TOMRA Systems — Investor Presentation 2016

Sep 7, 2016

CARNEGIE SMALL & MID CAP SEMINAR

Espen Gundersen 7th of September 2016 © TOMRA

CREATING VALUE THROUGH TWO STRONG BUSINESS AREAS

TOMRA Collection Solutions

A COMPLETE TRANSFORMATION OF THE PRODUCT PORTFOLIO IN PROGRESS

2012 Portfolio

2015/2016 Portfolio

CURRENT DEPOSIT MARKETS

COMPETITIVE LANDSCAPE*

Number of RVS markets

Annual revenue from RVS sales

Source: TOMRA estimates and analysis * Estimates

T-9: THE FIRST OF A NEW GENERATION OF MACHINES

• In fourth quarter 2013, TOMRA presented the first machine of the new generation of machines to come
• T-9 features the first 360 degree recognition system applied in an RVM and a completely new industrial design
• The machine is faster, cleaner and takes all types of beverage containers
• The launch has been successful
• Several machines already installed in core markets
• Key product for replacement sale in e.g. Germany
• 2014 installations: ~1,200 machines
• 2015 installations: ~4,000 machines

TOMRA is setting the standard for reverse vending for the next decade

ENTER NEW SEGMENTS

GERMANY REPLACEMENT UPDATE

TOMRA MACHINES INSTALLED IN THE GERMAN MARKET

POTENTIAL NEW DEPOSIT MARKETS

COLLECTION SOLUTIONS – FINANCIAL DASHBOARD

TARGETS 2013 -2018

Yearly growth 4 – 8%

EBITA-margin 18% – 23%

TOMRA Sorting Solutions

STRONG REVENUE GROWTH SINCE INCEPTION IN 1996

Revenue development and key milestones MNOK

• Total revenue growth (organic plus inorganic) CAGR of ~32% per year from 2004- 2015
• Average annual organic growth for the same period was ~21%
• Technology base and segment/application knowledge expanded both through acquisitions and inhouse ventures

HOW DOES SENSOR BASED SEPARATION WORK?

• High-tech sensors to identify objects
• High speed processing of information (material, shape, size, color, defect, damage and location of objects)
• Precise sorting by air jets or mechanical fingers
• Product specific equipment design often including multiple technologies to maximize sorting efficiency

ADOPTION OF SENSOR-BASED SORTING AT DIFFERENT MATURITY LEVELS

* In certain mining sub-segments, such as industrial minerals and diamonds, sensor-based sorting is a more mature technology.

A COMMON SENSOR BASED TECHNOLOGY PORTFOLIO

Gamma radiation	10-12
	10-11 10-10
X-ray	10-9
	10-8
Ultraviolett (UV)	10-7
Visible light (VIS)	10-6
	10-5
Near Infrared (NIR)	10-4
Infrared (IR)	10-3
	10-2
Microwaves	10-1
	101
Radio waves	102
	103
Alternating current (AC)	104

[m]	Sensor/ Technology	Material Property	Segment
10-12 10-11	RM (Radiometric)	Natural Gamma Radiation	Mining
10-10 10-9	XRT (X-ray transmission) Low Energy X-ray	Atomic Density	Recycling, Mining, Food
10-8 10-7	XRF	X ray fluorescence (Elemental Spectroscopy)	Recycling, Mining
10-6 10-5	COLOR (CCD Color Camera)	Reflection, Absorption, Transmission	Recycling, Mining, Food
10-4 10-3 10-2	Laser attenuation and PM (Photometric)	Monochromatic Reflection / Absorption of Laser Light Scattering analysis of Laser Light	Mining, Food
10-1	NIR / MIR (Near/Medium Infrared Spectrometry)	Reflection, Absorption (Molecular Spectroscopy)	Recycling, Mining, Food
101 102 103	LIBS	Laser induced breakdown spectroscopy	Recycling, Mining
104	EM (Electro Magnetic sensor)	Conductivity, permeability	Recycling, Mining, Food

BACKLOG DEVELOPMENT AND MOMENTUM

• Order intake of 667 MNOK in the quarter (compared to 646 MNOK same quarter last year)
• Revenues were 680 MNOK (up from 617 MNOK in 2Q15)
• With both all time high order intake and revenues (measured in NOK), the quarter ended with a healthy order backlog of NOK 816 MNOK, almost unchanged from end 1Q16.
• Estimated backlog conversion ratio in 3Q16: 80%*

* Based upon current production and delivery plans, the revenues in 3Q16 are estimated to be approximately 80% of order backlog at the end of 2Q16

FINANCIAL DASHBOARD – SORTING SOLUTIONS

TARGETS 2013 -2018

Yearly organic growth 10-15%

Geographical expansion

EBITA-margin 18-23%

(i) In markets served. Total food sorting (incl. rice and lane sorting*) 12-15%

18

MARKET SIZE FOOD SORTING*

Total annual market size

EUR million

* Market sizes shown include peeling, meat/process analytics, virgin materials and tobacco.

Market growth

• Total market for food sorting growing around 6- 8% per year
• Approximately a third of total growth is dormant potential
• only unlocked by development of new applications and technologies
• New world share grows but the two old world ~770 champions (Europe & Americas) remain strong

Expected development in geographical revenue contribution

TOMRA HAS THE BROADEST FOOTPRINT WITHIN THE FOOD SORTING UNIVERSE

* TOMRA estimates

Circa 5% of annual global sorter sales revenue comes from other segments, like confectionary

FOOD COMPETITIVE LANDSCAPE

* Total Food sorting (also including rice and lane sorting): 12-15%

OUR BROAD COVERAGE AND TECHNOLOGY BASE IS SETTING US APART

	DRIED FRUIT	NUTS	FRESH CUT	FRUIT	VEGETABLES	MEAT	POTATOES	SEAFOOD
FOOD	• Apricots • Craisins • Figs • Prunes • Raisins	• Almonds • Cashews • Hazelnuts • Macadamias • Peanuts • Pecans • Pistachios • Seeds • Walnuts	• Baby leaves •Iceberg lettuce • Spinach • Spring mix	• Apples • Blackberries • Blueberries • Cherries • Citrus • Cranberries • Peaches & pears • Raspberries • Strawberries • Tomatoes	• Beans • Beet • Broccoli • Carrots • Corn • Cucumbers • IQF vegetables • Jalapenos/ Peppers • Onions • Peas • Pickles	• Bacon bits • Beef •IQF meat • Pork • Pork rind	• Washed • French fries • Unpeeled • Peeled • Potato chips • Specialty products • Sweet	• Mussels • Scallops • Shrimps
SENSOR TECHNOLOGY	LASER NIR VIS X-RAY	LASER CAMERA X-RAY	LASER CAMERA	LASER CAMERA NIR VIS	LASER CAMERA NIR VIS	LASER CAMERA NIR	LASER CAMERA NIR VIS	LASER CAMERA NIR VIS X-RAY

OUR CUSTOMERS

We are active in five continents and 80 markets

• 6 of the 10 largest, global food companies are our customers
• We have ~2,000 customers globally

TSS Food provides sorting solutions for:

• Growers: Harvester mounted tomato, onion and garlic sorters
• ~5% of our customers
• Packers: Sorting of many different types of fruit and vegetables by color, size, shape, defect, blemish, damage or foreign objects
• ~30% of our customers
• Processors: Sorting of processed potatoes (French fries, chips), fruits and vegetables
• ~65% of our customers

MARKET SIZE RECYCLING

Total annual market size

EUR million

Market growth

• Market expected to grow at around 7-9% per year, lower than previous expectations due to economic slowdown
• Demand in old world flattening, while new markets expected to drive growth
• Existing segments will serve as a base, whilst the majority of growth will come from:
• New geographies
• New applications
• New products

AUTOMATED WITH TOMRA SORTING UNITS

Sorting of Municipal Solid Waste, Cyprus

RECYCLING COMPETITIVE LANDSCAPE

TOMRA competitive positioning

• Largest installed base
• Highest revenues
• Broadest technology platform
• Highest number of applications and markets served
• Leading brand
• Market share: 55-65%

Source: TOMRA estimates and analysis

MARKET SIZE MINING

Total annual market size

EUR million

Market growth

• Capex has declined recent years
• Sensor based machines sales expected to grow at around 15% per year
• Growth is however conditional on new applications and technologies being developed
• Sensor based sorting is still a technology to be accepted and growth in this niche has been limited in recent years

THE CONCEPT OF SENSOR-BASED SORTING IN MINING

Mining process: Industrial minerals

• 15% to 50% of the ROM can be rejected in an early stage of the process (application dependent)
• These low grade waste rocks don't need to be transported, crushed, grinded or further treated

Mining process: Metal mining

Current segment Potential new segment

MINING COMPETITIVE LANDSCAPE

TOMRA competitive positioning

• Wide geographical coverage
• Broadest technology platform
• Leading brand
• Pioneering in developing high volume sorter in corporation with Rio Tinto
• Market share: 40-50%

Historical financial performance

KEY FINANCIALS DEVELOPMENT

EBITA and margin Earnings per share

FINANCIAL HIGHLIGHTS BALANCE SHEET, CASH FLOW AND CAPITAL STRUCTURE

Amounts in NOK million	30 June 2016	30 June 2016	31 Dec 2015
ASSETS	7,355	6,782	7,317
• Intangible non-current assets	2,810	2,610	2,891
• Tangible non-current assets	793	687	837
• Financial non-current assets	318	297	316
• Inventory	1,275	1,113	1,209
• Receivables	1,766	1,736	1,751
• Cash and cash equivalents	393	339	313
LIABILITIES AND EQUITY	7,355	6,782	7,317
• Equity	3,846	3,216	3,945
• Minority interest	186	138	160
• Interest bearing liabilities	1,252	1,565	1,206
• Non-interest bearing liabilities	2,071	1,863	2,006

Ordinary cashflow from operations

• 239 MNOK (137 MNOK in 2Q 2015)

Solidity

• 52% equity
• NIBD/EBITDA = 0.6 (Rolling 12 months)
• Dividend of NOK 1.75 (NOK 1.45 last year)

CURRENCY

Revenues and expenses per currency; NOTE: Rounded figures

	EUR**	USD	NOK	SEK	OTHER	TOTAL
Revenues	45 %	30 %	5 %	10 %	10 %	100 %
Expenses	45 %	25 %	10 %	10 %	10 %	100 %
EBITA	45%	50 %	- 15 %	10 %	10 %	100 %
** EUR includes DKK Mainly CNY

TOMRA SHAREHOLDER STRUCTURE

	th Top 10 shareholders as of 30	of June 2016			Shareholders by country
1	Investment AB Latour	38 130 000	25.8%
2	Skandinaviska Enskilda A/C Clients account	9 744 496	10.8%		3% 8%
3	Folketrygdfondet	9 640 190	3.7%	(NOM)	5% 35%
4	The Bank of New York BNYM, Stichting Dep	3 946 086	2.3%		7%
5	The Bank of New York BNYM	3 042 816	2.0%		11%
6	Nordea Nordic Small	2 745 407	1.7%
7	Clearstream Banking	2 566 292	1.5%	(NOM)	29%
8	Goldman Sachs & Co	2 462 764	1.6%	(NOM)
9	ODIN Norge	2 280 188	1.5%	(NOM)	Sweden Norway USA Great Britain Luxembourg Finland
10	Danske invest Norske C/O Danske Capital A	2 038 430	1.5%	(NOM)	Others
	Sum Top 10	76 596 669	51.8%
	Other shareholders	71 423 409	48.2%
	TOTAL (5,725 shareholders)	148 020 078	100.0%

Source: VPS

DISCLAIMER

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