TOMRA Systems — M&A Activity 2016

Oct 12, 2016

FURTHER FOOD SORTING EXPANSION

TOMRA Systems ASA Asker 12.10.2016

THE FOOD SORTING MARKET IS A LARGE AND GROWING MARKET

Key market drivers

TOMRA HAS A STRONG PRESENCE IN FOOD SORTING

FOOD COMPETITIVE LANDSCAPE

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

INTRODUCTION TO COMPAC

Introduction

• Compac is a New Zealand-based provider of post-harvest solutions and services to the global fresh produce industry
• Founded in 1984 by Hamish Kennedy with HQ in Auckland NZ and has around 700 employees
• Compac has a leading position within sorting of apples, kiwifruit, cherries, citrus, stonefruit, avocados and tomatoes
• The company designs, manufactures, sells and services packhouse automation systems that sort produce based on their weight, size, shape, colour, surface blemishes and internal quality
• Fruit handling equipment singulates fruits into lanes, in-feeds (wash and wax), inspects, sorts/grades and partly packages
• About 6,000 Compac sorting lanes have been sold worldwide in over 40 markets

62 75 105 152 7 8 -1 3 -2% 0% 2% 4% 6% 8% 10% 12% -5 15 35 55 75 95 115 135 155 175 FY13 FY14 FY15 FY16 Revenues EBITDA EBITDA margin%

Spectrim: Compac's latest sorter

• The sorter was launched in 2015
• Represents an unmatched capability of external defect detection and an advanced 3D imaging and modelling
• For sorting of apples, citrus, stone fruit and kiwi fruit
• Uniform lighting that minimizes shadows and reflections
• Sensors and cameras generate up to 500 images of every piece of produce, creating an accurate 3D model of each fruit
• Three different wavelengths that can be configured to target specific defects: color, blemishes, bruising

Key Financials (NZDm)¹

COMPAC: A MARKET LEADER WITHIN LANE SORTING

Click on the apples to play client testimonial

TRANSACTION RATIONALE ELABORATED

Attractive Market	• Lane sorting is a fast-growing adjacentsegment with a ~8% historical CAGR and strong future outlook • Key market trends drive further growth, especially in the developing markets as a substitute for manual labor as we see wages increase • The industry is yet to mature and fully industrialize
Complimentary geographical footprint	• Geographic expansion: Utilizing the different footprint and strengths in certain markets • Stronger in China together
Application fit expansion	• TOMRA is currently present in processed fruit and vegetables, Compac serves as a "natural" expansion also into fresh fruit
Confirming our leading position in food	• Lane and Bulk Sorting cater to same client needs, but offers complimentary functionality • Possibility to create a comprehensive Food Sorting solution provider • First mover advantage in combining Lane and Belt sorting: TOMRA to be the first company, which is active in all technology platforms used for sensor-based sorting of Food
Mutual benefits	• Potential in data capability, IoT and solution development • Combine current offering: Bulk presorter in front of lanes • Potato business: Utilizing TSS strength in potatoes and the upcoming demand for sizing • Complimentary fit within food traceability and food safety (emerging demand)
Why Compac	• Strong potential. Ongoing and planned business improvement initiatives and funding to get in shape • Strong brand name, recognized as the technology leader (Spectrim) • Established complimentary footprint in the US, NZ, Australia and Latin America • Good platform for growth

TOMRA WILL ESTABLISH THE BROADEST FOOTPRINT WITHIN FOOD SORTING

BULK SORTING

SINGULATED SORTING

8

BUSINESS IMPROVEMENT INITIATIVES AND THE WAY FORWARD TOGETHER

KEY TRANSACTION DETAILS

Earn-out scheme in place for FY17, FY18 and FY19

Funding of the transaction*

• Loan of NZD 10m to be provided at signing.
• Will be deducted from the purchase price
• Initial installment of NZD 70m to be paid at closing
• Total consideration dependent upon financial performance for the period FY17 to FY19
• Progress payments after FY17 (August 2017), FY18 (August 2018) and FY19 (August 2019)

• Total consideration capped at NZD 300m, reached at an accumulated EBIT of NZD 84m for the three year period

• Due to positive cash-flow from operations between 30.06.16 and closing, TOMRA is assumed to have sufficient funding from existing drawing rights to finance the initial installment of the acquisition

• The initial installment will increase Tomra's Net Debt/EBITDA ratio with approximately 0.3, based on rolling twelve months actual as of 30.06.16.***

*Assuming a EUR /NOK 9.03 and NZD/NOK 5.8

** Illustrative. Actual payment can deviate somewhat due to progress payments in FY17 and FY18 *** Not including eventual effect from accrual for future earn-out payments

Q&A

DISCLAIMER

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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