1 st quarter 2020 results announcement

TOMRA Systems ASA 5 May 2020 © TOMRA

HIGHLIGHTS FROM THE QUARTER

Key financial highlights

Revenues	• Revenues of 2,302 MNOK (2,081 MNOK in first quarter 2019) – up 11% Adjusted for currency, revenues were: - Up 3% for TOMRA Group - Up 5% in TOMRA Collection Solutions - Up 1% in TOMRA Sorting Solutions
Gross margin	• Gross margin 42.3% (up from 42.0% in first quarter 2019) - Improved margins in TOMRA Sorting Solutions
Operating expenses	• Operating expenses of 745 MNOK (667 MNOK in first quarter 2019) - Ramp-up in TOMRA Collection Solutions and Circular Economy - Currency effects
EBITA	• EBITA of 228 MNOK – up from 207 MNOK in first quarter 2019
Cash flow	• Cash flow from operations of 265 MNOK – up from 229 MNOK in first quarter 2019
Order intake Tomra Sorting Solutions	• Strong order intake and all-time high order backlog in TOMRA Sorting - Increased order intake in all business streams, up 11% currency adjusted
COVID-19	• Only minor impact from the pandemic in the first quarter

Highlights from the quarter

Revenues well above last year
- Growth in Northern Europe and Australia
Gross margin was stable versus last year
Operating expenses increased due to continued investments in ramp-up
EBITA increased by 9%
Preparations for new deposit markets ongoing

Improved order intake compared to same quarter last year
Order backlog healthy, up compared to end of both 4Q19 and 1Q19
Revenues slightly down from last year
- Some customer delays
Improved gross margin compared to last year

Collection Solutions Food Recycling & Mining

Order intake slightly up despite strong yearover-year comparison
Order backlog slightly down compared to 1Q19 but up from 4Q19
Revenues slightly up from last year
Gross margin slightly down compared to same period last year

TOMRA at Euroshop 2020 TOMRA at Fruit Logistica Berlin TOMRA integrates AI with its sorting technology

COVID-19 business update for TOMRA

Ensuring resilient and robust business operations

Focus areas	Status	Actions
Workforce protection	• Small number of confirmed cases • Morale has been maintained	• Policies and actions for protection and prevention, incl. work from home procedures • Stepping up engagement and multi-channel communications • Facility and on-site norms, e.g. staggered work shifts
Customer engagement	• Customers defined as essential business (retail, food suppliers, waste management)	• Stay loyal, helpful and close to our customers • Leverage technology and geographical presence for better support • Monitor every project and order and take necessary actions
Supply-chain stabilization	• Minor impact on production • Small disruptions in logistics	• Ensure cross-tier transparency into suppliers' risks • Inventory and production management • Estimate and accelerate logistics capacity
Financial stress-testing and control	• Satisfactory liquidity situation • Cost measures mirroring change in business activity	• Assess financial and liquidity outlooks using scenario planning • Appropriate cash-management/working capital focus • Reduce non-essential spending
Prepare for recovery and future growth	• Long-term outlook remains positive	• Anticipate longer-term implications and structural changes • Balance short-term cautiousness with long-term growth ambitions • Pre-emptive moves to turn challenges into opportunities

COVID-19 business update for TOMRA Collection Solutions

Exposure to lockdowns and COVID-19 responses

Solid customer base in an essential industry, immediate term impact on volumes

Container Deposit legislations, update on selected markets²

Scotland - July 2022

Final DRS regulations have been laid in the Scottish Parliament. During 2020 the legislation is expected to pass and as of 1 July 2022, the scheme will go live.

Western Australia - November 2020 / June 2021

The launch date for Containers for Change has been delayed due to COVID-19. The new startup date is expected to be November 2020 or June 2021.

The Netherlands - July 2021

The government announced introduction of deposit on small plastic bottles as of July 1 st, 2021 in addition to already existing deposit on larger bottles.

TOMRA stays close to customers and helps consumers recycle

Online Sales New RVM machine R1 presented to customers via webinar and digital tools

Production Continuity

No impact on operational ability Offices and factories reopened in China

Live Status myTOMRA live status lists open times, services and payout methods available at the location

1) The chart is intended for illustration purposes and should not be used as factual evidence

COVID-19 business update from TOMRA Food

Disruptions in the food value chain creating uncertainties TOMRA taking actions to ensure business continuity

Production	Distribution	Consumption
- Access to labor - Supply under pressure	- Channel management (Retail vs. HORECA) - Logistics under constraint	- Shifting behavior (home consumption, hoarding etc.) - Household economic situation under pressure

Processed Food:

Lower demand potatoes sector (French fries)
Higher demand for canned food and IQF*

Fresh Food:

Changing preference patterns as people make food at home
More health consciousness

Customers:

Investment sentiment impacted
Opportunities to bridge with service and spare parts
Stay close to our customers and understand market dynamics
Use our global scale to help pre-empt potential disruptions to our operations and supply chain
Benefit from localized service structure and global presence
Leverage digital technology for remote service and training tools

"…it is vital that we step up our collective efforts to keep the global food supply chain operating effectively." Michel Picandet – Head of TOMRA Food

TOMRA Food is making its test and demonstration centers virtual, enabling participants to see first-hand TOMRA's sorting solutions in action.

COVID-19 business update for TOMRA Recycling & Mining

Different customer segments posing different characteristics TOMRA being a proactive solution-seeker

Municipal Solid Waste

Defined as critical infrastructure
Strong regulatory drivers
Public tenders

Plastics upgrading

Demand for r-PET from big FMCGs
Other applications affected by lower demand and commodity prices

TOMRA technology helping recycling operations to decrease number of manual sorters in times of labor shortage while increasing material purity.

TOMRA team doing its utmost to maintain first-class service, ensuring ongoing on-site support for several mines.

Metal Mining

Influenced by lower demand from e.g. automation / construction sector
Sensitive to commodity prices

Influenced by lower demand
Lengthier investment decisions

TOMRA Recycling creates temporary COVID-19 portal to increase customer intimacy and demonstrate its capacity on sales and support.

Circular Economy Highlights – We forge ahead

TOMRA signed the European Plastic Pact to accelerate transition towards a Circular Economy

TOMRA engages in a set of initiatives through the Alliance to End Plastic Waste

TOMRA provides expertise and solutions to enable high quality upgrade of recycled plastics

FINANCIALS AND OUTLOOK

Currency risk and hedging policy

Revenues and expenses per currency:

	EUR¹	USD	NOK	OTHER²	TOTAL
Revenues	45 %	35 %	0 %	20 %	100 %
Expenses	40 %	25 %	5 %	30 %	100 %

Assets and liabilities per currency:

	EUR¹	USD	NOK	OTHER²	TOTAL
Assets	50 %	15 %	15 %	20 %	100 %
Liabilities	60 %	10 %	20 %	10 %	100 %

10% change in NOK towards other currencies will impact:

		Revenues	Expenses	EBITA
+19.7%**	EUR*	4.5%	4.0%	7.0%
	USD	3.5%	2.5%	8.0%
	OTHER**	2.0%	3.0%	-4.0%
	ALL	10.0%	9.5%	11.0%

HEDGING POLICY

CASHFLOW AND P/L

• TOMRA can hedge up to one year of future predicted cash flows. Gains and losses on these hedges are recorded at the finance line, not influencing EBITA

B/S

• TOMRA only hedges B/S items where exchange rate fluctuations could have P/L impact. Gains and losses on B/S hedging are recorded in accordance with IAS 21 and will normally not have P/L impact

¹ EUR includes DKK NOTE: Estimated and rounded figures ² Most important: AUD, NZD, RMB, CAD, SEK, GBP and JPY

Decomposition of currency effects on TOMRA's financials*

EFFECT ON BALANCE SHEET

A

Currency effect on total assets:
In %: +14%
In NOK: +1,495 MNOK

B

Currency effect on total liabilities:

In %: +14%
In NOK: +792 MNOK

C

Currency effect on equity:

In %: +14%
In NOK: +703 MNOK

STATEMENTS OF FINANCIAL POSITION	31 March	31 Dec
(MNOK)	2020	2019
ASSETS
Deferred tax assets	343,4	307,3
Intangible non-current assets	3 882,4	3 480,9
Tangible non-current assets	1 438,6	1 293,2
Right of use assets	1 199,1	1 036,4
Financial non-current assets	463,3	406,1
Inventory	1 943,3	1 596,1
Receivables	2 535,6	2 287,7
Cash and cash equivalents	444,0	459,7
A TOTAL ASSETS		12 249,7 10 867,4
EQUITY & LIABILITIES
Majority equity	5 717,3	5 076,4
C Non-controlling interest	207,0	170,3
Deferred taxes	97,8	145,0
Lease liability	1 260,3	1 101,7
Long-term interest bearing liabilities	1 783,6	1 588,3
Short-term interest bearing liabilities B	155,0	291,7
Accounts payables	649,3	502,4
Contract liabilities	622,4	491,8
Other liabilities	1 757,0	1 499,8
TOTAL EQUITY & LIABILITIES		12 249,7 10 867,4

EQUITY (MNOK)	Paid in capital	Transl. reserve	Actuarial Gain / (Loss)	Retained earnings	Total majority equity	Non controlling interest	Total equity
Balance per 31 December 2019	1 065,8	719,0	(109,7)	3 401,3	5 076,4	170,3	5 246,7
Net profit				(29,0)	(29,0)	3,6	(25,4)
Changes in translation difference		669,9			669,9	33,1	703,0	C
Dividend to shareholders					0,0		0,0
Balance per 31 March 2020	1 065,8	1 388,9	(109,7)	3 372,3	5 717,3	207,0	5 924,3

EFFECT ON PROFIT AND LOSS STATEMENT

STATEMENT OF PROFIT AND LOSS	1st Quarter
(MNOK)	2020	2019
Operating revenues	2 302,0	2 080,5	D
Cost of goods sold	1 328,8	1 207,0
Gross contribution	973,2	873,5
Operating expenses	744,9	666,9
EBITA	228,3	206,6	E
Amortizations	55,8	52,0
EBIT	172,5	154,6
Net financial income	(206,4)	(7,4)	F
Profit before tax	(33,9)	147,2
Taxes	(8,5)	35,3
Net profit	(25,4)	111,9
Non-Controlling interest (Minority interest)	(3,6)	(4,0)
Earnings per share (EPS)	(0,20)	0,73

D

Currency effect on Revenues

In %: +8%
In NOK: +163 MNOK

E

Currency effect on EBITA

In %: +11%
In NOK: +23 MNOK

F

Currency effect included in Net financial income

• In NOK: -190 MNOK (cashflow hedge at 31 March rates)

Financial highlights | P&L statement

	st 1 quarter
Amounts in NOK million	2020	2019	2019 Adj*
Revenues	2,302	2,081	2,244
Collection Solutions	1,168	1,042	1,116
Sorting Solutions	1,134	1,039	1,128
Gross contribution in %	973 42%	874 42%	944 42%
Operating expenses	745	667	714
EBITA in %	228 10%	207 10%	230 10%

Collection Solutions financials

		st 1 quarter
Amounts in NOK million		2020	2019	2019 Adj*
Revenues		1,168	1,042	1,116
Northern Europe		192	152
Europe (ex Northern)		423	391
North America		386	353
Rest of the world		167	146
Gross contribution		462	417	445
in %		40%	40%	40%
Operating expenses		311	278	297
EBITA		151	139	148
in %		13%	13%	13%
Europe	North America			Australia
• Currency adjusted, revenues were up 6% in Europe • Improved activity in Northern Europe • Stable activity in Central Europe	• • •	Currency adjusted, revenues were unchanged in North America Overall stable machine sales Improved throughput volumes until	•	Good volume development continued in both NSW and QSL until late March
• Netherlands moves towards deposit expansion	mid-March

Sorting Solutions financials

		st 1 quarter
Amounts in NOK million		2020	2019	2019 Adj*
Revenues		1,134	1,039	1,128
Europe		473	403
America		358	359
Asia		152	149
Rest of the world		151	128
Gross contribution		511	457	499
in %		45%	44%	44%
Operating expenses		397 365		391
EBITA		114	92	108
in %		10%	9%	10%
P/L	Food			Recycling/Mining
• Revenues up 9% - Up 1% adjusted for currencies • EBITA up 24%	• Improved order intake • Revenues slightly down • Improved gross margin		• Order intake slightly up • Revenues slightly up • Gross margin slightly down

Up 6% adjusted for currencies

Development in order intake and order backlog

Order intake Order backlog

Revenues

• TOMRA Sorting Solutions:

Revenues of 1,134 MNOK, up from 1,039 MNOK last year
Order intake of 1,591 MNOK in the quarter, compared to 1,104 MNOK same quarter last year, up 11% currency adjusted
All time high order backlog of 1,915 MNOK at the end of 1Q20, up from 1,458 MNOK at the end of 4Q19 – up 13% currency adjusted
Estimated backlog conversion ratio in 2Q20: 60-65%*

Financial highlights | Balance sheet and cash flow

	31 March		31 Dec
Amounts in NOK million	2020	2019	2019
ASSETS	12,250	10,695	10,868
Intangible non-current assets	4,226	3,765	3,788
Tangible non-current assets	2,638	2,281	2,330
Financial non-current assets	463	343	406
Inventory	1,943	1,563	1,596
Receivables	2,536	2,267	2,288
Cash and cash equivalents	444	476	460
LIABILITIES AND EQUITY	12,250	10,695	10,868
Equity	5,924	5,222	5,247
Lease liabilities	1,260	1,044	1,102
Interest-bearing liabilities	1,939	1,543	1,880
Non interest-bearing liabilities	3,127	2,886	2,639

Ordinary cashflow from operations

• 265 MNOK in the first quarter (229 MNOK in first quarter 2019)

Solidity and gearing

48% equity ratio
NIBD/EBITDA (Rolling 12 months)
- o 0.9x without IFRS 16
- o 1.4x including IFRS 16

TOMRA has a solid financial position

Weighted average debt maturity of 2.3 years
All interest-bearing debt except for the overdraft is swapped to EUR and is exposed to EUR/NOK exchange rate.

Debt maturity profile Current funding sources

TOMRA has a satisfactory liquidity situation with available unused credit lines of approx. 900 MNOK
The senior unsecured bonds (no financial covenants) of 1000 MNOK (swapped to EUR) have been successfully listed on Oslo Stock Exchange
The financial covenant related to the bank debt is minimum equity ratio of 30%

Update from Annual General Meeting 2020

• Revised dividend proposal approved:

Board is granted an authorization to resolve dividends, up to NOK 2.75 per share, at a later stage
The authorization covers the period until the annual general meeting in 2021
PwC selected as new auditor:
- KPMG has been the auditor for several years
- Tender process with participation from Deloitte, EY and PwC
- PwC nominated by the audit committee
No changes in composition of the Board of Directors
- All shareholder elected members of the Board of Directors from 2019 have been re-elected

Stock market announcement from TOMRA dated 1 April 2020

Outlook

Collection Solutions	• Europe showing resilience, but delays in installations should be expected • Throughput volumes dependent on length and severity of lockdown • Growth in ramp-up expenses slows down
Sorting Solutions - Food	• Solid order backlog as basis, but delays in installations should be expected • Order intake in processed food negatively influenced
Sorting Solutions – Recycling/Mining	• Underlying good momentum • Deviations between business streams due to impact of lower commodity prices and industrial demand
Currency	• Reporting in NOK and with some NOK cost base, TOMRA will in general benefit from a weak NOK, particularly measured against EUR • With significant revenues in USD and costs in EUR, TOMRA Sorting Solutions is exposed to USD/EUR

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Disclaimer

This Document (which may be a presentation, video, brochure or other material), hereafter called Document, may include and be based on, inter alia, forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. The content of this Document may be based on current expectations, estimates and projections about global economic conditions, including the economic conditions of the regions and industries that are major markets for TOMRA Systems ASA and its subsidiaries and affiliates. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions, if not part of what could be clearly characterized as a demonstration case. Important factors that could cause actual results to differ materially from those expectations include, among others, changes in economic and market conditions in the geographic areas and industries that are or will be major markets for TOMRA Systems ASA. Although TOMRA Systems ASA believes that its expectations and the Document are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Document. TOMRA Systems ASA does not guarantee the accuracy, reliability or completeness of the Document, and TOMRA Systems ASA (including its directors, officers and employees) accepts no liability whatsoever for any direct or consequential loss arising from the use of this Document or its contents. TOMRA Systems ASA consists of many legally independent entities, constituting their own separate identities. TOMRA is used as the common brand or trademark for most of these entities. In this Document we may sometimes use "TOMRA", "TOMRA Systems", "we" or "us" when we refer to TOMRA Systems ASA companies in general or where no useful purpose is served by identifying any particular TOMRA Company