TOMRA Systems — Interim / Quarterly Report 2017

Feb 21, 2018

4 TH QUARTER 2017 RESULTS ANNOUNCEMENT

TOMRA SYSTEMS ASA 4 th Quarter Results 21.02.2018

HIGHLIGHTS FROM 2017

	• Revenues of 7,432 MNOK (6,610 MNOK in 2016) – Adjusted for currency and acquisitions, revenues were :	up 12% (including Compac)
Revenues	- Up 1% for TOMRA Group
	- Down 5% in TOMRA Collection Solutions
	- Up 9% in TOMRA Sorting Solutions
	• Gross margin 42%, down from 43%
Gross margin	- Improved margin in TOMRA Collection
	- Slightly lower margin in TOMRA Sorting
Operating	• Operating expenses 2,073 MNOK (1,695 MNOK in 2016)
expenses	- Up 2% adjusted for currency, acquisitions and ramp up cost Australia
EBITA	• EBITA of 1,068 MNOK (1,119 MNOK in 2016)
Cashflow	• Cashflow from operations of 1,023 MNOK (1,095 MNOK in 2016)

HIGHLIGHTS FROM THE QUARTER

Revenues	• Revenues of 2,041 MNOK (1,766 MNOK in fourth quarter 2016) – up 16% Adjusted for currency and acquisitions, revenues were: - Up 2% for TOMRA Group - Down 6% in TOMRA Collection Solutions - Up 12% in TOMRA Sorting Solutions
Gross margin	• Gross margin 43%, up from 42% in fourth quarter 2016 - Improved margin in TOMRA Collection Solutions - Stable margin in TOMRA Sorting Solutions
Operating expenses	• Operating expenses of 574 MNOK (427 MNOK in fourth quarter 2016) - Up 4% adjusted for currency and acquisitions, and ramp-up in Australia
EBITA	• EBITA of 301 MNOK (316 MNOK in fourth quarter 2016)
Cashflow	• Cash flow from operations of 356 MNOK (390 MNOK in fourth quarter 2016)
TOMRA Collection	• New South Wales (Australia) launched deposit system 1st December 2017
TOMRA Sorting	• Order intake (ex Compac) of 793 MNOK, compared to 649 MNOK same period last year • Order backlog of 872 MNOK (ex Compac), up from 704 MNOK at the end of fourth quarter 2016

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

	4th Quarter			YTD
Amounts in NOK million	2017	2016	16 Adj*	2017	2016	16 Adj*
Revenues	2,041	1,766	1,812	7,432	6,610	6,616
• Collection Solutions	995	1,028	1,056	3,871	4,065	4,065
• Sorting Solutions	1,046	738	756	3,561	2,545	2,551
Gross contribution	875	743	764	3,141	2,814	2,814
in %	43%	42%	42%	42%	43%	42%
Operating expenses	574	427	437	2,073	1,695	1,707
EBITA	301	316	327	1,068	1,119	1,107
in %	15%	18%	18%	14%	17%	17%
Including:
Ramp up cost Australia	57	-	-	68	-	-
Other one time cost	-	6	6	8	12	12

FINANCIAL HIGHLIGHTS BALANCE SHEET, CASH FLOW AND CAPITAL STRUCTURE

Amounts in NOK million	31 Dec 2017	31 Dec 2016
ASSETS	8,437	7,115
• Intangible non-current assets	3,412	2,750
• Tangible non-current assets	998	801
• Financial non-current assets	349	342
• Inventory	1,197	1,127
• Receivables	1,887	1,696
• Cash and cash equivalents	594	399
LIABILITIES AND EQUITY	8,437	7,115
• Equity	4,594	4,192
• Minority interest	143	178
• Interest bearing liabilities	1,280	760
• Non-interest bearing liabilities	2,420	1,985

Cashflow from operations

• 356 MNOK (390 MNOK in 4Q 2016)

Solidity

• 55% equity
• NIBD/EBITDA = 0.5x (Rolling 12 months)

Dividend

• The Board propose a dividend of NOK 2.35 per share, up from NOK 2.10 last year

TOMRA COLLECTION SOLUTIONS

HIGHLIGHTS COLLECTION SOLUTIONS

	• Revenues of 995 MNOK, down from 1,028 MNOK in fourth quarter 2016 - Revenues down 6% in local currencies
	• Gross margin was 40% in the period - Up from 39% in fourth quarter 2016
Overall	• Operating expenses of 266 MNOK - Including ramp up cost Australia with 57 MNOK - Adjusted for currency and ramp up cost; unchanged from last year
	• EBITA decreased from 198 MNOK to 135 MNOK - A result of lower revenues and increased operating expenses
Europe	• Currency adjusted revenues down 15% in Europe - Still high replacement activity in Germany, but down compared to a strong fourth quarter 2016
North America	• Currency adjusted revenues up 4% - Machine and throughput volumes slightly up
Australia	• Deposit introduced 1st December in New South Wales - Ramp up cost of 57 MNOK booked in 4Q17

TOMRA machines installed in the German market

UPDATE ON THE NEW SOUTH WALES RAMP-UP

New South Wales Container Deposit Scheme announced opened the 1st of December 2017

• The network of Collection Points at scheme commencement date numbered 280 collection points across the state
• − 60 Automated Collection Points (with RVMs)
• − 220 manual sites
• There will be a significant increase in Collection Points coming online from Scheme start date and the following months
• TOMRA will continue to add infrastructure based on consumer traffic and adoption of the system
• As of the 20th of February more than 100 million* containers was recycled under the scheme
• The Automated Collection Points are technically performing well

We expect the full infrastructure to count ~1,000 RVMs in NSW

ILLUSTRATIVE: VOLUME AND SITE DEVELOPMENT

Volume to gradually follow as the number of Automated Sites increase in the total infrastructure

The volume graph does not account for seasonal effects

COLLECTION SOLUTIONS FINANCIALS

	4th Quarter			YTD
Amounts in NOK million	2017	2016	16 Adj*	2017	2016	16 Adj*
Revenues	995	1,028	1,056	3,871	4,065	4,065
• Northern Europe	180	157		614	665
• Europe (ex Northern)	407	505		1,671	1,860
• North America	377	354		1,520	1,474
• Rest of the world	31	12		66	66
Gross contribution	401	402	418	1,601	1,664	1,667
in %	40%	39%	39%	41%	41%	41%
Operating expenses	266	204	208	895	821	825
EBITA	135	198	210	706	843	842
in %	14%	19%	20%	18%	21%	21%
Including: Ramp up cost Australia Other one time cost	57 -	- -	- -	68 -	- -	- -

TOMRA SORTING SOLUTIONS

HIGHLIGHTS SORTING SOLUTIONS

Revenues	• Revenues equaled 1,046 MNOK in fourth quarter 2017, up from 738 MNOK in fourth quarter 2016 up 12% in local currencies (organic) —
Gross margin	• Gross margin 45%, down from 46% same period last year Slightly down due to currency and Compac —
EBITA	• EBITA of 182 MNOK (134 MNOK in fourth quarter 2016)
Orders	• Order intake (ex Compac) of 793 MNOK, compared to 649 MNOK same period last year (up 11% currency adjusted)
	• Order backlog (ex Compac) of 872 MNOK, up from 704 MNOK at the end of fourth quarter 2016

BUSINESS STREAM UPDATE

FOOD

• Overall good momentum • Revenues in 4Q17 up from 4Q16
• Order intake stable quarter over quarter, on the back of three consecutive strong quarters in 2017

RECYCLING

• Momentum continue to increasing, after a period of lower activity
• Revenues in 4Q17 up from 4Q16
• Order intake significantly up quarter over quarter

MINING

• Order intake and revenues has improved from last year, though still from a low level

SORTING SOLUTIONS FINANCIALS

	4th Quarter		YTD
Amounts in NOK million	2017	2016	16 Adj*	2017	2016	16 Adj*
Revenues	1,046	738	756	3,561	2,545	2,551
• Europe	302	290		1,182	1,100
• North America	354	194		1,282	805
• South America	51	47		140	80
• Asia	128	122		419	368
• Oceania	117	48		329	115
• Africa	94	37		209	77
Gross contribution	474	341	347	1,540	1,150	1,148
in %	45%	46%	46%	43%	45%	45%
Operating expenses	292	207	213	1,114	822	828
EBITA	182	134	134	426	328	320
in %	17%	18%	18%	12%	13%	13%

BACKLOG DEVELOPMENT AND MOMENTUM

TOMRA Sorting Solutions (TSS) without Compac:

• Order intake of 793 MNOK in the quarter, compared to 649 MNOK same quarter last year, up 11% currency adjusted
• Revenues came in at 845 MNOK (up from 738 MNOK in 4Q16)
• Order backlog of 872 MNOK, up from 704 MNOK at the end of December 2016

Compac

• Reported revenues of 201 MNOK in the quarter and finished the year with a backlog of 275 MNOK
• Estimated backlog conversion ratio in 1Q18, including Compac: 70%*

OUTLOOK

OUTLOOK

Collection Solutions	• The replacement demand in Germany is assumed to continue into 2018 • Ramp-up in New South Wales continues throughout first quarter 2018
Sorting Solutions	• Currently good momentum in all business streams
Currency	• Reporting in NOK and with some NOK cost base, TOMRA will in general benefit from a weak NOK, measured particularly against EUR • With significant revenues in USD and costs in EUR and NZD, is Tomra Sorting exposed to USD/EUR and USD/NZD.

Q&A

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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