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

Presentation of the Norsk Gjenvinning Group September 2017

Content I. Presentation of the NG Group II. Q2 2017 snapshot III. The road ahead 2

The Norsk Gjenvinning Group – overview Broad geographic coverage and strong local presence The largest waste management company in Norway  Unparalleled, comprehensive geographic coverage from Revenues North to South with a large number of sites across Norway MNOK 1 4091  Broadest range of services in Norway; the only player with total waste management business model  Number 1 position in all key segments 1168 1147 1128 1110 1051 806 794 332  Innovator and leader in the provision of value Stena Ragn Sells Metallco Franzefoss Retura Hellik Teigen SAR Rekom added services Key facts  Volumes: 1.8 million tons SWEDEN  Market share: ~25% NORWAY  Recycling rate: 85%  Number of customers: 43,000  Number of employees: 1,200  Number of vehicles: 610 2 UK DENMARK  Number of transports: 3.36 million per year  ISO-certified operations 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 3 2 Including subcontractors

Key business areas Total waste management Metals Industry & Offshore Household collection  Collection, sorting and treatment/  Collection, sorting and treatment/  Industrial services, including tank  Collection of household waste from recycling of mixed industrial waste, recycling of all kinds of ferrous and cleaning, maintenance stops, Norwegian and Swedish paper, plastics, wood, other non- non ferrous materials, including cleaning of oil separators, and high municipalities hazardous waste fractions, as well end-of-life vehicles and electrical pressure suction  Pure logistics service based on as hazardous waste waste  Emergency services public tender contracts with 5-7  Operation of municipal recycling year duration stations Key competitors Key competitors Key competitors Key competitors #1 #1 Top 5 #2 4

A key part of society's infrastructure – what’s needed? Hub-and-spoke plant infrastructure  Large central processing hubs to recycle resources from waste - scale at plant level increasingly important Large scale logistics operation  Vast national plant network with  Large fleet of vehicles and strategic locations close to urban containers - Point-to-point centers and industrial clusters logistics, route collection and  specialized service vehicles ~NOK 6 billion mark-to-market in properties and fixed infrastructure  Scale in transportation of secondary raw material globally – on the road and at sea 5

NGs perspektiv på verdikjeden – hva er det vi ønsker å få til? 1 2 Lokal tjenesteleverandør Selger av resirkulerte råvarer gjennom industriell verdikjede Innsamlings- Salg Anleggsdrift Langtransport Nedstrøms salg logistikk Lokal markedsfokus Produksjon Logistikk Råvaresalg/-trading  Definert av kundebehov, stort  Fokus på effektivitet og  Fokus på effektivitet og  Fokus på salg av egne og sett logistikk rett produktkvalitet til leveransepresisjon til egne eksterne produkter til en nedstrømskundene anlegg og nedstrøms optimal pris  Fokus på kvalitet og kunder kundetilfredshet Fokus på oppstrømskunden Fokus på nedstrømskunden 3 Optimert flyt i verdikjeden for å skape høyest bruttomargin til lavest driftskost 6

Basic quality is critical for customer satisfaction and loyalty Customer loyalty Customer complaints From the customer survey: How likely are you to From the customer survey: Have you ever remain a customer of us in the future? complained or felt reason to complain during the past year? 60% 5 4,7 4,6 4,5 54% 52% 4,5 49% 50% 4 3,6 3,7 3,5 3,5 40% 37% 37% 3 33% 2,5 30% 2 20% 1,5 1 10% 0,5 0 0% År 2011 År 2012 År 2013 År 2014 År 2015 År 2016 År 2011 År 2012 År 2013 År 2014 År 2015 År 2016   Very tough measure «have you ever…». The average score We are close to the top in Norway on customer loyalty for Norwegian companies is 42%  We are no. 29 amongst Norwegian companies according  We have moved from poor to good in a very short time to ‘Norsk Kundebarometer ’ 7

September ’16 price increase gave 2,5 x higher effect than previous years OVERSIKT PER REGION Effects 2017 Endring% abs.  Gross annual effect of 55 MNOK (3,3%) Total effekt Omsetning* - No of complaints: 314 Agder 374 567 4,5 % Hordaland 261 034 2,0 %  Gross annual effect in 2015 of 20,4 MNOK Midt-Nord 491 647 3,3 % - No of complaints: 327 Nord-Vest 193 641 2,5 %  Rogaland 228 698 2,7 % Tendency of better ability to maintain effects over time: TVB 1 530 806 3,6 % - Mixed waste up 4% in 2016 Øst 1 743 646 3,6 % - Woodchips up 8% in 2016 Østfold 138 848 1,7 % Totalt 4 962 888 3,3 % * 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. 8

Development of auxiliary services NOK per year 1 70 000 000 61 544 000 60 000 000 52 104 556 50 000 000 45 952 923 40 000 000 36 070 906 30 000 000 18 767 628 20 000 000 10 000 000 8 880 000 0 2011 2012 2013 2014 2015 2016 9 1 Prognosis for Des 2016

Hvordan hjelper vi med å skape konkurransekraft for våre kunder? Brevik Manhattan Avfallsbasert brensel Serox Kull Bauxitt 10

RESTAVFALL Bruttofortjeneste (NOK/TONN) Markedskommentar  BF pr tonn – BF stabil – naturlige svingninger basert på produktmiks/sesongvariasjon  Volum nedstrøm – Normal volum, som forventet for perioden.  Lagerstatus er lav Volum nedstrøm YTD Bruttofortjeneste pr tonn YTD 11

Status full cost program – NG200 (autumn 2015) NG200 cost reductions, full cost program 1 NG200 status as of autumn 2015 NOK million  Cost reducing initiatives of ~275 MNOK initiated or to be initiated ‒ ~12% of 2014A OPEX 2 ‒ ~9% of 2014A Transport Cost 3 ‒ 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 12 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

Overview of SG&A reductions 2016 NG group’s total SG&A development Run-rate FTEs SG&A -30 FTE 440 Logistics -63 FTE 410 55 53 347 48 385 357 299 Jan-16 Sep-16 Nov-16 SG&A cost 413 391 344 (MNOK) % of total 10,1% 9,5% 8,4% revenues 13

Plant consolidation Number of plants/ unique addresses • Plant consolidation has been one of 74 the most important drivers of our positive results development • We have now reduced the number of -26 plants from 74 in 2012 to 41 at the end of Q2 48 • During H1 we continued to consolidate -7 41 our plant footprint by closing down our plants at Ausenfjellet, Fagerstrand, Kongsvinger, Molde, Namsos, Bodø, and Balsfjord. Number of Shut down Number of Shut down Number of plants 2012 2012-16 plants 2016 1H2017 plants per 1H2017 14

Waste management business model – simplified value chain and P&L Transportation + Mixed waste Simplified P&L Upstream NOK/t Processing Downstream NOK/t Inbound transport +1,000 Mixed waste +1,500 Sorting out metals (10% Shredded waste -500 Equipment rent +150 of weight) Metals +1,000 Mixed waste (upstream) +1,500 Inbound transport +1,000 Revenue (metals sale) +100 Processing waste-to- Equipment rental +150 Cost (waste-to-energy) -450 energy product Gross margin +2,300 Positive fraction (upstream customers get paid for waste) – shredder material example Simplified P&L Upstream NOK/t Processing Downstream NOK/t 1 ton mixed steel/metals NOK Mixed steel/metals -825 Shredding into smaller parts Steel +1,375 Revenue (steel sale) +962,5 Sorting into: Metals mix +10,500 Revenue (metals sale) +735 — Steel 70% of weight Waste -1,500 Cost (upstream purchase) -825 — Metals 7% of weight Cost (waste downstream) -345 — Waste 23% of weight Gross margin +527,5 Note: All figures are illustrative 15 Photographer: Marion Haslien

Content I. Presentation of the NG Group II. Q2 2017 snapshot III. The road ahead 16