[PPT] - Presentation of the Norsk Gjenvinning Group September 2017 Content PowerPoint Presentation

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Presentation of the Norsk Gjenvinning Group

September 2017

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Content

I. Presentation of the NG Group II. Q2 2017 snapshot III. The road ahead

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1 Source: Proff.no, based on latest available data (2015), Retura is a franchise company of which revenue is sourced from the company’s website, and is not an exact figure 2 Including subcontractors

The Norsk Gjenvinning Group – overview

Unparalleled, comprehensive geographic coverage from

North to South with a large number of sites across Norway

Broadest range of services in Norway; the only player with

total waste management business model

Number 1 position in all key segments
Innovator and leader in the provision of value

added services

Broad geographic coverage and strong local presence 3

UK 1051 1168 4091 SAR 794 Hellik Teigen 806 Retura Franzefoss 1110 Metallco 1128 Ragn Sells Stena 1147 Rekom 332 Revenues MNOK1

The largest waste management company in Norway Key facts

Volumes: 1.8 million tons
Market share: ~25%
Recycling rate: 85%
Number of customers: 43,000
Number of employees: 1,200
Number of vehicles: 6102
Number of transports: 3.36 million per year
ISO-certified operations

SWEDEN NORWAY DENMARK

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Key business areas

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Total waste management Metals Industry & Offshore Household collection

Collection, sorting and treatment/

recycling of mixed industrial waste, paper, plastics, wood, other non- hazardous waste fractions, as well as hazardous waste

Operation of municipal recycling

stations

Collection, sorting and treatment/

recycling of all kinds of ferrous and non ferrous materials, including end-of-life vehicles and electrical waste

Industrial services, including tank

cleaning, maintenance stops, cleaning of oil separators, and high pressure suction

Emergency services
Collection of household waste from

Norwegian and Swedish municipalities

Pure logistics service based on

public tender contracts with 5-7 year duration Key competitors Key competitors Key competitors Key competitors

#1 #1 Top 5 #2

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A key part of society's infrastructure – what’s needed?

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Hub-and-spoke plant infrastructure Large scale logistics operation

Large fleet of vehicles and

containers - Point-to-point logistics, route collection and specialized service vehicles

Scale in transportation of

secondary raw material globally –

n the road and at sea
Large central processing hubs to

recycle resources from waste - scale at plant level increasingly important

Vast national plant network with

strategic locations close to urban centers and industrial clusters

~NOK 6 billion mark-to-market in

properties and fixed infrastructure

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NGs perspektiv på verdikjeden – hva er det vi ønsker å få til?

Lokal markedsfokus

Definert av kundebehov, stort

sett logistikk

Fokus på kvalitet og

kundetilfredshet

Langtransport Anleggsdrift Nedstrøms salg Innsamlings- logistikk Salg

Produksjon

Fokus på effektivitet og

rett produktkvalitet til nedstrømskundene Råvaresalg/-trading

Fokus på salg av egne og

eksterne produkter til en

ptimal pris

Logistikk

Fokus på effektivitet og

leveransepresisjon til egne anlegg og nedstrøms kunder

Selger av resirkulerte råvarer gjennom industriell verdikjede Lokal tjenesteleverandør

Fokus på oppstrømskunden Fokus på nedstrømskunden

Optimert flyt i verdikjeden for å skape høyest bruttomargin til lavest driftskost

1 2 3

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Basic quality is critical for customer satisfaction and loyalty

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3,6 3,7 3,5 4,5 4,6 4,7 0,5 1 1,5 2 2,5 3 3,5 4 4,5 5 År 2011 År 2012 År 2013 År 2014 År 2015 År 2016

Customer loyalty

52% 54% 49% 37% 37% 33% 0% 10% 20% 30% 40% 50% 60% År 2011 År 2012 År 2013 År 2014 År 2015 År 2016

Customer complaints

We are close to the top in Norway on customer loyalty
We are no. 29 amongst Norwegian companies according

to ‘Norsk Kundebarometer’

Very tough measure «have you ever…». The average score

for Norwegian companies is 42%

We have moved from poor to good in a very short time

From the customer survey: How likely are you to remain a customer of us in the future? From the customer survey: Have you ever complained or felt reason to complain during the past year?

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September ’16 price increase gave 2,5 x higher effect than previous years

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Effects 2017

Gross annual effect of 55 MNOK (3,3%)
No of complaints: 314
Gross annual effect in 2015 of 20,4 MNOK
No of complaints: 327
Tendency of better ability to maintain effects over time:
Mixed waste up 4% in 2016
Woodchips up 8% in 2016

Total effekt Endring% abs. Omsetning* Agder 374 567 4,5 % Hordaland 261 034 2,0 % Midt-Nord 491 647 3,3 % Nord-Vest 193 641 2,5 % Rogaland 228 698 2,7 % TVB 1 530 806 3,6 % Øst 1 743 646 3,6 % Østfold 138 848 1,7 % Totalt 4 962 888 3,3 % OVERSIKT PER REGION

* Absolutt omsetning = Fakturert kunde + absolutt verdi av avregnet kunde (eks: fakturert 1000 kr for avfall og avregnet 500 for jern = 1500 kr i «absolutt omsetning» Omsetningen inkluderer alle kunder, inkl. sentralavtaler, slik at 3,3% er effekten på totalporteføljen.

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Development of auxiliary services

9 8 880 000 18 767 628 36 070 906 45 952 923 52 104 556 61 544 000 10 000 000 20 000 000 30 000 000 40 000 000 50 000 000 60 000 000 70 000 000 2011 2012 2013 2014 2015 2016

NOK per year1

1 Prognosis for Des 2016

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Hvordan hjelper vi med å skape konkurransekraft for våre kunder?

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Manhattan Kull Bauxitt Avfallsbasert brensel Brevik Serox

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Markedskommentar

BF pr tonn

– BF stabil – naturlige svingninger basert på produktmiks/sesongvariasjon

Volum nedstrøm

– Normal volum, som forventet for perioden.

Lagerstatus er lav

Bruttofortjeneste (NOK/TONN)

RESTAVFALL

Volum nedstrøm YTD Bruttofortjeneste pr tonn YTD

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Status full cost program – NG200 (autumn 2015)

12 NG200 cost reductions, full cost program1 NOK million NG200 status as of autumn 2015

Cost reducing initiatives of ~275 MNOK

initiated or to be initiated ‒ ~12% of 2014A OPEX2 ‒ ~9% of 2014A Transport Cost3 ‒ Reduction of ~150 FTEs

Adjusted for estimated loss of gross profit,

another ~114 MNOK of cost reductions needed to reach target of 360 MNOK

114 MNOK targeted in 2016 through

decisive cost cuts

1 Includes OPEX and transport costs. Adjusted for internal cost transactions 2 OPEX 2014A: NOK ~1.7 billion 3 Transportation cost (gross margin effect) 2014A: NOK ~0.8 billion, includes NOK ~10 million from phase 1 and NOK ~65 million from phase 2

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Overview of SG&A reductions 2016

13 NG group’s total SG&A development Run-rate FTEs 385 357 299 55 53 48 347

63 FTE

410

30 FTE

Nov-16 Sep-16 Jan-16 440

Logistics SG&A

10,1% 9,5% 8,4% 413 391 344

SG&A cost (MNOK) % of total revenues

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Plant consolidation

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41 48 74

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Shut down 1H2017

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Number of plants per 1H2017 Shut down 2012-16 Number of plants 2016 Number of plants 2012 Number of plants/ unique addresses

Plant consolidation has been one of

the most important drivers of our positive results development

We have now reduced the number of

plants from 74 in 2012 to 41 at the end

f Q2
During H1 we continued to consolidate
ur plant footprint by closing down
ur plants at Ausenfjellet, Fagerstrand,

Kongsvinger, Molde, Namsos, Bodø, and Balsfjord.

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Waste management business model – simplified value chain and P&L

Transportation + Mixed waste

Upstream NOK/t Mixed waste +1,500 Inbound transport +1,000 Equipment rental +150 Processing Sorting out metals (10%

f weight)

Processing waste-to- energy product Downstream NOK/t Shredded waste

500

Metals +1,000 Inbound transport +1,000 Equipment rent +150 Mixed waste (upstream) +1,500 Revenue (metals sale) +100 Cost (waste-to-energy)

450

Gross margin +2,300

Simplified P&L

Note: All figures are illustrative Photographer: Marion Haslien

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Positive fraction (upstream customers get paid for waste) – shredder material example

Upstream NOK/t Mixed steel/metals

825

Processing Shredding into smaller parts Sorting into: — Steel 70% of weight — Metals 7% of weight — Waste 23% of weight Downstream NOK/t Steel +1,375 Metals mix +10,500 Waste

1,500

1 ton mixed steel/metals NOK Revenue (steel sale) +962,5 Revenue (metals sale) +735 Cost (upstream purchase)

825

Cost (waste downstream)

345

Gross margin +527,5

Simplified P&L

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Content

I. Presentation of the NG Group II. Q2 2017 snapshot III. The road ahead

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Q2 2017

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Highlights Q2 and YTD 2017

1.5% reduction in waste volumes compared to Q2

2016; YTD waste volumes are up by 3.5%

Reduction in operating revenue of 1.3% compared

to Q2 2016; YTD revenue is up by 2.8%

Gross profit fell by NOK 16.8 million compared to

Q2 2016; YTD gross profit is up NOK 26.1 million

Adjusted EBITDA up by NOK 13.3 million to NOK

120.7 million compared to Q2 2016; YTD adjusted EBITDA is up NOK 65.8 million

NG200 cost and productivity initiatives

implemented according to plan. Operating costs reduced by an additional NOK 21.2 million in Q2 in NG core divisions; NOK 30 million YTD. Note: Easter in Q2 this year compared to Q1 in 2016 Q2 is the third quarter in a row with increasing results The results improvement comes as a result of our systematic work to industrialize Norsk Gjenvinning. Higher effectiveness, lower costs and an improved gross margin were important contributors to the results improvement. We expect a continued positive development for the group in the second half of 2017

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Operating revenue Reported EBITDA Adjustments Adjusted EBITDA

Q2 2017 MNOK

Q2 2016 MNOK

EBITDA snapshot for Q2 and YTD 2017

1 051 108

1

107

Special items in Q1:

No special items
Positive impact

from Easter falling in Q2 in 2017 vs. Q1 in 2016 of 12- 14 MNOK Special items in Q2:

No special items
Negative impact

from Easter falling in Q2 in 2017 vs. Q1 in 2016 of 12- 14 MNOK YTD 2017 MNOK

1 972 142 142

18

1037 122

1

121

Operating revenue Reported EBITDA Adjustments Adjusted EBITDA

YTD 2016 MNOK

2027 208

1

207

Operating revenue Reported EBITDA Adjustments Adjusted EBITDA

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MNOK

2Q 2017 2Q 2016

Adjusted earnings by segment Q2

Division Recycling Division Metal Project based businesses Division Household Collection

Revenues Adj. EBITDA(1)

598 79 586 77

Revenues Adj. EBITDA(1)

213 8 206 8

Revenues Adj. EBITDA(1)

90 12 99 5

Revenues Adj. EBITDA(1)

71 16 90 13

(1) Before internal charges

High activity level ; 14.2%

increase in collection assignments, 2.5% increased waste volumes

GP expansion
Cost and productivity

improvements/ industrialization

10% increase in ferrous

volumes, 3% reduction in metal volumes

Continued low metal

content in scrap

Cost and productivity

improvements and high production utilization

Discontinuation of loss

making activities and contracts

Cost and productivity

improvements

Stable and steady
No new tenders awarded

in Q2

Dispute with Karmøy

municipality won

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Development in OPEX

Comments

Real cost savings of NOK 30 million

Q2 YTD 2017

Adjustments for:

1) Reversal of charges for

nerous contract in Division

Household collection; 2) Adjustments for non core divisions not included in cost reduction program; and M&A’s (Sortera) 20

29,9
39,1

Adjustments for divisions not included in NG200 program (2) Adjustments for non recurring items (1) 0,1 Absolute unadjusted OPEX cost reduction Q2 YTD 2017 vs. Q2 YTD 2016 9,1 Real cost savings Q2 YTD 2017 on comparable business

OPEX cost comparison Q2 YTD 2017 vs Q2 YTD 2016 MNOK

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Outlook

In H2 we expect a continued improvement in our bottom line as we will continue to see the effects

f our cost cutting and a range of other measures that will increase productivity and efficiency

along the full value chain, combined with efforts to further improve gross margins through increased upstream prices.

Adjusted outlook for 2017:

− 2-3% increase in top line* compared to 2016 − Expect gross margins** to be 0.0-0.2% higher than in 2016 − We expect normal RDF and woodchips inventories, and metals volumes − Net opex reductions of 45-55 million compared to 2016

FY 2017 Maintenance Capex expectations reduced to 100-110 MNOK
Growth capex***, i.e. investment in vehicles for the Household Collection

business of 60 MNOK

Comfortable liquidity position

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* Commodity prices higher than expected ** GM expectations reduced due to higher commodity prices and changes in product mix *** Growth investments in environmental projects of 30 MNOK postponed until 2018

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Content

I. Presentation of the NG Group II. Q2 2017 snapshot III. The road ahead

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NG Flyt

Downstream sales Downstream/mid-stream logistics Processing Upstream logistics Upstream sales

Regionalize all dispatch

and co-locate regional sales frontline close to customer

Build central competence

center/ group to perform route optimization and support, track and push regions Organization / footprint Operations

Standardize and automate

processes at dispatch

ffices
Implement new tools for

route optimization

Optimize and standardize
perating model (use of

load carriers, hired vs.

wn cars)

Implementation risk 2019E EBITDA effect

Reduce number of self-

managed plants from 48 to 31

Convert sorting plants

to reloaders

Wind down or
utsource operations of

redundant/ marginal plants

Implement lean

production processes at main plants

Start systematic lean

initiatives on regional transport terminals and plants, to ensure standardized production methods and performance measurement

Centralize all long haul

logistics (between plants and downstream) in one unit and build competence

Take complete control
f downstream and

internal logistics (today provided by 3rd parties) to take advantages of scale

Maximize weight/car

from load optimization

Continuously build/

improve portfolio (pricing and balance) through re-negotiations,

ptimization of

contracts and sales to new geographies

Take physical positions

in immature markets based on improved market insights

Increase 3rd party

trading volumes

Change business model

so division Downstream takes over all price and market risk from the upstream divisions

Continuously develop
rganization and

increase market focus

Strengthen central

sales, customer service and “hunter”-sales

Tailored salesforce and

deployment

Centralize back office

function

Standardize and increase

follow-up of salesforce based on improved tools/KPIs

Implement standardized

and improved pricing model reflecting “value- added” services

Perform segmentation to

prioritize customers and

ptimize channel

strategy

Customize product
ffering to meet each

segment's unique needs High Medium Medium Medium Medium ~50 MNOK ~50 MNOK ~25 MNOK ~200 MNOK ~25 MNOK 1 2 3 4 5

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Kraftig produktivitetsøkning som resultat av kontinuerlig forbedring basert på lean-prinsipper

2017E 220 000 84 000 186 000 2014 2015 2016 134 000 Produksjon shredder Tonn pr år Implementering av enkle lean-prinsipper og kontinuerlig forbedring i produksjon… 38% Fokus på måling og oppfølging Trening og utvikling av medarbeidere God orden og kontroll på anlegget (5S) Strukturert problemløsing og rotårsak-analyser Forbedringsprosjekter i daglig drift …har resultert i kraftig produktivitetsøkning

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…og effektiviteten i den lokale innsamlingslogistikken øker som resultat av kontinuerlig forbedringsarbeid

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Produktivitetsøkning leder til større nedslagsfelt for innsamling av varer

Midt-Norge Nord-Norge Vestlandet Sverige Shredder

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Større volumer ut av anlegget resulterer i et større nedstrømsmarked

g mer effektiv long haul-logistikk

38 33 33 2017E 2015 +7% 2016 Antall bulkbåter nedstrøm øker # båter ut bulk jern, Øra

Flere transporter og større lastbærere

Antall containere nedstrøm øker # containere ut ikke magnetisk metall, Øra 561 464 423 +15% 2016 2015 2017E 2016 3.359 +16% 4.269 2017E 2015 3.182 Størrelse på bulkbåter øker Snittlast per båt ut jern, Øra

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Financials P&L Q2 2017 (1)

(1) The interim financial information has not been subject to audit

INTERIM CONSOLIDATED STATEMENT OF PROFIT AND LOSS 29

(NOK’000) Q2 2017 Q2 2016 YTD Q2 2017 YTD Q2 2016 Revenue 1 030 325 1 050 420 2 017 805 1 969 806 Other income 6 833 561 9 113 2 180 Total operating income 1 037 159 1 050 981 2 026 919 1 971 986 Cost of goods sold 509 915 506 987 1 000 744 971 889 Employee benefits expense 231 086 247 372 465 865 499 306 Depreciation and amortization expense 54 522 55 263 109 980 114 480 Other operating expenses 175 096 189 230 350 575 356 334 Other (gains)/losses - net (659) (147) 1 395 1 962 Operating profit 67 200 52 275 98 360 28 013 Finance income 976 4 768 1 787 9 356 Finance costs 68 386 52 972 129 825 102 824 Net income from associated companies 468 1 434 468 1 434 Profit / (loss) before income tax 257 5 505 (29 211) (64 021) Income tax expense 1 239 (4 498) (4 648) (23 923) Profit / (loss) for the period from continuing

perations

(982) 10 003 (24 563) (40 098) Profit / (loss) attributable to: Owners of the parent (3 971) 7 583 (29 084) (42 916) Non-controlling interests 2 990 2 420 4 521 2 818

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Balance sheet Q2 2017(1)

(1) The interim financial information has not been subject to audit

ASSETS 30

(NOK’000) 30.06.2017 31.12.2016 Non-current assets Property, plant & equipment 962 064 1 015 748 Intangible assets 109 486 124 649 Goodwill 1 235 986 1 235 986 Deferred tax assets 95 406 96 262 Investments in associated companies 21 587 15 119 Other receivables 45 543 39 487 Total non-current assets 2 470 072 2 527 251 Current assets Inventories 97 951 85 065 Trade and other receivables 674 235 607 663 Other financial assets

3 581

Cash and cash equivalents 88 734 167 724 Total current assets 860 920 864 034 Total assets 3 330 992 3 391 284

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Balance sheet Q2 2017(1)

(1) The interim financial information has not been subject to audit

EQUITY AND LIABILITIES 31

(NOK’000) 30.06.2017 31.12.2016 Equity Share capital and reserves attributable to owners of parent 49 453 75 125 Non-controlling interest 17 118 17 952 Total equity 66 571 93 077 Non-current liabilities Loans and borrowings 2 427 459 2 431 168 Other financial liabilities 15 602 24 885 Deferred income tax liabilities 31 493 31 794 Post-employment benefits 9 017 7 919 Provisions for other liabilities and charges 90 844 93 531 Total non-current liabilities 2 574 415 2 589 298 Current liabilities Trade and other payables 589 960 608 619 Current income tax 9 231 11 971 Loans and borrowings 66 024 65 432 Other financial liabilities 12 697

Provisions for other liabilities and charges

12 094 22 886 Total current liabilities 690 006 708 909 Total liabilities 3 264 421 3 298 207 Total equity and liabilities 3 330 992 3 391 284

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Consolidated cash flow statement Q2 2017(1)

(1) The interim financial information has not been subject to audit

INTERIM CONSOLIDATED STATEMENT OF CASH FLOW 32

(NOK’000) YTD Q2 2017 YTD Q2 2016 Profit / (Loss) before income tax (29 211) (64 021) Adjustments for: Income tax paid (2 686) (2 457) Depreciation and amortization charges 109 980 114 480 Items reclassified to investing and financing activities 100 966 92 544 Other P&L items without cash effect 18 804 (8 339) Changes in other short term items (116 459) (90 594) Net cash flow from operating activities 81 394 41 613 Payments for purchases of shares and businesses (9 000) (12 940) Proceeds from sale of business 1 600

Payments for purchases of non-current assets

(43 458) (112 112) Proceeds from sale of non-current assets 12 456 9 257 Net other investments (11 420)

Net cash flow from investing activities

(49 822) (115 795) Repayment of borrowings (1 595) (2 682) Debt related expenses (3 217)

Net change in credit facility

(13 435) 16 803 Dividend paid to non-controlling interest (5 355) (2 757) Net interest paid (88 247) (84 112) Net cash flow from financing activities (111 849) (72 747) Net increase in cash and cash equivalents (80 277) (146 929) Effect of exchange rate changes 1 287 (1 107) Cash and cash equivalents at beginning of period 167 724 219 819 Cash and cash equivalents at end of period 88 734 71 783