TOMRA Systems — Investor Presentation 2017

Jun 7, 2017

HANDELSBANKEN'S MID&SMALL CAP SEMINAR

Stefan Ranstrand 7th of June 2017 © TOMRA

CREATING VALUE THROUGH TWO STRONG BUSINESS AREAS

TOMRA Collection Solutions

CURRENT DEPOSIT MARKETS*

* In addition, Tomra has some activity in markets with refillable deposit systems like: Austria, Belgium, Chile, Czech Republic, France, Hungary, Poland and South Korea

COMPETITIVE LANDSCAPE

Number of RVS markets

Annual revenue from RVS sales

Source: TOMRA estimates and analysis

# of installed RVS

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
• 2016 installations: ~4,600 machines

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

ENTER NEW SEGMENTS

GERMANY REPLACEMENT UPDATE

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 ~30% per year from 2004- 2016
• Average annual organic growth for the same period was ~17%
• Technology base and segment/application knowledge expanded both through acquisitions and in-

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

A COMMON SENSOR BASED TECHNOLOGY PORTFOLIO

Gamma radiation	10-12 10-11
X-ray	10-10 10-9
	10-8
Ultraviolett (UV)	10-7 10-6
Visible light (VIS)	10-5
Near Infrared (NIR)	10-4
Infrared (IR)	10-3 10-2
Microwaves	10-1
	101
Radio waves	102
Alternating current	103
(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 10-1	Laser attenuation and PM (Photometric)	Monochromatic Reflection / Absorption of Laser Light Scattering analysis of Laser Light	Mining, Food
	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

Tomra Sorting Solutions (TSS) without Compac:

• Delivered all time high order intake of 682 MNOK in the quarter, compared to 661 MNOK same quarter last year
• Revenues came in at 512 MNOK (up from 491 MNOK in 1Q16)
• With an all time high order intake, and somewhat limited number of orders taken to P/L, the quarter ends with a healthy order backlog of NOK 874 MNOK

Compac

• Reported revenues of 175 MNOK in the quarter and ends the quarter with a backlog of 265 MNOK
• Estimated backlog conversion ratio in 2Q17, including Compac: 80%-85%*

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

BULK SORTING

SINGULATED SORTING

21

FOOD COMPETITIVE LANDSCAPE

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

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

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%

www.tomra.com

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	31 March 2017	31 March 2016	31 Dec 2016
ASSETS	7,927	7,152	7,115
• Intangible non-current assets	3,177	2,858	2,750
• Tangible non-current assets	856	795	801
• Financial non-current assets	349	306	342
• Inventory	1,211	1,278	1,127
• Receivables	1,808	1,570	1,696
• Cash and cash equivalents	526	345	399
LIABILITIES AND EQUITY	7,927	7,152	7,115
• Equity	4,301	3,915	4,192
• Minority interest	184	166	178
• Interest bearing liabilities	1,174	1,140	760
• Non-interest bearing liabilities	2,268	1,931	1,985

Ordinary cashflow from operations

• 122 MNOK (118 MNOK in 1Q 2016)

Solidity

• 54% equity
• NIBD/EBITDA = 0.5 (Rolling 12 months)
• Dividend of NOK 2.10 (NOK 1.75 last year)
• Paid out 11 May 2017

CURRENCY

Negative impact from stronger NOK vs both USD and EUR

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

CURRENCY EXPOSURE

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

10% change in NOK towards other currencies will impact;

	Revenues	Expenses	EBITA
EUR*	4.5%	4.5%	4.5%
USD	4.0%	3.0%	9.0%
NZD	0.0%	0.5%	-2.5%
OTHER	1.5%	1.5%	1.5%
ALL	10.0%	9.5%	12.5%

* EUR includes DKK

HEDGING POLICY

• TOMRA hedges B/S items that will have P/L impact on currency fluctuations
• TOMRA can hedge up to one year of future predicted cash flows. Gains and losses on these hedges are recorded in the finance line, not influencing EBITA

COLLECTION SOLUTIONS – SEGMENT FINANCIALS

Revenue development NOK million

Gross and EBITA margin development Percent

SORTING SOLUTIONS – SEGMENT FINANCIALS

Revenue development NOK million

Gross and EBITA margin development Percent

TOMRA SHAREHOLDER STRUCTURE

	Top 10 shareholders as of 05 April 2017	Shareholders by country
1	Investment AB Latour	38 651 000	26.1%
2	Folketrygdfondet	9 529 819	6.4%	3% 5%
3	The Bank of New York BNY Mellon	7 845 000	5.3% (NOM)	5% 6%
4	Skandinaviska Enskilda (Client Account)	4 054 735	2.7% (NOM)	36% 7%
5	Goldman Sachs & Co	3 743 460	2.5% (NOM)
6	Clearstream Banking	2 732 855	1.8% (NOM)	12%
7	Nordea Nordic Small	2 349 276	1.6%	26%
8	ODIN Norge	2 280 188	1.5%
9	Danske Invest Norge c/o Danske capital	2 190 530	1.5% (NOM)	Sweden Norway USA Great Britain Luxembourg Nederland
10	Verdipapirfondet DNB	2 006 435	1.4%	Finland Others
	Sum Top 10	74 862 298	50.6%
	Other shareholders	73 157 780	49.4%
	TOTAL (5,869 shareholders)	148 020 078	100.0%

Source: VPS

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