of shareholders decreased from 5,792 at the end of second quarter 2016 to 5,683 at the end of third quarter 2016. Norwegian residents held 27% of the shares at the end of third quarter 2016.

TOMRA's share price increased from NOK 88.75 to NOK 92.75 during third quarter 2016. The number of shares traded on the Oslo Stock Exchange in the period was 7 million, down from 9 million in the same period in 2015.

Asker, 20 October 2016

The Board of Directors TOMRA SYSTEMS ASA

Jan Svensson Stefan Ranstrand Chairman of the Board President & CEO

Condensed Consolidated interim financial statements

STATEMENT OF PROFIT AND LOSS		3rd Quarter		YTD		Full year
(MNOK)	Note	2016	2015	2016	2015	2015
Operating revenues	(5)	1 714,6	1 748,4	4 844,0	4 327,3	6 142,9
Cost of goods sold		948,1	1 011,0	2 697,0	2 454,8	3 500,5
Depreciations/write-down		27,5	20,4	76,2	60,6	79,5
Gross contribution		739,0	717,0	2 070,8	1 811,9	2 562,9
Operating expenses		378,4	367,2	1 183,9	1 067,6	1 448,4
Depreciations/write-down		29,7	25,9	84,3	76,0	99,5
EBITA	(5)	330,9	323,9	802,6	668,3	1 015,0
Amortizations		37,1	34,1	102,3	92,0	124,3
EBIT	(5)	293,8	289,8	700,3	576,3	890,7
Net financial income		31,7	(7,0)	35,7	(22,2)	(24,7)
Profit before tax		325,5	282,8	736,0	554,1	866,0
Taxes		79,5	80,6	179,6	150,1	211,6
Profit from continuing operations		246,0	202,2	556,4	404,0	654,4
Discontinued operations		(2,8)	(1,1)	(7,8)	(4,1)	(6,7)
Net profit		243,2	201,1	548,6	399,9	647,7
Non-Controlling interest (Minority interest)		(22,0)	(18,7)	(43,0)	(36,3)	(46,9)
Earnings per share (EPS)		1,50	1,23	3,42	2,45	4,06
Earnings per share (EPS) continuing operations		1,51	1,24	3,47	2,49	4,11
STATEMENT OF OTHER COMPREHENSIVE INCOME		3rd Quarter		YTD		Full year
(MNOK)		2016	2015	2016	2015	2015
Net profit for the period		243,2	201,1	548,6	399,9	647,7
Other comprehensive income that may be reclassified to profit or loss
Translation differences		(149,6)	260,1	(301,8)	264,8	352,2
Other comprehensive income that will not be reclassified to profit or loss
Remeasurements of defined benefit liability (assets)						(0,4)
Total comprehensive income		93,6	461,2	246,8	664,7	999,5
Attributable to:
Non-controlling interest		15,6	28,8	29,1	53,1	68,3
Shareholders of the parent company		78,1	432,4	217,7	611,6	931,2
Total comprehensive income		93,7	461,2	246,8	664,7	999,5
		-

STATEMENTS OF FINANCIAL POSITION		30 September	31 Dec
(MNOK)	2016	2015	2015
ASSETS
Intangible non-current assets	2 744,8	2 816,2	2 890,5
Tangible non-current assets	754,7	721,4	837,9
Financial non-current assets	321,8	309,1	315,7
Inventory	1 234,8	1 157,9	1 209,0
Receivables	1 815,3	1 918,0	1 751,2
Cash and cash equivalents	334,1	395,5	312,9
TOTAL ASSETS	7 205,5	7 318,1	7 317,2
EQUITY & LIABILITIES
Equity	3 924,5	3 648,3	3 945,1
Non-controlling interest	173,5	135,6	160,4
Deferred taxes	115,1	150,4	124,2
Long-term interest bearing liabilities	979,6	1 153,6	1 206,4
Short-term interest bearing liabilities	-	285,7	-
Other liabilities	2 012,8	1 944,5	1 881,1
TOTAL EQUITY & LIABILITIES	7 205,5	7 318,1	7 317,2

STATEMENT OF CASHFLOWS		3rd Quarter			YTD	Full year
(MNOK)	Note	2016	2015	2016	2015	2015
Profit before income tax*		322,7	281,7	728,2	550,0	859,3
Changes in working capital		(56,3)	19,2	(94,1)	(115,1)	(88,9)
Other operating changes		81,7	82,7	71,4	135,3	143,1
Total cash flow from operations		348,1	383,6	705,5	570,2	913,5
Cashflow from (purchase)/sales of subsidiaries		0,0	(29,0)	0,0	52,2	59,3
Other cashflow from investments		(85,6)	(52,5)	(225,9)	(181,2)	(339,5)
Total cash flow from investments		(85,6)	(81,5)	(225,9)	(129,0)	(280,2)
Cashflow from sales/repurchase of treasury shares	(3)	0,0	0,0	20,4	7,1	(15,7)
Dividend paid out	(2)	0,0	0,0	(258,8)	(214,3)	(214,3)
Other cashflow from financing		(321,4)	(287,0)	(222,1)	(316,8)	(580,6)
Total cash flow from financing		(321,4)	(287,0)	(460,5)	(524,0)	(810,6)
Total cash flow for period		(58,9)	15,1	19,1	(82,8)	(177,3)
Exchange rate effect on cash		0,5	41,3	2,1	42,0	53,9
Opening cash balance		392,5	339,1	312,9	436,3	436,3
Closing cash balance		334,1	395,5	334,1	395,5	312,9

Condensed Consolidated interim financial statements (continued)

* Including loss from discontinued operations

EQUITY	Paid in	Transl.	Actuarial	Retained	Total	Minority	Total
(MNOK)	capital	reserve	Gain /	earnings	majority	interest	Equity
Balance per 31 December 2015	1 065,9	656,0	(37,5)	2 260,7	3 945,1	160,4	4 105,5
Net profit				505,6	505,6	43,0	548,6
Changes in translation difference		(287,9)			(287,9)	(13,9)	(301,8)
Remeasurement defined benefit liability					0,0		0,0
Dividend non-controlling interest					0,0	(16,1)	(16,1)
Purchase of treasury shares					0,0		0,0
Treasury shares sold to employees	0,3			20,2	20,5		20,5
Minority new consolidated companies					0,0		0,0
Dividend to shareholders				(258,8)	(258,8)		(258,8)
Balance per 30 September 2016	1 066,2	368,1	(37,5)	2 527,7	3 924,5	173,4	4 097,9

EQUITY	3rd Quarter		YTD		Full year
(MNOK)	2016	2015	2016	2015	2015
Opening balance	3 846,4	3 216,0	3 945,1	3 244,0	3 244,0
Net profit	221,3	182,4	505,6	363,6	600,8
Translation difference	(143,2)	249,9	(287,9)	247,9	330,8
Remeasurement defined benefit liability	0,0	0,0	0,0	0,0	(0,4)
Dividend paid	0,0	0,0	(258,8)	(214,3)	(214,4)
Net purchase of own shares	0,0	0,0	20,5	7,1	(15,7)
Closing balance	3 924,5	3 648,3	3 924,5	3 648,3	3 945,1

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 1 Disclosure

This interim report has been prepared in accordance with IAS34, and in accordance with the principles used in the annual accounts for 2015. The quarterly reports do not however include all information required for a full annual financial statement of the Group and should be read in conjunction with the annual financial statement for 2015. The quarterly reports have not been audited. The quarterly reports require management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The significant judgments made by management in preparing these condensed consolidated interim financial statements in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ending 31 December 2015.

A number of new standards, amendments to standards and interpretations are not effective for the period ending 30 September 2016 and have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these standards early. These will be adopted in the period that they become mandatory unless otherwise indicated:

IFRS 9 Financial Instruments IFRS 15 Revenue from Contracts with Customers IFRS 16 Leases Amendments to IAS 12 – Recognition of Deferred Tax Assets for Unrealized Losses Amendment to IAS 7 – Disclosure Initiative

TOMRA is considering the effects of the future adoption of these standards. The current assessment is that TOMRA does not expect any material effects in the financial statements from the new standards.

Revenue recognition: Revenues from sales and sales-type leases of the company's products are generally recognized at the time of installation. Revenues from service contracts and operating leases of the company's products are recognized over the duration of the related agreements. Other service revenues are recognized when services are provided.

Seasonality: The Material Recovery operations, and to some extent the US Reverse Vending operations, are influenced by seasonality. The seasonality mirrors the beverage consumption pattern in the US, which normally is higher during the summer (2Q and 3Q) than during the winter (1Q and 4Q). Also the Food business stream within Sorting Solutions is influenced by seasonality, with somewhat higher activity during the harvest season in the northern hemisphere.

Financial exposures: TOMRA is exposed to currency risk, as only ~4% of its income is nominated in NOK. A strengthening/ weakening of NOK toward other currencies of 10% would normally decrease/increase operating profit by 8-12%. An increase in NIBOR and EURIBOR of 1 percentage point, would increase financial expenses by ~NOK 7 million per year.

Segment reporting: TOMRA has divided its primary reporting format into two business areas: Collection Solutions and Sorting Solutions. In addition, the corporate overhead costs are reported in a separate column. The split is based upon the risk- and return profile of the Group's different activities; also taking into consideration TOMRA's internal reporting structure.

• Collection Solutions consists of the business streams Reverse Vending (development, production, sales and service of Reverse Vending Machines and related data management systems) + Material Recovery (pick-up, transportation and processing of empty beverage containers on behalf of beverage producers/fillers on the US East Coast and in Canada)
• Sorting Solutions consists of the business streams Food, Recycling and Mining, all providing advanced optical sorting systems
• Group Functions consists of costs related to corporate functions at TOMRA's headquarters

Assets and liabilities are distributed to the different business streams, except for cash, interest-bearing debt and taxpositions, which are allocated to Group Functions. There are no material revenues from transactions with other business areas. There are no material related party transactions in 2016.

NOTE 1 Disclosure (cont.)

Alternative performance measures:

Alternative performance measures used in this report are defined in the following way:

• EBITA is the calculated profit (loss) for the period before (i) income tax expenses, (ii) finance income and expenses and (iii) amortization.

• Net interest bearing debt is calculated as the difference between interest-bearing debts and cash and cash equivalents. Interest-bearing debts include loans from financial institutions (current and non-current loans) and cash and cash equivalents include short-term deposits, cash funds and bank accounts.

• Currency adjusted revenues is the change in revenues, after adjusting for estimated currency effect.

The divested Compaction business is classified as discontinued operations in the profit and loss statement and as assets/liabilities held for sale in the balance sheet, and classified under Group Functions in the segment reporting.

NOTE 2 Dividend paid

Paid out May 2015:	1.45 NOK x 147.8 million shares = NOK 214.3 million
Paid out May 2016:	1.75 NOK x 147.9 million shares = NOK 258.8 million

NOTE 3 Purchase of treasury shares

Net purchase of own shares	# shares	Average price		Total (MNOK)
2015
Gross purchased	250 000	NOK	91,16	22,8
Sold to employees	(103 603)	NOK	68,59	(7,1)
Net purchased	146 397			15,7
2016
Sold to employees	242 136	NOK	84,25	20,4
Net purchased	242 136			20,4

NOTE 4 Interim results

(MNOK)	3Q16	2Q16	1Q16	4Q15	3Q15
Operating revenues (MNOK)	1 715	1 770	1 360	1 816	1 748
EBITA (MNOK)	331	318	153	347	324
EBIT (MNOK)	294	285	121	315	290
Sales growth (year-on-year) (%)	-2 %	20 %	23 %	30 %	47 %
Gross margin (%)	43 %	43 %	42 %	41 %	41 %
EBITA margin (%)	19 %	18 %	11 %	19 %	19 %
EPS (NOK)	1,50	1,38	0,54	1,61	1,23
EPS (NOK) fully diluted	1,50	1,38	0,54	1,61	1,23

NOTE 5 Operating segments

SEGMENT	Collection Solutions		Sorting Solutions			Group Functions		Group Total
(MNOK)	3Q16	3Q15	3Q16	3Q15	3Q16	3Q15	3Q16	3Q15
Revenues	1 079	1 110	636	638			1 715	1 748
Gross contribution	455	431	284	286			739	717
- in %	42 %	39 %	45 %	45 %			43 %	41 %
Operating expenses	194	184	198	199	1 6	1 0	408	393
EBITA	261	247	8 6	8 7	(16)	(10)	331	324
- in %	24 %	22 %	14 %	14 %			19 %	19 %
Amortization	1 4	1 2	2 3	2 2			3 7	3 4
EBIT	247	235	6 3	6 5	(16)	(10)	294	290
- in %	23 %	21 %	10 %	10 %			17 %	17 %

SEGMENT	Collection Solutions		Sorting Solutions		Group Functions		Group Total
(MNOK)	YTD16	YTD15	YTD16	YTD15	YTD16	YTD15	YTD16	YTD15
Revenues	3 037	2 664	1 807	1 663			4 844	4 327
Gross contribution	1 262	1 069	809	743			2 071	1 812
- in %	42 %	40 %	45 %	45 %			43 %	42 %
Operating expenses	617	550	615	568	3 6	2 6	1 268	1 144
EBITA	645	519	194	175	(36)	(26)	803	668
- in %	21 %	19 %	11 %	11 %			17 %	15 %
Amortization	3 6	2 9	6 6	6 3			102	9 2
EBIT	609	490	128	112	(36)	(26)	701	576
- in %	20 %	18 %	7 %	7 %			14 %	13 %
Assets	3 023	2 961	3 598	3 761	585	596	7 206	7 318
Liabilities	1 136	1 127	639	617	1 333	1 790	3 108	3 534

About TOMRA

TOMRA was founded on an innovation in 1972 that began with design, manufacturing and sale of reverse vending machines (RVMs) for automated collection of used beverage containers.

Today, TOMRA has ~86,000 installations in over 80 markets worldwide and had total revenues of ~6.1 billion NOK in 2015.

The Group employs ~2,600 globally, and is publicly listed on the Oslo Stock Exchange. (OSE: TOM)

The TOMRA Group continues to innovate and provide cutting-edge solutions for optimal resource productivity within two main business areas: Collection Solutions (reverse vending and material recovery) and Sorting Solutions (recycling, mining and food sorting).

For further information about TOMRA, please see www.tomra.com

The results announcement will be broadcasted Friday 21st of October at 08:00 CET via live webcast. Link to webcast for this and previous releases are available at https://tomra.com/en/investor-relations/webcasts/

For further information contact:

Espen Gundersen, Deputy CEO / CFO, Tel: +47 97 68 73 01 Elisabet V. Sandnes, Vice President Investor/M&A, Tel: +47 97 55 79 15