TOMRA Systems — Interim / Quarterly Report 2018

Oct 23, 2018

3 RD QUARTER 2018 RESULTS ANNOUNCEMENT

TOMRA SYSTEMS ASA 3 rd Quarter Results 23.10.2018

HIGHLIGHTS FROM THE QUARTER

Revenues	• Revenues of 2,247 MNOK (1,855 MNOK in third quarter 2017) – up 21% Adjusted for currency and acquisitions, revenues were: - Up 14% for TOMRA Group - Up 9% in TOMRA Collection Solutions - Up 20% in TOMRA Sorting Solutions
	• Gross margin 44%, up from 43% in third quarter 2017
Gross margin	- Stable margins in TOMRA Collection Solutions - Improved margins in TOMRA Sorting Solutions
Operating expenses	• Operating expenses of 587 MNOK (496 MNOK in third quarter 2017) - Higher activity - BBC and New South Wales
EBITA	• EBITA of 408 MNOK – up 35% from third quarter 2017
Cashflow	• Cash flow from operations of 433 MNOK (375 MNOK in third quarter 2017)
TOMRA	• Higher activity in North America, offset by somewhat lower activity in Europe
Collection Solutions	• Ramp-up in New South Wales completed
TOMRA	• Order intake of 1,105 MNOK, up from 964 MNOK same period last year (up 6% organic)
Sorting Solutions	• Order backlog of 1,579 MNOK, up from 1,226 MNOK at the end of third quarter 2017

CURRENCY

Revenues and expenses per currency: NOTE: Rounded figures

	EUR*	USD	NOK	NZD	OTHER	TOTAL
Revenues	45 %	45 %	0 %	0 %	10 %	100 %
Expenses	40 %	30 %	5 %	5 %	20 %	100 %
EBITA	50 %	100 %	- 20 %	- 20 %	-10 %	100 %

* EUR includes DKK

FINANCIAL HIGHLIGHTS P&L STATEMENT

	rd 3 Quarter			YTD 9 months
Amounts in NOK million	2018	2017	17 Adj*	2018	2017	17 Adj*
Revenues	2,247	1,855	1,896	6,129	5,391	5,404
• Collection Solutions	1,135	1,024	1,044	3,124	2,876	2,897
• Sorting Solutions	1,112	831	852	3,005	2,515	2,507
Gross contribution	995	799	819	2,633	2,266	2,258
in %	44%	43%	43%	43%	42%	42%
Operating expenses	587	496	502	1,776	1,499	1,520
EBITA	408	303	317	857	767	738
in %	18%	16%	17%	14%	14%	14%

FINANCIAL HIGHLIGHTS BALANCE SHEET, CASH FLOW AND CAPITAL STRUCTURE

Amounts in NOK million	30 Sept 2018	30 Sept 2017	31 Dec 2017
ASSETS	9,117	8,214	8,437
• Intangible non-current assets	3,653	3,314	3,412
• Tangible non-current assets	1,129	848	998
• Financial non-current assets	327	307	349
• Inventory	1,400	1,204	1,197
• Receivables	2,322	2,067	1,887
• Cash and cash equivalents	286	474	594
LIABILITIES AND EQUITY	9,117	8,214	8,437
• Equity	4,577	4,326	4,594
• Minority interest	156	174	143
• Interest bearing liabilities	1,487	1,214	1,280
• Non-interest bearing liabilities	2,897	2,500	2,420

Ordinary cashflow from operations

• 433 MNOK (375 MNOK in third quarter 2017)

Solidity

• 50% equity
• NIBD/EBITDA = 0.8x (Rolling 12 months)

TOMRA COLLECTION SOLUTIONS

HIGHLIGHTS COLLECTION SOLUTIONS

• Tomra to operate 10 Collection Refund Points

TOMRA machines installed in the German market

QUEENSLAND DEPOSIT SCHEME: LIVE FROM 1 NOVEMBER 2018

QLD Scheme: The Beverage Industry Governs the Scheme through Producer Responsibility Organization CoEx

• TOMRA and Cleanaway have signed standalone contracts directly with CoEx
• TOMRA will run 10 modern depots in the Greater Brisbane Area
• The depot need to sort in 8 fractions: −Glass −PET clear −PET color −Aluminum 95% of volume
• −Steel, Tetra Pak (Liquid Packaging Board), HDPE, Other Plastic

POTENTIAL NEW DEPOSIT MARKETS

Western Australia	Scotland	England
• Beverage containers accounts for 35% of all litter in WA • Deposit value: 0.1 AUD (150mL – 3L) • Utilize curbside recycling and other existing waste services • Consultation round ended 10th of September 2018	• September 2017, First Minister Nicola Sturgeon announced a deposit return scheme for drink containers • Aims to increase recycling rates from current levels of 50% • Consultation round ended 25th of September 2018	• March 2018, UK Environment Secretary Michael Gove announced plans for a deposit return scheme • Consultation expected to be released within year end • No known consultation round deadline
Estimated Startup: Early 2020	Estimated Startup: 1/7/2020	Estimated Startup: 1/1/2021

9

COLLECTION SOLUTIONS FINANCIALS

	3rd Quarter			YTD 9 months
Amounts in NOK million	2018	2017	17 Adj*	2018	2017	17 Adj*
Revenues	1,135	1,024	1,044	3,124	2,876	2,897
• Northern Europe	147	146		457	434
• Europe (ex Northern)	433	470		1,245	1,264
• North America	467	397		1,202	1,143
• Rest of the world	88	11		220	35
Gross contribution	484	438	445	1,299	1,200	1,211
in %	43%	43%	43%	42%	42%	42%
Operating expenses	240	202	206	752	629	638
EBITA	244	236	239	547	571	573
in %	21%	23%	23%	18%	20%	20%

TOMRA SORTING SOLUTIONS

HIGHLIGHTS SORTING SOLUTIONS

• Revenues equaled 1,112 MNOK in third quarter 2018, up from 831 MNOK in third quarter 2017

Revenues

• Adjusted for currency and acquisitions, revenues were up 20%

• Includes BBC revenues of 93 MNOK in third quarter 2018

• Gross margin

• Gross margin 46%
• Up from 43% last year, due to product mix and higher activity
• Improved or stable margins in all business streams

EBITA

• EBITA of 184 MNOK (83 MNOK in third quarter 2017)

Orders

• Order intake of 1,105 MNOK, up from 964 MNOK same period last year (+6% organic)
• Order backlog of 1,579 MNOK, up from 1,226 MNOK at the end of third quarter 2017

BUSINESS STREAM UPDATE

FOOD

• Stable revenues in 3Q18 compared to 3Q17
• Order intake slightly down in the quarter due to timing, but up year-to date
• BBC consolidated from 1 March 2018, ending third quarter with a backlog of 80 MNOK

RECYCLING

• Revenues in 3Q18 significantly up from 3Q17
• Order intake up quarter over quarter
• Order backlog significantly up from end of 3Q17

MINING

• Both revenues, order intake and backlog improved significantly in Mining

SORTING SOLUTIONS FINANCIALS

	3rd Quarter			YTD 9 months
Amounts in NOK million	2018	2017	17 Adj*	2018	2017	17 Adj*
Revenues	1,112	831	852	3,005	2,515	2,507
• Europe	423	344		1,107	880
• North America	336	242		1,024	928
• South America	74	31		142	89
• Asia	136	91		339	291
• Oceania	97	73		254	212
• Africa	46	50		139	115
Gross contribution	511	361	374	1,334	1,066	1,047
in %	46%	43%	44%	44%	42%	42%
Operating expenses	327	278	280	964	822	832
EBITA	184	83	94	370	244	215
in %	17%	10%	11%	12%	10%	8%

DEVELOPMENT IN ORDER INTAKE AND ORDER BACKLOG

REVENUES

ORDER INTAKE ORDER BACKLOG

• TOMRA Sorting Solutions (TSS):
• Revenues of 1,112 MNOK, up from 831 MNOK last year
• Order intake of 1,105 MNOK in the quarter, compared to 964 MNOK last year
• Despite all time high revenues in the quarter, a strong order intake led to healthy order backlog of 1,579 MNOK by the end of third quarter
• Estimated backlog conversion ratio in 4Q18: 80%*

OUTLOOK

OUTLOOK

Collection Solutions

• Queensland ramp-up ongoing go live 1 st of November 2018
• Increased operating expenses due to preparation for new markets

Sorting Solutions

Currency

• Currently good momentum in all business streams

• Reporting in NOK and with some NOK cost base, TOMRA will in general benefit from a weak NOK, particularly measured against EUR.
• With significant revenues in USD and costs in EUR and NZD, TOMRA Sorting is exposed to USD/EUR and USD/NZD.

GROUP FINANCIAL TARGETS 2018-2023 – OUR AMBITIONS AFFIRMED

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