capital markets day 2005 presentation

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Recycling Technology

Trond Johannessen, SVP Business Development

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The recycling technology equipment industry

Optical sorting - TiTech

Volume reduction – Orwak Group

Perspectives going forward

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Material Recovery Facilities (MRFs) are key in all recycling systems

• Operated by waste management companies, municipalities or private operators

• Typical capital expenditure: 1.5-2.5 MEUR, but mega MRFsmight cost 6-10 MEUR

• Capacity varies between a couple of thousand tons to more than 150,000 ton/year

Input

Sorting

Output

Volumereduction

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The recycling technology demand side – EU & US

Germany

Number of large MRFs in different countries Automation level

France

UK

Italy

Spain

Total selected EU

Additional EU

Total EU-25

440

340

90

220

60

~1,150

~350?

~1,500

High

Moderate

Low

Moderate

Low

Moderate/Low

Very low

ESTIMATES

There are approximately 2,000 large MRFs in EU and the US, the majority with low degree of automation

In addition, there is a large number of small MRFs in Europe and US and a significant and growing number of MRFs in rest of world

Each MRF potentially needs 1-10 TiTechunits and 1-2 balers

US ~500

TOTAL ~2,000

Source: ASCON; EPA; MSW Management; TOMRA analysis

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The recycling technology supply sideExamples Description

Full service/system providers

• CP Manufacturing• Synmet• Bollegraaf (US)

Turnkey suppliers with inhouseengineering and equipment manufacturing

• Orwak Group• Bollegraaf• PAAL Group• Macpresse• Doppstadt• HSM

Manufacturers of balers and shredders used to reduce volume of sorted material prior to transportation and further processing

Recognition and sorting providers

• Titech• Pellenc• RTT• Bollegraaf/LUBO• Mogensen• S+S

Manufacturers of high-technology optical recognition equipment or advanced mechanical sorting equipment for obtaining clean fractions

Volume reduction providers

• Stadler• OK.Engineering• SUTCO • Vauché

Engineering/ consulting companies (plant builders)

Designers and manufacturers of turnkey plants, but limited stand-alone component sale

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TOMRA Recycling Technology – two platforms

Volume reduction platform

Recognition & Sorting platform

Our foucs is on:•The platforms with highest value creation potential•The technologies that are closest to our core

competencies•The companies that lead their industries

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TiTech is the innovator and leader in the industry

History: Established 1990, first unit sold in 1996

Products: Optical sorting equipment for sorting of• Plastics (by type or by colour)• Paper• Metals• Glass

Customers: Plant builders or MRF owners

Markets:• Sales to 15 countries in Europe, US, Asia and

Australia• 60% of historical sale to Germany• 60-90% market share in all major markets.

Competitors: 3 major competitors• RTT (Germany)• Pellenc (France)• MSS (USA)

RestAir Valves

ConveyorHigh speed: 2-3 m/s

Scanner

Light source

Objects are illuminated with NIR light and ejected at the end of

the conveyor using air jets• Hardware• Software

Control unit

Paper, plastics etc.

Desired Product

Scanner width: 0,5-2,8mCapacity: 1,5-10 tonnes per hour

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TiTech’s value proposition

Reduced costs•Reduces man-hours by up to 75 % -

quick payback on investment

Increased material value•High precision (up to 98/99% purity)

High capacity and max flexibility• Sorting of up to 10 tons per hour• Easy to adapt to changing needs and

sorting tasks (from PET to PVC with “the click of a button”)

• No accidents, fewer system stops, less strain for rest of the staff

vs.

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TiTech development 1996 - 2005

1996

1997

1998

1999

2000

2001

2002

2003

2004

E2005

Revenue developmentMNOK

418

27

56 53 55

8288

114CAGR: 20%

Main growth drivers:

Macro environment• Increased waste production per capita• Increased energy prices/material value

Regulations• Enforcement of EU landfill regulative• Stricter recycling laws in many countries• Labor safety regulations

Business development• Geographic expansion• Segment expansion (many opportunities)• New business models (service & rental)

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The market potential in TiTech’s core segments

ESTIMATES

Aggregated worldwide demand for optical sorting equipment medium-termUnits

Forecasted potential by regionPercent

20

55

12

5

8

North America

Australia

Asia

EU

Rest Europe

6,000

Low case High case

4,000

Source: TOMRA analysis

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The Orwak Group is a global leader in volume reduction

• Acquired by TOMRA in Feb. 2005• 2004 revenues of ~260 MNOK• ~170 employees• ~52,000 units installed worldwide • 3 factories in Sweden

• Orwak AB: small vertical balers for retail stores, factories, on ships etc.

• Morinders AB: automatic mid-size briquette press for cardboard and plastics at high volume sites

• Presona AB: large horizontal balers for sorted materials in MRFs

• Europe (mainly Nordics, Germany, UK, France, Poland, Russia), US and Japan

General

Products

Markets

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The market for Orwak Group balers

ESTIMATESNOK millions

End user segment Annual market size*

MRFs, sorting plants ~400

~300

~550

~250

~0

~1,500

Orwak Group has approximately 20% market share in its defined market

5-10% annual industry growth rate expected

We expect the industry to consolidate in order to gain economies of scale in production and marketing

Supermarkets, industries, transfer stations

Retailers, industry

Small shops, fast food, hotels

Food service, shops, garages

Total

* Based on markets where Orwak is present, e.g., Europe, Russia, Japan and to some extent the USSource: TOMRA analysis

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Main growth drivers Orwak Group 2006-2008

Overall

• Increased recycling in general –regulations and profit driven

• Increased transportation costs

• Increased labor cost

• Increased cost of real estate/land

Presona• Continued penetration in East Europe/Russia• Re-entry into US market• Reduced costs and increased productivity from

platform consolidation

Orwak• Replacement sales in key European markets• New business models, e.g. rental• New segments, e.g., Little Elephant and new

strategic alliances• Cost reductions from efficiency improvements

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Strategic fit between TiTech and Orwak Group

• TOMRA and AB Orwak operate in a lot of the same markets with some overlap in customer bases

• Presona and TiTech sell to the same customer segments

• TOMRA and TiTech use same base technology for material recognition (NIR)

• TOMRA and Orwak have technology overlaps on the compaction side

Synergies will be utilized where present...

... but without jeopardizing the independent positions of each company

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The recycling equipment market

Potential new markets

Emerging markets

• Electronic and electrical waste (WEEE)

• Used cars (ELVD)• Other industry

waste

Established markets

• Packaging• Paper• Glass/metals

• Refuse Derived Fuel/incineration

• Bio-mass/compost• Construction &

Demolition waste

We are well positioned to

capture emerging

opportunities

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Further development of TOMRA’s recycling technology platforms

~70

~375

2004 2005 2006 2007

New growth• New segments• M&A

RevenuesNOK million

The world’s leading recycling technology solutions provider:• Sorting equipment• Volume reduction

equipment

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Key messages

The recycling technology equipment industry is large

TOMRA has created a strong and attractive platform within the two key areas of this industry •TiTech is the world leader in the very attractive and growing

optical sorting market •Orwak Group is a leader in the volume reduction business

The recycling technology equipment industry will grow as new segments are penetrated, and TOMRA intends to capture a significant share of the growing market

capital markets day 2005 presentation

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