TOMRA Systems — Investor Presentation 2011

Jan 12, 2011

TOMRA

SEB Enskilda Nordic 2011 Seminar

Copenhagen

12 January, 2011

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The world's resources are under unprecedented pressure.

World population in 2010
~7 billion
Consumption in 2010
1.5 planets

World population in 2050
>9 billion
Consumption in 2050
2 planets

2

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TOMRA's role

TOMRA provides solutions for optimal resource productivity:

• We relentlessly pursue cutting-edge technology solutions for solving our planet's resource and environmental challenges
• We enhance business productivity through innovative and open-minded technology solutions

TOMRA

bsi

ORWAK

ODENBERG

commodas ultrasort

TITECH

a part of TOMRA

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TOMRA in brief

• Founded in 1972
• Started out with design, manufacturing and sale of reverse vending machines (RVMs) for automated collection of used beverage containers
• Today, TOMRA is a technology provider enabling increased resource productivity
• Active in more than 50 markets
• Revenues of NOK ~3.3 billion (USD 550 million) in 2009
• ~2,000 employees
• Publicly listed on the Oslo Stock Exchange (Ticker: TOM)

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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TOMRA's business segments

Collection Technology

Industrial Processing Technology

Material Handling

Key activities	Sale and service of solutions for automated collection of used beverage containers with deposit in retail stores	Sale of optical inspection & sorting solutions for processing of food, waste materials, minerals/mining materials etc.	Pick-up, transportation and processing of used beverage containers and operation of a network of collection sites in California
Share of '09 revenues	~55%	~20%	~25%
Employees	650	350	1000
Geographic presence	Europe, North America (10 states, 1 province), South America, Japan etc.	Global	North America (10 states, 1 province),

TOMRA has leading market positions in ALL business segments.

TOMRA's lead on competitors depends on complexity of technology.

No other player has the same overall approach to recycling as TOMRA.

TOMRA

bsi

ORWAK

ODENBERG

commodas ultrasort

TITECH

a part of TOMRA

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TOMRA Collection Technology

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Transforming behavior

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Highlights

Business characteristics

• TOMRA is the number 1 player in the reverse vending machine (RVM) industry
• Installed base of more than 65,000 machines across more than 30 markets
• Annual revenue of ~2 bn NOK of which ~75% is recurring
• Annual replacement sales of ~3000 machines or ~0.5 bn MNOK
• Service and lease business close to ~1 bn NOK
• EBIT margin of 15-20% after R&D charges

Investment opportunities

• Opportunities for introduction of new (deposit) legislation and expansion of existing deposit systems
• Opportunities to further leverage installed base
• Accelerated replacement of old machines in existing markets
• Incremental revenue streams on installed base (value added services etc.)
• New material streams handled by RVMs
• Penetration of new segments/channels

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Current global installed base of RVMs in deposit markets

• Trautwein has 10,000 simple RVMs installed in corporate cantinas etc.

Source: TOMRA analysis

TOMRA

bsi

ORWAK

ODENBERG

commodas ultrasort

TITECH

a part of TOMRA

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Our strategy

Protect and defend existing business

• Increased differentiation
• Cost leadership

Spur growth in existing markets

• Accelerated machine replacement
• Incremental revenue streams on installed base
• New segments/channels

Succeed in new markets

• New deposit markets
• Viable non-deposit business models

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Segment financials

Profit & Loss Statement	2007					2008					2009					2010
Amounts in NOK million	1Q07	2Q07	3Q07	4Q07	Total	1Q08	2Q08	3Q08	4Q08	Total	1Q08	2Q08	3Q08	4Q08	Total	1Q10	2Q10	3Q10
Collection Technology
Revenues
- Nordic	111	152	142	206	611	158	151	134	158	601	129	133	124	119	505	114	125	109
- Central Europe & UK	197	206	201	226	830	174	198	214	303	889	218	239	279	308	1 044	204	200	247
- Rest of Europe	-	-	-	-	0	-	4	-	4	8	1	5	1	1	8	1	1	1
- US East & Canada	79	86	85	76	326	64	88	75	86	313	82	95	89	77	343	75	119	113
- Rest of World	1	2	4	5	12	1	2	3	2	8	1	1	1	3	6	1	1	1
Total revenues	388	446	432	513	1 779	397	443	426	553	1 819	431	473	494	508	1 906	395	446	471
Gross contribution	157	183	192	209	741	178	200	189	231	798	205	218	233	193	849	189	201	220
-%	40 %	41 %	44 %	41 %	42 %	45 %	45 %	44 %	42 %	44 %	48 %	46 %	47 %	38 %	45 %	48 %	45 %	47 %
Operating expenses	124	126	111	125	486	134	133	135	134	536	123	126	110	110	469	123	128	124
Operating profit before other items	33	57	81	84	255	44	67	54	97	262	82	92	123	83	380	66	73	96
-%	9 %	13 %	19 %	16 %	14 %	11 %	15 %	13 %	18 %	14 %	19 %	19 %	25 %	16 %	20 %	17 %	16 %	20 %
Restructuring charges included in COGS														19	19
Restructuring charges in operating expenses								22		22					0

TOMRA

bsi

ORWAK

ODENBERG

commodas

ultrasort

TITECH

a part of TOMRA

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TOMRA Industrial Processing Technology

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Transforming efficiency and quality

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Highlights

Business characteristics

• Two business streams – sensor based sorting/inspection and compaction
• Sensor based sorting/inspection business
• Focused on recycling, mining and food segments
• TOMRA is the leading player in sensor based sorting waste and mining material and a key player in food
• Installed base of ~4,500 optical sorters and 500 peelers across 45 markets
• Compaction business
• Mainly focused on food/non-food retail but has a diverse customer base
• TOMRA is a leading player in Europe, but lacks true global presence
• Installed base of ~65,000 vertical balers
• Total annual revenue in excess of 1 bn NOK, EBIT margin of ~20%

Investment opportunities

• Strong value propositions and attractive ROI for customers based on reduction of operational costs and/or increased quality/output of material stream
• Expansion into new segments (new verticals/industries) and new geographies
• Potential for increased scale benefits and rapid growth through industry consolidation

TOMRA

bsi

ORWAK

ODENBERG

commodas ultrasort

TITECH

a part of TOMRA

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Formation of IPT division

Revenue development for Industrial Processing Technology

NOK million

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Sorting and inspection business

	TITECH	commodas ultrasort	ODENBERG
SEGMENT	RECYCLING	MINING	FOOD
SHARE OF REVENUE	~50%	~10%	~40%
MATERIALS	Plastics, paper, metals etc.	Minerals, gems, coal, metal slag etc.	Potatoes, tomatoes, carrots etc.
CUSTOMERS	Material recovery facilities, scrap dealers, metal shredder operators	Mining companies	Food growers, packers and processors
INDUSTRY POSITION	1	1	Top 5

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Sensor based technology portfolio

	[m]	Sensor/Technology	Material Property	Segment
Gamma-radiation	10-12
10-11
10-10	RM (Radiometric)	Natural Gamma Radiation	Mining
X-ray	10-9	XRT (X-ray transmission)	Atomic Density	Recycling, Mining, Food
Ultraviolett (UV)	10-8	XRF	X ray fluorescence (Elemental Spectroscopy)	Recycling, Mining
Visible light (VIS)	10-7	COLOR (CCD Color Camera)	Reflection, Absorption, Transmission	Recycling, Mining, Food
Near Infrared (NIR)	10-6	PM (Photometric)	Monochromatic Reflection /Absorption of Laser Light	Mining
Infrarot (IR)	10-5	NIR / MIR (Near/Medium Infrared Spectrometry)	Reflection, Absorption (Molecular Spectroscopy)	Recycling, Mining, Food
Microwaves	10-4	LIBS	Laser induced breakdown spectroscopy	Recycling, Mining
Radio waves	10-3	EM (Electro-Magnetic sensor)	Conductivity, permeability	Recycling, Mining, Food
Alternating current (AC)	10-2

TOMRA

bsi

ORWAK

ODENBERG

commodas ultrasort

TITECH

a part of TOMRA

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Installed base of optical sorters

• Installed or sold machines

Source: TOMRA analysis

Recycling
Units
2100
Mining
Units
150
Food
Units
2,700

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Market size and potential

ESTIMATES

Total annual market size for different sensor-based sorting segments
EUR million

Source: TOMRA analysis

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Our strategy

Maintain technology leadership position
- Continue to invest heavily in R&D
- Further develop web of partners

Expand geographically
- Aggressively target promising regions and markets
- Leverage market presence across entire portfolio

Use M&A to consolidate market and enter new segments
- New verticals/segments in sensor-based sorting
- Increase footprint and scale through consolidation

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Segment financials

Profit & Loss Statement	2007					2008					2009					2010
Industrial Processing Technology	Q3	Q4	Q5	Q6	Q7	Q8	Q9	Q10	Q11	Q12	Q13	Q14	Q15	Q16	Q17	Q18	Q19	Q20
Revenues
- Nordic	21	25	18	14	78	19	30	32	39	120	15	13	12	16	56	20	10	8
- Central Europe & UK	68	90	49	93	300	98	76	87	94	355	40	55	75	88	258	48	66	89
- Rest of Europe	42	8	28	29	107	27	47	29	29	132	21	21	14	38	94	27	17	8
- US East & Canada	10	8	6	10	34	9	15	11	16	51	9	5	5	16	35	13	31	42
- US West	-	10	4	10	24	5	11	10	13	39	8	9	9	15	41	11	11	9
- Rest of World	22	25	23	34	104	37	25	12	22	96	14	15	11	26	66	12	43	39
Total revenues	163	166	128	190	647	195	204	181	213	793	107	118	126	199	550	131	178	195
Gross contribution	84	85	63	89	321	98	103	91	111	403	54	63	66	96	279	66	95	101
-%	52%	51%	49%	47%	50%	50%	50%	50%	52%	51%	50%	53%	52%	48%	51%	50%	53%	52%
Operating expenses	53	53	49	65	220	61	65	57	76	259	63	74	56	86	279	57	61	61
Operating profit before other items	31	32	14	24	101	37	38	34	35	144	-9	-11	10	10	0	9	34	40
-%	19%	19%	11%	13%	16%	19%	19%	19%	16%	18%	-	-9%	8%	5%	0%	7%	19%	21%
Restructuring charges included in COGS														6	6
Restructuring charges in operating expenses											2	9		29	40

TOMRA

bsi

ORWAK

ODENBERG

commodas ultrasort

TITECH

a part of TOMRA

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TOMRA Material Handling

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Transforming used materials into new products.

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Highlights

Business characteristics

• Material handling includes pick-up, transportation and processing of UBCs (Used Beverage Containers) in North America
• TOMRA is involved in this business because in North America, unlike in Europe, we have to organize the return logistics (material handling) for our customers in order to deploy RVMs
• In all markets except California, we collect UBCs from our RVMs and handle these on behalf of the beverage distributors
• In California the business model is different because TOMRA claims ownership of the collected UBCs and state regulations prevent full automation through RVMs
• Stable business with ~10% EBIT margin, though California performance influenced by handlingfee rates and aluminum prices

Investment opportunities

• Improved profits from operational excellence
• Plant optimization programs
• Routing of trucks and drivers
• Commodity marketing programs
• Expansion of existing deposit systems, e.g. inclusion of water bottles in CT and NY
• New deposit/bottle bill markets

TOMRA

bsi

ORWAK

ODENBERG

commodas ultrasort

TITECH

a part of TOMRA

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Our strategy

Operational excellence

• Continue to invest in fleet optimization programs
• Build scale in sub-scale markets

Explore strategic options

California

• Long term fix for material handling business
• Continue to explore RVM/technology opportunities

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Segment financials

Profit & Loss Statement	2007					2008					2009					2010
Amounts in NDC million	1Q07	2Q07	3Q07	4Q07	Total	1Q08	2Q08	3Q08	4Q08	Total	1Q08	2Q08	3Q08	4Q08	Total	1Q10	2Q10	3Q10
Material Handling
Revenues
- US East & Canada	108	119	133	103	463	91	98	111	165	465	117	122	132	109	480	110	137	154
- US West	135	156	168	142	601	108	129	163	145	545	99	105	104	77	385	95	119	126
Total revenues	243	275	301	245	1 064	199	227	274	310	1 010	216	227	236	186	865	205	256	280
Gross contribution	42	57	67	54	220	31	47	58	39	175	14	34	31	6	85	39	61	73
-%	17 %	21 %	22 %	22 %	21 %	16 %	21 %	21 %	13 %	17 %	6 %	15 %	13 %	3 %	10 %	19 %	24 %	26 %
Operating expenses	29	31	28	27	115	25	26	27	31	109	32	31	28	66	157	25	29	33
Operating profit before other items	13	26	39	27	105	6	21	31	8	66	-18	3	3	-60	-72	14	32	40
-%	5 %	9 %	13 %	10 %	10 %	3 %	9 %	11 %	3 %	7 %	-	1 %	1 %	-32 %	-8 %	7 %	12 %	14 %
Restructuring charges included in COGS															0
Restructuring charges in operating expenses														42	42

TOMRA

bsi

ORWAK

ODENBERG

commodas ultrasort

TITECH

a part of TOMRA

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Financial performance

TOMRA

bsi

ORWAK

ODENBERG

commodas ultrasort

TITECH

a part of TOMRA

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Profit and loss statement

Figures in NOK million	YTD 3Q 2010	FY 2009	FY 2008	FY 2007	FY 2006	FY 2005
Revenues	2,557	3,321	3,622	3,490	3,965	2,413
• Collection Technology - Deposit Solutions	1,312	1,906	1,819	1,779	2,440	1,186
• Material Handling	741	865	1,010	1,064	1,021	848
• Industrial Processing Technology	504	550	793	647	504	379
Gross contribution	1,045	1,213	1,376	1,282	1,433	911
Gross margin	41%	37%	38%	37%	36%	38%
Operating expenses	653	921	920	837	778	778
Operating profit	392*	291	456	445	655	133
Operating margin	15%	12%	13%	13%	17%	6%
EPS (in NOK)		1.67	1.82	1.76	2.48	0.05
Excluding restructuring charges and RVM sales Germany
Revenues		2,991	3,330	3,175	2,645	2,413
Gross contribution		1,148	1,296	1,195	1,075	923
Gross contribution margin		38%	39%	38%	41%	38%
Operating expenses		848	916	835	775	711
Operating profit		300	380	360	300	212
Operating profit margin		10%	11%	11%	11%	9%

• Does not include 244 MNOK in extraordinary expenses (18 MNOK on sale of Presona AB and 226 MNOK in provision for EU penalty)

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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Solid capital structure and cash flow

Amounts in NOK million	30 Sep 2010	30 Sep 2009
ASSETS	3,385	3,281
• Intangible assets	925	923
• Leasing equipment	167	98
• Other fixed assets	623	666
• Inventory	531	556
• Short-term receivables	1,082	1,034
• Cash and cash equivalents	57	4
LIABILITIES AND EQUITY	3,385	3,281
• Equity	1,749	1,818
• Interest bearing liabilities	569	509
• Non-interest bearing liabilities	1,067	954

• Cash flow from operations
• 180 MNOK in 3Q 2010 versus 194 MNOK in 3Q 2009
• YTD: 300 MNOK in 2010 versus 222 MNOK in 2009
• Seasonality in material handling operations
• Cash flow from investments
• Investments of 52 MNOK in 3Q 2010, vs. 46 MNOK in 2009 in 3Q 2009
• Interest bearing debt
• Increased due to accrual for EU penalty of 226 MNOK
• Strong financial position
• 52% equity

TOMRA
bsi
ORWAK
ODENBERG
commodas ultrasort
TITECH
a part of TOMRA

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TOMRA

USING THE POWER OF BUSINESS TO DO GOOD