A World of Opportunities Erik Thorsen, CEO

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A World of OpportunitiesErik Thorsen, CEO
President

• Enskilda Securities Small Midcap Seminar
• Copenhagen, 14 January 2004

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TOMRA an international market leader

• World leading supplier of integrated recycling
  systems and technology with representation in 46
  markets
• Worldwide RVM installations 49,000
• Europe 36,000 - RVM market share 95
• - Mainly refillable deposit containers
• North America 13,000 - Market share 80
• - Mainly non-refillable deposit
  containers
• TOMRAs activities vary from region to region
• Europe - Technology sales service only
• Americas - Integrated in the value chain

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Vision
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TOMRA in the recycling loop
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2004 Growth Drivers New Business Opportunities

• Automation of non-refillable stores in Germany

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Deposit on non-refillable containers in Germany
in place since January 2003
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Automation in Island deposit systems is the
major near-term opportunity for TOMRA

• Island systems are operated by all discount
  chains and some hyper-/ supermarket chains
  (15,000 outlets)
• System identification of the containers via
  physical packaging modification and unique
  barcode
• Beverage portfolio consists predominantly of
  private label products, mostly in non-refillable
  PET bottles
• Chains take back exclusively containers which are
  sold by themselves
• Systems are generally operated manually first
  efforts to automate have been started

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Manual handling is currently the norm in Germany
For high volume stores automation pays back in
12-18 months
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Increase in refillable container volume offers
additional new sales and upgrade opportunities
German retail structure

• Refillable containers increasing due to
  de-listing of one-way containers in traditional
  supermarkets
• Market potential 7,000 12,000 machines on
  top of installed universe of 8,000
• Additional 120 MNOK upgrade potential of
  installed machine base to cope with increased
  beverage portfolio complexity

Classical RVM users
Source EHI, Cologne
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TOMRA is ready to handle the challenge

• Wide product range
• Production and sourcing capacity
• Organizational commitment
• Operational plans
• Key account teams
• 3rd party servicing

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2004 Growth Drivers New Business Opportunities

• Automation of non-refillable stores in Germany
• New segment penetration

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The Small Store Opportunity

• North America
• The convenience store segment in TOMRAs U.S.
  East region represents 27,000 stores
• Virtually none of these stores utilize RVM
  technology

• Europe
• gt120,000 small stores in Germany, Holland,
  Belgium and in Scandinavia that manually accept
  empty containers
• 10 of consumers would prefer to return at gas
  stations/ convenience stores
• Small stores have not invested in RVMs due to the
  high cost and space required

Source Movement Shopper Watch, Sweden 2002
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Small Store Machine Concept Under Development

• Machine specifications
• Tailor-made concept with lt0.5m2 footprint
• Less than 5,000 Euros cost
• Accepts all deposit containers in one spot

• Benefits for the store owner
• Improved consumer service and sales focus
• Better allocation of personnel time
• Avoid theft and miscalculation of refund
• Improved hygiene in the store
• 5 increase in store traffic and revenue due to
  the RVM (European survey)

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2004 Growth Drivers New Business Opportunities

• Automation of non-refillable stores in Germany
• New segment penetration
• Extend trade-in potential

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I. Significant RVM replacement potential
14,000 RVMs are 7 years or older
Old machines New
solutions
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Better compaction saves
3 Containers (Competitor X)
10 Containers (Tomra)
Note 0,5 liter can example
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II. Gain Market Share in the U.S.

• 8-10 MUSD opportunity in market share gain in
  2004-05
• Success Factors
• Superior technology
• Financial strength
• Integrated solution network

Tomra Estimare
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Victory 1 Shaws Markets

• Competitors largest customer
• 135 stores in Connecticut, Massachusetts
  Vermont
• 100 conversion to TOMRA
• 500 RVMs in initial deal
• 5 year operating lease worth 85 MNOK

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2004 Growth Drivers New Business Opportunities

• Automation of non-refillable stores in Germany
• New segment penetration
• Extend trade-in potential
• California legislation

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New legislation passed in California

• Increase of deposit from 2.5 and 5 cents to 4 and
  8 cents effective Jan 1, 2004
• Increase of deposit to 5 and 10 cents in 2007 if
  a 75 recycling rate is not achieve

Significant volume increase anticipated due to
deposit increase
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Positive Development in California 2004-05

• Revenue growth potential of 10-15 MUSD expected
  with limited additional fixed costs
• Recycling center market share grows with
  increased incentive and demand for convenience
• TOMRAs share of recycling center volumes also
  grows
• With market share gains, profitability should
  increase substantially

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2004 Growth Drivers New Business Opportunities

• Automation of non-refillable stores in Germany
• New segment penetration
• Maximizing value of installed machine base
• California legislation
• Future non-deposit market opportunities

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TOMRA handles lt5 of the worlds beverage
containers
Growth in non-deposit markets
TOMRA 35 global market share
World UBC legislation, containers
Deposit 15
Estimated global UBC consumption 800 billion
p.a.
TOMRA 0 global market share
Non-deposit 85
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Growth in non-deposit markets
Tomras Mission Helping the world recycle
Processing Technology for Materials Handling

RVM Technology And Related Services
Collection Technology and Services
Deposit
Non-deposit
Materials Handling And Processing
Recycling Solutions
Retail Solutions
The worlds No.1 provider of solutions that make
it attractive for people to return packaging for
reuse and recycling
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TOMRA will cater to the global waste trends by
capitalizing on its core competencies
Recycling

• Total recycling volumes to more than double next
  3 years in Europe alone

Waste to landfill
Incineration/WTE

• 47 new WTE plants only last 2 years

• More and more countries with zero-landfill
  regulations
• Strict regulations for waste going to landfill

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Most countries have ineffective and expensive
no-tech systems that do not deliver required
results
Landfill
Incineration
Recycling
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Basic challenges require simple solutions
Challenges
Solutions

• Pure material fractions have significantly higher
  recycling value than mixed fractions
• Can be used in high value applications
• Reduced loss in the process
• Incineration requires fractions free from
  contaminants
• Transportation is the largest cost element in all
  waste handling reduced volumes reduce costs
• Manual material handling processes result in
  inefficiencies and low material quality

Material recognition
Material sorting
Processing (e.g. compaction)
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High-tech solutions reduce costs, deliver on
requirements and are totally flexible
Landfill
Incineration
Recycling
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TOMRAs high tech front-end solutions attract
significant interest from target markets
Attractive and user friendly
Advanced communication and incentive platform
Unique material compaction rates and storage
capacity
Sophisticated material identification and
automatic sorting
Optimized operations and logistics
Flexible solution with maximum revenue generating
capabilities
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TOMRAs three focus regions have very different
frame conditions
Europe
Asia/Australia
Latin America

• Landfill challenges require more recycling or
  incineration
• Significant incineration capacity built last 5-10
  years
• Littering often seen as a big problem
• Limited collection infrastructure established

• Landfill challenges, particularly in big cities
• Littering often seen as a big problem
• Recycling of valuable materials driven by poverty
  level scavenger system
• Limited collection infrastructure established

• Recycling challenge driven by the EU directive is
  the biggest opportunity
• Landfill capacity is coming to an end, and
  significant changes need to happen to redirect
  volumes
• Large variations with respect to collection
  infrastructure

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Case study Japan

• The Japanese recycling scene at a glance
• 126 mill inhabitants
• 3240 municipalities
• 70 billion beverage containers
• High recycling rates, driven by municipalities,
  of app. 80 achieved for Cans and Glass, but not
  for PET (40)
• Strong political willingness/objective to reduce
  costs and further increase recycling
• Current systems are very expensive

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Changing the system in Japan
Before
After
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Recent installations in Mizuho city
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What is the Tomra System all about in Japan?

• Cost Reduction
• Reduction of transportation and handling
• Higher sales value of material
• Users(Residents) Satisfaction increase
• Seen as rewarding due to incentives
• Very convenient compared to curbside

Comparative Image VS Conventional Collection
Recycling Cost
Users Satisfaction
Current Curbside Collection
Tomra System
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50-80 cost reduction can be achieved with the
TOMRA system
Current curbside system
Recycling cost per UBC, JPY
New TOMRA bring system
16-24
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2
4-5
Aluminum cans
PET bottles
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Huge market potential in Japan for municipality
model
Facts
Assumptions
Potential

• App. 300 very high potential municipalities have
  been identified
• population between 10.000 and 100.000
• Limited investments made in building collection
  infrastructure
• Not too densely populated areas
• Political willingness to act and aggressive with
  respect to 3R

• 126 mill inhabitants
• 3240 municipalities
• 70 billion beverage containers
• High recycling rates of app. 80 achieved for
  Cans and Glass, but not for PET (40)
• Strong political willingness/objective to reduce
  costs and further increase recycling

• With approx. one collection center (2 RVMs) per
  4500 inhabitant
• potential of app 5.000 RVMs in highest potential
  municipalities
• Overall potential in Japan of app. 50.000 RVMs

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