TOMRA Systems — Interim / Quarterly Report 2017

Jul 19, 2017

2 ND QUARTER 2017 RESULTS ANNOUNCEMENT

TOMRA SYSTEMS ASA 2 nd Quarter Results 19.07.2017

HIGHLIGHTS FROM THE QUARTER

Revenues	• Revenues of 1,972 MNOK (1,769 MNOK in second quarter 2016) – up 11% Adjusted for currency and acquisitions, revenues were: - Down 4% for TOMRA Group - Down 12% in TOMRA Collection Solutions - Up 8% in TOMRA Sorting Solutions
Gross margin	• Gross margin 42%, down from 43% in second quarter 2016 - Slightly reduced margins due to consolidation of Compac
Operating expenses	• Operating expenses of 530 MNOK (439 MNOK in second quarter 2016) - Unchanged when adjusted for currency and acquisitions - Including 4 MNOK in transaction costs
EBITA	• EBITA of 306 MNOK (319 MNOK in second quarter 2016)
Cashflow	• Cash flow from operations of 170 MNOK (239 MNOK in second quarter 2016)
TOMRA Collection	• Slower development in Nordic due to completion of Swedish replacement • Still high activity in Germany, but slightly down compared to a strong 2Q16
TOMRA	• Order intake (ex Compac) of 752 MNOK, compared to 667 MNOK same period last year, currency adjusted up 16%
Sorting Solutions	• Order backlog of 873 MNOK (ex Compac), up from 816 MNOK at the end of second quarter 2016

CURRENCY

Revenues and expenses per currency; NOTE: Rounded figures

	EUR*	USD	NOK	NZD	OTHER	TOTAL
Revenues	45 %	40 %	0 %	0 %	15 %	100 %
Expenses	45 %	30 %	5 %	5 %	15 %	100 %
EBITA	45 %	90 %	- 25 %	- 25 %	15 %	100 %

* EUR includes DKK

FINANCIAL HIGHLIGHTS P&L STATEMENT

	2nd Quarter			1st Half
Amounts in NOK million	2017	2016	16 Adj*	2017	2016	16 Adj*
Revenues	1,972	1,769	1,799	3,536	3,129	3,112
• Collection Solutions	975	1,089	1,105	1,852	1,958	1,943
• Sorting Solutions	997	680	694	1,684	1,171	1,169
Gross contribution	834	758	769	1,467	1,332	1,323
in %	42%	43%	43%	41%	43%	43%
Operating expenses	528	439	452	1,003	860	862
EBITA	306	319	317	464	472	461
in %	16%	18%	18%	13%	15%	15%
One time costs included in operating expenses	4	-	-	8	-	-

*2016 actual restated at 2017 exchange rates, estimated

FINANCIAL HIGHLIGHTS BALANCE SHEET, CASH FLOW AND CAPITAL STRUCTURE

Amounts in NOK million	30 June 2017	30 June 2016	31 Dec 2016
ASSETS	8,260	7,355	7,115
• Intangible non-current assets	3,364	2,810	2,750
• Tangible non-current assets	839	793	801
• Financial non-current assets	362	318	342
• Inventory	1,220	1,275	1,127
• Receivables	1,976	1,766	1,696
• Cash and cash equivalents	499	393	399
LIABILITIES AND EQUITY	8,260	7,355	7,115
• Equity	4,275	3,846	4,192
• Minority interest	197	186	178
• Interest bearing liabilities	1,480	1,252	760
• Non-interest bearing liabilities	2,308	2,071	1,985

Ordinary cashflow from operations

• 170 MNOK (239 MNOK in 2Q 2016)

Solidity

• 52% equity
• NIBD/EBITDA = 0.7x (Rolling 12 months)
• Dividend of NOK 2.10 (NOK 1.75 last year) paid out 11 May 2017

TOMRA COLLECTION SOLUTIONS

HIGHLIGHTS COLLECTION SOLUTIONS

NEW SOUTH WALES CDS: AN UPDATE

NSW Scheme Commencement date is set to December 1st

• Scheme goal: Reduce littering by 40% by 2020
• Beverage suppliers (incl. own labels) will finance the scheme
• The State of New South Wales is divided into 7 zones
• Given the short mobilization phase prior to Scheme Commencement, there will be a ramp up period to full coverage post December 1st
• TOMRA has submitted a bid for a Network Operator role jointly with Cleanaway, the leading waste management company in Australia

8

COLLECTION SOLUTIONS FINANCIALS

	2nd Quarter			1st Half
Amounts in NOK million	2017	2016	16 Adj*	2017	2016	16 Adj*
Revenues	975	1,089	1,105	1,852	1,958	1,943
• Nordic	149	186		288	344
• Europe (ex Nordic)	411	488		794	862
• North America	404	390		746	712
• Rest of the world	11	25		24	40
Gross contribution	411	455	460	762	807	798
in %	42%	42%	42%	41%	41%	41%
Operating expenses	220	218	224	427	423	424
EBITA	191	237	236	335	384	374
in %	20%	22%	21%	18%	20%	19%

*2016 actual restated at 2017 exchange rates, estimated

GERMANY REPLACEMENT UPDATE

TOMRA SORTING SOLUTIONS

HIGHLIGHTS SORTING SOLUTIONS

BUSINESS STREAM UPDATE

FOOD

• Overall good momentum
• Revenues in 2Q17 up from 2Q16
• Order intake up quarter over quarter

RECYCLING

• Momentum increasing, after a period of lower activity
• Revenues in 2Q17 up from 2Q16
• Order intake up quarter over quarter

MINING

• Marked still depressed in most commodities
• Revenues and order intake stable, but at a low level

COMPAC TRANSACTION

• TOMRA purchased Compac for an initial purchase price of NZD 70 million, free of cash and interest bearing debt and with normalized working capital
• In addition, the vendors were entitled to an Earn-Out based upon the financial performance for the period 1 July 2016 to 30 June 2019
• Completion took place 1 February 2017
• A financial completion statement has been prepared, which has been subject to discussion between the parties
• The parties have now agreed a final settlement where the Earn-Out has been cancelled in exchange for certain upfront agreements regarding level of working capital and warranty clauses

SORTING SOLUTIONS FINANCIALS

	2nd Quarter			1st Half
Amounts in NOK million	2017	2016	16 Adj*	2017	2016	16 Adj*
Revenues	997	680	694	1,684	1,171	1,169
• Europe	329	303		536	508
• North America	434	247		686	404
• South America	33	13		58	17
• Asia	92	67		200	157
• Oceania	82	34		139	55
• Africa	27	16		65	30
Gross contribution	423	303	309	705	525	525
in %	42%	45%	45%	42%	45%	45%
Operating expenses	292	211	217	544	417	417
EBITA	131	92	92	161	108	108
in %	13%	14%	13%	10%	9%	9%

*2016 actual restated at 2017 exchange rates, estimated

BACKLOG DEVELOPMENT AND MOMENTUM

TOMRA Sorting Solutions (TSS) without Compac:

• Delivered all time high order intake of 752 MNOK in the quarter, compared to 667 MNOK same quarter last year
• Revenues came in at 753 MNOK (up from 680 MNOK in 2Q16)
• Order backlog of 873 MNOK, up from 816 MNOK at the end of June 2016

Compac

• Reported revenues of 244 MNOK in the quarter and finished the quarter with a backlog of 220 MNOK
• Estimated backlog conversion ratio in 3Q17, including Compac: 80%*

OUTLOOK

OUTLOOK

Collection Solutions • The replacement demand in Germany is assumed to continue during 2017 • Replacement in Sweden has now finished

Sorting Solutions

• Currently good momentum in Food
• Improved momentum in Recycling

Currency

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

Q&A

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