Orkla Enskilda Securities

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Orkla Enskilda Securities

• 6 March 2003

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Financial highlights 2002

• Revenues of 2,667 MNOK, up 3
• Europe 937 MNOK, up 3
• North America 1,303 MNOK, down 4
• South America 427 MNOK, up 99 MNOK
• 13 revenue growth adjusted for currency impact
• Operating profit 330 MNOK
• (86) MNOK currency impact during 2002
• Strong cash flow from operations 501 MNOK
• Year-ending cash balance gt 1 billion NOK
• Total assets 3,137 MNOK, down 10 from prior year

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BU Europe
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Germany update

• Deposit implemented as planned
• Interim, store- or chain based manual solution
• Industry working on implementation of national
  deposit system set for 1 October 2003
• Executive Committee decision on security on 24
  January
• DSD subsidiary chosen as clearinghouse!!
• Retailers stepped up activities for execution of
  automated solutions
• Government to propose changes in Packaging
  Ordinance

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Decision on security system in Germany

• Based on automated collection in all trade
  segments
• Traditional RVMs in large discount stores
• Tailored small store solution for low volume
  handling
• Correct recognition of containers through
• EAN bar codes
• Special ink marking
• Additional recognition devices which might be
  deemed necessary
• Cancellation of deposit containers through
• Compaction in large discount stores
• New cancellation device for special marking
• TOMRA part of working technical group, which is
  developing new recognition cancellation devices
  for special marking

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The integrated RVM solution
Man Machine Interface
Automation
Recognition system
Data Administration Online Services
Pocessing In- store Logistics
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German product portfolioNeed for RVMs 40,000
without small store segment
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Government anticipates changes to Packaging
Ordinance to be implemented before 1 October

• Deposit on all drinks except on
• wine
• milk
• Tetrapaks
• Deletion of 72 minimum refillable quota thereby
  making deposit permanent

Simplified legal framework and more consumer
friendly deposit system
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EU Packaging Directive

• Directive is the overall legal framework for all
  Member states for recovery targets
• Entered into force in 1994
• Directive is currently being revised with new and
  higher recycling targets to be reached in 6 years
• Glass 60 Current min. 15
• Paper/cardboard 55
• Metals 50
• Plastics 20
• Producer responsibility expected to be included

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The Quantified Challenge
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170,000 RVM potential assuming Scandinavian
penetration
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BU North America
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California ? looking ahead

• 1.5 MNOK operating profit in 2002
• 2003 initiatives
• Goal of 4 volume growth
• Continued cost reduction improved operational
  efficiencies
• Increased interest from major retailers for TOMRA
  recycling center services
• Legislative amendments related to man-hour
  reduction payment structure from state expected
  by mid-2003

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T-83 HCP Launch in MI
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U.S. East RVM market
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U.S. East Materials Handling Market
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Consumer Response to RePlanet(RePlanet Users,
Post Launch)

• 84 Extremely Satisfied With Replanet
  Execution
• 83 Feel It Is Extremely Or Very Appropriate
  For Wal-Mart To Offer Service
• 71 of Preferred RePlanet Over Other Methods of
  Recycling
• 71 Indicated Convenience of Wal-Mart as a
  Factor In Their Decision to Recycle.
• 67 Were Extremely Satisfied With .01
  Redemption Value
• 67 Like Wal-Mart Much More For Providing
  Replanet Service
• 43 Were Not Interested In Replanet if .01
  Redemption Value Went Away
• 41 Are Recycling More Often Since Replanet
  Launched

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RePlanet Packaging MixTwo Center Test Numbers
338,857
304,337
276,312
152,327
89,158
111,505
77,337
32,847
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Next Steps

• Determine Coke Position on Key Findings
• .01 Incentive Works
• .019 Variable PET Cost
• Position on 500 Mining Rights
• Position on 2,500 Advertising Value
• Determine Anheuser-Busch Position
• Determine Wal-Mart Position on Funding Level For
  RePlanet
• Determine Areas for RePlanet Cost Reduction
• Determine Wal-Mart Installation Options

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Canadian deposit markets
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Canadian beverage market

• Population 31 million
• 14.3 billion containers sold per year
• Expanded deposit in 6 of 10 provinces
• 65.4 weighted average recycling rate
• Total containers recovered
• Deposit 7.6 billion containers p.a.
• Non-deposit 1.75 billion containers p.a.
• Tomra handles 954 million containers p.a.
• 10.2 market share

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Canadian RVM market
Typical retail configuration
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TOMRAs processing facility outside Montreal
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2003 key initiatives in Canada

• Cooperation with beer industry to improve
  handling efficiencies through automated
  collection at beer liquor stores (Ontario in
  2003 Alberta in 2004)
• Replace existing, non-intelligent USIPAC RVMs in
  Quebec in order to gain cost efficiency limit
  fraud
• Penetrate small store segment in Quebec
• Introduce TOMRA 83 HCp in large store segment in
  Quebec

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Canadian growth potential
Revenue
2003
2004
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BU South America
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Brazilian recycling context
All companies involved in the manufacturing, use
and sale of beverage containers are experiencing
increased pressure to step up recycling
efforts As retailers sell the majority of PET
bottles, they are naturally expected to
contribute strongly
Overall
Population 173 million Container universe 36
billion
Environmental context
Enormous beverage container littering problem
related to PET containers
Legal context

• Regulators are aware of the problem and several
  new regulations are currently being put into
  place
• PET law in Rio (25 recycling practical
  solutions under dev.)
• PET law in Sao Paulo
• National solid waste policy
• PET law in Pernambuco
• PET law in Ceara

Consumer context

• High consumer sentiment towards recycling
• Consumers expect a more active role from retail
  and beverage industry

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Tomra Latasa ClosedLoop
Tomra Latasa Warehouse
Tomra Latasa Recycling Plant - Pindamonhangaba
Collection
Latasa Can Factory
ALCAN
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rePlaneta history results
Observations
History

• A pilot for testing collection at the retail site
• Cooperation between Tomra, Ambev and Pao da
  Acucar
• Pilot initiated at 8 locations in Rio de Janeiro
  on June 4, 2001

• Some promising results in pilot period
• 198 000 customers
• 10 million containers collected
• Very well received by consumers and positive
  value realized for retailer
• Very positive signals from regulators
• Solid experience base established on how to
  operate retail collection infrastructure in Brazil

The Replaneta concept and business model is a
very cheap and effective way to significantly
increase recycling rates for PET in Brazil
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In Brazil, the retailer is at the center of
recycling
Regulatory environment
Retailer
Beverage industry
Advertisers
Consumers
Tomra
The retailers are taking a lead in establishing
an attractive/effective infrastructure and draw
on other stakeholders for financing and support
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Brazil number of grocery stores by format
57,800
Hypermarkets (50 checkouts)
150
Large number of grocery retail outlets, but
majority of smaller stores Initially estimated
potential for Replaneta installations at
1,000-2,000 stores
450
4,800
Large supermarkets (20-49 checkouts)
Medium supermarkets (5-19 checkouts)
52,400
Small supermarkets (1-4 checkouts)
2000
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Facing the challenge
Beverage Consumption
Growth!
Population
6.1 billion
Today
800 billion
9.3 billion
2050
4.4 trillion !!!
High legislative activity to promote increased
recycling of used beverage containers across the
globe
Source Canadean, UN, Tomra analyses
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Different recycling targets require tailored
collection solutions
Recycling target
Traditional deposit technology based systems
(retail based)

• Scandinavia
• Germany
• 10 US States
• Etc.

70-100
Tomra is currently optimally positioned globally
for delivering solutions to meet all targets
above 20
20- 70
Incentive based collection schemes technology
based

• Japan
• Brazil
• Etc.

No incentive kerbside/ sorting of household waste

• Most countries

5-20
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Two fundamental approaches to collection

• Retailer responsibility
• Driven by producer responsibility legislation
  (e.g. deposit) and establishment of competitive
  advantage through providing recycling opportunity
  for customers
• Municipality responsibility
• Driven through regulation of public waste
  management systems

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Japan 2002
Developments
Background

• Envipcos former distributor now a Tomra Partner
• Envipco equipment currently being replaced by
  Tomra recycling centers
• Municipality operated collection centers are very
  successful
• 73 resident participation with one collection
  center per 3000 inhabitants
• Significant cost reduction for municipality
• 4 MNOK in sales during 2002
• Unlimited potential through the municipality
  model 3240 municipalities in Japan

• No. of inhabitants 127 million
• Container universe 47.5
• billion
• High consumer recycling activity (70-80
  recycling rate for cans/glass and 15 for
  plastic)
• Existing municipal models run at extremely high
  costs

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Recent installations in Japan
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2003-2005 business development priorities
US hub CT (Stratford)
European hub Germany (Düs.)
Latin Am. hub Brazil (Sao Paulo)
Asian hub Japan (Tokyo)

• Japan
• Malaysia
• Australia
• Etc.

• Germany
• UK
• Slovakia
• Baltics
• Etc.

• WalMart
• Etc.

• Brazil
• Mexico
• Etc.

We will leverage current hubs to explore new
regional opportunities
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A World of New Opportunities
Pay Back
Project Identification
Project Exec.
Project Verification

• Malaysia
• Australia
• UK
• Non-Dep. Europe
• Japan Retail
• Deposit E.-Europe
• Ind. Consolid.

• Mexico
• Brazil Retail Collection
• WallMart
• Japan Municip.
• Deposit NL
• Europe Cuponing
• Europe Lottery

• Germany Deposit
• Canada Technology

Timing
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Has anyone seen a RVM in this neighborhood?
Thank You For Your Attention!